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Operator: Good day, and thank you for standing by. Welcome to the Frontier Group Holdings Q4 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, David Erdman, Senior Director, Investor Relations. Please go ahead. David Erdman: Thank you, and good morning, everyone. Welcome to our Fourth Quarter and Year-End 2025 Earnings Call. With me this morning are Jimmy Dempsey, President and Chief Executive Officer; Bobby Schroeter, Chief Commercial Officer; and Mark Mitchell, Chief Financial Officer. On today's call, Jimmy will be providing commentary on his strategic priorities, and then we're going to jump directly to the Q&A. However, a transcript of the prepared remarks, which would otherwise have been delivered by Bobby and Mark is available for download on our Investor Relations website. Before yielding, let me recite the customary safe harbor provisions. We will be making forward-looking statements, which are subject to risks and uncertainties. Actual results may differ materially from those predicted in these forward-looking statements. Additional information concerning risk factors which could cause such differences are outlined in the announcement we released earlier, along with reports we filed with the Securities and Exchange Commission. Moreover, we will also be discussing non-GAAP financial measures, actual results of which are reconciled to the nearest comparable GAAP measure in the appendix of the earnings announcement. And then we'll also be referencing state-adjusted unit metrics, which are based on 1,000 miles. So I'm going to give the floor to Jimmy to begin his prepared remarks. Jimmy? James Dempsey: I'd like to start by emphasizing how honored I am to be taking on the role of CEO, particularly at such a pivotal moment for Frontier. When I accepted this role, the Board gave me a clear mandate to enact change at our company. We know that we need to do better across the business and deliver increased value for all our stakeholders, employees, customers and our investors. With this in mind, I have spent the past 2 months rolling up my sleeves to build a clear strategic path designed to return Frontier to sustain profitability as the low-cost, high-value airline of choice. This plan comprises 4 strategic priorities: rightsizing the fleet, strengthening our cost discipline, reducing cancellations and improving on-time performance and driving customer loyalty. Today, I will walk you through the actions we are taking on these priorities that I expect will drive meaningful changes and improvement across our organization. First and foremost, I am focused on resetting and stabilizing the business through a comprehensive rightsizing of our fleet. Returning Frontier to profitability is about going back to our roots as an organization. This means taking action to increase fleet productivity and efficiency. Just recently, we entered into a nonbinding agreement with AerCap, which will enable us to benefit from the early termination of 24 aircraft leases in the second quarter. We plan to take advantage of this by increasing utilization across our remaining fleet to support our planned growth and drive efficiency. AerCap will remain one of our largest lessors, and we look forward to expanding our partnership with an additional 10 sale-leasebacks in the future as part of this agreement. Separately, we reached a nonbinding framework agreement with Airbus, which revises the delivery profile of our order book. It supports a more measured and sustainable long-term growth rate of approximately 10%, representing a meaningful moderation versus our prior growth trajectory. The update to our delivery profile and underlying growth rate helps to minimize the proportion of new market activity while supporting ongoing productivity and operational reliability. Our plan to rightsize the fleet directly contributes to my next strategic priority, strengthening our cost discipline. Cost discipline has always been a cornerstone of our business model. We are targeting $200 million of annual run rate cost savings by 2027, largely from network optimization, productivity enhancements and other efficiencies across the business, which includes approximately $90 million of expected annual rent savings from the early termination of the 24 aircraft leases. The next strategic priority throughout 2026 is centered around improving our operational reliability by reducing cancellations and improving our on-time performance. We're simply not satisfied with our past record in these areas. The status quo is not acceptable and every available option is on the table to improve our performance. I will give you some examples in a long list of initiatives we are working on across the business. Turn times, we are working on improvements to optimize our airport operation workflows, strengthening our head start performance and improving day of travel communications with our customers. Over 85% of our customers use our recently updated mobile app. By leveraging digital channels, we can push timely alerts of our clear next steps during delays and ensure customers feel supported and informed throughout their journey. We are also working on improved operational planning that better integrates scheduled maintenance into the early stage of our network design process to take advantage of our enhanced maintenance footprint. While we remain firmly committed to cost discipline and operational excellence, our final strategic priority is pairing that discipline with smart high-return upgrades that will accelerate the maturity of our customer loyalty program. Last year, we launched a series of enhancements to our loyalty ecosystem, including changes that simplify elite benefits, enhanced redemption opportunities and create broader customer engagement. Our simplified reward structure and easier elite status benchmarks have already begun to resonate with customers, and we are expanding on these efforts in 2026. Furthermore, we'll be modernizing every part of our commercial offering this year and into 2027 from digital tools and distribution to loyalty and onboard experience. These initiatives include the fleet-wide rollout of first-class seating, onboard WiFi, and upgraded website and mobile app and enhanced digital products and communications. These enhancements will broaden our appeal and effectively address friction points that have historically limited conversion and loyalty. We're building a product that remains incredibly affordable while delivering more value than ever before. Our loyalty assets represent one of our strongest long-term levers for value creation in the business. We're confident our recent and planned investments in our loyalty program and product offerings will be a significant part of our revenue growth. Overall, we're pairing our unique ability to provide low fares with an increasingly elevated product and customer experience to deliver unmatched value in air travel. The path ahead requires meaningful change and we are embracing that reality with clarity and conviction in order to capitalize on the substantial opportunity we see in front of us. We've adopted a disciplined actionable set of strategic priorities to transform our company and put Frontier on a path towards sustained profitability. Above all, we are deeply committed to creating long-term value for our shareholders, employees and customers. Thank you for your continued support. As David noted, we'll preempt commentary from Bobby and Mark to allow sufficient time for analyst questions. With that, operator, we're ready to begin the Q&A segment. Operator: [Operator Instructions] The first question we have today is coming from Atul Maheswari of UBS. Atul Maheswari: I had a question on your long-term growth plan of 10%. So where is this growth going to be concentrated? Is it simply going to be backfilling the space vacated by Spirit? Or are there other geographies where you see an opportunity? And then related to this topic, why is 10% the right growth target for this year and for the long term? Why is it not a smaller number than that, as that would in theory, accelerate your ROIC improvement. So any thoughts there would be helpful. James Dempsey: Yes, sure. Thanks, Atul. Look, we'll obviously be disciplined in deploying our capacity across over a multiyear basis across the system. And what you're seeing this year is effectively infilling our network from a growth perspective. So we anticipate growth will be approximately 10%. I mean there's a long way to go from now to the end of the year to determine exactly what that rate will perfectly be. We anticipate about half of that is filling out the existing network. And so moving capacity that was taken down on Tuesday and Wednesdays, and Saturdays and moving back into bringing capacity back into those days. And then about half is new markets. And new markets are driven by items that didn't work last year or opportunities that are presenting themselves with changes in capacity across the environment. So you're seeing us take advantage of that in parts of the U.S. And you've seen us do that in a lot of airports around the states like Atlanta, Las Vegas and other places. In terms of the 10% growth rate and why that makes sense for us. Look, historically, we've grown the airline by mid- to high single-digit teens, and in some cases, well over 20%. We think that about -- when you grow by about 5% to 7%, you don't necessarily take a significant RASM penalty to that growth. And we like the growth profile of around 10%. This drives a lot of utilization flexibility in the organization where you can manage your utilization and manage growth rates either below or above at 10% depending on market opportunities. What we see at the moment because we're infilling a lot of productivity into the airline, we think that, that would provide real stability in the revenue performance across this year and sort of piggybacks on the benefits that we're seeing from a revenue perspective across the back end of the fourth quarter and certainly, the run rate that we're seeing right now in terms of RASM going through this quarter and into the second quarter. Atul Maheswari: Got it. That's helpful. And then as my follow-up, I had a question on the guidance that was issued for this year. So based on my math, it appears you will need high-single digit to maybe double-digit RASM growth over the second to the fourth quarter to achieve the midpoint of the guidance. So a, can you confirm if that math is correct? And then b, if it is, what's giving you the confidence that you can drive this level of RASM increase beginning in the second quarter of this year because that's the time when your capacity growth will also accelerate to double-digit levels. James Dempsey: Look, a couple of things are happening, right? This is a major transition year for the airline. We will change the utilization profile of the business as you progress through into the second half of the year. And what we're seeing right now in terms of the RASM performance is meaningfully improved year-over-year. We're seeing a trend above 10% in terms of RASM improvement. We're seeing that in the early booking process through March and particularly April and May. And so we're actually quite encouraged by what we see in terms of RASM trends going across the year. In terms of the long term, post adjusting our costs, like one of the focuses in the business is getting a significant saving in unit costs across this year, but largely moving into 2027. And so you effectively have a reset year in terms of the business and its productivity, and that's where our focus lies at the moment. We're certainly seeing that stability in revenue and improvement in revenue carry forward, which gives us confidence that, that performance happens for the rest of the year. Robert "Bobby" Schroeter: Yes. And this is Bobby. So some of the things that we're seeing, of course, there's a good supply/demand backdrop that exists, capacity has been moderated a bit. But some of the things we've done that we're seeing unique benefits to as well. Last quarter, we moved back to a basic first product architecture that has the 3 clearly defined bundles that we have within there, so economy and premium and business. And then we reinforced revenue management discipline around that structure. So that allowed us to yield up more effectively across the fare ladder. And then in addition to that, which has enhanced this, we've seen significant in the past quarter, significant NDC distribution enhancement. So that's helping to improve the conversion across third-party channels. It's allowing us to merchandise those bundles more effectively on the OTAs and aggregators. And they're effectively, if you think about it now, they're on the shelf that they weren't before. So that's driving purchases early in the curve, allowing for improved attachment rates and better yield opportunities. And those are things that are going to continue in the future. So as Jimmy said, we're seeing that in the first quarter, and those are on continued benefits that we'll see throughout the year, we believe. Operator: And our next question is coming from the line of Savi Syth of Raymond James. Savanthi Syth: I wonder if you could remind us what the delivery cadence is for 2026. And then as you look to '27 and '28, just generally how many aircraft are you kind of anticipating with this revised orders? Mark Mitchell: Yes. So the delivery cadence for this year. So we have 24 aircraft scheduled, 6 in the first quarter, 8 in the second quarter and then 5 in both the third and fourth quarter. And with the fleet plan that we announced, when you look at those 24 inductions, 24 early terminations, we expect to end the year with the same number of aircraft we began the year with, so 176. And then as you look across '27, we expect to be roughly by the end of '27 at a similar level to where we ended '25 and expect to end '26. James Dempsey: Yes. And Savi, I mean that's an important point, right? We're going to start and end the year at the same number of aircraft and actually start and end 2027 with the same number of aircraft that we started 2026 with. And so really, the growth that you're seeing in the business is bringing back that productivity in the airline that's been missing for the last couple of years. And so that puts us on a better trajectory in terms of core operating unit costs in the business. So that gives us real confidence that this plan that we're putting in place today is very manageable across the airline. You're effectively infilling utilization into a largely already existing network. So that's where our confidence is coming from this plan from a stability of revenue perspective, but also from an ability to operate the airline at a higher utilization clip. Savanthi Syth: That makes sense. I mean I wonder like what do you think you can get to in terms of utilization as you exit this year? And what's the dispute order, like what's the new normal in utilization? And when can we get there? James Dempsey: We've targeted about 11.5 hours across the entire fleet. And the fleet is more complicated than it was prior to COVID, where you got closer to 12 hours because of some of the engine noise with the new engine technology that exists across the fleet. So you do have aircraft that are less productive because of that. And so we've picked 11.5 hours. It gives us flexibility to add time to it, if we see it in certain periods and take time away from a seasonal perspective or other periods. So we think about 11.5 hours. That's our initial target to reset the business and do that between now and probably running into the summer of 2027. You get a big boost from a utilization rate of like averaging about 9 hours last year when you remove the 24 aircraft and rightsize the fleet. I mean that's a very, very important change that will happen quite abruptly midway through the second quarter. So that's a really good step change as you progress into the second half of this year. And then you've got to grow into the remainder of the fleet from a pilot flight attendants perspective to operate at close to 11.5 hours probably by summer 2027. Operator: And the next question will be coming from the line of Jamie Baker of JPMorgan Securities. Jamie Baker: So the $200 million of run rate cost savings, I'm curious what labor assumptions underpin that. I believe at one time, Barry had at least sort of implied that revised economics were part of a longer-term plan that you would articulated. I know that there was never an official 2026 guide today. But yes, straightforward question. Is there a pilot deal in your full year guide? James Dempsey: There is not a pilot deal in our full year guide. We continue, Jamie, in negotiations with the pilots through the mediation process. And so look, we'll update on that if we have something to talk to you about. The $200 million of cost savings, about half of it is rent, right, which comes from the deal we've done today. About another 1/3 of it is really network shape, driving unit cost savings into the business from where we fly basically. And then you've got efficiencies that come on the back of having a business that was fragmented as the week progressed. So Tuesdays and Wednesdays had lower flying. Saturday had slightly lower flying than the other 4 days of the week. And so you get efficiencies from that. But back to your primary question, no, we haven't baked in the cost savings, any changes to crew other than efficiency that comes naturally across the week from flying a more stable schedule. Jamie Baker: Well, that's a good segue into my second question. And I guess this kind of builds on what Savi was asking about. But clearly, there are 2 iterations of low-cost flying in the U.S., the high daily utilization model and the other being more of the kind of Allegiant Sun country, only fly when you can make money, low utilization model, whatever you want to call that. So it's clear you're leaning back into the high utilization model. What is it about Frontier's structure or network that assures us that, that is the better of the 2 low-cost iteration operating models in the U.S.? James Dempsey: Well, fundamentally, the efficiency that comes to the airline from flying a more regular schedule throughout the week is a meaningful cost saving in the business. And so this business model, the focus is always on strengthening your cost discipline across the business. And that's the appetite to do it. What we've seen in our business over the past number of months as we invest in loyalty, invest in the network and adapt the network to today's environment and the playing field that we're in today, we've seen real performance improvement across the week, including some of the off-peak days that you have, albeit with lower capacity deployed in those days. So we're pretty confident that the run rate RASM that we're seeing at the moment, given the structural change that's happening in the -- that has been happening in the industry, and the capacity discipline that is in a number of carriers across the industry puts us in a really good place to take advantage of that and bring the airline back to that cost discipline place than it was prior to COVID. Operator: One moment for the next question. And the next question will come from the line of Ravi Shanker of Morgan Stanley. Katherine Kallergis: This is Katherine on for Ravi. I guess just a question on the guidance range. Obviously, there's a bit of a wide range here. So can you just maybe talk us through what would push you maybe to the low end of the guidance versus the high end and what you're assuming there for the full year? Mark Mitchell: Yes. So as you look at the full year, right? I mean, as Jimmy highlighted, this is a transition year. So as we go through this year, working to reset the productivity and the efficiency of the airline. We've got cost savings that we've got line of sight to that we're targeting. And so as you look at that guidance range, it takes into account the fact that there is a transition, there's a timing element to that needs to be worked through. And as you look at the other side of the range, we are seeing a more constructive supply-demand environment, and we do expect as we go through the year, benefits on it from a productivity standpoint and a cost savings standpoint and also further traction on the revenue initiatives that were highlighted earlier. Katherine Kallergis: Got it. That's very helpful. And just as a quick follow-up. What was the catalyst for deferring some of these planes? I know you talked about how 10% is going to be the right growth for you. So is it more so figuring out what the growth rate long term would work for you guys? Or kind of what kind of kicked this off? Robert "Bobby" Schroeter: Yes. I mean we've been -- look, we're obviously managing over the last 2 months, 2 deals that we've been doing to rightsize the fleet. The reason we picked 10% is we think it provides more stability from a revenue perspective than the airline has had historically where it's had a growth rate of 20% plus in certain years, but certainly high teens growth rate. And so we think 10% is a good number for the business to grow at. It provides an opportunity for us to drive growth into new markets where we're offering value that is clearly a differentiator with the rest of the industry, given our low cost base. And so we think about 10% makes sense. Obviously, you can accelerate that if you choose to or decelerate it depending on how you utilize the airline. But we think around 8%, 9%, 10% is a good number for the airline to be at over the kind of long term. We expect as the airline grows beyond 2030 and beyond, that may come down a little bit because the airline is much bigger. And so the level of growth is not necessarily as high from a percentage term basis, but may well be consistent with the ASM production that you produce each year from a growth perspective. Operator: And the next question will come from the line of Duane Pfennigwerth of Evercore. Duane Pfennigwerth: Thank you. Jimmy, I wonder if you could speak to return conditions generally on your engines. How much is an engine rebuild costing you in the current backdrop versus maybe what was contemplated in these leases 12 years ago? And if you're willing to speak to it, just remind us what your agreements sort of require at the back end? Is there a true-up mechanism in your return conditions? James Dempsey: Yes. I'm not going to get into the complexity of the deal that we've done in great detail. These are not 12-year-old aircraft. These are midway through their lease life. And so the opportunity that came is related to a need for more engines in the CFM engine pool. And so we have been in dialogue with multiple parties around this for the last month or so to try and put a structure in place that work for both us and them. And so we've got to a very creative place. There is no liquidity penalty on Frontier in 2026 in relation to this deal. We have to work through the redelivery conditions of the engines over the coming months. But we think that the cost of this is relatively minor in the context of our fleet. And actually, what it does, Duane, is it gives you a meaningful improvement in expected maintenance costs in the next 3 to 5 years from removing these aircraft from the fleet. So this is a very positive deal both in the short term and to reset the productivity of the airline, but over the medium term in terms of the maintenance profile of the business in the next 3 to 5 years. And so we're really happy with the deal that's been struck. Duane Pfennigwerth: Okay. How will you measure -- should we view this as this is a one and done or this is one of perhaps several of these? How will you measure if 24 aircraft is sufficient to get you back to where you need to be? James Dempsey: I mean, look, they're -- I don't know that there's another opportunity that is -- that can mirror this opportunity that we put in place to remove 24 aircraft. There may well be an opportunity. It would just accelerate the productivity of the airline. You would just move back to an 11.5 hour utilization rate at a faster pace. We've been very focused on this deal and separately fixing the medium- to long-term growth rate of the airline, so that we could have a measured growth profile of the airline. If another deal comes along, we'll certainly look at it, but we'll be disciplined in terms of how we assess whether it's the right thing to do for the airline or not. Operator: And the next question will come from the line of Michael Linenberg of Deutsche Bank. Michael Linenberg: Yes. Just maybe touching back on Duane's question, Jimmy. Obviously, the return of 24 airplanes, normally, there's a sizable upfront cash component tied to redelivery costs. I think you said that there was no liquidity penalty. So presumably, no cash goes out the door when they return. And I think you mentioned also that the P&L impact, it seemed like it would be modest. Is that reflected like when I look at the range for the year, the loss of $0.40 for the profit of $0.50, does that include any sort of P&L impact that would be associated with any sort of redelivery costs on the airplane? James Dempsey: Yes. So there will be a onetime expense for noncash onetime expense that occurs when we execute the final agreements. But there -- and look, that onetime expense is likely to be non-GAAPed out. The guidance range puts -- takes into account any real costs linked to this deal that we have from a return condition perspective. Mark Mitchell: So those onetime costs that we expect to be non-GAAPed out would not be part of that range. Michael Linenberg: Yes. Okay. Great. And then just on my second question, I saw that you did increase the size of the revolver and as I recall, I believe you had collateral pledged against that revolver, you could correct me if I'm wrong. But if you could just give us a sense where does your sort of unencumbered collateral position stand? Mark Mitchell: Yes. So the revolver is backed by our loyalty assets. And so as we have in the script and as we've talked about before, those cash flows continue to perform well. We just had in Q4, our third consecutive quarter of double-digit growth. Q4 was up over 30%. So those are the assets that back the revolver. And yes, you're right. In December, one of the banks that supports the facility, increase their position, providing a vote of confidence for the revolver. James Dempsey: Yes. And just to add to what Mark has said, like one of the byproducts of deferring aircraft with Airbus is that you have less PDP payments that are required in the near term because you're effectively taking a pause on deliveries during 2027. And so you end up actually with less because we finance some of our PDP, you end up with less drawn debt in our PDP structure. So you actually end up in a lower net debt position. Mark Mitchell: Yes. And to Jimmy's point, so you'll see in the guidance that we put forward an expectation of net PDP deposit returns. So lower PDP balance at the end of the year of $170 million to $210 million. And with that deposit level going down, the corresponding debt levels would go down as well, so helping the leverage ratios. Operator: Our next question is coming from the line of Scott Group of Wolfe Research. Ryan Capozzi: This is Ryan Capozzi on for Scott. Maybe first, so we saw a pretty big divergence in fare revenue versus ancillary revenue trends this quarter. What were some of the drivers here? And how should we think about the growth of both segments going forward? Robert "Bobby" Schroeter: Yes. So I kind of talked about this a little bit earlier. One of the things that we've done in the past quarter was migrate back to a basic first product. And what that means is people go in, they're deciding whether they want to take the basic product and purchase ancillary -- purchase whatever ancillary products they want from that or they can choose a bundle of which we have 3 bundles there and can choose that. So that has had good upward movement around ancillary itself in addition to NDC, the new distribution capability, which is you have -- it's effectively a direct connect. We've been scaling that up more broadly in the past quarter. And not only does that help conversion overall but the products, the bundled products are actually on the shelf, which they hadn't been previously. So that again helps move things back in the curve, helps you yield up and helps bundle attachment as well. So there's a variety of things that are unique to us again that have helped from that perspective. On the fare side, additionally, as we move back to basic first, a lot of that -- we're disciplined in how we handle that from a revenue management perspective. And that has helped, along with, of course, the environment, the macro environment has helped solidify an outsized benefit on that side as well. So you're seeing fare improvements, you're seeing ancillary improvements. And again, we anticipate based on some of those things being very structural to see that benefit move forward as well. James Dempsey: And Ryan, just to add to what Bobby you said, like, one of the benefits we're getting from having -- we went through this about 2 years ago with the new Frontier in our website, and we played around with different structures during last year. We got to a much more disciplined place from October on in terms of the way we price as he mentioned. But don't underestimate the impact that moving to NDC and giving clarity to someone who's booking through an online travel agent, exactly the total cost of their trip with Frontier. And so what you're seeing today is an ability for a customer to look at the value that they can get from Frontier by adding a bundle, economy bundle or other bundles to their booking. And so they know the all-in price. Historically, a customer would book through a GDS or through an OTA linked to GDS, and they wouldn't have that clarity. They just see the fare and then they typically come to our site at management booking or at check-in and add either on an a la carte basis or through a bundle, the incremental products that they want to buy. And so what we're seeing is an earlier conversion of bundles in the booking curve at the point of booking of the customer, but also clarity for the customer where they actually see the real value that's created by booking with us in comparison to the competition. And so that is having a unique benefit into Frontier. And other airlines have obviously had NDC for quite some time. We were late to the game. But since we launched it, we've seen a really good attachment rate and conversion rate across that distribution channel, where it's adding to the improvement in unit revenues that we're seeing in the business. Ryan Capozzi: Got it. That's helpful there. And then could you maybe just talk specifically about your strategy in Atlanta this year and maybe why you're growing so aggressively there this year? James Dempsey: Yes. I mean you've seen Southwest and Spirit reduced capacity in Atlanta. And we have, for a long time, had an operation in Atlanta, and we've seen an opportunity to enhance that in terms of the volume of traffic flows that we are flying from Atlanta. And we're really happy with the performance of the base. We had about 60 daily departures in Atlanta through the peak last summer. And obviously, we're encouraged by the commercial performance that we're adding more departures this year to Atlanta. So we're very happy with the performance. Operator: Our next question is coming from the line of Andrew Didora of Bank of America. Andrew Didora: Actually, just another question on your growth this year. So you talked about 50-50, kind of 50% new markets. You just touched on Atlanta. I guess in the 50% that you kind of dub the infilling, adding in Tuesday, Wednesday, Saturday flying. But RASM is improving now, I know these off-peak days have been highlighted as sort of the weakest RASM days. So why are you adding these back? James Dempsey: Largely because, Andrew, we see a real improvement in the revenue environment from more disciplined capacity deployment across the industry. You've seen significant reduction in capacity that's come from Spirit Airlines, particularly in the West of the United States. And so if you look historically, like 2 years ago, the overlap between Frontier and Spirit was close to 50%. It's now meaningfully lower than that and meaningfully lower than that in the West of the United States. And so we see opportunities that are coming on the back of their changes in capacity that we think allows us to move more flights to off-peak days of the week and do it successfully and contribute to the overall airline. And so that's really one of the reasons behind us. We're also seeing some discipline across other airlines in terms of their capacity deployment. And then we're really encouraged by the performance in terms of our revenue generation with the changes that we made that we discussed earlier around the disciplined pricing strategy together with actually the new distribution capability that we have across all our OTAs now. So we feel pretty confident that the revenue environment is moving in a very, very good place. And I mean, fundamentally, this business model is built on higher utilization and really strong cost discipline and that higher utilization gets you to a really good unit cost place that we think gets the airline back to -- on a path to sustain profitability. Andrew Didora: Got it. Understood. And then I guess I'll ask the question. Given you're backfilling a lot of Spirits markets, does that mean you're no longer would have interest kind of going forward in terms of combining with Spirit in the future? James Dempsey: Sure. Look, I'm not going to speculate on what happens next with Spirit. Look, both the Board and I are solely focused on putting Frontier on a path back to sustainable profitability. And that's really been the focus and high attention for the last 2 months. Operator: Our next question will come from the line of Daniel McKenzie of Seaport Global. Daniel McKenzie: Jimmy, I guess, first, congrats on your new role. And I guess my first question really is just putting on the hat of a longer-term investor, getting that capital into your stock. Is the Board holding you to any specific profit metrics, so either return on invested capital, operating margin or however, I guess you're measuring the success of the business. James Dempsey: Look, for the last 2 months, Dan, as you can see from what we've announced today, we are very focused on bringing the airline back to sustained profitability. I've been given a clear mandate to change the business and bring that back. And like I've been very focused on rightsizing -- initially rightsizing the fleet and getting a cost plan that makes sense for the airline over the medium term. Our job now is really to fix some of the other things in the business, such as like reducing cancellations and improving our on-time performance, that is the considerable effort that we have. A series of projects around to build customer loyalty into the business and a good customer experience that drives repeat traffic flows. And really, the outcome of that will be determined by how we perform on loyalty, right, and also the metrics that we have every day in terms of our operational performance. That's where the focus of the business is at the moment. Clearly from a long-term incentive perspective, there are multiple different metrics that exist in all of our teams in long-term incentives around shareholder performance and then the performance of Frontier within that world. And so we are very aligned with our shareholders with a real focus on returning the airline to sustain profitability. Daniel McKenzie: Yes, very good. My next question really is, I guess, for Bobby. A couple of points here. Just going back to that point of loyalty. What was the redeemed revenue per passenger in 2025? And how would you see Frontier exiting 2026 on that metric? And then just related to this is sort of the K-shaped economic recovery that we have seen here. I'm just curious, what percent of your passengers and/or revenue has been permanently lost from this uneven economic recovery, sort of among the low to middle income workers? And is that part of the missing revenue story today that potentially could come back at some point? Or how are you thinking about that? Robert "Bobby" Schroeter: Yes. I mean rather than talk about sort of the specific revenue around loyalty. I'll just talk about it in components of what we drive through revenue or through loyalty. So we have the co-brand card. Of course, that is a cornerstone of the loyalty program in terms of how we profit from that, but also provide value to our customers overall. That has seen tremendous amount of engagement. The overall loyalty revenue is up over 30% as we stated. And a lot of that -- a large part of that is the co-brand card set up. And again, that's because of the changes that we've made throughout the organization, not just in terms of what we provide from a product perspective, but also what we're providing in the loyalty program itself. And so you've seen engagement, not just in terms of new customers and acquisitions within that, but the spend has gone up tremendously as well within that, showcasing that people want to engage with us as an airline more than they had in the past. We also have 2 other subscription programs, of course, Discount Den and Go Wild, which have been very beneficial to us. Go Wild has seen a tremendous amount of upside in the revenue year-over-year as well. In large part because of the product that we provide, it's -- you're able to fly for free for a year and in some cases, more than a year based on when we rolled this out. And people have been seeing that value and transacting and we've been acquiring more Go Wild customers than we had historically within that. On the K-shape scenario, the way I'd say that is, look, we have a cost structure that provides opportunity for really multiple segments and create flexibility within that. We have people who want to have the lowest price possible. We have that. We also have been putting in a variety of options and premium products that people can engage with. UpFront Plus is one of those. Historically, we talked about the paid load factor there. That's up over 80% now. So -- and we have first class coming in a variety of other things. So we actually have the ability to profit in a wide range of setups and how people want to engage that other airlines don't have the ability to do as much. So we're focused on making sure that we have the cost structure set where we can continue to engage on that and provide the lowest fare but also providing premium products that people can engage with and if they so choose, be able to do that as well. So we have that spectrum. And so we haven't seen that. In fact, we've actually seen people engaging at a higher rate with us as we talked about some of the unique things that we have going for us, those actually will help in the future as well. James Dempsey: In terms of -- just to complete the K-shaped economy comment, like we are seeing an improvement -- a meaningful improvement in unit revenues. Like our unit revenues are going to be 10% plus up in the quarter. We'll see how March finally books in the coming weeks, but the trends are very, very favorable to the business. Bobby mentioned that we've obviously added some premium products into the business. But one of the benefits that we're getting is people booking earlier with clarity and booking their non-ticket items earlier in the process. And so our booking curve is actually extending out further than it previously was, which is a really good sign for our business and the product that we're selling and merchandising to our customers. Operator: Our next question will be coming from the line of Chris Stathoulopoulos of Susquehanna International Group. Christopher Stathoulopoulos: So I want to go back to -- and apologies upfront for another capacity question here, but I'm trying to reconcile, so the sustained profitability as part of your 4, I guess, 4-pronged plan here, 8% to 9% to 10% you said longer term here. Maybe if you could help understand -- and part of that, I heard in so far as the market, 50% in new markets. In the past, it's been about competing in some of these larger markets which are also typically more expensive to compete in and not sure how that also squares with the sustained profitability. But I guess maybe a more granular approach to how you're thinking about holistically whether it's the 10%, the 8% or 9% to 10%, you can frame that departure stage, engage, those tend to obviously have different margin profiles. How you're thinking about macro scenarios under that and also all the things that we're seeing from competitors here with their rebanking and connectivity efforts? It's just not entirely clear how that level of growth at this point is sort of, I guess, really squares with the plan that you've outlined and perhaps the best path forward, if you will, into this transition year into longer term? James Dempsey: Yes. I mean, most of the growth that's coming, I mentioned this earlier in the call, is coming from infilling the network that already exists, right? And so it's not a charge for 10% growth over the next 2 years where you're adding substantially new markets into the airline. So you already have clearly with a 10% improvement in RASM in this quarter, revenue stability in that network. And so we're really encouraged by the performance that we're seeing in the business in that network. We're obviously then looking at the opportunities that exist across the entire U.S. where capacity is changing across airports. And so we'll take advantage of capacity opportunities that exist at our cost base. And so our cost base is very, very important to how we deploy assets and how we move the airline back to a path to profitability. And getting more productivity and efficiency into the airline is foundational to that cost base and giving us the ability to offer real value to customers and that they now see it very clearly that real value, and they're able to attach to it and convert. And so that's where our business is. That's why we have confidence in growing the airline by 10% a year. We think it's very, very good for the unit cost in the business. And look, we have a value proposition to the customer that really is unmatched across the United States in a lot of the major markets that exist out there. And so we consistently provide the lowest fares and the lowest all-in pricing for customers. And we should be very proud of that as an airline. And why wouldn't we grow? Christopher Stathoulopoulos: Okay. My second question, I just want to follow up on the point Jamie made earlier. So it sounds like you're betting on or you're anchoring to this high utilization model, if you will. And I know you described this as a transition year. But as we think about Frontier exiting this year or end of decade, and you're able to achieve these initiatives here. In this environment, brand loyal, premium tech focused, however you want to describe it, could you help frame and I'm not asking for guidance here, but a high level assuming this all plays out and this environment is the new norm, if you will, how we should think about margins, free cash flow, return on -- anything at a high level that we should think about, assuming this all falls in place here and this high utilization model, as you said, you're anchoring yourself to is successful. James Dempsey: Sure. Look, we're very focused on moving the airline back to free cash flow generation business model. That is a core tenet of the modeling that's been put in place and the drive to rightsize the fleet this year. We use this year as a transition. I'm not going to start guiding 3, 4 years out but our expectation is that the airline gets back to sustained profitability and free cash flow generation over the next number of years, which puts the airline in a very, very strong position. Operator: We next have a follow-up from the line of Savi Syth of Raymond James. Savanthi Syth: I just was curious as you kind of go through these changes and some of your kind of sister organizations have kind of thought about financing aircraft recently. And curious what your views are on kind of continuing to use sale-leaseback versus some other avenues for financing? James Dempsey: Yes. I mean we're largely financed Savi this year through sale and leasebacks. I mean over the medium term, I think the airline will probably diversify somewhat from sale and leaseback financing. But I mean in the immediate near term, we've largely financed most of the fleet that's coming this year. And so I don't see any near-term change. But I can obviously over time, see navigating to kind of a more balanced financing structures across the airline where you continue to have a high proportion of your fleet financed with sale and leasebacks or financing, but you bring some other forms of financing into the business. That makes sense. If it commercially makes sense, we should do it. Operator: We will now turn the call back to Jimmy Dempsey for brief remarks. Please go ahead. James Dempsey: Thank you. I just wanted to quickly say thank you to all the analysts that are on the call. We're happy to take follow-up calls if you have any further questions today or in the coming days. And look, we look forward to seeing you in person over the next couple of months. Appreciate your time, and thank you very much. We have a lot of work to do here. We're going to roll up our sleeves now and move the airline back to a sustainable profitability path. I think that's fundamentally important for the airline. And I think today's plan that we've laid out to you puts us in a really good place and path to bring the airline back to that location. So thanks very much, and enjoy your day. Operator: This concludes today's conference call. Thank you so much for joining. You may now disconnect.
Operator: Welcome to 2020 Bulkers Q4 2025 Financial Presentation. [Operator Instructions] This call is being recorded. I'll now turn the call over to CEO, Lars-Christian Svensen. Please begin. Lars-Christian Svensen: Thank you, operator. Welcome to the Q4 2025 Conference Call for 2020 Bulkers. My name is Lars-Christian Svensen, and I will be joined here today by our Chairman, Magnus Halvorsen; and our CFO, Vidar Hasund. Before we start the presentation, I would like to remind you that we will be discussing matters that are forward-looking. These assumptions reflect the company's current views regarding future events and are subject to risks and uncertainties. Actual results may differ materially from those anticipated. I will now continue with the highlights of the quarter. We reported a net profit of $13.8 million and an EBITDA of $16.5 million for the fourth quarter of 2025. We achieved an average time charter rate of about $39,300 per day in the same period. Our total dividends amounted to $0.63 for the months of October, November and December 2025. In October 2025, we signed an agreement to sell the Bulk Sao Paulo for a total of $72.75 million with Q1 2026 delivery. In November 2025, we signed further agreements to sell the Bulk Sydney and the Bulk Santos for a total of $145.5 million. These 2 vessels will also be delivered to new owners within Q1 2026. In subsequent events, we reported an average net TCE earnings of about $30,800 per day for the month of January 2026. And this morning, we also announced a dividend of $0.15 for the same month. And with that, I will now pass the word to Vidar. Vidar Hasund: Thank you, Lars-Christian. 2020 Bulkers reports a net profit of $13.8 million and earnings per share of $0.60 for the fourth quarter of 2025. Operating profit was $15.8 million and EBITDA was $16.5 million for the quarter. Operating revenues and other income were $21.4 million for the fourth quarter. The average time charter equivalent rate was approximately $39,300 per day gross. Vessel operating expenses were $3.5 million, and the average operating expenses per ship per day were approximately $6,300 in the fourth quarter. G&A for the fourth quarter was $1.1 million. 2020 Bulkers recognized approximately $0.5 million in management fee as other income in the financial statements. Interest expense were $1.9 million for the quarter. Shareholders' equity was $148.4 million at the end of the quarter. Interest-bearing debt was $112.5 million at the end of the fourth quarter and is nonamortizing until maturity in April 2029. Cash flow from operations was $15.5 million for the quarter. Cash and cash equivalents were $22.1 million at the end of the quarter. The company declared total dividends to shareholders of $0.63 per share for the months of October, November and December 2025. That completes the financial section. And now over to you, Magnus. Lars Halvorsen: Thank you, Vidar. As our remaining ships will now soon be delivered to their new owners, I just wanted to reflect and summarize a little bit the 2020 Bulkers history and the financial returns we've generated for our loyal shareholders. We started out in 2017 by ordering 8 scrubber-fitted Newcastlemax vessels at New Times Shipyard paying at the time, all-inclusive $47.6 million. And we believe at the time, there was a very interesting risk reward given the attractive newbuilding prices and falling order book. As we became an operating company, we remained profitable every single quarter from the delivery of our last vessels. And looking at what this has meant in terms of returns, the company was initially financed by $142 million in equity through a number of share issues. As of and including the declaration we made today, we have declared a total of $251 million in dividends and distributions to other shareholders. And as we've reported today and Vidar went through, we expect to have net proceeds from the sale of the last vessels amounting to around $311 million after all debt has been repaid. Additionally, we have around $50 million on cash on the balance sheet as of today. What this means for the investors who supported us throughout the whole story, participating prorate in every equity offering since November 2017, we've generated an IRR of 28% per annum measured in dollars. For those and perhaps more relevant who came in on the IPO on then Oslo Axess in June 2019, the annual return, including dividends, has been 31% measured in U.S. dollars. This compares to 17% for the S&P 500 and just under 16% for the Oslo Stock Exchange measured in dollars for apples-to-apples comparison. As we stated in the release today, our intention is to, as soon as possible, return all the proceeds from the sales to shareholders as well as the majority of cash on hand. We will retain a small amount in the company to support G&A, which will enable us to stay listed while we can evaluate potential strategic or other opportunities. Before I go to the Q&A, I'd like to thank everyone who's been part of the story so far. We obviously wouldn't have been able to do this without the investors. And I think particularly the ones that supported us in a very challenging share offering in May 2019. At the time, dry bulk was not exactly in fashion. It was very tough to get it done. And also a big thanks to the employees, the Board, the banks, brokers, New Times Shipyard and of course, very importantly, our very good charters, so -- which we have remained very loyal to. And with that, I'll leave it over to the operator for questions. Operator: [Operator Instructions] As there appears to be no questions in the queue, I'll hand it back to the speakers for any closing remarks. Lars Halvorsen: Okay. I think we've said what we want to do. So thank you, everyone, for dialing in. And if you have any questions that you didn't ask, feel free to reach out to us. Thank you very much.
John Campbell: Good afternoon, everyone. Thank you for participating in Porch Group's Fourth Quarter 2025 conference call. Today, we issued our earnings release and filed our related Form 8-K with SEC. Press release can be found on our Investor Relations website at ir.porchgroup.com. I would like to take a moment to review the company's safe harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995, which provides important cautions regarding forward-looking statements. Today's discussion, including responses to your questions, reflect management's views as of today, February 11, 2026. We do not undertake any obligations to update or revise this information. Additionally, we will make forward-looking statements about our future financial or business performance or conditions, business strategy and plans. These statements are subject to risks and uncertainties, which could cause our actual results to differ materially from these forward-looking statements. Please refer to the information on this slide and in our SEC filings for important disclaimers. We will reference both GAAP and non-GAAP financial measures on today's call. Please refer to today's press release and the slides, both available on our website for reconciliations for non-GAAP measures to the most directly comparable GAAP measures discussed during this call. As a reminder, this webcast will be available for replay along with the presentation after this call on the company's website at ir.porchgroup.com. So joining me here today are Matt Ehrlichman, Porch CEO, Chairman and Founder; Shawn Tabak, Porch CFO; and Matthew Neagle, Porch COO. With that, I will turn the call over to Matt for his key updates. Matt Ehrlichman: All right. Good afternoon, everybody. Thank you for joining us. Q4 capped a transformational year for Porch. Throughout 2025, we delivered results ahead of expectations and made meaningful progress toward building a simpler, higher-margin fee and commission-based business. Full year 2025 adjusted EBITDA ended at $77 million, an 11x increase over 2024. This translated into $65 million in Porch shareholder interest cash flow from operations for the year. . Profitability was a highlight, but 2025 was also about positioning the company for durable profitable growth. Statutory surplus at the reciprocal grew approximately $50 million. Incremental value creation on top of our adjusted EBITDA, and it ended 2025 almost 50% higher than 2024. We strengthened the top of the funnel more than doubling the number of active agencies and nearly tripling quote volumes year-over-year. With some actions we put in the market, we saw new policyholder conversion rates grow substantially at the tail end of 2025 and continue into 2026. With this foundation in place, we're confident in delivering against our 2026 plan, $600 million in organic reciprocal written premium and implied 25% growth rate and $100 million in adjusted EBITDA. We positioned the business for rapid premium growth through multiple levers, growing agency and quote volumes, pricing adjustments in agency incentives to increase conversion rates and the launch of Porch Insurance, which went live for all Texas agents at the start of 2026. So Q4 performance was strong with every metric better than expectation, consistent with the progress we've seen really all year. Reciprocal written premium or RWP, was $126 million, Revenue was $112 million. Q4 gross profit was $91 million, resulting in an 81% gross margin. Q4 adjusted EBITDA was $23 million, a 21% margin. Cash used in operations was negative $5.5 million due to the timing of our interest payments and working capital. For the full year, cash flow from operations was a positive $65.4 million reflecting the strong cash-generative nature of the model. We continue to deliver predictable, high-margin results for Porch shareholders. There are 3 components to growing our insurance premiums, statutory surplus, which dictates the capacity to scale, quote volume, which is our top of the funnel and sets the growth potential and then conversion rate, which dictates then the volume of new policies. In the second half of last year, we prioritized growing statutory surplus at the reciprocal faster than planned, and we're certainly pleased with the outcome. Statutory surplus grew again in Q4 despite the decline in the Porch stock price in the quarter. For the year, step surplus rose 47% and as a result, we have substantial capacity well in excess of what is needed to support our 2026 RWP target. We achieved meaningful gains in both capacity and top-of-funnel activity throughout 2025. Late in the year, we began realizing gains in conversion rates as well. Matthew will outline these actions in our go-forward plans later in the call, but let me just say, momentum is building. Premiums from new business in November increased 61% versus the January through October 2025 monthly average. December new business premiums accelerated further, rising 104% versus that same baseline. Next, Porch Insurance. Our new homeowners insurance product was fully rolled out in Texas at the start of January, giving agents a product they can sell alongside HOA, offering now a second product that is unique and higher end will further improve conversion rates. Porch Insurance is an important part of our long-term strategy as it's better for homeowners, better for agents, the reciprocal and therefore us. For policyholders, included in the offering is a full home warranty and other coverages as well as 4 hours of movers and other offerings for homebuyers. Agents make more money when they sell Porch Insurance. And for the reciprocal, more margin is created via surplus contribution that customers pay. Overall, we are not seeing any changes in competition that impacts our quote volumes or conversion rates, and we remain confident in our ability to deliver on our organic RWP target this year. Our strategy, which gives us a structural advantage in underwriting creates durable advantages for Porch. We spent years building the data, software and inspection ecosystem needed to understand homes better than anyone in the market. That shows up in how we select risk, how we price it and ultimately in the loss ratios we deliver. HOA and other reciprocal have routinely produced top-tier underwriting results with loss ratios improving even through inflation and weather pressure. It's not luck. As a result of advantaged risk assessment with our Home factors data, which provides insight into 90% of U.S. homes due to disciplined underwriting, winning low-risk customers and avoiding balance. 2025 proved this point. The reciprocal saw full year gross loss ratios of 27%, an attritional loss ratio of just 17%. While 2023 and 2024 were historically bad weather years, 2025 was more of a normal weather year in Texas. You can really see the gains we've created in the yellow line here on this chart, which highlights the attritional loss ratio, which includes all claims outside of catastrophic weather. These exceptional industry-leading results creates more margin in the system, part of which flows to surplus at the reciprocal to support future growth and part of which flows the Porch Group and our shareholders, it's a durable advantage, and it's only getting stronger. With that, let's take a look at how this margin advantage supports the surplus at the reciprocal. We've previously shared the reciprocals statutory surplus combined with nonadmitted assets, which ended the year at $289 million. This is the total capital base at the reciprocal and includes the full value of the 18.3 million Ports Group shares it owns. We think this is an important number as it highlights the amount of opportunity we have ahead to scale premium without the capital base growing further. In fact, even after a decline in the stock price after Q3 earnings, this capital could still support approximately $1.5 billion of premiums as we look at. A component of this number is the statutory surplus where there's a cap on the value of a single equity and is used on a quarter-to-quarter basis to ensure insurance companies are healthy, and appropriately capitalized to support its premium. As you can see from this chart in blue, because of the cap value of the shares, statutory surplus does not move up or down meaningfully based on the share price volatility. The reciprocal ended the year with $155 million of statutory surplus, up further from Q3 and again, up $49 million year-over-year. This value created across the system is incremental to the $77 million of adjusted EBITDA produced at Porch Group. So the takeaway, without the reciprocal growing its statutory surplus any further, it can support approximately $780 million of premium at our 5:1 or better premium to stat surplus rule of thumb. This is without the reciprocal selling any shares. And as you can see, short-term stock price volatility won't impede our plans. I'll now turn it over to Sean to cover our financial results. Shawn Tabak: Thank you, Matt, and good afternoon, everyone. Before we dive into the results, I'll summarize the key financial highlights for Q4 and the full year. One, we delivered a strong Q4, outperforming expectations across each metric. We ended the year with adjusted EBITDA of $76.6 million, an 11-fold increase over the prior year. We are quite pleased with this outcome. . Two, Insurance Services, RWP and revenue exceeded expectations, driven by growth in total customers, including strong performance with new customer additions. As discussed previously in Q4, we updated new customer pricing in agency incentives to accelerate premium. These actions increased the new customer conversion rate. Number three, Reciprocal surplus finished the year in a strong position with $289 million of Circa Plus combined with non-admitted assets and $155 million of statutory surplus. Statutory surplus grew again quarter-over-quarter and increased $49.4 million from the beginning of 2025. We're pleased with this performance because it positions us to the scale RWP effectively. And finally, number four, Looking ahead to 2026, we are accelerating toward our RWP target of $600 million. This was largely driven by an increase in new customer additions, driven by the quote and conversion rate increases we are already seeing. Similar to Matt's overview, my comments will address performance of the Porch shareholder interest, since generating cash for Porch shareholders remains our ultimate goal. Under GAAP, we consolidate the Reciprocal Exchange financials, which are available in the press release and our 10-K when it is filed. Now let's dive into Q4 results. Q4 2025 Porch shareholder interest revenue was $112.3 million, with insurance services generating 67% followed by software and data at 20% with the balance from consumer services. Associated gross profit was $91.4 million with an 81% gross margin, led by our Insurance Services segment, which had an 86% gross margin. Adjusted EBITDA of $23.5 million was ahead of expectations driven by insurance services which delivered a 38% adjusted EBITDA margin. Q4 adjusted EBITDA declined year-over-year and that was due to the seasonality of the legacy carrier model when we own HOA, which favored Q4. As a reminder, full year adjusted EBITDA increased 11-fold year-over-year. Now let's move a little deeper into the segment results, starting with Insurance Services. In the quarter, RWP was $125.7 million, ahead of expectations driven by new customer additions. As a reminder, RWP is typically higher in Q2 and Q3 as home buying activity drives new and renewal policies. Typically, the seasonal decline from Q3 to Q4 is much greater, but this year was offset by the acceleration in execution of stronger-than-expected customer additions, Matt mentioned previously. Insurance Services revenue was $75.7 million or 60% of RWP. Revenue comes from 4 sources: commissions based on RWP, policy fees based on policies written, the premium from the captive and lead fees from third-party agencies. Segment gross profit was $65.1 million with a gross margin of 86%. And Segment adjusted EBITDA was $29 million, a margin of 38%. Adjusted EBITDA as a percent of RWP, was 23%, 465 basis points higher than Q3 and primarily driven by the higher revenue. We held operating expenses flat quarter-over-quarter, producing strong incremental margins. Shifting now to software and data. As a reminder, weak housing conditions impact transaction volumes for companies we serve and therefore, our results. Most of our software businesses charge per transaction, so we are positioned to benefit from an increase in housing conditions. Segment revenue was $22.3 million, a 3% increase over the prior year, driven by price increases. Gross profit was $14.4 million, a 65% gross margin, which is a 580 basis point decline over the prior year driven by $2.1 million of incremental and nonrecurring cost of revenue related to software expense in Q4, which did not impact adjusted EBITDA. Adjusted EBITDA was $3.7 million. This includes the investments we've discussed around product innovation in our software businesses, which position us well to benefit from a housing market recovery and in our home factors go-to-market organization. Shifting to Consumer Services, which is also impacted by the weak housing conditions. Revenue was $16.6 million, a 2% increase over the prior year. Gross profit was $14.2 million, an 85% gross margin, which is a 450 basis point increase over the prior year. Adjusted EBITDA for this segment was $1 million. Now let's take a step back and review our financial results in our first year under the reciprocal operating model. I think we can all agree it's been a tremendous and breakout year for Porch. Full year 2025 Porch shareholder interest revenue was $418.9 million, with insurance services generating 64%, followed by software and data at 22% with the balance from consumer services. Associated gross profit was $343.9 million, an 82% gross margin and a 74% increase over GAAP gross profit in the prior year. 2025 corporate expenses of $46.8 million, decreased $0.5 million from the prior year. 2025 adjusted EBITDA was $76.6 million, an 11-fold increase over the prior year. Adjusted EBITDA margin was 18%. The adjusted EBITDA was high quality with an 85% conversion to cash provided by operating activities for Porch shareholders, which was 600 -- sorry, which was $65.4 million and includes $29 million in cash used for interest payments on debt. Moving on to the balance sheet. In 2025, we increased our cash position while also decreasing our debt. We closed the year with Porch Cash plus investments of $121.2 million, a $31.3 million increase from the beginning of the year driven by $65.4 million in Porch shareholder interest cash flow from operations and partially offset by $17.2 million, which was used to reduce our debt. Our 2026 notes have a remaining balance of $7.8 million, which we expect to settle at maturity on September 15, 2026, with cash from the balance sheet. In Q4, cash flow used in operations for Porch shareholders was $5.5 million as the adjusted EBITDA was offset primarily by the $17 million coupon on our convertible notes, which is paid twice per year in Q4 and Q2 and working capital changes. Additionally, our Board of Directors has authorized a $2.5 million share repurchase program, which is the maximum amount permitted under our 2028 indenture. Lastly, shifting to our 2026 guidance for Porch shareholder interest. Underpinning our annual financial guidance is the expectation that we deliver $600 million of organic RWP representing 25% year-over-year growth. For 2026 Porch shareholder interest guidance, we are starting the year with revenue growth expectations of 13% to 17%, resulting in a range of $475 million to $490 million. We assume associated gross margin of 81% to 82%, consistent with 2025, resulting in a gross profit range of $385 million to $400 million. Adjusted EBITDA is expected to be between $98 million to $105 million, representing a margin of approximately 21%. From a modeling standpoint, we expect insurance services revenue growth north of 20% year-over-year, with the software and data and Consumer Services segments expected to grow modestly, given our assumption that U.S. housing activity remains at trough-like levels in 2026. As a reminder of the framework we shared in our 2024 Investor Day, the MBA had initially projected a 20% rise in home purchases from 2024 to 2026. However, their latest forecast suggests only a modest 3% increase. While the soft U.S. housing conditions are persisting longer than expected, our Insurance Services division is more than offsetting that market headwind. One final modeling point relates to the cadence of adjusted EBITDA in 2026. While Q1 revenue and RWP are expected to be higher versus the prior year, we currently expect adjusted EBITDA to be modestly lower year-over-year due to a tough comparison with the legacy captive reinsurance terms. Beyond that, we expect adjusted EBITDA to sequentially improve throughout the remainder of the year in addition to an accelerating top line growth rate. And now I'll hand over to Matthew to provide a strategic update and KPI read. Matthew Neagle: Thank you, Shawn. I'll start by giving a brief business update and then dig into our KPIs. Our 2026 RWP target implies organic premium growth of 25%. In order to achieve that type of lift, we knew we'd need to scale agents and quotes, increase conversion rates and grow statutory surplus. This is what we got done in a major way in 2025. Last quarter, we spoke to the strong progress we made at the top of the insurance funnel, and we're excited to report that the momentum continued in Q4. The number of agencies we added in the quarter more than doubled year-over-year and grew more than 30% sequentially from an already strong Q3 base. This is fantastic, but still only a very small fraction of the total number of agencies in our existing states. Beyond the increase in agency count, the quality of our partnerships continues to improve. In Q4, we deepened our relationship with Ballan Group and prepared for a Q1 launch with SmartChoice, one of the nation's premier agent networks. More agencies mean more agents, more agents mean more quotes. This is reflected clearly in the right-hand chart. Relative to the prior year period, quote volumes were up nearly 3x and unlike typical seasonal declines, quotes increased 9% sequentially from Q3. In November, pricing adjustments for low-risk customers began to hit. We understand the elasticity of the conversion rate curve, given we have more margin in the system than other carriers, we were able to effectively control conversion rates and therefore, growth. We experienced triple-digit growth in Q4 new business premiums, but it's worth double-clicking on the monthly results given progress from our work really began to show up in November. The combination of higher quotes volumes and greater conversion drove November new business premiums up 61% from the January to October time frame. December was 27% higher than November and up 104% versus the January to October average. At the start of January 2026, we officially rolled out Porch insurance, making it available to all agents in Texas. This, combined with further actions on January 1, set us up well to achieve our premium growth goals. Let's move to the Q4 insurance KPIs. Reciprocal rate premium was $126 million, ahead of expectations. As you can see on the right-hand chart, the typical Q4 seasonal decline was much more muted this year. We delivered a $17 million improvement relative to the average Q3 to Q4 decline over the past 3 years. This is due to the impact from our initiatives to grow new business premium. Reciprocal policies written reflects the total number of new and renewal insurance policies written by the reciprocal during the period. We generated policy fee revenue directly from these policyholders. In the quarter, we wrote nearly 49,000 policies. RWP, per policy ring is calculated by dividing the reciprocal rate premium by the total number of reciprocal policies written. And this represents the amount the customer is expected to pay. For the fourth quarter, we posted RWP per policy written of $2,569. Lastly, our RWP to adjusted EBITDA conversion rates remain strong. Simply put, we are generating more profit in doing so without earnings volatility and direct weather exposure as compared to others across our industry. Moving to software and data, where we continue to invest and set these businesses up for robust growth when the housing market recovers. At ISN, we launched the AI image defect detector, which allows inspectors to upload images and have AI flagged potential defects for validation and 1 click report and chip insertion. At Rynoh, the team continued to execute well, delivering enhancements such as wire fraud protection that support ongoing pricing gains. Within our data business, we exceeded our internal goal for Home factors testing. Results from carrier testing continue to indicate strong implied ROI. Not a surprise to us, given we know from our own work that knowing more about property enables better prediction of risk and pricing. As we've said in the past, sales and implementation cycles are long, but the team is making great progress, and we remain optimistic about how this will impact our business as we look ahead. In terms of the software and data KPIs, in Q4, we served approximately 23,000 companies with annualized revenue per company of $3,833, a 7% decline from Q3 due to seasonality. One thing to note, as part of our strategy to focus on larger customers, we plan to sunset certain legacy software products that serve small contractors. This is expected to reduce segment revenue by a few million dollars but positively impact profitability. From a KPI standpoint, this will reduce the number of companies by a few thousand though we expect a favorable offset in the form of higher annualized revenue per company. In our Consumer Services segment, we have been busy extending our partnership efforts in preparing the organization to support Porch Insurance. Like software and data, we feel our targeted investments in lean cost structure positions well for when the housing cycle returns. As for the KPIs, in Q4, we had 77,000 monetized services with annualized revenue per monetized service of $215. We are excited about these businesses beginning to fulfill their purpose and drive meaningful strategic impact by providing all Porch Insurance customers with an included full on warranty, Four hours of moving service, a moving concierge assisting with TV, Internet and security, we not only differentiate in homeowners insurance with unique property and data from our software and data segment, but now we have a fundamentally better product for customers. Our Consumer Services business will deliver value by helping us create the best insurance product for home buyers in growing insurance services revenue faster. I'll now pass it back to Matt to wrap this up. Matt Ehrlichman: Thanks, Matthew. I'll wrap by just reinforcing the most important messages from today. So first, we beat expectations and raised guidance in every quarter in 2025. Q4 adjusted EBITDA of $23 million resulted in full year adjusted EBITDA of $77 million, again, 11x 2024 and well above our initial guidance of $50 million. Cash generation was strong at $65 million for the full year. Clearly, it's a great first year under our new operating model. Second, we successfully bolstered the Reciprocal's capital position, with Q4 statutory surplus of $155 million, again, rising $49 million or 47% versus the end of 2024. This positions us for years of profitable growth ahead. Third, we've demonstrated our ability to manage the growth of premium and are pleased with the quote and conversion rate improvements. The 2026 RWP target of $600 million represents, again, 25% year-over-year organic growth. This will steepen our growth trajectory in 2026 and in turn, puts us on a direct path to reach our medium-term target of $660 million of adjusted EBITDA from $3 billion of premium, which would make us a top 10 homeowners insurance company. We have a mousetrap that's uniquely profitable, where earnings isn't impacted by the volatility of weather and has long term differentiate. I've been transformative and our culture and values is the reason we're now positioned to build what I believe will be a truly great and enduring company. So thank you all for your time today. We do appreciate it. To my fellow shareholders, thanks for your support, and we look forward to continuing this journey with you. With that, John, please go ahead and open up the call for questions. John Campbell: Thank you. [Operator Instructions]Our first question comes from the line of Ryan Tomasello with KBW. Ryan Tomasello: Nice to see the top of funnel, a new customer momentum. I guess in terms of pricing, obviously, the elasticity curve is quite steep. But can you give us a sense of the magnitude of price actions you've taken to drive the acceleration so far and whether more is needed on the pricing side or agent distribution to hit that target of $600 million for the year. And just overall, how much more flexibility do you think you have to continue to lean into pricing to drive higher conversion if you see that opportunity just given where loss ratios are today? Matt Ehrlichman: Yes. I mean on the second point first. I mean, you can see based on where our loss ratios are that we have just tremendous amounts of margin in the system, right? And that is fundamentally a core advantage of what we're able to do and so if we wanted to tick down prices for low-risk new customers, right, the right particular segment of new customers that we want to win, we can do that. . But to your first question, Ryan, like you said it exactly right, which is the slope of the curve of that elasticity curve for new customers is quite steep in certain places. And so you can and we have been able to meaningfully increase conversion without dramatic changes without giving so much price. And you can see that really in some of the metrics that Matthew shared in the KPIs where you see not that big of changes in terms of reciprocal written premium per policy, as an example, so we're able to get the gains that we want with, I would say, very surgical and targeted moves there to the right segment of customers. Obviously, our unique data helps us identify who are those right customers that we want to win and who are the customers that we want to not win and where we're going to be a much higher priced than the rest of the market. And so yes, we feel like we're in control of being able to drive to the right outcomes while still making sure that the reciprocal is very healthy and continuing to perform really well. Ryan Tomasello: And then in terms of the RWP EBITDA conversion, that came in at 23% in the quarter, which was obviously really strong relative to high teens last quarter. How should we think about the operating leverage in that EBITDA conversion as you scale RWP from here? And then for the guidance specifically, can you give us any color on what you're baking in for that WPD EBITDA conversion for the outlook in 2026? Daniel Kurnos: Yes. Happy to take that. So to your point, Ryan, I think you hit the nail on the head, the RWP to adjusted EBITDA conversion again accelerated in the quarter. It improved quarter-over-quarter sequentially. It also improved Q3 versus Q2. And a lot of that is operating discipline. You could see that even we had higher revenue and we kept the operating expenses relatively fixed quarter-over-quarter sequentially. So we're quite pleased with that outcome. And as I mentioned, that comes from cost control being very diligent in how we're running that business and containing those costs. With respect to the guidance for next year, we don't break out guidance by segment. Overall, for the year, obviously, we guided to $102 million at the midpoint, which would be an increase in the overall adjusted EBITDA margin for the company by about just over 300 basis points. So we're excited to provide not only that top line growth, but also the acceleration, an improvement in the adjusted EBITDA margin. The last thing I'll just say on adjusted EBITDA, if I can also, the cash conversion is another thing that we're quite pleased with. Matt mentioned it, I think I mentioned that this year in 2025, rather, we had $65 million of cash flow from operations on $77 million of adjusted EBITDA. So again, quite pleased that it's a very high conversion rate. And I think it just shows the quality of the adjusted EBITDA that we're generating for shareholders. John Campbell: Our next question comes from the line of Jason Helfstein with Oppenheimer. Jason Helfstein: Two questions. The first on Porch Insurance and the second, just about the fourth quarter. So on the Porch Insurance, I guess you've already highlighted for us it's coming out as a more premium product, you get more call like a chub like, but you get more functionality with it. I guess just talk about how you're also able to make it a better deal for agents and then kind of perhaps how the relationship, I think, is with Goose that plays into that? And then secondly, just talk about like why you alluded to, but why was the fourth quarter insurance results kind of better than you guided. And if you recall, there was a pretty steep reaction last quarter. Just maybe talk about do you have improved visibility now as you kind of enter first quarter and just broadly how you think about visibility in the insurance business for the year. Matt Ehrlichman: Maybe I'll take the first. Matthew later on, if there's things you want to add, Shawn, you can take the second. We are excited about Porch insurance. We've been working on this for a long time. And if you look back in years from now, we do think it is going to be a cornerstone of building a household brand, which we fully intend to be able to do. We talked about how it's better for consumers. You're exactly right. Just on we're they get additional coverage, full home warranty. We want Porch insurance to be definitively known as the best insurance product for a home buyer because they get full moving service as well. So we've built these capabilities out in our company for this specific moment so that we are just dramatically differentiated for the consumer. Agents, obviously, therefore, want to sell it because it convert well for them. It's the right product for their customers. But to your question, because there's more margin in our system just overall, we can be able to deploy that. Yes, for more surplus, yes, for more profit at Porch Group, but we're also providing some of that to agents to make sure that they are compensated better than the market, better than their alternatives with bringing Porch insurance out to the market. And so that's obviously great for them. We want to be able to be a true partnership with these agents and help them to be able to prosper as our business also grows. Lastly consumers do pay a 10% surplus contribution, which again creates just more economics in the system. And so that allows us again to be able to share some of that with agents. You mentioned Goosehead specifically, a great partner, great relationship. Just to be clear, Porch insurance is a product we brought out to all Texas agencies just to make sure that, that point was clear. John, do you want to take Q4 results and versus kind of expectations? John Campbell: Yes, definitely happy to. And at the top level, on each metric we performed better than expected, really across from RWP all the way down to adjusted EBITDA. I think the question was specifically for insurance services results and RWP there and revenue. And I think over there, it's really new customer additions that's driving that. We talked about the acceleration there. that we saw in the quarter with the agency incentives and the pricing that we -- adjustments that we made due to the elasticity curve that drove new customer additions, new customers into the book of policies at the reciprocal. The thing I'll just highlight there, too, Matthew included in his remarks, and I think I talked about it a little bit too, typically, we would expect a seasonal decline in Q4 versus Q3 that was much steeper, like homeowners typically don't buy as many homes in Q4 and don't buy home insurance and therefore at the same clip in Q4 as they do in Q3 and Q2. And so we more than offset the typical seasonal decline with those new customer additions. So it's just another way to think about the progress that we made there. And I think as Matthew talked about, and Matt, like we continue to add even more agents that we work with. We're still really just scratching the surface there. And so that team that goes out and recruits new agents and brings them in the door to sell the products continues to exceed expectations, do a phenomenal job. And that just leads to more quotes. And then at our conversion rates, that leads to more new customers. Operator: Our next question comes from the line of Dan Kurnos with Stone. . Daniel Kurnos: Great. Matt, let me stick the landing in Q4, definitely better tone on the messaging, too. I guess a couple of things. If I go back to Ryan's initial question, I think what people are trying to get at effectively is understanding the confidence that you have that this scales, right? And clearly, you've got all the data. I mean you had a record take rate in the quarter, you had record RWP to EBITDA conversion. And just any comfort you can give us around sort of what the long tail looks like as you guys get towards your $3 billion in RWP over time, if those metrics are sustainable would be super helpful. That's number one. And number two, you mentioned several times on the call that you've got excess surplus. I think you -- I lost track after a certain point. We know your history, I think here's a pretty big optimism out there for you guys to put that to work maybe with some what we are calling cashless M&A. So just any thoughts you want to give on that front? And just to be clear, outside of the $600 million in organic RWP, that would be super helpful. Matt Ehrlichman: You got good questions. I'll take them. The first I mean candidly, and also, I don't know how 1 doesn't grow this business sequentially for a long period of time given we have this fundamental margin advantage in this massive industry where the industry is growing, where consumers need are required to have our products in order to have a mortgage the natural kind of characteristics of the market where you buy our product, and you usually have it for a long time, exists. It really is a beautiful market. And so for us, because we have more margin, we are able to drive conversion rate outcomes that we want. Now I do think we've proven a few key things, that we're obviously highlighting, which is, can we grow surplus? Well, clearly, we have grown surplus at the reciprocal dramatically this last year. Can we grow top of funnel? And clearly, we've dramatically grown the number of agencies, the number of quotes and so then it really is just what the conversion rate is. And when we talk about at the beginning of the journey and just scratching the surface, like we are just at the beginning of this journey. Like we are a small player in Texas, which is our largest state. But we'll continue to add more states. We'll continue to grow in existing states. We'll obviously add now the Porch insurance product on top of HOA to kind of hit different customer demographics. So yes, I mean to answer that first question, Dan, I would say we are sincerely, our team meetings fired up about what is ahead for these next 30 years. And when we talk about that midterm goal of that $3 billion target, it's not just this number that's off there, like we are building all the business to be able to go become a top 10 player in that medium term. And then guess what? We're there, we're going to have some other bigger, more ambitious goals. Like I'm looking to build this thing to become a real player, a very large business for a long period of time. It was a lot for answer number one. Number two, the -- there's a lot of ways to be able to grow premium faster with more surplus. We've talked about, obviously, being able to increase conversion rates. There could be other ways to be able to do certain deals to be able to bring more premium on top of our organic not only just M&A, which I know is what you're kind of asking about there, which is we've talked in the past about turning our M&A engine, building pipeline back on, but other things, book rolls or renewal rights deals like there's a variety of ways of things that we can do there. And so we're excited about that and on it, I would say, to be able to create optionality for ourselves Daniel Kurnos: Very comprehensive, Matt. . Operator: Our next question comes from the line of Jason Kreyer with Craig Hallum. Jason Kreyer: So just on the insurance side, we're going from a world of pretty rapid premium increases over the last couple of years. Now I think '26 will be a little bit more muted environment. So I'm curious on a 25% growth target for RWP, how are you balancing that between premium growth and policy growth? Matthew Neagle: Sure. I can take that. We certainly are not expecting the double-digit price increases that we've seen over the last few years. We are, as Matt has mentioned and I mentioned, looking at where we can strategically reduce price for low-risk customers, to increase our conversion rate. And so we aren't materially counting on price increases next year to hit that 25% organic growth number. Jason Kreyer: I wanted to also just ask on surplus a little bit because we've talked the last couple of quarters about Q4 being the best quarter for surplus growth. statutory surplus was up a few million quarter-over-quarter. I'm just wondering if we can break that down like how much of the change in equity impact that versus how much surplus gain came from operational? Unknown Executive: Yes. I'm glad you asked that question. I think that's an important 1 for folks to understand. I think we've articulated a message and you can really see it come through this quarter that the reciprocal owns these 18,300 million Porch shares. And the statutory surplus just is not that sensitive to that. And that's what we saw in the quarter. The stock price, I think at the end of Q3, it was like around $17 and in Q4 was around $9. So with that drop in the stock price, there is only about $10 million, a little bit more than that impact to statutory surplus quarter-over-quarter. So I think it just is the point around like, it's just not that sensitive to it. And it's in a great spot and healthy to support our growth goals. We also, I guess, the other things I'd mention the reciprocals generated a lot of income. So it basin taxes. So that offset some of the underwriting profit. And then all of those 2 things were offset by a really strong underwriting performance with the loss ratios, which just generates operating income after reciprocal. So those are the components. And I guess, what I would just reiterate what I said that from a statutory surplus perspective, I think we're really well positioned for 2026 and our growth goals ahead. Jason Kreyer: Just to clarify, Shawn. So like absent the change in stock price, statutory surplus would have been like $10 million-ish better in the quarter. Is that -- am I understanding that right? Shawn Tabak: Yes. The impact from the stock price movement was just over 10%. It was a little bit more than 10%, but it was around 10 Yes. . Operator: Our next question comes from the line of Timothy Austin from B. Riley Securities. Timothy D'Agostino: I'm looking at Slide 20 and I understand quote volume kind of outgrew that seasonality. But as I look at the active agencies growth quarter-over-quarter, per quote volume. There seems to be some lag. And I guess I was wondering, is that primarily due to seasonality? Or did a lot of agencies come on closer towards the end of the quarter and that quote volume could maybe see a little bit of a tailwind in the first quarter, given maybe a lag for our agencies on at the end of the quarter? Matthew Neagle: Yes, there is a lag. So it's just like any -- bringing on a new customer, there's onboarding and system setup and engagement process. And so the number of agencies is the biggest leading indicator and then it goes into quote volume. I will say we're doing a lot of things to engage and educate our distribution base. And the full rollout of Porch insurance is something that is exciting because it offers them a way to give their consumers a new different product that has these additional things that can be helpful to them. and our commission rates are very competitive with Porch Insurance. And so I'm excited about how all the work we did in Q4, building up our distribution and our number of agents is going to help push us into growth in 2026. Operator: Our next question comes from the line of Tim Greaves with Loop Capital. . Timothy Greaves: I guess my first question is around more, I guess, the competitive landscape and the dynamics there. Have you noticed like a shift in the way competition appears in your key markets? And if so, like how could that impact the business in the near and long term? And what I mean by a shift in the way competition appears is as in our focus from more in-house agents to independent agents from an optician. So that is the query, there would be great. Matt Ehrlichman: I mean there is just this slow but broad shift from in-house agents to independent agents. That obviously is a positive and helpful shift for us because we distribute and work with independent agents. And so we expect that trend to continue. -- overall, last metric we saw more than 60% of all owners insurance policies were purchased through agents. It's a complex product. We think that they're really an important part of the ecosystem, and we want to continue to partner with these agencies to be able to provide them really great products to provide to their customers. So no, it's a good question because, yes, we have seen that particular shift slowly happening. And again, that's a net good thing for us. Timothy Greaves: Okay. I guess my next question would be around the affordability and shopability conversations. What are your thoughts around the affordability conversation and its potential impact to Porch, especially what you guys operate in relatively high priced areas compared to the broader industry? And what have you noticed in those markets around policy shopping and some policy shopping what that could mean for retention rates and competitive wins versus more like, I guess, greenfield typical win? Matthew Neagle: Yes. I mean, certainly, affordability is currently a national conversation. As I had mentioned earlier, we are anticipating raising prices. on our policies to be able to do what we want to do next year. And we have ways to make sure the best customers get the best rate. And so I don't think it will change anything that we are going to do, but certainly, prices are on people's mind, and we're in a good position where we have that as a lever given the kind of the margin profile we currently have to be able to support our growth. Operator: Thank you. And at this time, we have no further questions. I will now turn the call back over to Matt Ehrlichman for closing remarks. Matt Ehrlichman: Thanks very much. Appreciate it. As always, we appreciate the questions. I appreciate the engagement. 2025 was obviously, it's fantastic, fun, exciting year for the company, transformational year for the company. We think 2026 is going to be another just fantastic year for us as we continue on this journey. So again, to our shareholders, we appreciate your support and partnership and we will talk with you all soon.
Operator: Good day, and welcome to the Hansa Biopharma Fourth Quarter and Full-Year 2025 Financial Results Conference Call. [Operator Instructions]. Please note that this event is being recorded. I would now like to turn the conference over to Hansa Biopharma's CEO, Renee Aguiar-Lucander. Please go ahead. Renee Aguiar-Lucander: Thank you. Good afternoon, and good morning. Welcome to the Hansa Biopharma conference call to review Q4 and the results for the full-year of 2025. I'm Renee Aguiar-Lucander, CEO of Hansa Biopharma. Joining me today is Evan Ballantyne, Chief Financial Officer; Richard Philipson, Chief Medical Officer; and Maria Tornsen, Chief Operating Officer and President, U.S. Please turn to Slide 2. Please allow me to draw your attention to the fact we'll be making forward-looking statements during this presentation, and you should therefore apply appropriate caution. Please turn to Slide 3 and today's agenda. Let's move on to Page 4, please. In terms of key achievements in Q4, Q4 saw strong growth over the same quarter last year, with product revenue growth of almost 140% and total revenue growth of 135%. Total revenues for the year amounted to SEK 222.3 million or about $25 million, a growth of 46% compared to total revenues in 2024. In Q4, we successfully also closed an equity round of SEK 671.5 million or about USD 71 million, which will fund operations into 2027. As planned, we submitted our BLA application to the FDA in December of 2025, and we await their decision to accept the filing and communicate a PDUFA date, which we expect to receive shortly. We also announced the planned development for HNSA-5487, which we plan to take into GBS, Guillain-Barre in a late-stage trial before the end of this year. Finally, we also reorganized the European commercial organization as part of a broader initiative to improve transparency, accountability across the organization. Please turn to Slide 5. 2025 really was a year of transformation for the company. Driven by senior leadership changes, several initiatives were successfully implemented to strengthen the organization and make it fit for purpose in a competitive global environment. We renegotiated the existing debt facility, strengthened the senior management team and brought in key expertise, restructured the organization and streamlined reporting lines. We also clarified the positioning of HNSA-5487 and financed the company with 2 equity capital raises, ensuring runway into 2027. Please turn to Slide 6. A recent area of focus has been the European commercial organization. As I pointed out previously, the launch in Europe was quite unusual as there was very limited clinical data as well as clinical experience in Europe at the time. The challenge of launching a product under these circumstances with a large Phase III trial is well ongoing should not be underestimated. I believe that the upcoming European Phase III readout in combination with the presentation of the ConfIdeS data and expected real-world data publications from Europe will positively impact this situation. In addition, we've launched a number of initiatives, which are being rolled out this quarter. I expect this to impact performance to some extent as all change management implementation tends to do this. I would therefore expect a relatively weak development of revenues in Q1, complemented by a strong second half 2026 as these changes take effect. Please turn to Slide 7. In the U.S., we're faced with a very different landscape to that of Europe. We recently read out the very successful ConfIdeS trial, and we're expecting additional data to become available, as I've already covered. We have a well-researched and data-backed plan for our pre-commercial activities managed by a highly experienced and well-integrated team. Structurally, the U.S. market is quite different from the European market in terms of organ allocation systems, pricing and reimbursement, patient advocacy and data availability. We believe that we're well-positioned to successfully launch the product into the market later this year, subject to approval. With that, I will hand over to Maria, who will provide some more details on these topics. Maria Tornsen: Great. Thank you very much, Renee. Next slide, please. Before I comment on our progress in Europe and international markets, I would like to take a moment to discuss the opportunity in front of us. In Europe, we have up to 11,000 highly sensitized patients waiting for a kidney transplant. Most of these patients have waited for years, sometimes up to as long as 12 years. When Idefirix was conditionally approved a few years ago, it was the first and only treatment approved for desensitization of highly sensitized patients. This is still the case, and Idefirix has no competition in this space. Over the years since launch, we have more than 200 patients treated with Idefirix across 40 centers at the same time, as the company has been running a large Phase III study with 50 patients, the PAES study. Today, we are in a different position with significant additional data being released for Idefirix. In September, we released the U.S. ConfIdeS data, which European KOLs are showing great interest in. We have also published our 5-year data in November in Transplant International, and we are expecting more data to become available in 2026, in particular, the readout from the PAES study and real-world evidence from European transplant centers as well as additional data from the U.S. ConfIdeS study. All of these clinical data combined puts us in a good position to continue to progress the commercial adoption across Europe. Please turn to the next slide. As Renee mentioned, we delivered solid growth in Q4 with SEK 61.1 million product sales and 139% growth versus the same quarter 2024. The sales came from multiple European markets, but it is worth noting that we had sales in all 5 large European countries, including Germany, where, as you know, faced some challenges in 2025. I will comment more on the German situation shortly. As mentioned in last quarter's report, we have been working on securing regional reimbursement in some key regions and one of them being Catalonia in Spain. In December, we received positive news that the temporary funding for Idefirix has been approved by the Catalent Pharmacy department. They are currently setting up the logistical and invoicing process, and we expect this to take a couple of months. In the meantime, we know that there are already several Idefirix requests that have been sent in from hospitals in Catalonia to CatSalut, the Catlan Health Service. We are, as a result, cautiously optimistic that we will see improved sales from Spain in 2026. From a market access perspective, we also gained reimbursement in Slovakia in Q4, bringing the total number of countries reimbursed to 24. In addition, we learned in November that the French ANSM made the decision to reimburse Idefirix for use in connection with lung transplants. As you know, Idefirix is only approved for use in kidney transplantation, and this decision to reimburse in lung transplantation is a result of the French lung transplant KOL community driving the process and asking the ANSM to provide special reimbursement for use in this patient population. As I mentioned on the previous slide, having access to clinical data is critical to drive further adoption of Idefirix. In November, we arranged a large scientific event with 72 transplant experts from 17 countries. This meeting created a forum for the KOLs to discuss the latest data and facilitate best practice sharing between centers and countries. In Germany, we faced some challenges in 2025, as mentioned in the last couple of quarterly reports. Germany decided to pause the participation in the Eurotransplant Priority Program for highly sensitized patients. We have worked diligently across public affairs and medical affairs to understand how, and if, and when this program can potentially be reinstated. At this point in time, it is our assessment that it will take some time before the German Bundesrat [indiscernible] has decided whether to continue participating in this program or not. We do not believe there is a path for us to speed up this process as it is an administrative process driven by the Bundesrat [indiscernible]. At the same time, we also know that the majority, approximately 2/3 of highly sensitized patients are on the normal ECA waitlist in Germany, and German transplant centers can transplant patients with Imlifidase in this program. In Q4, German KOLs started writing new guidelines for the ECA program. We hope that these guidelines will be published in the first half of 2026 to help guide German transplant centers on how to delist highly sensitized patients to enable transplantation with Idefirix. The German KOLs believe that this is the best path forward to facilitate future transplants. Finally, we made some operational changes to our European organization in Q4. In December, we appointed Max Sakajja to lead our European and international organization. We have also made some other changes to our operations in Europe, which we believe will, in the long term, enable the region to perform better. Please turn to the next slide for the U.S. market. Turning to the U.S. market and the opportunity in front of us, assuming FDA approval. We know that there is a high unmet need in the U.S., as there is currently no approved desensitization therapy for highly sensitized patients. These patients wait for years to have a match in kidney, which may never arrive. In the U.S., there are approximately 15,000 patients who are highly sensitized, meaning, they have a cPRA over 80%. In the category above 98% cPRA, there are 7,000 patients. In the most highly sensitized patients, the population studied in ConfIdeS, there are 3,500 patients waiting for a transplant today. Each year, thousands of patients die or become too sick to transplant and the waitlist continues to grow, again, confirming the unmet need that exists in this population. We know this not only from published statistics, but also from both KOLs and patients as they reach out to our medical affairs and patient advocacy team almost on a weekly basis to ask when Imlifidase will be available in the U.S. It is with these patients in mind that we move swiftly to prepare for a potential U.S. launch and bring Imlifidase to the U.S. market. Please turn to Slide 11. Our launch preparations are ongoing, and we will be launch ready at PDUFA. There are 200 transplant centers in the U.S., and 100 of these centers drive 80% of the transplant volume and the 25 centers who participated in ConfIdeS represent 25% of the volume. From a launch perspective, our current assumption is that the initial uptake will come from larger centers with clinical experience, and we believe, we are in a great position with the clinical knowledge that exists already today in the U.S. From a reimbursement and access perspective, Imlifidase will be an inpatient treatment covered by the patient's medical insurance. Hospitals are reimbursed via DRG payments and outlier payments for kidney transplants. That is something that they are familiar with today. We will apply for NTAP, New Technology Add-on Payment, which if granted, will provide a separate Medicare payment to hospitals when Imlifidase is used. Most large academic hospitals have experience in this form of reimbursement from adopting new therapies such as the CAR-Ts for the inpatient setting. Our market access leader is very experienced, and he is in the process of bringing in a field access team in Q1. This team will be charged with working with the transplant centers, financial stakeholders to ensure access for patients post approval. We also have U.S. pricing research ongoing, and we are in the process of defining our supply and distribution network. In addition to our access team, we are also expanding our field-based medical team in Q1. Our current team have significant transplant experience, and we are looking to add additional team members with similar expertise. Finally, on the commercial side, we hired a Senior Vice President in December, and she joined the organization in January. She joined Hansa with transplant and nephrology experience, and she will be charged with building up our commercial team prior to PDUFA. With that, I would like to hand it over to our Chief Medical Officer, Richard Philipson, who will provide an update on our pipeline. Richard? Richard Philipson: Thanks very much, Maria. I'd like to take a few minutes today to summarize the outcomes of the company's Phase III study in anti-GBM disease or Goodpasture disease. I'll also briefly discuss next steps for the project. Next slide, please. As a brief recap, this Phase III clinical trial was conducted at 48 centers in 14 countries in Europe, the U.K. and the U.S. Enrollment began in the second quarter of 2023, and all patients were enrolled by the fourth quarter of 2024. The study recruited patients aged 18 years or older with a diagnosis of anti-GBM disease based on serological testing of anti-GBM antibody levels with an eGFR of <20 mL/min calculated using the modified diet and renal disease formula. Patients with a diagnosis of anti-GBM disease more than 10 days prior to randomization were excluded. A total of 50 patients were randomized in a 1:1 ratio to 1 of 2 treatment arms. Patients randomized to the control arm started treatment with plasma exchange or PLEX within 24 hours of randomization. Subsequent treatment with PLEX was determined based on anti-GBM antibody levels and using a schedule defined in the study protocol. In addition, cyclophosphamide was administered for a minimum of 6 cycles and a maximum of 10 cycles and glucocorticoids were also given. For patients randomized to the Imlifidase treatment arm, Imlifidase was administered as a single intravenous infusion as soon as possible after randomization, along with cyclophosphamide and corticosteroids. After an interval of at least 48 hours, patients started treatment with PLEX using the same approach as described for the control arm. The primary endpoint in the study is function as evaluated by eGFR at 6 months, and the key secondary endpoint is the proportion of patients functioning kidneys at 6 months, defined as no dialysis events within 4 weeks prior to the assessment. Next slide, please. Now moving on to the results. A total of 50 subjects were randomized to the study. However, one subject was excluded from the efficacy analysis following a diagnosis of Hantavirus infection as the primary cause of illness made after randomization. Therefore, 49 subjects were included in the full analysis set for the evaluation of efficacy, and of these, 47 subjects or 96% completed the trial. In brief, 49% of subjects were male, 88% were white and the mean age of the trial population was 59 years. At the time of enrollment, 45% of subjects were dialysis dependent and 57% had a history of smoking. Next slide, please. Turning to the study outcomes. The primary endpoint, which was eGFR at 6 months and the key secondary endpoint, which was proportion of patients with functioning kidney at 6 months were not statistically significant. There was no difference in treatment arms in the proportion of patients with end-stage kidney disease or death within 6 months. It is noteworthy that anti-GBM antibodies declined as expected following Imlifidase treatment and the safety profile was in line with previous clinical trial experience in anti-GBM disease and other patient populations. Next slide, please. Since the announcement of the results of the study at the end of last year, we have taken time to understand the study outcomes in more detail. That work is ongoing, and we're particularly interested in determining whether any particular subgroup of patients derive benefit from the treatment. It's clear that the control arm of the study, the design of which reflected from regulatory authorities performed much better than [indiscernible]. This likely reflects the rigorous administration of standard therapies including PLEX in the study and may not be achievable in real-world medical practice. We do not plan any further clinical trials in anti-GBM disease, but we'll, of course, present the outcomes of the study at a forthcoming conference. With that, I'd now like to hand over to our Chief Financial Officer, Evan Ballantyne. C. Ballantyne: Thank you very much, Richard. Next slide, please. Sales performance. For the fourth quarter, total revenue reached SEK 222.3 million, up 30% or SEK 51 million year-over-year. Full-year product sales were SEK 204.7 million, representing a 46% increase or SEK 64.6 million compared to the prior year of SEK 104.1 million. Fourth quarter performance was particularly strong with total revenue of SEK 76 million, up 135% or SEK 43.7 million year-over-year. Idefirix product sales in Q4 were SEK 61.1 million, increasing 139% or SEK 35.5 million compared to the same period last year. Fourth quarter contract sales, primarily from AskBio were SEK 14.9 million. As we've previously noted, while full-year Idefirix sales were strong, quarterly results can fluctuate due to the inherent variability of the European kidney allocation systems. Next slide, please. SG&A expense. SG&A expense totaled approximately SEK 101.6 million for the fourth quarter compared to SEK 88 million in the fourth quarter of 2024, representing an increase of SEK 14 million or 15%. On a full-year basis, SG&A expense of SEK 357 million was SEK 13 million or 4% higher compared to the same period a year ago of SEK 344 million. Excluding a SEK 21 million restructuring charge recorded in the second quarter of 2025, SG&A expenses were slightly favorable compared to the full-year 2024. R&D expense. 2025 R&D expense totaled approximately SEK 304.7 million for the full-year compared to SEK 346 million in 2024. This represents an improvement of approximately SEK 71 million or 19% compared to the prior year. In the fourth quarter of 2025, R&D expense of SEK 74.4 million was SEK 27 million or 26% favorable compared to the fourth quarter in 2024 of SEK 101 million. With the completion of enrollment for both the ConfIdeS and the PAES clinical trials, R&D expense should continue to decline. Operating loss. For the full-year 2025, the company's operating loss of SEK 521 million was an improvement of SEK 116 million or 18% compared to the operating loss of SEK 637 million in 2024. In the fourth quarter, the operating loss of approximately SEK 125 million was an improvement of SEK 49 million or 28% compared to the same period in 2024 of SEK 174 million. The year-over-year improvement in operating results is driven by strong revenue growth and a continued focus on controlling operating expenses. Next slide, please. Cash. Cash used in operations for the fourth quarter totaled SEK 149 million and SEK 149 million for the full-year ended December 31. As previously mentioned, the company completed a direct share issue of approximately SEK 671.5 million or approximately USD 71.3 million for the fourth quarter. At December 31, 2025, cash and cash equivalents totaled SEK 701 million. Now I'd like to turn the call back to Renee for closing remarks and Q&A. Renee Aguiar-Lucander: Thank you, Evan. Please turn to the next page. In summary, during 2025, we have built a strong foundation to capitalize on the strong science, competitive advantage and deep expertise in Hansa Biopharma. We've developed a clear road map with clear strategic imperatives, reflecting the many key inflection points in 2026. This includes the communication of our PDUFA date, readout of the PAES trial, presentation and publication of ConfIdeS data, agreement with the FDA regarding our development program in GBS and the potential approval of Imlifidase in the U.S., and launch into the U.S. market as well as the filing for full approval in Europe. The entire organization is now highly focused on execution, leveraging the agility, clarity of vision and mission, strong expertise and highly integrated cross-functional teams. We value accountability, transparency and strong horizontal communication. We are driven by our overarching ambition to deliver novel treatment solutions to patients with unmet medical needs. Please turn to the next slide. I cannot emphasize enough the value of the highly experienced team in Hansa. This is only the most senior level on this page, but I can assure you that the level of experience and expertise runs deep in the organization. I truly believe that the importance and value of highly motivated and clearly aligned human resources cannot be overestimated in this industry. We all look forward to delivering on our hopes and dreams in 2026, and we hope that you will continue to support us on this journey. With that, I will hand over for Q&A. Operator: [Operator Instructions]. The first question today comes from Farzin Haque with Jefferies. Farzin Haque: For the U.S. launch, you talked about the launch preps underway. It's a bit early, but do you have any initial feedback from payers on what reimbursement policies could potentially look like? Then on EU commercial operations quickly, you provided some color on the broader impact going forward based on operational changes, but any color on revenue guidance for the year? Renee Aguiar-Lucander: We are not going to provide any revenue guidance for the year at this stage. I will hand over to Maria to address the question on reimbursement. Maria Tornsen: Sure. Thank you for the question. As I mentioned before, this is a well-established pathway in the U.S. It's an inpatient drug. covered by the patient's medical insurance, and we know that the majority of patients are on Medicare in the U.S. The concept of getting reimbursed for kidney transplant with the DRG code is well established, and so is also the outlier payment that the hospitals can apply for anything not covered by the DRG. The other path we are taking is, as I mentioned, the NTAP path. We're going to apply for NTAP that would allow, if approved, an extra payment for Medicare. That pathway has been well established with the CAR-Ts. The pathway itself is not really an unknown thing for U.S. for the healthcare system. As part of the pre-launch work, what we are doing is obviously engaging with each hospital's financial stakeholders to understand their particular expertise in doing this. If they have expertise, as an example, in applying the NTAP from CAR-Ts. That's some of the work that is ongoing currently, but it's not a new reimbursement pathway. I think that's the best way I can answer it. The work is ongoing at the moment to really understand on the center-by-center, what is their expertise and experience in doing this. Operator: The next question comes from Suzanne van Voorthuizen with Kempen. Suzanne van Voorthuizen: This is Suzanne from Kempen. Looking a bit ahead on the potential launch of Imlifidase in the U.S., can you elaborate a bit more on the opportunity? One, if you can help drill down the actual addressable patient population on an annual basis?. You mentioned a couple of thousand patients in the highest CPA subset on the waitlist, but there's also a certain number of transplantations that occur in any given year at targeted centers. Second, on the pricing, what kind of flexibility you see there for the U.S., noting that there is a price point in Europe and there is, of course, the most face with nation element? Last, how do you believe we should think about the trajectory of sales in the first years of a launch? Renee Aguiar-Lucander: I'll start -- why don't you start, Maria, and take the question in terms of the market opportunity, and I will address some of the questions around [ MFN ], etc. Maria Tornsen: Sure. The big benefit we have in the U.S. is that the data available in terms of how many patients are at each center is remarkable. We know center-by-center, how many patients are listed for kidney transplant, how many are highly sensitized, their cPRA score, how long they have been on the waitlist. That is data that is readily available in the U.S. That, again, gives us a lot of confidence as we approach the launch. If you want to think about the addressable patients on a national level, you have 15,000 patients on the waitlist today above 80% cPRA. As I mentioned, if you go up to 98%, you have 7,000 patients. In the most sensitized patients, the population we studied in ConfIdeS, there are today 3,500 patients in the U.S. in that group. As I mentioned, we know where they are center-by-center. The other thing I would say that each year in the U.S., there are 27,000 transplants going on. Again, we know also center-by-center how many transplants are happening at each center. That goes back to my comment earlier on 100 centers represent 80% of the volume, and we know that from statistics. I think at the end of the day, we don't know what our label will look like, but if you look at how the product has been used in Europe, where we don't have any cutoff on the cPRA, it's been used down to 80% as well. I think we'll see when we get the final label. Again, the market opportunity is significant in the U.S. Renee, do you want to comment on the pricing in MFN maybe? Renee Aguiar-Lucander: Yes. I'll certainly take the MFN question and maybe you can address something around kind of the launch expectations. I guess one of the things I just want to add is obviously that today, as Maria said, there are 100,000 patients on this waiting list, but we also know, obviously, that this particular patient category really quite a few of the nephrologists or physicians may not put these patients on the waiting list today at all, because they would say, what is the point of putting you on the waiting list? We know already that you're not going to get an organ offer. It's very, very difficult for you to do that. I think that there is a gray area there in terms of which we are not going to really know much more about until we actually have an approved product and can launch this into the market, but I'd like you to keep that in mind. Secondly, obviously, we know that there are about 45,000 or so patients added to this list every year, and about 20% of those are highly sensitized. Again, you're having a very significant number of additional patients being added. That is, again, obviously without having a real sense of what that potential gray area looks like today. With regards to MFN, I mean, I guess that the price point in Europe today in terms of list price across most of these countries in Europe is around $350,000 per treatment. As you also know, obviously, these prices are really based on health economic analysis and are considered to be either cost neutral or cost savings to the systems since they are set by the actual countries themselves and not by the company. Knowing obviously that dialysis and comorbidities and other costs in the system in the U.S. are probably higher than what they are in Europe. We would not expect to have a price or have a price in the U.S. that are lower than what it is in Europe. However, as Maria said, we are having price discussions, pricing research is ongoing. Obviously, we'll take all of that into account before we actually set a price in the U.S. With regards to MFN, I guess my view would be that I think that without getting into any political statements, I do think that MFN is probably not the thing that I worry about the most in terms of this particular rare disease area with limited patient populations really that have really no alternatives today at all and who face the most severe consequences of not being treated. I'm sure, we'll hear more about this in the future. Again, I don't think that this is the area that would be initially addressed or even be considered to be relevant to address them in the first or even second or third wave of any kind of future discussions on MFN. Do you want to talk a little bit, Maria, about potential expectations around the launch or what we think. Maria Tornsen: Sure. I would start by saying, there's a lot of learnings we can take from Europe in terms of the launch that happened several years ago, but there's also some differences, obviously, in the U.S. market. Let's first look at the number of transplant centers. You have 200 centers. As I mentioned, 100 of those represent 80% of the volume. Our initial focus with the market access and medical team will be those top 100 centers. What we will do is going back to what I mentioned before, we will both understand the reimbursement pathway and their expertise, who are the people in each center that are involved in applying those outlier payments and managing the reimbursement for kidney transplant. Then the other path we will also obviously examine with our medical team is their clinical knowledge. Do they have awareness of desensitization? Are they doing that today to what extent? Our initial focus will be on those 100 centers. I think the key learning is that having clinical experience will matter. That's why I made a comment earlier that we believe that the initial uptake will come from high-volume centers that are used to doing many transplants and that have clinical experience. Going back to the fact that we have 25 centers in the U.S. that have participated in ConfIdeS, I would expect those centers to be among the early adopters, but not limited to those 25, obviously. I think that's the way we're currently looking at the market is focused on those 100 centers and those that have a clear knowledge of the reimbursement pathway and clinical knowledge, I think, will be the early adopters. I think what we need to keep in mind also is that we are launching into a new space. There is no other product in the U.S. approved for desensitization that have the same mechanism of action as Imlifidase and can do the same thing. There's a lot of interest from KOLs and from the patient community. I mentioned it earlier that we get multiple requests already today from the community around when will the drug become available, when can I have access? I have a patient that I'm thinking about. I think the potential is clearly there, but as I mentioned, we'll take a very focused approach as we prepare for launch in the U.S. Operator: The next question comes from Douglas Tsao with H.C. Wainwright. Douglas Tsao: I guess just in terms of following up on the reimbursement, Maria, you mentioned both the opportunity -- this will obviously largely be reimbursement in DRG for Medicare patients and the access of both eventually wanted to get applied from the NTAP. I agree with you, institutions are generally very familiar with it. I'm just curious, you did note that before the NTAP that hospitals will be able to access the outlier payments. How much would those or that outlier payment cover the DRG -- or cover the cost of Imlifidase early go? Maria Tornsen: A very good question. First, I would say that the concept of outlier payment exists already today. As you know, the DRG codes are like an amount that has a retrospective look back at the cost for kidney transplant. Hospitals are today applying the outlier payment for anything additional that they may be doing for these patients. Then when it comes to how much will they be covered, that's a quite interesting mathematical exercise that it really depends on multiple factors, where the hospital is based, the cost of living of that state as an example. It also depends on what they are submitting to CMS. A hospital could, in reality, submit a long list of things that they think they need coverage for and say, I need an outlier payment for this. The CMS then has a mathematical formula that they apply, again, going back to, as an example, in which state the hospital is located and look at what they determine are the appropriate costs for all of these things that the hospital have submitted for. Then they will do their mathematical calculation, and they will go back to the hospital and say, "You know what, this is what we will reimburse you for." It's hard to say, it's not a precise number. It depends on what they charge CMS for, and this mathematical formula. As I said, that is something hospitals are doing today. They do outlier payments for the DRG type Medicare reimbursements. I can't answer fully the question, but I hope I gave you some insight into how it works. Douglas Tsao: No. I mean, because this is a kidney transplant with complication from in terms of the DRG and they submit a lot. I mean when you think about the typical DRGs or the outlier payments because I think the CMS typically buckets them or think of them roughly in the same range, do you think you'd be able to cover a fair amount with Imlifidase? Then I guess just as a follow-up, to the extent that there are patients in the early going who maybe reimbursement is not easily accessible, how are you thinking about free goods and just the value of getting clinicians used to using the product in that early clinical experience versus maybe not having optimizing revenues in the early going? Obviously, free goods would impact your gross to net. Maria Tornsen: Yes. I was the first answer your question on getting outlier payments to cover our drug. I would say that I'm confident that we will work with the hospitals to ensure that they can use Imlifidase. As I mentioned, as part of the pre-launch work we're doing right now is to understand what are they doing today, what does their P&T committee look like today. I would not say that, that is going to be something that is going to prevent us from having a successful launch. We will make that work. I think one of the early learnings is that, that may look different from center-to-center in terms of how they today manage DRG payments and outlier payments. I would not say that, that is something that is going to prevent us. Then your comment on free goods, we don't have a policy for that right now. I think that is something that we would assess as we come to launch. I'm obviously aware of the fact that companies tend to have a policy around access to free drugs when they launch, and we'll have that as well when we have Imlifidase hopefully approved in the U.S. Renee Aguiar-Lucander: One of the things I would just add is obviously just the Medicare reimbursement received for hospital is not tapped at DRG, right? DRG is a guaranteed base payment that the hospital can expect to receive. If you actually look at something like CAR-T, which I think is a fairly good analog here, if you look at [indiscernible], it was launched with a price of, I believe, just under $500,000 per treatment and the assigned DRG had a base payment rate of $36,000 at that time. There was a pretty robust uptake of that. I think certainly, even hospitals were reporting that they were profitable when they were providing CAR-T treatment. Again, I think that there is certainly familiarity with the hospitals around these situations. I don't think that we should get too carried away with the actual DRG number per se, because it is more of a guaranteed minimum, I would say, than a kind of -- this is the amount that the hospital actually receives because I would probably bet you that, that is probably not what a lot of the hospitals receive at the end of the day, depending on the patient, what they have to use and again, as Maria said, the way the CMS looks at this. Hopefully, we've covered that for you. Operator: The next question comes from Thomas Smith with Leerink Partners. Thomas Smith: Congrats on the progress. Just on the U.S. commercial launch preparations, you referred to some work you're doing refining the supply and distribution plans for Idefirix in the U.S. Can you just elaborate on that? Update us on the manufacturing and how you're thinking about distribution of the drug product in the states? Then as a follow-up, I was hoping you could elaborate a bit on this interesting decision in France to expand reimbursement to include lung transplant. Are you expecting that we could see similar decisions in other European countries? When it comes to the U.S., how are you thinking about potential adoption in other solid organ settings beyond kidney transplant? Renee Aguiar-Lucander: You want to start off, Maria, on supply? Maria Tornsen: Sure. Some more details on supply and distribution. Our drug, Imlifidase is manufactured in Europe. The work that we're doing now is selecting our 3PL and also deciding on our specialty distributors and what the network is going to look like. Really, the question that we're solving for is how do we get the drug into the U.S. Then when it comes into the U.S. to 3PL, what is the distribution network going to look like, which specialty distributors are we going to use? Then how are they going to purchase -- the hospitals are going to purchase the drug from the SD. That's a very typical U.S. launch prep that we're doing. When it comes to France, and the lung transplant program, there is a KOL in France that has, I think, a few years ago used Imlifidase in a compassionate use in a lung transplant patient. That is really how it started that obviously saw the benefit of using this despite the fact that we don't have an indication in lung transplant. This KOL and the other KOLs in the lung transplant community in France, they went to ANSM in France and asked them to consider a special reimbursement for lung transplant. I would say that, that particular pathway is has happened for other drugs in France as well. ANSM has this pathway to -- if a drug is approved in one indication, they can approve special reimbursement in other indications. That's what happened. Obviously, this is not an approved indication for us. We haven't generated any clinical data, but that is the pathway that has been established in France since November. You asked also about U.S. adoption across other transplants. I think that is a bit too early to say. I think if you -- Renee may want to comment on it, but if you look at the mechanism of action, you can understand why the French KOL decided to try Imlifidase. I think it's something that is hard to tell at this point in time in the U.S. There is another publication from a center in the U.S. that used Imlifidase in heart and liver transplant that is a published case study. It's hard to judge at this point in time how and if it will be used. I don't know, Renee, if you want to comment anything further on that other organ transplant. Renee Aguiar-Lucander: Sure. Yes. I mean, as Maria said, I mean, this is tricky to discuss off-label use when we don't really have an approved product at this point in time. I would say, subsequent to potential approval, obviously, it would make sense for us to revisit this whole area of potential label broadening with the FDA in terms of understanding what would they like to see, how do they look at this? Is there anything that we should do, could do to try and facilitate some of this. I think it will depend a lot on what regulatory advice we get regarding this potentially. I think for now, we're really just focused on getting the approval and launching in kidney, which is a very, very substantial opportunity. We are aware, obviously, that there's a lot of can perceive unmet medical need in all of these transplant settings. I think we will take one step at a time at this point. Operator: The next question comes from David Nierengarten with Wedbush Securities. David Nierengarten: I just had one on the future GBS study or similarities or differences or other guidelines you could point to with other trials in the field, like Axonal and GBS and just if there were key differences or similarities you were looking for when you talk with the FDA about that design. Renee Aguiar-Lucander: I guess I'll have Richard comment on this shortly. I guess that we're internally at this stage, we are looking at a variety of different options to bring to the FDA, and we will very shortly decide upon which way we're going to take this forward. Obviously, in all of these conversations with KOLs, various trials have come up. Also, most drugs and most trials, they all have their benefits and drawbacks. We should all learn from each other in terms of how to best optimize for the benefit of the patient. Richard, I don't know if you have any specific comments on that. Richard Philipson: Sure. I think there clearly are opportunities to learn other development programs, other clinical trials that are being conducted in the field, as Renee says. I mean, we're still at the stage of looking at different development options, different clinical trial options. I think it's also important that we do have evidence from our mechanism from a previous study that we did. I think that's provides us with useful information that we can use when we are designing our program molecule 5487. I think that's an equally important area of information that we're using along with, as Renee said, and you have indicated learning from what other companies have done. I think the critical step really is to take our preferred design option, which we will very shortly identify and take that for discussion with regulatory authorities, in particular, the FDA. I think that feedback will be critical in terms of determining the way forward. Operator: The next question comes from Richard Ramanius with Redeye. Richard Ramanius: I have one question. When do you recognize revenue? How long on average does it take to convert the conversion from into cash? Renee Aguiar-Lucander: Evan, do you want to take that question? C. Ballantyne: Yes. Sure. Great question. We recognize revenue, as you would guess, under IFRS 15. We recognize revenue when the product ownership has been transferred from Hansa to the hospital. As you're probably aware, some of the hospitals pay us based on an actual transplant and some hospitals pay us in terms could be 30, 60 or 90 days later. There is sometimes a timing difference between revenue recognition and the collection of cash in accounts receivable. Operator: The next question comes from Erik Hultgard with Carnegie. Erik Hultgard: Congrats on the quarter. Two quick questions, if I may. First, on the Sarepta collaboration, you say in the report that you're actively reviewing the data and discussing the next steps. When will you expect to communicate the outcome of these discussions? Then a short one for Evan on the annual cost for the full U.S. organization when reps have been onboarded. What's the rough number for that full organization? Renee Aguiar-Lucander: Thanks for that. In terms of the Sarepta collaboration, as I'm sure you're aware, I mean, Sarepta is having quite a lot of regulatory interactions at the moment with regards to their core business. That's really where their focus is at the moment. I think that the only thing that I can say is that we are continuing to have very constructive and good interactions, but we're also mindful of the fact that this program is probably not at the very top of the list at the moment for Sarepta. It's difficult for me to give you an exact timing of when we'll be able to fully communicate exactly what the next steps are going to look like. That really is not, unfortunately, not really under my control at the moment. I can assure you as soon as we do, we will communicate it. As I said, I mean, we're in ongoing discussions and communication and conversation. It is hard to give an exact time at this point in time. That has nothing to do with the interest in the program or any kind of anything else. I think it's just really a matter of priorities at Sarepta at this point in time. Evan, do you want to take the second part? C. Ballantyne: Yes. Sorry, you broke up on that second part. Could you repeat that question, the second question? Erik Hultgard: My second question related to the annual costs for the full U.S. organization when the 20 reps have been onboarded. C. Ballantyne: Yes. We baked that into our budget. As Renee mentioned earlier, we have cash into 2027. We've anticipated those costs. We haven't reported them or broken them out specifically, but the U.S. is a very, very large market. I think to address that work with 18 to 20 different reps is a really good use of capital. Erik Hultgard: Sorry, Evan, my question was more about how we should model costs on an annual basis when you have the full organization in place. C. Ballantyne: Yes. You should model them. I think including the 15 to 20 different reps we'll have on the commercial team under Maria, we'll probably have an equal number of support staff, including some SG&A and MSLs in the organization. Then I would take an average salary and wage for U.S. employee. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to CEO, Renee Aguiar-Lucander, for any closing remarks. Renee Aguiar-Lucander: Thank you very much. Thank you, everybody, for listening in to this presentation, and we hope to see you again soon. Thank you. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good morning, ladies and gentlemen, and welcome to Stingray Group's Third Quarter 2026 Conference Call. [Operator Instructions] This call is being recorded on Wednesday, February 11, 2026. I would now like to turn the conference over to Mathieu Peloquin. Please go ahead. Mathieu Peloquin: Good morning, everyone, and thank you for joining us for Stingray's conference call for the third quarter of fiscal 2026 ended December 31, 2025. Today, Eric Boyko, President, CEO and Co-Founder; as well as Marie-Helene Fournier, Interim Chief Financial Officer, will be presenting Stingray's operational and financial highlights. Our press release reporting Stingray's third quarter results was issued yesterday after the market closed. Our press release, MD&A and financial statements for the quarter are available on our investor website at stingray.com and SEDAR+. I will now provide you with the customary caution that today's discussion of the corporation's performance and its future prospects may include forward-looking statements. The corporation's future operation and performance are subject to risks and uncertainties, and actual results may differ materially. These risks and uncertainties include, but are not limited to, the risk factors identified in Stingray's annual information form dated June 10, 2025, which is available on SEDAR+. The corporation specifically disclaims any intention or obligation to update these forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law. Accordingly, you're advised not to place undue reliance on such forward-looking statements. Also, please be advised that some of the financial measures discussed over the course of this conference call are non-IFRS. Refer to Stingray's MD&A for a complete definition and reconciliation of such measures to IFRS financial measures. Finally, let me remind you that all amounts on this call are expressed in Canadian dollars unless otherwise indicated. With that, let me turn the call over to Eric. Eric Boyko: [Foreign Language] Good morning, everyone, and thank you for joining us for our third quarter fiscal '26 earnings call. I want to begin the call with talking about the significant progress that Stingray has made in positioning itself for long-term sustainable growth. We have built a unique and powerful position in the market, and I want to share with you the framework that will underpin our strategy. Stingray is built on 3 pillars that work together to drive our growth: distribution, monetization and content. Our first pillar, distribution. Our purpose is simple: to be everywhere our listeners are. We had executed on this and today, Stingray is the most widely distributed streaming media company across the platforms that are now part of our daily lives. We are the most widely distributed music player on connected TVs, smart speakers, mobile device, connected cars and thousands of retail stores. This massive footprint is our core strength. We have built our services directly into the device people use every day, making our content very easy to access. This gives us a powerful and lasting advantage that is difficult for anyone to replicate. As of today, we estimate that we have over $200 million of FAST channels unsold inventory and over $400 million of unsold retail media inventory. And as you can see with our reveals, we are quickly building our car inventory. Second, our second pillar, monetization, that -- we like the word monetization. Having a massive audience is one thing, monetizing it effectively is another. With the acquisition of TuneIn, we now have a world-class advertising engine to turn our reach into revenue. We have the technology, the ad stack, and the right demand side partnership to sell both audio and video ads across our entire network. For advertisers, this is a game changer. They can now come to one place, Stingray to connect with a global audience through their TVs, their speakers, their cars and at retail. This unified platform creates a predictable and highly scalable revenue stream for our businesses. So we have distribution. We have the monetization engine. That brings me to our third and perhaps the most important pillar, content. So in terms of monetization, we feel that we will be achieving $500,000 a day of programmatic sales. A year ago, when we were talking at this time, our sales of programmatic was 0. And now our run rate is $500,000 a day at USD 102 million or CAD 250 million. So when you talk about growth going from CAD 0 to CAD 250 million, that's a great new vector. Well, content -- what is the fuel in our entire model and what truly sets us apart? While other streaming compete in the expensive, very expensive world of on-demand music, we have built a smarter model focused on creation. We create expertly crafted players, engaging karaoke experience and world-class catalog of recorded concerts. This strategy gives us something very powerful, unmatched and scalable unit economics. Our content costs do not grow at the same pace of our audience. As we reach more listeners, our models become more profitable. We deliver premium experiences to hundreds of millions of users without the prohibitive costs that challenge others in the industry. It is a smarter, more sustainable way to grow. This is the story of Stingray, a company with unmatched reach, a world-class advertising engine and a unique content strategy. We are building a scalable platform for the future of streaming. The results we are sharing today are a direct outcome of this focused strategy. Let me now turn to review to our third quarter fiscal 2026. Stingray announced exceptional third quarter results for fiscal '26 with revenues and adjusted EBITDA -- adjusted free cash flow reaching record levels. On a consolidated basis, Stingray generated adjusted EBITDA of $44.5 million and adjusted free cash flow of $34.8 million on revenues of $124.8 million in the third quarter. The highlights has similar positive impact of its recent TuneIn acquisition and the continued expansion of high-growth areas like FAST channels, in-car entertainment. FAST channels, particularly drove our robust financial results as we leverage Stingray premium ad networks, which we call backfill to monetize unsold inventory and benefit from new deployment across the LG platform. In addition, the integration of TuneIn has progressed even better than planned. Following the closing of this transformative acquisition on December 19, TuneIn's performance has exceeded our expectations, creating powerful, new synergies that are already reflected in our strong financial performance. Revenue synergies with TuneIn reached an annual run rate of $16 million in revenues and $5 million in cost savings. As a reminder, we have established synergy goals for sales between $20 million to $40 million of cross-selling and for cost savings between $10 million to $15 million in the next 18 months or before March 27. So we started the year, let's say, on a fast track. On the in-car entertainment side, our recent agreement with world-class automated brands like BYD, Mercedes, and Nissan are a powerful validation of our in-car entertainment strategy. By integrating our full suite of products from Stingray Music and Karaoke to the rich content of TuneIn, we are cementing our role as an essential partner for the connected cars. These new partnerships certainly expand our global footprint and accelerate our momentum. At BYD, we raised our partnership to a new level through an OEM radio deal involving the integration of our full suite of products, including Stingray Music and TuneIn, under the BYD audio by Stingray brand, Stingray Karaoke and Comm Radio. Turning to Mercedes, we will launch Stingray Music and Stingray Karaoke applications in all vehicles equipped with our latest MBUX infotainment system. This application, which will be newly pre-installed in Mercedes cars is expected to be released in the first half of calendar '26. Just last week, we announced a collaboration with Nissan to bring a unique TuneIn offering to select Nissan and INFINITI vehicles in the United States. As a result, drivers will gain access to live sports, breaking news, creative music, millions of podcasts and tens of thousands of radio stations on the latest Nissan infotainment system. These partnerships do -- not only strengthen Stingray's global automotive presence, but also accelerate the rollout of branded in-vehicle audio experiences. Amid this flurry of activity, revenues for Broadcasting and Commercial Music business grew by 22% to $88 million in the third quarter of '26, while Radio revenues rose 2% to $36.7 million. In terms of our Radio business, we entered into the agreement to acquire the assets of CHUP-FM in late November to solidify our position in the Calgary market. More specifically, this deal will enable us to improve efficiency and achieve economies of scale, since we already own 2 other radio stations in the market. Altogether, Stingray Radio owns and operates 32 radio license in Alberta and 96 radio stations across Canada. Calgary, the transaction is subject to CRTC approval, while we expect it to close in the second quarter of fiscal 2027. Finally, I would like to reiterate the relative strength of our balance sheet post-acquisition. We are very happy to show that our leverage ratio is below 2.8x that we had told the market for the third quarter, and we ended December 31 at 2.49x. So a very good closing, very good cash flow for the company. Looking ahead for the next 12 months, reducing our debt will be our top of our capital allocation priorities with a target set to drop below 2x EBITDA by the end of calendar year, so by the end of December. So a very quick deleverage of this acquisition. Consequently, we believe Stingray's path to value creation will be marked by accelerated EBITDA growth and free cash flow generation in upcoming quarters. I will now turn over the call to Marie-Helene for our financial overview of the quarter, and I will be pleased to ask questions. [Foreign Language] Marie. Marie-Helene Fournier: [Foreign Language] Good morning, everyone. Thank you, Eric. Revenues reached $124.8 million in the third quarter of fiscal 2026, up 15.4% from $108.2 million in Q3 '25. The year-on-year growth was mainly driven by enhanced advertising revenues from the recent TuneIn acquisition, higher equipment sales related to the acquisition of The Singing Machine, and greater FAST channel revenues. Revenues in Canada decreased 1.1% to $53.6 million in the third quarter. The year-over-year decline can be attributed to lower equipment and installation sales related to digital signage, partially offset by higher radio revenue. Revenues in the U.S. grew 42.5% to $60.3 million in Q3 '26, reflecting enhanced advertising revenues from the recent TuneIn acquisition, higher equipment sales related to The Singing Machine Company transactions. Revenues in other countries decreased 6.7% to $10.9 million in the most recent quarter. The year-over-year decline was mainly due to lower subscription revenues, partially offset by greater FAST channel sales. Looking at our performance by business segment, Broadcasting and Commercial Music revenues increased 22% to $88.1 million in the third quarter of 2026. The growth was driven by enhanced advertising revenues from the recent TuneIn acquisition, higher equipment sales related to the acquisition of The Singing Machine and greater FAST channel revenues. Further apart, Radio revenues rose 2% to $36.7 million in Q3 on higher digital advertising sales, partially offset by lower airtime revenues. In terms of adjusted EBITDA, Stingray also reported record numbers. Consolidated adjusted EBITDA improved 5.7% to $44.5 million in the third quarter. Adjusted EBITDA margin reached 35.7% in Q3 compared to 38.9% for the same period in 2025. The increase in adjusted EBITDA was mainly driven by organic revenue growth as well as the impact of the acquisitions. The decline in EBITDA margin, meanwhile, can be attributed to lower gross margin on sales related to the TuneIn and The Singing Machine acquisitions. By business segment, Broadcasting and Commercial Music adjusted EBITDA grew 4.6% to $33 million in the third quarter. Like consolidated adjusted EBITDA, the increase was due to organic revenue growth as well as the impact of the acquisition. Adjusted EBITDA for our Radio business improved 5.5% year-over-year to $13.2 million in the third quarter on the strength of higher revenues. In terms of corporate adjusted EBITDA, it amounted to negative $1.7 million in the third quarter of '26 compared to negative $2 million in the third period of 2025. Stingray reported net income of $7.5 million or $0.11 per diluted share in the third quarter of '26 compared to $15.7 million or $0.23 per diluted share in Q3 '25. The year-over-year decline was mainly due to the higher performance and deferred share units expense related to an increase in the Corporation's share price, as well as greater acquisition, legal restructuring and other expenses. These factors were partially offset by an unrealized gain on the fair value of derivative financial instruments and by a foreign exchange gain. Adjusted net income totaled $26.3 million or $0.38 per diluted share in Q3 2026 compared to $23.4 million or $0.34 per diluted share in the same period in 2025. The increase can be attributed to a foreign exchange gain and higher operating results, partially offset by greater income tax expense. Turning to liquidity and capital resources. Cash flow from operating activities amounted to a record $38 million in Q3 '26 compared to $35.4 million in Q3 2025. The year-over-year improvement was mainly due to a foreign exchange and positive net change in non-cash operating items. These factors were partially offset by higher acquisition, legal, restructuring, and other expenses. Similarly, adjusted free cash flow reached a peak level in the most recent quarter. Adjusted free cash flow totaled $34.8 million in Q3 compared to $28.6 million in the same period of '25. The improvement can be attributed to higher operating results, combined with lower income taxes and interest paid. From a balance sheet standpoint, Stingray had cash and cash equivalents of $17.3 million at the end of the third quarter and credit facilities of $519.7 million. Net debt at the end of the third quarter of '26 totaled $502.3 million, up $181.2 million from the end of Q2 2026, mainly due to outlays related to business acquisitions. As Eric mentioned earlier, our leverage ratio stood at 2.49x at the end of the third quarter. We intend to bring it down under 2x over the next few months or by the end of the calendar year, by diligently reducing our debt and generating higher adjusted EBITDA. Finally, we repurchased 303,000 shares for a total of $3.8 million during the third quarter under our NCIB program. This ends my presentation. I will now turn the call over to Eric. Eric Boyko: Okay, Marie. This concludes our prepared remarks. I hope you like my introduction. At this point, Marie-Helene and I will be pleased to answer your questions. Back to you guys. Operator: [Operator Instructions] First question comes from Stephanie Price at CIBC. Sam Schmidt: It's Sam Schmidt on for Stephanie Price. I appreciate the disclosure around the run rate TuneIn revenue synergy figures. How are you thinking about the cross-selling opportunity from here? And what gets you to the top versus bottom end of that $20 million to $40 million target? Eric Boyko: You know what, when we started it was very interesting. The deal wasn't even closed because we announced the deal and we had 2 weeks to wait for the Competition Bureau. And I think 3 days later, we already had like 8 different vectors that TuneIn is already helping us sell. So what are we selling? They're helping us on CTV, helping us sell Comm Radio, they're helping us sell ads on Stingray Music, they're helping our radio team, which we sell TuneIn in Canada. So the cross synergies, we have over 9 products. We quickly achieved just in 1 month in January, $16 million run rate. We said $20 million to $40 million, but right now, I'd say $20 million to unlimited because like I said before, a year ago, we were doing 0 in programmatic sales and we are very confident that by the end of this quarter, by the end of March, we will be running at USD 500,000 of programmatic sales on all the different platforms, which is USD 182 million, which is roughly CAD 250 million. So I think the cross synergies are really -- and the more we launch products, the more we launch cars, again, we're talking about distribution, all will be net finance, all the model is advertising in programmatic. And the beauty of programmatic is it's a very deep lake and the TuneIn team is a first-class, sophisticated, ad tech machine. And I think this merger is a perfect merger on the cross-selling. So I think the $20 million is just a starter and we're very excited -- in June, in 4 months -- to really give you our first quarter together and just give you a bit of feedback. TuneIn grew in January by 81%. So a big start of the year in January. So very happy about that. Again, we have to be careful, it was a good quarter, last year was a bit weaker. There was the tariffs, and there was Trump and the Liberation Day -- won't go in that debate, but a very good start of the year, so very happy. Sam Schmidt: Just one more for me. I wanted to ask around the cost synergies as well. Can you provide some color on those initiatives? And how are you thinking about Broadcast and Commercial segment margins as you work through those cost synergies... Eric Boyko: In terms of cost synergies -- right now, we've only focused on cost of goods sold. For example, cost of goods sold, music rights, since we have more scale, we have better music rights, usual saving on insurance, saving on audit fees, saving on all these. So we haven't even looked yet at the personal side. Over time, there will be -- there are duplication in certain positions. But right now, we started the year so strong. The results are so strong on their side and our side, there is no big rush. So very confident to achieve our $10 million plus of OpEx and COG savings by year-end. And I think we might just achieve it with the COGs. We have a lot of also synergies on in terms of paying the Amazon fees and also ad service fees. So we're very excited. Again, a great merger on both sales and cost savings. I would say it's a perfect marriage. Operator: The next question comes from Adam Shine at National Bank Financial. Adam Shine: Eric, just on the synergies, can we just confirm that these are in CAD, or are they actually in U.S., because I thought originally they were in CAD. Eric Boyko: So very good. We didn't realize, but we had told the markets last time when we did the deal that all these savings are in U.S. dollars. So thank you, Adam, for the question. So we had sold USD 20 million to USD 40 million of positive sales and $10 million to $15 million of OpEx savings... Adam Shine: So turning next, we're seeing obviously, some of the top line growth. Can you speak a little bit about the possibility of margin expanding? I mean, understandably, your mix has evolved with some lower margin components that are putting a bit of pressure on the margin. But how do you see margins expanding going forward above, let's say, a 35% level? Eric Boyko: Yes. And we did a good sheet on different margins. For sure, examples, when we get money from a fast channel partner like from LG or VIZIO, that money in that case is recorded net -- I'm going to accounting. When we do backfilling and when we do programmatic sales, we sell $1, now we have to pay our partner whatever the amount, $0.35, $0.40, $0.50. So the gross margin on both products are, one is at 95% gross profit, the other one is at 40%, 45%. So very difficult to predict. The more we do backfilling and programmatic, it's not the same margin as getting net revenues. So I'm happy offline with Marie to give you more guidance on the gross margin and the EBITDA margin. But there is an effect, when we sell directly, we report the numbers gross. I'm an accountant, so I don't want to go into too much detail, so I'll get you bored. I do have brown socks today. Adam Shine: Okay. But my point is simply that do you see over the next, let's say, 3 years to 5 years, an opportunity to scale a mid-30% margin towards 40% or something maybe slightly above the current level? Eric Boyko: I think we're now globally at 35%. The programmatic sales will grow so fast that a bit of the other products that we sell with E&L and with our friends at Singing Machine, I think, we can expect the 35% to grow back again towards the 40%. Adam Shine: Okay. And just in terms of leverage, I mean, you've done a good job in the prior 2 years of significantly bringing down leverage. And I think you're already doing a pretty good job in terms of bringing leverage down after TuneIn. But what's the optimal target for you on the leverage front? Do you really want to be sub 2x? Is 1.5x, frankly, too low? What's the strategy here? Eric Boyko: I think before a bit more aggressive entrepreneur, our range was 2.25x to 2.50x. Now I'd say after what happened, the tariffs, and COVID and all this stuff, we're getting older. So I think for Stingray, the second we get below 2x, you can start expecting capital allocation, which, again, would be increasing the dividend. We're always looking at deals, but increasing the dividend or doing more NCIB. I was reading your report this morning, Adam. I think you're estimating $2.32, $2.40 of free cash flow per share. If we do $2.40 of free cash flow per share and our dividend policy is $0.20, $0.25, then you should expect our dividend to be growing to $0.45 to $0.50. Operator: The next question comes from Aravinda Galappatthige from Canaccord Genuity. Aravinda Galappatthige: I just wanted to clarify, go back to the sort of the synergies on TuneIn, Eric. I mean the way that you kind of laid it out, the fact that you've already realized on a run rate basis, the $5 million on cost of $16 million on revenue synergies. If I were to perhaps simplify and simply add that to the EBITDA at the point of acquisition, as you announced is $30 million, I mean, we're really talking about a bump of a little more than $50 million in U.S. dollars, that is, by the way, in EBITDA for raised numbers as we look to kind of lay out our fiscal '27 in a more granular fashion. I just wanted to make sure I'm properly characterizing that. Is that accurate? Eric Boyko: Roughly, you can see the cost synergies, depending if we sell third party and all that, roughly 40% gross margin and the fixed costs are pretty much -- so you can add 40% to that. So I agree with you there. And the cost synergies are coming in over the next few months. So I think those synergies will be fully coming in, in our year-end 2027. So for example, some of the cost synergies are happening in February. So you're not going to get the full value. But starting April 1, you will get full value of those synergies. And I think Marie can give you more guidance of exactly when do they come in and what timing. But you're exactly right. This deal with TuneIn, if it's a $50 million, like you say, was a very accretive deal that we did since we paid $150 million, excluding also the fact that we have all those incredible fantastic tax savings. Aravinda Galappatthige: Exactly. And then on the same subject, but more qualitatively, can you just talk about now that you've closed the transaction, how you're sort of synthesizing your efforts in the in-car side? Because obviously, they've had their sales efforts, you had yours. How are you kind of thinking about harmonizing that? Are you just letting that run parallel for now? Eric Boyko: No. So the day happened, the next day we were one. So when you think about it, what we do right now is every deal we have, there will be in every car. So the Nissan deal was a TuneIn deal. But with Nissan, we already added Stingray Music, and we're going to be adding Karaoke. With BYD we're adding TuneIn right away. So every car deal we have, and I must say, we used to play a game when we were -- with cash and all, we call quote on the market. But I think in this one, TuneIn and Stingray for the car manufacturers, they're very excited about our offering, but they were each talking to both of us one against each other. We were the only 2 companies offering a model that we said we'll put music, we'll put TuneIn Radio, and we'll do a rev share on advertising. Our competitor, which is a known satellite company are more in asking for a fixed price per car. But now that we merge both together, I say the car manufacturers are very excited. They're talking to one company. They feel that we're well positioned. We're the only global company on music. When you think about our competitors being iHeart or XM, they're only U.S.-based. There is not many companies that are global. And when you talk to BYD, and Mercedes and Nissan, they want us to be global and also we have the right structure of rights management. As you know, we're not on-demand, we don't pay 70% rights, so we're able to offer advertising and rev shares. So I think the car manufacturer, we're talking at CES. We met all car manufacturers in the world. We had a BYD car there at CES in Vegas. Everybody was going crazy to see the BYD car. We had Stella, the President of BYD with us in Vegas. So now we're very well positioned. And I would say now, I was telling our team here, I feel we're like the Seahawks. We're winning 19-0 in the third quarter. So I think it's for us to lose this game because we're really ahead, and we don't see anybody else in the space. And I think the car manufacturers want to go faster, because I think, they see a clear solution. So very excited. The only negative thing about cars, cars is a long process. You don't build one million cars overnight, you start with your cars. But the beauty about the cars, once you're in the car, you're in the car for 10 years and the cars last for 11 years. So it's like doing a 20-year deal. So by the time all the cars are all ready, I'm going to be 76 years old. Aravinda Galappatthige: Congrats on all the progress. Eric Boyko: We're very, very happy with the monetization of the current inventory -- of the unsold inventories. Operator: The next question comes from Jerome Dubreuil, at Desjardins. Jerome Dubreuil: First one, I want to touch again on the synergies there. You seem to be kind of resisting the urge to change your synergy guidance. So maybe other than the initial $10 million in cost savings, it now sounds like it's $10 million to $15 million. Can you agree that the lower end of the ranges seem a bit too conservative now in light of the update that you provided last night? Eric Boyko: No, I think on the COGS and OpEx or the... Jerome Dubreuil: Revenue and OpEx, both with the update that you provided. Eric Boyko: On the sell side, when we said $20 million to $40 million, I said to our Board yesterday, I said we should never say -- we should say $20 million and above. Right now, I think it's $20 million to $100 million. I think there is no limit to the positive sell side that we can have. We're adding an increased number of the inventory that we're adding with LG right now, with VIZIO, we're adding Samsung, we're adding a lot of new partners with the cars, we're doing more retail deals, we're also discussing also with different partners. So the inventory that's coming in with our distribution is unmatched. Again, it is the chicken and the egg. So the more you monetize, the more people want to give you their inventory. The more you have inventory, the more you have scale, the more you can monetize. So it's a virtual circle. We have a daily meeting at noon every day to watch the programmatic sales. And if we're going to be doing $500,000 a day in March, if you look at the trends, that means we should be doing USD 1 million a day of programmatic ads in November, December in the big months. So that's the scale of that business. It's not a business programmatic that will grow by 5% to 10%. It's a business that can easily double in 6 months. And we have the inventory. Jerome Dubreuil: Yes. Follow-up for me on the organic growth perspectives for TuneIn, you mentioned that they were up 81% year-on-year in January. Wondering if you can discuss maybe what are their stand-alone opportunities, maybe on and off platform aside from the revenue synergies that you've already discussed? Eric Boyko: Yes, good point. Again, January was a weak January last year. Last night, we had our LG partners in town, and I don't want to say their numbers, but they had a huge number in January. January seemed to be a very -- in 2026, all of our partners are saying for programmatic ads is looking like a great year. So let's see, but a very positive year on advertising for programmatic, not only us, but we're seeing from LG, from VIZIO, and Samsung. So that's good to hear. But your exact question is what? Jerome Dubreuil: I want to hear whether your stand-alone opportunities, maybe they can help monetize other audio platforms that are outside of the Stingray ecosystem. Maybe is that still on the table? Eric Boyko: Absolutely. We have deals that have been announced that will be -- I guess, we'll be able to announce, but I think you'll be surprised about many third-party platforms that we're reselling on. TuneIn really developed an ad tech selling platform that we are able to sell third parties, and the third parties are approaching us and don't want to get all the details to really leverage their inventory. In Radio, believe it or not, in Radio, there is more demand than there is inventory. I know you're going to say it's impossible. But right now, with terrestrial radio declining, a lot of audio ads, people are looking to where they can advertise. So there is more demand right now than there's inventory. And TuneIn is tapped to all these partners. So it's a very exciting time where we're positioned. Operator: The next question comes from Drew McReynolds at RBC. Drew McReynolds: Eric, I'll say you don't see a perfect marriage very often from my experience. So good to see all of this goodness coming through. Two follow-ups. One, on the Connected Car side, are you able to just size up like at a 30,000-foot view, the revenue kind of contribution maybe in fiscal 2026, and then what that could look like in fiscal 2027? The second question, just on TuneIn and subscription revenue. I know this is not necessarily the focus of the acquisition, but just maybe some updated expectations around that revenue bucket. Eric Boyko: Yes. So the car business, again, car business is growing well. Car business is growing by 40% to 50%, still a small number. This year, we'll do above $10 million. I think the number should double next year. Again, it's a long curve. But once you're in the cars, you're in forever. So I think the car business, we're really investing for the next 10 years. So this year, let's say, we'll go from $10 million to $20 million, but we won't go from $10 million to $100 million in the car business. It's just all the deals, they have to produce the cars and then we got to start selling the ads. So we love the business. It's good. Again, a lot of partners, every time we win a deal, you can imagine that the people that are in the cars or want to be in the cars, the Amazon, the Google, the Apple, they start calling us and say, "Hey, you're with this car. How can we be your partner in that car? How can we sell advertising with you in this car?" So we're really attracting all of the big players, because they're not in the cars. So it's going to be interesting, the monetization and the growth of each of these deals. Once you sign, it's a long time to implement and to produce the cars. It's not as fast as the FAST channels. So that was your first question. And Drew, the second question? Drew McReynolds: Just on the TuneIn subscription revenues... Eric Boyko: Good point. Drew McReynolds: Your focus of the acquisition, any update there. Eric Boyko: So when we did the deal with TuneIn, we told this to the Board and the market. So advertising growing very aggressively. We had budgeted for subscription to be down by 9%. In Q1, we're slightly better at 6%. So our goal is to become flat. The focus of the company for the last 3 years was really to sell the inventory. And now one of our focus, and we have a team put together is to bring new content to the subscription and at least have a subscription that is stable, but the growth of TuneIn and the growth of Stingray is going to be programmatic sales for the next 3 years to 5 years. Subscription for us is going to be a nice add-on. And Drew, it's a perfect wedding because like the Royal Bank, it's a royal wedding. Operator: The next question comes from Tim Casey at BMO. Tim Casey: Questions have been asked and answered. Operator: At this time, I will turn the call back over to Eric Boyko for closing comments. Eric Boyko: All right. So I hope that you like our little introduction. A couple of points that we didn't talk today, I think it's important. We also announced with a big move, the one ticker. What's the timing of this? With the deal of TuneIn, we met with all the U.S. largest investors, met with a lot of their investors, the TuneIn team was very well connected in the U.S., and we quickly realized that having the rate A, rate Bs, if you're American, you had to buy Bs, but there was no market on Bs, and the As, so we work hard to make it simple. The goal is to increase the liquidity for both Canadians and Americans to buy one symbol and not have 2 tickers. So I think all the banks did it, Canada did it, all the telecoms did it. And so our goal here is really to increase U.S. investors. We're going to be looking for U.S. coverage, and we will be much more aggressive since TuneIn is a well-known brand, and we do 60% of our sales in the U.S. to really attract a good U.S. investor base and every media company in the world, every tech company in the world has been able to grow their market cap and their multiple by having U.S. investors. We love Canada, we love Quebec, but we have to be world winners. So I'm very excited about the ticker. So hopefully, we'll see the impact of that over the next few quarters, and we'll see more of our U.S. friends buying our shares. So that was also a big move for us and excited to see the impact of that. So with this in mind, I'll say thank you very much. [Foreign Language] And excited for our next call because this year-end is only in June. So we have 4 months until we see each other. So I will miss you great analysts. If you have friends in the U.S. that want to cover us, give me their names. [Foreign Language] Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.
Operator: Ladies and gentlemen, thank you for holding, and welcome to Suzano's conference call to discuss the results for the fourth quarter of 2025. [Operator Instructions] They would be addressed CEO, Mr. Beto Abreu and other executive officers. This call will be presented in English with simultaneous translation to Portuguese. [Operator Instructions] Before proceeding, please be aware that any forward-looking statements are based on the beliefs and assumptions of Suzano's management and on information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events and therefore, depend on circumstances that may or may not occur in the future. You should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Suzano and could cause results to differ materially from those expressed in such forward-looking statements. Now I will turn the conference over to Mr. Beto Abreu. Please, you may begin your presentation. João Fernandez de Abreu: Thank you, and welcome, everyone, for our fourth quarter results call. I would like to cover mainly 3 highlights related to the -- our results in the fourth quarter and also our results for 2025. Let me start highlighting the strong shipment in pulp during the fourth quarter. This is record volumes for Suzano, and it's absolutely related to our supply chain team on the operational excellence side. So flawless execution in our process. So the team here is very glad of what the supply chain team was able to deliver. On the paper business unit, we also had a strong volume. But the point that I would like to highlight here is the continuous improvement of the Pine Bluff operation in U.S. We have been doing a great job over there, learning a lot and showing how our management skills and competence can add value from assets also outside Brazil. We are learning a lot of things that for sure will be used during our K-C operation in the future. On the side of cost, cash costs came absolutely in line with the plan. On the other side, I would like to ask you to pay attention to the DTO -- sorry, the TDO of Suzano, I would consider 2025 as an inflection point. So what we can expect for 2026 and for the coming years is a new trend in terms of TDO, and this is absolutely in line with our agenda of increasing and improving our level of competitiveness. We also saw a strong operational cash flow in the fourth quarter and also free cash flow, even on the lower price, I would say, cycle. And for me, the message here is the level of resilience of our business, resilience and competitiveness. So this is a business that's going to be even stronger in the future in terms of competitiveness to face any kind of business environment. So that's the summary for me for the first quarter, volume, cost and the capacity of the business to generate cash in any kind of business scenario. Having said that, I'd like to hand over to Fabio that will cover the Paper and Packaging business. Fabio Almeida Oliveira: Thanks, Beto, and good morning, everyone. Please let's turn to the next page on the presentation. During the fourth quarter of 2025, our Paper and Packaging business unit delivered strong volumes from its operations in Brazil and also in U.S. Favorable seasonality helped to lift volumes in the quarter, while we continue to see paper prices declining in export markets. In U.S., Suzano Packaging continued to be a positive highlight with stable prices quarter-over-quarter and a solid 21% increase year-over-year. During the quarter, we also had our annual maintenance downtimes for both Suzano and Limeira. Despite the outage in Limeira -- during the outage in Limeira, we finalized important upgrades at the mill, which will improve cash cost competitiveness as explained in our last Suzano Day. Looking at our markets in Brazil, print and write demand according to IBA increased by 1% in the first 2 months of the fourth quarter compared to the same period of last year, led by uncoated paper demand due to seasonality. Demand for cut size and coated paper remained relatively stable year-over-year. International markets remained weak with declining demand and oversupply. Latin America demand has been more resilient when compared to the U.S. and Europe, but the region has seen an income of inflows of Asian papers at very low prices. Now looking at paperboard, demand in Brazil grew 2% in the first 2 months of the Q4 compared to the same period of last year, also showing the same improvement versus last quarter. In the U.S. market, according to FP&A data, SBS shipments on the fourth quarter were stable quarter-over-quarter and year-over-year, but production was up 2% with the ramp-up of new capacity. New capacity has put pressure in operating rates, mainly in folding box and foodservice market segments, while liquid packaging board remains more insulated. Looking now at EBITDA performance, the 10% increase over Q4 was driven by the ongoing turnaround of Suzano Packaging, which delivered improved EBITDA quarter-over-quarter and year-over-year. Our EBITDA from our Brazilian operations took a hit from lower prices and FX despite higher volumes in the quarter on a year-over-year and quarter-over-quarter basis. The maintenance downtimes performed at Suzano and Limeira mills were on time and on budget, but also had an impact on our costs. Looking ahead to Suzano's Paper and Packaging business performance, sales volumes from our Brazil and U.S. operations will be lower in Q1 compared to last quarter, following the normal seasonality of the period. We also expect prices to improve with the phased implementation of the price increases we have announced in Brazil and export markets. Price for Suzano package should remain stable in dollars since the majority of our volumes are under contracts with pre-agreed prices. On the cost performance, since there are no planned downtimes in Q1, we expect an improvement in our cash cost in our Brazilian operations. For Suzano Packaging, we continue to work to reduce our cash cost, but we could see some pressure in Q1 due to the winter conditions in the region and much higher natural gas prices than expected. As a final note, I would like to share that in January, we made the decision to cease our paper operations at our Rio Verde mill. This small site was our only nonintegrated mill and was producing around 50,000 tonnes of paper annually. This mill had the highest cash cost in our asset portfolio. And with this closure, we expect a positive impact to our 2026 results by reallocating its products to the more competitive Suzano and Limeira mills and adjusting our commercial strategy. Now I'll hand it over to Leo, who will present our pulp business results. Leonardo Grimaldi: Thanks, Fabio, and good morning, everyone. Let's now turn to our pulp business unit, where I'd like to highlight the key developments from the fourth quarter of 2025. This past quarter was marked by price recovery in all markets due mainly to a higher demand of hardwood pulp in China and Asia in general as well as a more pressured cost base for wood in Asia, consequently increasing cash costs of those producers as anticipated in our Investors Day. In China, paper and board production according to SCI, posted a 17% increase in Q4 '25 when compared to Q4 '24, and the full year analysis presents another positive year with 3% growth in paper and board production and with highlights to Ivory Board, which posted 8% growth in tissue with a 6% growth in 2025. This has reflected in a higher demand of pulp, having pulp imports grown 1.7 million tonnes in 2025 according to Chinese custom statistics, of which 1.4 million tonnes of hardwood pulp. Purchases of hardwood pulp have been further incentivized by softwood fiber substitution trend and also by players in the textile markets increasing their purchases of paper-grade pulp, mostly hardwood. Our order intake during the quarter was above expectations, meaning that despite a very strong quarter in terms of invoicing, we are still carrying backlogs of deliveries to markets where we invoice directly out of Brazil, like China, Southeast Asia and the Middle East. Looking at our price performance in Q4 '25, the $538 per tonne that you see on the slide, although higher than previous quarter, is a backward-looking figure. Market prices are already above that level, as you know, but our reported prices in Q4 was impacted by invoicing backlogs. All incoming orders during the quarter and in all regions in the world were captured at a higher price set point, fully aligned with our price increase announcements with a strong month after month order intake, a trend that is still ongoing. We sold record volumes in Q4 and above our production output during the period, meaning year-end inventories or bringing year-end inventories to very low levels and placing pressure on our logistics operations as inventories fell below optimum operational levels. Looking at the right side of the slide, the BRL 4.8 billion in EBITDA, up 8% quarter-over-quarter was supported by higher volumes and better prices in U.S. dollar terms. Now looking forward, I would like to highlight the following points. In China, following a strong production pace of paper and board producers in Q4 '25, January has posted upbeat figures according to SCI, even slightly above the strongest production month in 2025, which was December and 27% higher when compared to January '25. Importantly, this increase has not led to paper inventories build up at paper producers compared to the past month's levels. And just to connect that to pulp demand, as an example, these figures translate into an additional consumption of 250,000 tonnes of pulp compared to Jan '25 just for Chinese tissue producers. Also in January, order intake from our customers continued quite strong with full implementation of the announced price increase. Our announced price increase were also implemented in all Western markets. As the year began, news on the supply side of the equation have positively affected short and midterm price perspectives. First, news about the Indonesian government revoking forestry permits covering an area of over 1 million hectares, including plantations for industrial users such as pulp and paper on top of the 500,000 hectares that had that permit revoked during 2025. This brings 2 tailwinds to pulp markets as Indonesia currently produces over 4.5 million tonnes of market hardwood pulp, of which 3.5 million tonnes are exported to China. One of them is that a key pulp producer has promptly announced an immediate and unexpected curtailment of 150,000 tonnes of market pulp for February and March combined. Another is that according to our market intelligence analysis, Indonesians are likely intensifying their wood chip purchases mostly from Vietnam, placing upward pressure on wood chip prices. This would affect not only Indonesian costs, but also Chinese and Japanese pulp producers who are major offtakers of Vietnamese wood chips. Even before the developments in Indonesia, we had been observing rising imported wood chip prices into China, which, as I have shared in our last Investor Day, represents roughly 50% of the wood furnace for Chinese pulp and paper industry. Separately from that and very important, APP has announced the delay of the OQ 2 project start-up from early Q2 to mid-Q4 2026. As this was the only market pulp capacity addition considered for 2026, now no incremental market pulp capacity is expected to reach markets this year. The addition of positive paper production figures in China with their gradual price increases in Tissue and Ivory board grades added to unforeseen news on the supply side of the equation, results in a positive short-term dynamic for hardwood pulp, way better than we had expected for the beginning of the year. We don't believe that this trend is short-lived, and we expect that it should continue post February. For Suzano, Q1 and Q2 '26 concentrate most of our planned maintenance downtime program for the year, as you saw on our previous earnings release. Therefore, we now need to ensure the proper inventory buildup in Q1 after the record Q4 '25 invoicing performance, focused on recovering our global inventories to optimum operational levels, which will reflect in improved logistics efficiency and also service levels to our customers. We also need to especially prepare our inventories for Q2 when our planned maintenance downtimes will peak, resulting in almost 300,000 tonnes of lower output compared to Q2 '25 according to our production plan. This requires ensuring that our inventories are strategically positioned to serve contracted customers in line with their agreed inventory policies. As a consequence, we have lower pulp availability to be sold to customers who purchase directly out of Brazilian ports, such as China, Asia markets, Middle East and Africa, meaning that our volumes will remain constrained in the coming months and with 0 allocation to spot markets and customers. To finish my presentation, I would also like to call your attention to the fact that despite price increase implementations during recent months and taking the latest China PIX indexes as a reference, just yesterday night, updates from Hawkins Wright presents that an equivalent to approximately 7 million tonnes of bleached chemical pulp are currently loss-making, and this is still clearly unsustainable. With that said, I would now like to invite Aires to address our cash cost performance during the past quarter. Aires Galhardo: Thank you, Leo. Good morning, everyone, and move to the cash cost slide. We closed the fourth quarter confirming the cost path we had anticipated at the beginning of last year, reaching the lowest level of 2025 with a cash cost of BRL 778 per tonne. Compared with the third quarter '25, the 3% reduction was mainly driven by lower input costs, supported by stronger operational stability across our mills and by lower prices for key energy and chemical items such as natural gas and caustic soda. Fixed costs also declined driven by lower labor costs, while wood costs benefited from a shorter average radius and better wood quality, which in turn reduced the specific consumption in the pulp production. In addition, higher energy export volumes and more appreciated FX contributed positively to cash cost performance in the period. Fourth quarter '25 marks our best cash cost performance since 2021 with the lowest nominal level since fourth quarter '21 and even better performance in real terms as it represents the lowest level since first quarter '21. For 2026, we expect the average cash production cost of pulp to be broadly in line with the fourth quarter '25. The partner should mirror 2025, meaning a more pressure first quarter versus fourth quarter '25 due to planned maintenance and nonrecurring events such as 2 turbines overhaul, followed by a gradual decline in cash cost over the course of the year. Moving on to the next slide. As I recently shared with you at our latest Investor Day, Suzano is implementing a comprehensive multiyear program to improve its competitiveness with a clear focus on reducing what we call total operation disbursement or TOD. As you can see on the slide, the 2025 TOD reached BRL 2,060 per tonne, improving on year-over-year base and reinforcing the downward trend toward our 2025 guidance also shared with the market at our Investor last December -- Investor Day last December. Now I turn the floor over to Marcos, who will continue the presentation. Marcos Assumpcao: Thank you, Aires, and good morning, everyone. Moving to the next slide, I will start commenting about the positive free cash flow generation of $400 million in 4Q 2025. even in a scenario of pressured pulp prices. This cash flow generation contributed to reduce our net debt to $12.6 billion by the end of 2025. And as a result, our leverage in dollar terms declined to 3.2x. On liability management, I would like to emphasize that last week, we renewed our revolving credit facility with 20 banks. And the result of that was that we upsized the line from $1.3 billion to $1.8 billion, and we were also able to reduce the cost of this new line. Moving to the next slide. I would like to highlight our financial discipline by 3 key metrics. First, we delivered our 2025 CapEx in line with our guidance. Second, we are reducing our 2026 CapEx guidance by nearly 20% year-on-year. And third, we are maintaining a very healthy portfolio of FX hedges. By December 2025, we had a $6.2 billion portfolio with an interval of BRL 5.83 to BRL 6.73 per dollar. So as reported in this big orange box, the expected cash adjustments for our zero-cost collars portfolio, if the FX remains at BRL 5.50, which was the level at the closing of 2025, we would receive positive cash adjustments of BRL 2.7 billion. If BRL remains at BRL 5.20, for example, which was close to the level of yesterday's closing, our adjustment would surpass BRL 4 billion in the upcoming 24 months. Now moving to the last slide. I'd like to update you with our shareholder remuneration program. Last week, we paid BRL 1.4 billion in dividends, which equates to more than 2% of dividend yield. We also concluded our fifth buyback program on February 9, in which we acquired 15 million shares. And we announced yesterday a new buyback program to acquire up to 40 million shares in the upcoming 18 months. Now I would like to turn it over to Beto for his final remarks. João Fernandez de Abreu: Thank you, Marcos. As we just hear, I think a couple of things to clarify when we look ahead. From Leo's presentation, what we saw is a more constrictive business environment for 2026, and this was related to clear and concrete events that somehow has changed the supply and demand balance. On the cash, Aires also had a chance to share the level of ambition that he has for the cash cost during 2026. We also expect the same level of trend when we look for the TOD. We still see opportunities on the sustaining CapEx and also on this logistic infrastructure and cost. And this will also allow us to keep reducing our net debt in line with our deleverage objective for the business. And I also would like to highlight that our JV with K-C is progressing absolutely as planned for closing in mid-2026. The level of liquidity that we have today is also considering the payment in the third quarter for our JV. So having said that, I will hand over to the group to hear all the questions for the Q&A. Thank you very much. Operator: [Operator Instructions] Our first question is from Mr. Rodolfo Angele from JPMorgan. Rodolfo De Angele: I have 2 questions for you. First, I think the main discussions with investors have been on what Leo has discussed in his remarks. So I just wanted to dig a little bit deeper on that front. Aside from all the topics that you mentioned, Leo, can you talk a little bit more about what do you see in China? You mentioned that paper demand is strong, but I would like to hear a bit more what do you see on the pulp side? Any updates, any change in the trend that we were seeing of increased production out of China? Any risks to the numbers that you presented on the Investor Day of close to 6 million tonnes of distance. So that's my first question. And my second question is to Marcos. I think the message from Beto was very clear on the trends on the cost side. But I wanted to hear from you a little bit on CapEx, especially if we look ahead, not for this year, but the trends, especially into '27. We believe there is a case for lowering CapEx through time. We don't need a hard number, but if you could comment on at least the trend, that would be great. Leonardo Grimaldi: Rodolfo, thank you for your question. This is Leo here answering regarding pulp. And just to review, right, in our Investors Day, we give a 5-year road map of what we're seeing in terms of further verticalization or upstream verticalization in China despite not disclosing the year-over-year numbers. But I will do that here for 2025 and 2026, just to make my answer clear. In 2025, all our very detailed mapping of upstream verticalization in China pointed out to roughly 2 million tonnes of new pulp capacity coming to market. And that 2 million tonnes were almost all, if not all, compensated by lower operating rates of the mills at the beginning, plus the Chenming effect, negative effect when you compare their shutdown in '25 compared to '24 and also to the fact that several integrated pulp-to-paper players and buyers have swapped hardwood pulp volumes especially in Q3 when pulp prices reached the minimum. So we saw a net zero effect of verticalization in 2025. And that explains why we see a very positive imports of hardwood and growth of over 1.7 million tonnes or 1.4 million tonnes, sorry, into China, as I mentioned in my opening speech. For 2026, we have mapped closely a new addition of upstream verticalization. The number is a bit even bigger than in 2025. It's roughly 2.8 million to 3 million tonnes of capacity. But different than last year, all of these projects with an exception of one are starting or supposed to start in Q4 2026 and one starts in Q3 2026. So we should see no effect of that in the beginning of the year, maybe in the end of -- very most end of 2026, if nothing is delayed. So that's very much concentrated in the latest part of the year. That's why we see even stronger fundamentals for the short-term dynamics in hardwood. Marcos Assumpcao: Rodolfo, thank you for your question regarding CapEx. Yes, there are a lot of moving parts on CapEx, including inflation for sure. But we see a couple of nonrecurring items that we will have to pay on our CapEx in 2026. To give you a couple of examples, first, we are -- we have our SAP upgrading version. We also have the Pangea Deal that we did, which was the wood swap with Eldorado, which had a payment in the first quarter of 2026. We even had an additional investment at Cerrado regarding the bonus for the productivity that we had over the initial 12 months of the project. And we also had a spillover payments from a couple of industrial projects that we concluded in the second half of 2025. So considering all of those nonrecurring items, let's say, there is room for us to see a lower number on CapEx, but I would not like to give you that as a guidance, okay? Operator: Our next question is from Mr. Caio Ribeiro from Bank of America. Caio Ribeiro: So my first question is on buyback execution, right? I'm just wondering if you could talk a little bit about the mentality and the process that goes behind deciding whether to execute the buyback or not, particularly as you look at the previous program execution versus the new one that was announced. Looking at the past program, I'm wondering if the M&A transactions that were announced by the company impacted the magnitude or pace of execution of the buyback program. And going forward, as the company focuses on absorbing those assets acquired and assuming that no more M&A is carried out, does it make sense to execute a higher portion of the new buyback program or fully executed? And then my second question is on potential divestments, I just wanted to see if you could share a little bit more color on how this divestment lever could be used to accelerate the deleveraging progress of the company? What assets you could consider as potential divestments and what the timing would be? And if there is a targeted leverage level for the company? Marcos Assumpcao: Okay. Caio, remember that at our Suzano Day, we mentioned that we have an ambition to reduce our net debt to $11 billion, okay? That's the most important priority here for the company. So connecting your question on the buybacks, the focus of the company remains on deleveraging its balance sheet. But we try to be very opportunistic on our buyback program. There are a lot of variables that we look when we are doing the buybacks or when we are more active on the buybacks, including leverage, but also our view for the share price, our views for pulp price outlook in the short term, our view for the currency outlook as well. So there are a lot of variables that we consider, and we try to be as opportunistic as possible in order to create value for shareholders. Regarding divestments, as we mentioned also in the Suzano Day, this is a very small portion of the free cash flow expectations for 2026. This is just like a changing mentality for the company, looking for opportunities that are not core business for the company and eventually divesting. The most -- the opportunities that we see are mainly on the forestry business in which we could do the high best use of the land. Sometimes we're using a land for our forestry plantations, but that land is probably more valued for other crops or for other businesses, and we could eventually transform that into cash by converting that land into other businesses. So I would say that this is the most likely event that we will see in terms of divestments. And this, as I mentioned, is not a relevant portion of our free cash flow generation expectations for 2026. João Fernandez de Abreu: Caio, I just want to complement what Marcos just said. The deleverage plan for the company, it's not related to any divestment. The deleverage will come from the operational side. That's our plan here. If there's any specific opportunity in terms of generating value for the shareholder with a specific assets, this is something that we will consider. Operator: Our next question is from Mr. Marcio Farid from Goldman Sachs. Marcio Farid Filho: Two questions on my side. Maybe the first one to Leo. Leo, very clear message on the pulp markets. Maybe the missing link there is paper prices in China, which have either been under historical lows or have not performed as good as pulp. So maybe the question is, does it matter at all, right? Obviously, the upstream and downstream markets have their own supply-demand dynamics. They tend to correlate to each other. But does it matter that paper prices are not moving? Are you confident that they are going to be moving? Does it matter at all for the pulp price direction from here? And how do you see the relationship between hardwood and softwood at this point because the gap has narrowed quite significantly with hardwood performing a lot better, right? Just trying to understand those 2 topics also important to try and build the pulp mill as well. And secondly, to Fabio. Fabio, obviously, great momentum on the U.S. Packaging side. And obviously, internally, it seems that you are progressing quite well in terms of operational efficiency and also renegotiating some of the contracts with suppliers and clients as well. We look at your global peers and especially the major -- the largest ones in Europe and the U.S. And after earnings quarter, they pointed to quite negative outlook on -- especially on demand side as well in the case of Europe with competition with imports. So just trying to understand how do we make that up? I mean, can you perform well in this current market environment? If you have any comment in terms of what you're seeing for your specific products in the U.S., obviously, a more protected region as well. So if you can comment a little bit on the broader market view as well and the progress around U.S. packaging business, that would be great. Leonardo Grimaldi: Marcio, thank you for your question on the pulp side and how that correlates to paper prices in China as well as softwood. First part of the question, we see -- obviously, the main line that drives our business is tissue, and we see quite on average margins as we speak. We saw the beginning of a price recovery for those grades, but we track that with the current fiber mix that they're using. And obviously, as they are also focusing on this fiber transitioning agenda, moving a bigger part of their purchases to hardwood that also helps offset their cost structure. And in most cases and in several times of the cycle or in most times of the cycles, we see pulp prices pushing paper prices and not the other way around. So Obviously, the margins and the prices of paper in China are one of the factors that we use in our decision-making process, but not the only one that we use to decide what we're going to do. And also just in line with that we have been supportive in a way. Our last price moves were at a lower range, let's say, closer to $20 a month price increases with time, and that has obviously also the objective to give time to our paper customers to adjust their prices in market. But again, that's not the only variable that we take into consideration. Your question on the hardwood-softwood gap. Obviously, everyone noticed that we were trending at above $200 in China. Now this number is closer to $100 in other regions in the world is over $100, but I use the $100 as a reference. As we have more and more customers engaging with the fiber-to-fiber agenda and understanding how to better blend and use hardwood pulp, I think that what we see today is paper producers everywhere in the world having a lot of pressure in their margins, and everyone will try to capture margin despite the gap is $170, $150 or $200. The agenda is of a much bigger knowledge in terms of how to utilize hardwood. And I believe that this trend is not stopping despite if the gap is lower or higher. Fabio Almeida Oliveira: Marcio, this is Fabio. Thank you for your question. I will address your question about packaging market. You're right. Global packaging market is undergoing a major challenge with lots of oversupply in most of the grades of packaging papers and also some weak demand, especially in Europe. In the U.S., I don't think demand is the main issue here. What's happening, the market is kind of insulated with the tariffs. What's happened is that we have a new capacity that come to market this year and also last year. And this is causing some imbalance in the supply and demand curve and the operating rates for SBS has gone down. So when you look at the major results for the players that have announced their results, there's some concerns about this imbalance and impact on prices. But this has happened mainly on the open market for SBS, which is Folding Box Board and also food service market. We are kind of insulated from that. You know that our production here at Suzano Packaging, 80%, 85% of that goes into liquid packaging in a market which we have a very large market share. And we are -- we have a 2- to 3-year contract with our major customers. In that 80% to 85% of our exposure, we are protected. Demand is quite stable. Our prices are covered and protected under our contract. And on the 15%, 20% that we sell to the market, that's the type of pressure that we feel momentaneously from the market. But we're confident that there's still some costs that we can take out of our operation here and the resilience of the liquid packaging market in 80% of our business is going to help us to survive well during these tough market conditions here. The U.S. markets have adjusted themselves in terms of supply and demand imbalances, and we have started to see some capacity closures as well. So I expect operating rates to come back to normal in the near future. Operator: Our next question is from Mr. Daniel Sasson from Itau BBA. Daniel Sasson: Congrats on the results. My first question is related to the cost front. Aires, you mentioned that you do want to have a better performance on average in 2026 versus 2025, but you're already running at 5% below the average of 2025 in the 4Q. I know it's not a straight line, but if you could compare your current performance at the margin with your total disbursement operation guidance or maybe let us quantify a little bit the sort of improvement that you expect in 2026, if the 4Q '25 is a good proxy. I think that would help us think about the evolution from now until your guidance in 2027. And my second question, Leo, it was great to hear you say that the order intakes that you've received so far this year have had prices above the average of the 4Q for all regions. But can you please comment a little bit if you're seeing any changes at the margin over the past few weeks, maybe? My question is more related to the decline in resale prices that we've seen or the fact that you guys are trying to increase prices by $10 per tonne this time around and not by $20 per tonne as you had been doing since the end of last year. I mean, are you seeing any weakness or signs at all? And if you could comment a little bit about the current wood price or wood cost for Chinese producers in China, the domestic wood and the import wood chips mainly from Vietnam, which have also shown a slight decline in prices or in that case, cost for Chinese producers, that would be great. Aires Galhardo: Daniel, thanks for your question. As I mentioned, we intend to work on average of 2026 roughly in the level that we operate in the fourth quarter 2025 when we closed BRL 778 per tonne. If you consider our average in the year 2025 of BRL 817 per tonne, it's close to what you said 5% in reduction. But of course, we have a challenge in the first 2 quarters, especially because our stoppage that we have scheduled. In the first quarter, we have Imperatriz, [indiscernible], Veracel, and Aracruz Linha A that put a lot of pressure in our cost, especially because of Ribas performance that will bring our cost below. And in the second quarter, we have Tres Lagoas, 2 lines that put pressure in the same way. Then our trend is a proxy of we have last year when we start the first quarter with a higher probably cash cost when we compare with the fourth quarter, but a trend to reduce in the coming quarters, close the effort in the same level that we achieved in the fourth quarter of 2025. Leonardo Grimaldi: Okay. Good. Daniel, this is Leo here. I'm going to answer the several questions on pulp together. First, just to rephrase, I mentioned that our order intake in Q4, all months of Q4 had prices higher than our Q4 delivered and invoiced prices. And obviously, January follows the same trend. So even what we were able to capture month-over-month in Q4 had price at points higher than the $538 price that you saw in our release. In terms of how we are seeing the margin or the market going forward, already talking a bit about February. As I mentioned, January is quite strong. We see no changes at all. We -- despite this calendar of the Chinese New Year, where our customers will be leaving for holidays on this weekend and probably returning closer to Feb 23, 24. Prior to leaving all of our customers have confirmed purchasing intentions or numbers. We are just finalizing the details and most will be finalized indeed after the Chinese New Year. We didn't see absolutely no customer in China and in Asia skipping their purchases or what they expect to purchase in February, meaning that we see no changes in this habit or pattern that we have been observing for the last several months. Our decision of not pushing a higher price increase in February was much more related to the calendar of the month because as most of negotiations will be concluded in a very short time period due to the return of the holidays, we didn't want to be opening any spread of negotiation with customers. So our increase of February is unnegotiable. We will implement it at all costs. Resale, your question on resale, we believe that this should react post Chinese New Year. Today is trending roughly $10 to $15 below the imported PIX prices references. And our certainty comes to the fact that we also, as I have mentioned in previous calls, we also are always tracking and selling in our customer portfolio in China, integrated pulp and paper producers and also traders who are big markers of price in the resale market. And I can confirm to you today that already all major traders in China have purchased volumes at higher set points than the resale prices that you see on screen. So we have an expectation that you should -- that we should see some reaction on this index post Chinese New Year. Now on wood costs. Wood costs, we saw on the end of last year, an increase on the wood cost base for China, increasing their cash costs, as we have commented and talked about during Suzano's Investors Day. On the end of the year and early '26, we saw different movements. We saw imported wood chip prices increasing at a range of 12% to 15%, while Chinese wood falling at a range of 10% to 12%. And if you consider that the Chinese industry uses half-half imported and local, I would say that today, our view is that these wood costs are quite stable to what we had on the end of last year, the higher cost basis that we saw at the end of last year, imported wood compensating the -- a bit lower cost of Chinese wood. This precedes all the news on the floods and revocations of licenses in Indonesia. Just to make it clear, Vietnam, which is a major supplier of wood chips to the region, 70% of that wood chip goes to China. roughly 25%, 23% goes to Japan and currently 7% goes to Indonesia. And our market intelligence analysis show that with this latest revocation of lands and we correlate that to the pulp and paper industry, we believe that Indonesia will push for a higher demand that their needs could reach almost 20% of the available wood chips from Vietnam. So you can imagine the pressure that will put on the markets, on the wood chip markets going forward. So our expectation is that especially this imported base will have a higher cost point looking forward. Operator: Our next question is from Mr. Rafael Barcellos from Bradesco BBI. Rafael Barcellos: Congratulations for the results. The first question is just like a follow-up and a wrap-up on these discussions on the pulp market. So Leonardo, sorry, one more question. But just to wrap up everything you have just said during the call, I mean, there was a clear positive tone, particularly when we compare with our last interactions, right? So I just wanted to understand what was the key development that has made you change the tone. I mean if you just -- if you can just like wrap up and just comment, I mean, what was the key development that has made you change the tone? And secondly, Beto, I mean, when we look at the Paper division, there were like 3 important developments in 2025, right? I mean there was the acquisition of K-C, the first positive EBITDA in your paperboard assets in the U.S. and the new Tissue mill in Brazil. So that said, I mean, what do you believe should be the highlights for the division in 2026? Leonardo Grimaldi: Okay. Good. So Rafael, let me share with you what made us change the tone from our last interactions. First is the intensification of the revoking of forestry licenses in Indonesia. now affecting directly the pulp and paper industry. At the end of last year, when we had summed up almost 500,000 tonnes of hectares with license revoked, we didn't correlate any of that directly to the pulp and paper industry. Now that's not more the case. So that is one major factor happening and already affecting directly one of the key producers and an immediately -- an immediate curtailment of 150,000 tonnes in 2 months only of market pulp and how that can affect all the wood dynamics, as I mentioned in my last answer to Daniel. Second and major change is the delay of OKI from April to the fourth quarter last -- this year. meaning that in terms of pulp coming into market, we should see no new volumes in 2026. This is a major change. It's also important. It's not only that OKI also started or APP also started a board machine -- is expected to start this board machine over 1 million tonnes in Indonesia now in March, meaning that the plan was, as we understand, to be integrated with OKI 2. But now as OKI 2 was delayed, you have a double effect of less market pulp in the market or no additional supply of market pulp in 2026. At the same time, they're going to need to feed up this new machine and our expectation is that they're going to need roughly 350,000 tonnes of pulp in 2026, meaning that their system should be even tighter to run 2026. So I would say that the major changes have been really on the supply side of the equation. And just to sum up and wrap up, this has changed market dynamics completely and on a very fast-moving pace, as I mentioned in my opening speech. João Fernandez de Abreu: Thank you, Leo. Regarding the questions for 2026, what do we expect from K-C paper business in U.S. and also the tissue after the investment that we made in Aracruz, as you mentioned, on the tissue side, we are expecting to increase the level of return of the business. Firstly, we were able to deliver another project on time and on budget. That was the case of [indiscernible]. She is in Aracruz. And we expect to now in 2026, extract the right level of value that we expect from this investment. So in the end of the day, we expect to have a better ROIC in this business with a lower cash cost and higher volume. On the Pine Bluff business in the U.S., I want to highlight again the great turnaround that the local team were able to implement. We have now a positive EBITDA differently from the asset that we have received it, but we are looking to generate cash with the business. So we still a journey in this process of not only generating positive EBITDA, but of course, generating cash with the business. So that's what we expect for 2026 is to keep moving forward on this direction of having assets that can generate value for the shareholders. On the K-C JV, I think there are 2 main elements that we must consider for 2026. One, of course, is the carve-out is finalized, the carve-out in all countries on time. So that's not a simple process. It's complex, consider the amount of countries that we have. We are on track, but still a lot to do. So finalizing this process on time is absolutely key. So keep working very close the 2 clean teams to make sure that we will deliver this on time. On the other side, we also have the value creation stream. So making sure that we have all the details regarding, let's say, the levers that we must consider in the beginning of this operation to start generating value as soon as we can is also the second priority. So by the way, we are glad on how the both teams are working together in this process. And -- but for 2026, we would like to see value being created in the JV in the beginning and the carve-out being finalized on time. So again, I think the bottom line of everything is what I have been saying this, which is 2026, we must extract value from the investment that we have made in the past. Operator: Our next question is from Ms. Eugenia Cavalheiro from Morgan Stanley. Eugenia Cavalheiro: If possible, I would like to understand better where do you expect the cost reductions in the pulp business to come from? So I mean, you already disclosed a bit the level that you expect for the year, but just to understand what are the levers for that cost reduction? Aires Galhardo: We gave some drive for this year. We are not hoping for coming years, just in TDO (sic) [ TOD ] that we presented in our last Investor Day. And for this year, our intention is to work in the same level that we closed the fourth quarter 2025, roughly BRL 780 per tonne. That's the idea for the average of 2026. Operator: The Q&A session is over. We would like to hand the floor back to Mr. Beto Abreu for his final remarks. João Fernandez de Abreu: Thank you very much for everyone. Thank you for the questions. If still any doubt, as you know, our IR team is always available. So thank you very much, and see you in the next quarter call. Bye. Operator: The Suzano S.A. Fourth Quarter of 2025 Conference Call is concluded. The Investor Relations department is available to answer further questions you may have. Thank you, and have a good day.
Operator: Ladies and gentlemen, thank you for standing by, and welcome to Radware's Fourth Quarter and Full Year 2025 Earnings Call. Our prepared remarks today will be followed by question-and-answer session. [Operator Instructions] I must advise you that this call is being recorded today. I'd now like to hand over the call to our first speaker today, Yisca Erez, Head of Investor Relations. Yisca, please go ahead. Yisca Erez: Good morning, everyone, and welcome to Radware's Fourth Quarter and Full Year 2025 Earnings Conference Call. Joining me today are Roy Zisapel, President and Chief Executive Officer; and Guy Avidan, Chief Financial Officer. A copy of today's press release and financial statements as well as the investor kit for the fourth quarter and full year are available in the Investor Relations section of our website. During today's call, we may make projections or other forward-looking statements regarding future events or the future financial performance of the company. These forward-looking statements are subject to various risks and uncertainties, and actual results could differ materially from Radware's current forecasts and estimates. Factors that could cause or contribute to such differences include, but are not limited to, impact from changing or severe global economic conditions, general business conditions and our ability to address changes in our industry, changes in demand for products, the timing in the amount of orders and other risks detailed from time to time in Radware's filing. We refer you to the documents the company files and furnishes from time to time with the SEC, specifically the company's last annual report on Form 20-F as filed on March 28, 2025. We undertake no commitment to revise or update any forward-looking statements in order to reflect events or circumstances after the date of such statement is made. Before I turn it over to Roy, I'd like to remind you that we're hosting our Investor Day on February 17, in New York City. If you haven't received the registration e-mail, please e-mail us at ir@radware.com. I will now turn the call to Roy Zisapel. Roy Zisapel: Thank you, Yisca, and thank you all for joining us today. I'm pleased to report that we ended 2025 on a high note with all major financial metrics, revenues, EPS, total ARR and cloud ARR reaching record highs. In Q4, revenue increased 10% year-over-year to $80 million and non-GAAP earnings per share grew 19% to $0.32. For the full year, we also delivered 10% year-over-year growth in revenues, surpassing $300 million while growing our RPO to $400 million. Over the last year, we've executed a strategy to accelerate our revenue growth and strengthen our position as the best-of-breed provider in application and data center security. Our strategy is built on three core pillars: gaining meaningful market share in cloud security; leading through AI and algorithmic-driven innovation; and expanding our go-to-market footprint. Well, we did it and our strategy proved itself. The cloud security business continued to grow at a healthy pace and remain a key driver of our results with cloud ARR rising 23% year-over-year and 7% sequentially to $95 million in the fourth quarter. This shows accelerated growth from 19% in the beginning of 2025 and demonstrates strengthening momentum throughout the year. We achieved our goal of reaching nearly $100 million in cloud ARR by year-end, underscoring the confidence customers place in Radware to protect their mission-critical application. One example among the many cloud deals we secured in Q4 is a 7-digit deal with a European financial group, a new logo, which is undergoing a major data center build-out. We were selected to provide a comprehensive cloud, web and API solution, web DDoS protection and more, all aligned with the stringent regulatory and operational demands. Our strong technological leadership and trust relationship enabled us to overtake the competition. To support rising cloud demands, we continue to invest in our cloud infrastructure. We expanded our global footprint with a new cloud security center in Singapore, and we also continued scaling our cloud security network, advancing mitigation capacity towards 30 terabit to stay ahead of the increased attack volume and fortifying the foundation for continued cloud security growth. This quarter, we expanded our cloud security offering with the launch of our new Radware API security service. We view API security as a new wave of growth, the third wave following DDoS and application security. As APIs become increasingly central to modern software architecture, customers need real-time visibility and protection against business logic attacks and coverage for shadow APIs. To further expand our API security offering, we announced the acquisition of Pynt Security, whose API testing technology identified vulnerabilities before the APIs reach production. With Pynt, we now offer a full life cycle API security solution, spanning testing, discovery, posture management and runtime protection, enhancing our value proposition, accelerating our road map and strengthening our position to capture opportunities in this rapidly expanding market. This is truly exciting news and an enhancement to our cloud security platform. But we did not stop here. We just released our new Agentic AI Protection Solution, which marks yet another major expansion of the Radware security platform. As organizations use anonymous AI agents, risks like intent manipulation, prompt-based attacks and unauthorized data access increase. Our solution leverages a new set of behavioral algorithms and provide real-time AI agent discovery, intent detection, integration with top AI ecosystems and ongoing security management. These advancements help enterprise adopt AI securely and supports Radware continued platform growth. This new capability positions Radware at the forefront of securing the next era of AI. We look forward to sharing more about our AI vision and road map on our Investor Day. Fueled by strong cloud ARR momentum, subscription revenue surged 21% year-over-year, a sharp acceleration from 12% growth in 2024. Importantly, this momentum was also driven by robust demand for product subscription. This demand was driven by very strong DefensePro X cycle and major competitive displacements, resulting in exceptional double-digit year-over-year growth in DefensePro X in Q4 and for the full year of 2025. Looking ahead, our pipeline remains robust across both existing and new logos, and we plan to take full advantage of our technology leadership in this space. We closed multiple large DefensePro X deals in the fourth quarter. One 8-digit win was a major strategic expansion with a government IT services agency in North America. Facing an upcoming end-of-life refresh, the customer selected our next-generation DefensePro architecture, reinforcing our deep technical engagement and proven on-prem capabilities as well as our long-term relationships. Another important win is a multiyear, multimillion dollar agreement for a hybrid cloud DDoS with a new logo, top 10 global SaaS and IT services management leader. Facing repeated large-scale DDoS, the customer required fast, reliable mitigation at global scale and its legacy solution could no longer meet performance and resilience needs. The customer replaced its on-prem vendor and cloud DDoS vendor with Radware DefensePro X and Cloud DDoS Protection. Our detection accuracy, automation capabilities and proven ability to protect mission-critical applications were key differentiators that drove the wins and position us as a strategic partner for their continued expansion. Overall, 2025 was a year of improved execution and meaningful progress across the business. We delivered record results driven by continued expansion in cloud security and increased momentum in our go-to-market engine. Additionally, we advanced our technology leadership with significant innovation in AI security and API security. With a stronger foundation, a strengthening go-to-market approach and enhanced TAM, leading security platform and rising demand for modern security solutions, we're carrying this momentum forward as we move into 2026. With that, I will turn the call over to Guy. Guy Avidan: Thank you, Roy, and good day, everyone. I will review the financial results and business performance for the fourth quarter and the full year of 2025 as well as our outlook for the first quarter of 2026. Before beginning the financial overview, I would like to remind you that unless otherwise indicated, all financial results are non-GAAP. A full reconciliation of our results on a GAAP to non-GAAP basis is available in the press release issued earlier today and in the Investors section of our website. We closed the fourth quarter with a strong finish, delivering record revenue and record non-GAAP earnings per share for both the quarter and the full year. In Q4, revenue increased 10% year-over-year to $80 million, driven primarily by continued momentum in our cloud security offering and the DefensePro X, both new logos and refresh. For the full year, we delivered 10% year-over-year growth in revenue to a record of $302 million. Cloud security offering continued to be a key contributor to our performance. Cloud ARR grew strongly in the fourth quarter, increasing 23% year-over-year, and we ended 2025 with $95 million in cloud ARR. Cloud ARR was the primary catalyst behind the acceleration of total ARR from 8% in Q3 to 11% growth year-over-year, reaching $251 million and becoming a larger share of our overall ARR mix. We will elaborate on this trend at our upcoming Investor Day next week. As we indicated on our last call, Q4 delivered exceptional booking performance, delivering RPO to a record of $400 million, up nearly $50 million from 2025 and 13% year-over-year growth. This reflects solid demand and improving deal visibility as we look ahead to 2026 and beyond. Looking at regional performance. In the fourth quarter, the Americas region declined 4% year-over-year to $32 million, while in the full year of 2025, the Americas grew 6% year-over-year to $125 million, representing 41% of total revenue. As highlighted earlier, we had an exceptional booking quarter led by the Americas, and we expect this strength to translate into revenues over the coming quarters. EMEA delivered performance in Q4, revenue increased 38% year-over-year to $32 million, accounting for 40% of total revenue. For the full year, EMEA revenue grew 18% year-over-year to $111 million, representing 37% of total revenue. In APAC, fourth quarter revenue declined 3% year-over-year to $16 million, accounting for 20% of total revenue. For the full year, APAC revenue grew 5% year-over-year to $66 million, accounting for 22% of total revenue. Turning to profitability. We delivered solid margin in the quarter, supported by favorable mix, model leverage and continued scalability in our cloud business. Gross margin was healthy at 82.2% in Q4 and in the full year of 2025 compared to 82.4% in Q4 2024 and 82.2% in 2024. Operating margin expanded by 240 basis points in the fourth quarter and by 330 basis points in the full year of 2025. Our operating expenses reflected targeted investment in innovation, cloud infrastructure, and go-to-market initiatives that support our future growth, and we plan to increase these investments in 2026. Following February 2026 financial review, it was decided based on accounting principle to classify SkyHawk's operation as a discontinued operation and excluded from our non-GAAP reporting as of the first quarter of 2026. Importantly, we expect EdgeHawk to begin generating revenues in 2026. Therefore, we will be no longer providing EBITDA breakdown as we expect it to negative EBITDA contribution to be marginal. Adjusted EBITDA for the fourth quarter of 2025 increased by 25% to $13.7 million compared to $11 million in the same period of last year. Excluding the Hawks business, adjusted EBITDA for the fourth quarter was $16.9 million, representing a 21.1% EBITDA margin, up from $13.7 million and 18.8% margin -- EBITDA margin in Q4 2024. Adjusted EBITDA for the full year of 2025 increased by 37% to $47.4 million compared to $34.7 million in 2024. Excluding the Hawks business, adjusted EBITDA for 2025 was $58.8 million, representing a 19.5% EBITDA margin, up from $45.6 million and 16.6% EBITDA margin in 2024, a testament to the operational leverage in our core business. Financial income for the fourth quarter and full year of 2025 was $5.1 million and $21.1 million, respectively, up from $5 million and $17.8 million in the same period of last year. Due to lower interest rate, share repurchase plan and M&As, we expect lower financial income in 2026. Our effective tax rate for the fourth quarter was 14.9% compared to 15.4% in the same period of 2024. For the full year of 2025, effective tax rate was 15.3% compared to 15.4% in 2024. We expect the effective tax rate to remain approximately at the same level in the coming quarter. Net income rose 21% year-over-year to $14.5 million compared to $11.9 million in Q4 2024. And diluted earnings per share increased by 19% to $0.32, up from $0.27 in the same period last year. For 2025, net income rose 37% year-over-year to $51.5 million compared to $37.7 million in 2024, and diluted earnings per share increased by 32% to a record of $1.15, up from $0.87 in the same period last year. Turning to cash and the balance sheet. Cash flow from operations in Q4 2025 was $17.3 million compared to $12.7 million in the same period last year. Cash flow from operations in 2025 was $50.1 million compared to $71.6 million in 2024. During the fourth quarter, we repurchased shares in the amount of approximately $10.5 million. We ended the quarter with a strong liquidity position, holding approximately $461 million in cash, cash equivalents, bank deposits and marketable securities. This cash position provides us with flexibility to invest in organic growth, support cloud capacity expansion and product innovation, maintain a disciplined approach to capital allocation and pursue acquisitions that enhance our cloud platform, such as the acquisition of Pynt, a technology tuck-in acquisition, which strengthened our API security capabilities. And now to the guidance. We expect total revenue for the first quarter of 2026 to be in the range of $78 million to $79 million. We expect Q1 2026 non-GAAP operating expenses to be between $54 million to $55 million. The expected increase in Q1 2026 OpEx versus the fourth quarter 2025 reflect our continued investment in innovation and go-to-market, along with approximately $1.5 million of exchange rate impact associated with the U.S. dollar weakening. We expect Q1 2026 non-GAAP diluted net earnings per share to be between $0.28 and $0.29. With that, I'll turn the call back to the operator, and we'll be happy to take your questions. Operator: [Operator Instructions] Our first question comes from Joseph Gallo from Jefferies. Joseph Gallo: Nice job this quarter. Our RPO grew 14% in 2025, which I think was double what you were targeting. Can you just talk a little bit more about what drove that strength and what your expectations for RPO growth are in 2026? Roy Zisapel: Yes. I think as Guy mentioned and also in my comments, we have very, very strong booking, driven both in cloud and in product subscriptions. So definitely, we saw a lot of momentum there. And as those subscriptions are being recognized over the period of the contract, obviously, RPOs are growing nicely. For next year, at this point, we expect RPOs to grow in line with the revenue growth. Of course, there's opportunities to do more than that. But at this point, that would be our expectation. Joseph Gallo: Okay. No, that's helpful. And then, I know the EMEA was really strong. U.S. declined a little bit. Part of that is just due to the tough 4Q '24 comparables. But could you just unpack a little bit more? I know you've invested heavily in go-to-market in the Americas. Just an update on if any changes are remaining there and when we can see a rebound in the growth profile of the Americas? Roy Zisapel: Yes. I think on a booking perspective, North America had a very, very strong Q4 with very significant growth. Yes, you don't see it in the revenues, but from the numbers we see, the traction we see, we've done a lot of progress this year and in Q4 specifically. And as part of our 2026 plan, we are actually increasing our investments in North America. We'll talk about it in the Investor Day, but we are adding more personnel, additional ways to market and so on. So we think we're progressing well, and we're confident that we can continue to grow there significantly. Operator: Our next question is from Chris Reimer from Barclays. Chris Reimer: Congratulations on the strong quarter. I was wondering if you could talk about the broader market environment where we've seen a lot of volatility in relation to potential AI disruption in cloud services. How do you think security, in particular, is positioned? Would you agree that it's a bit more defensive? And then if you could just explain maybe why? Roy Zisapel: Yes. I think to begin with, obviously, attacks continue to take place and you need very strong security. And I think what's unique in security is that the hackers are also using AI. So not only that attacks continue, they're actually becoming more sophisticated, more volumetric, more frequent and more dangerous. On top of that, the circle of possible attackers is being expanded because today, even someone who's not an expert using tools and it's becoming more and more as time goes, they can become very, very professional by using prompts on open-source models, on malicious models and so on. So even the gaps between the, I would say, a regular hacker and a very professional hacker is constantly eroding. As a result of that, I think there's a fundamental shift and requirement on the defense side to use way more algorithms and AI. And it actually plays to our strength for many, many years, as you follow us, we are constantly talking about algorithmic security, AI-based security and so on. And it's becoming clear that that's the only way to protect. So that's item number one. You need AI-based defense because the attackers are using AI. And it's not -- whether they displace the applications on the enterprise side or not, attacks continue becoming more frequent, more malicious. You need better security. Radware is positioned extremely well here. That's item number one. Item number two is as you deploy those AI agents, you give them access to all of your tools, data, resources, enterprise applications. And suddenly, there's a huge risk from a risk -- productivity perspective, it's clear why we do it. It's clear why enterprise are interested and so on. If you look from a security point of view, suddenly, those entities, those human entities have access to everything. And if I'm a hacker, I'm now targeting them instead of targeting the human and I'm getting control over them, the damage is enormous. There's no limit to the size of the damage, leaking personal information, changing files, deleting resources, you name it. It's a complete chaos. We are targeting that market, protecting the agentic AI, those AI agents with our new AI security offering. So we're seeing a completely new TAM a huge opportunity in front of us to secure those agentic AI and a great growth opportunity. That's what we are targeting with the new solution. So for us, this agentic AI is a significant TAM expansion that we are going after, and we believe that can be another growth area for the company beyond DDoS, beyond the continuation of the WAF, but we're doing very well there. Beyond the new wave of API, we see agentic AI as yet another growth driver. So I'm looking at AI on multiple ways, the attacker using AI and then the need to protect by AI, a lot of your applications. And then the second wave is protect the AI, agentic AI. And last but not least, as users will start to use those AI agents and AI browsers to approach applications, we will need to enable the service of those AI agents. And that's another layer. We are going to cover it in the Investor Day. We'll call that [ surve AI ]. So we're seeing three distinct major opportunities with AI, and we're excited of the opportunity ahead. Chris Reimer: Great. That's really helpful. Good color. Just one more on the revenues guide for Q1. And forgive me if I'm wrong, but to me, it seems like it's a little higher than the usual Q1 seasonality. Are there any differences going into Q1 or maybe something specific impacting? Guy Avidan: Well, actually, you're right. It is different. Normally, we're seeing a sharp decline after Q4. But as we both mentioned in our script, we saw strong demand in Q4, and we are entering the year with very solid backlog that give us confidence that Q1 revenue is going to be according to the guidance. Operator: Our next question is from Ryan Koontz from Needham. John Jeffrey Hopson: This is Jeff Hopson on for Ryan Koontz. Congrats on the quarter, and thanks for the question. For the API and the agentic AI security solutions, will any changes needed to be made to the sales motion to best sell these? Roy Zisapel: Yes. Great question. So for the API security, we think it's squarely within the knowledge, capabilities, existing go-to-market of our sales force. And it's actually a great extension and expansion of our current cloud security motion with customers. It's the same buyer and so on. AI is a completely new market. It's even responsibilities for that within the organization of who will actually protect the agentic AI? Is it the CISO? Is it security operations? Is it the business? Are yet unclear. And for that, we've already assembled a dedicated agentic AI go-to-market overlay group that's actually working in tandem with our sellers and channels to advance our position in this market. And as the year will evolve, we'll see how to completely integrate it into our sales force. But API completely integrated, already all our workforce is trained, accessing customers. And for AI, it's this overlay effort that I've mentioned. John Jeffrey Hopson: Got it. And you also noted a win for DefensePro X refresh that was facing end of life. I guess how far along are we in that refresh cycle? Or how many customers are out there still needing to refresh? Guy Avidan: So it's -- we announced end of sale, and we haven't crossed half of the way. So we still have a long runway here in terms of refresh. Operator: Our next question is from George Notter from Wolfe Research. George Notter: A few questions. I was just curious about the agentic AI product. I'm trying to figure out how you guys are going to go to market with that in terms of just the commercial arrangement, how are you guys going to price it? I assume it's a subscription-based offering. Is it cloud managed? Does it run on DPX? Is it a hybrid model? Anything you can share would be really helpful. I've got some follow-up questions, too. Roy Zisapel: Okay. So at a high level, it's a hybrid model. It's subscription-based. It's cloud managed. And there are multiple options, some are per seat and some are a certain yearly subscription per agent and usage-based on tokens, depends if it's enterprise AI agent or it's a copilot like operation. We will provide much more information and details on all these AI, agentic AI options and go-to-market in our Investor Day, but that's the current go-to-market. George Notter: Got it. And is it sold a la carte? Or is it bundled as part of a larger Radware offering around cloud and subscription. Roy Zisapel: It can be done both ways. George Notter: Got it. Okay. And then I'm just curious, if you think about agentic AI and enterprises deploying agentic, I'm curious about how you see the intersection of the marketplace with your timing on product delivery. Certainly, it seems like many enterprises are struggling to roll out agentic and kind of move from proof of concept to commercial deployment. I know there's a lot of pitfalls in that process. Many of them are sort of operational and concerns about data and security, and that kind of feeds into your business. But how do you think about the timing of your product relative to the development of the marketplace? And then how quickly could this product ramp? Roy Zisapel: Yes. I think we have great timing because now it's really when enterprises will start moving those POCs into production. So it's very early time like you're saying. And we're coming with a very, very strong offering there. It's not only guardrails or some rules based on model. It's a complete behavioral algorithms, testing and POCs with customers have proven very, very strong results. So we think we're in a great time to the market. I think there's a lot of possible alliances as this market is very early and shaping up. And three, like you said, there's a major concern with those AI agents on compliance, on security, on data leak, and those are the problems we solve. So I think here, security is even more critical as much as I can say that than in a regular application and already there is obviously critical because it's fundamental to the use of agentic AI. So I think the role is critical. I think it can drag with it a lot of our other offerings like API security, like web security for the same applications that the agent AI is covering. So there's tremendous opportunity for us. Operator: There are no further questions. I'd like to hand over the call to Roy for a closing statement. Roy Zisapel: Thank you, everyone, and we look forward to meeting you next week in our Investor Day. Have a good day.
Conversation: Ciaran Potts: Good morning, everyone, and thank you for joining us today for our fourth quarter and full year 2025 results. As a reminder, statements in today's press releases and presentations and the comments made by management during this call may be considered forward-looking statements. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, the factors identified in the earnings release and in our SEC filings as well as those discussed in our investor update presentation on our medium-term plan. The company undertakes no obligation to revise any forward-looking statements. Today's remarks also refer to certain non-GAAP financial measures. Where applicable, reconciliations to the most comparable GAAP measures are included in today's earnings release and in the appendix to the accompanying presentation, which are available at investors.smurfitwestrock.com. In addition, today's remarks include statements about Smurfit Westrock's medium-term financial goals and capital allocation priorities. These goals are aspirational and actual performance may differ, possibly materially, and no guarantees are made that these goals will be met. For additional information, please refer to our medium-term plan related presentation. Tony will now present an abridged version of our fourth quarter results, after which we will take some questions before moving on to the medium-term plan. You'll note the additional level of disclosure in the appendix to the fourth quarter results presentation facilitating that shorter discussion. In the interest of time, I request those asking questions to restrict themselves to one. I'll now hand you over to Tony Smurfit, CEO of Smurfit Westrock. Anthony P. J. Smurfit: Thank you, Ciaran, and good morning or good afternoon to everyone from a warming up New York City. Today, I'm joined by Ken Bowles, our Executive Vice President and Group CFO, along with Saverio Mayer, Laurent Sellier and Alvaro Henao, who run our regions as we'll be presenting, as you know, the medium-term plan later. Before I get into the quarter, you'll have seen our recent announcement on the closure of our SBS machine in La Tuque, Quebec, which is another step in our portfolio optimization. Decisions such as this, while always difficult, are always carefully considered and any further portfolio optimizations will be done in an equally considered manner. In the context of what were difficult market conditions across many of our countries, I am very pleased with the performance we've delivered during the quarter and, of course, for the year. In the quarter, we reported USD 1.172 billion of adjusted EBITDA and an adjusted EBITDA of USD 4.939 billion for the year. This is, by far, the largest outturn by any packaging company in the world. And I'm incredibly proud of the performance of everyone in the company who has contributed towards this. In addition, in our first full year of operation, we have focused on cash, generating USD 679 million of adjusted free cash flow for the quarter and over USD 1.5 billion for the year. I view this as a key metric of our success. Finally, while this is far away from the summit of our ambitions, our adjusted margin at 15.5% for the quarter and a similar number for the year provides a great launching pad for our future success. Looking now at the results by region for the quarter. Our adjusted EBITDA in North America was down modestly year-on-year at $651 million and a margin of 14.7%. Conversely, our European margins expanded during the quarter to over 16% and an adjusted EBITDA of $438 million. And lastly, but by no means least, once again, we had a very strong performance in our Latin American region, with margins of over 24% and an adjusted EBITDA of over $130 million. With regard to volumes, you will see a sharp fall in our North American volume with stable volumes in Europe and a stronger growth in our Latin American region. We'll talk to these figures in a few moments as I go through the regions. Turning now to the group and regional highlights. I am very proud of the medium-term plan that we have created and will be presenting to you very shortly. This has been the accumulation of a year-long effort that has been done bottom up. While all of us here steered the direction of the plan every individual operating unit within the company has developed their ideas for the future and the outcomes of which you'll see shortly. During the first full year, the group continued to put its balance sheet on an ever more positive footing with successful refinancings and associated redemptions of bonds pushing the next maturity out to 2028 with an average interest rate of 4.64%. It is a fundamental philosophy of all of us in the group to have balance sheet strength. And you will see at year-end, we have reduced our leverage to 2.6x moving towards our target of 2x. Reflecting the confidence we have, we continue to have a progressive dividend. And again, as was noted last week, we have increased our dividend by a further 5%. Smurfit Westrock as was the case in Smurfit Kappa continued to see the dividend as a key pillar of our capital allocation framework. This was evidenced quite clearly during the COVID years when others cut or delayed their dividend but we paid in full. Turning now to the regions. Let me start with North America. When we arrived in the legacy WestRock organization and following our first 6 months, we identified there was business in our portfolio that was heavily loss-making for the company and for the individual operating units. Our fundamental philosophy, and that is why we have successfully stood the test of time is that every unit must be able to justify its own existence. As such, we have shared uneconomic business, which will be replaced. To give you and me confidence, half of the 1.2 billion square meters we have lost has already been replaced and is in the process of being implemented in our system. And our prospects in what we call our pipeline significantly exceed the business that has been lost, both in terms of volume and quality. The short-term effect of the low volume loss is the need for us to take additional downtime in the mill system, which we've taken in Q4 amounting to a cost of about $85 million. A hallmark of this company, our company, has always been working capital management and cash generation. So this action has been necessary to make sure we optimize our system. In the year gone by, we have significantly reduced the number of loss makers already within the organization. We have also optimized our footprint with some closures, which we will continue to proactively evaluate reflecting our recent announcement and other closures during 2025. We've already started implementing our investment programs, and most importantly, we've been putting in place the right people to take our North American business forward. With regard to EMEA and APAC, we have a very, very good business in this region, and our margins reflect that. If you consider how the rest of the whole industry is performing and you see where we currently sit, I'm sure you'll recognize that our positioning in this area is indeed very strong. What is also very interesting is that our consumer business is adding a lot to our offering, to our strong customer base as we -- and we'll talk about this shortly, as we see nothing but opportunities to continue to progress this business alongside our strong corrugated business. Of course, in light of the current paper market situation, we are looking at our footprint with a continuing focus on portfolio optimization. Our Latin American business remains incredibly strong with great margins and a seamless integration achieved between both legacy Smurfit Kappa and WestRock. I'll let Alvaro reflect on this in a few moments. As I stated at the outset, our full year -- our first full year of operation, integration and development at Smurfit Westrock has been truly outstanding, notwithstanding that the general economic environment has been as difficult as I have seen in my lifetime for such an extended period of time. Our significant achievements, which everyone in the company is proud of as it sits within our vision is that we have been recognized by Forbes, Fortune and Time Magazine as a leader and one of the world's great companies. Our designers continue to meet and exceed our customers' needs and our operations continue to deliver superior performance in quality and service. And this is regularly recognized with over 230 awards received by customers and suppliers. Our consistent improvement in quality, productivity and utilization and on-time and full delivery for customers, is what is driving many of the recognitions and awards we have received. In closing out the year, we recognize that we have well overachieved our initial synergy target of $400 million. And while this is -- much of this is masked by the general economic activity we see, we believe this sets us up to be a much more efficient and leaner organization into the future. And lastly, as I mentioned, our improved balance sheet of 2.6x levered has been recognized by Fitch with an upgrade to BBB+. Finally, turning to our outlook, notwithstanding that we've had significant weather events, both in Europe and, of course, here in the United States, and we're continuing to work through the impact of these, the year has begun with a generally better industry operating environment. Given our progress of developing new and high-quality business, the enthusiasm of our teams and our expectation for an improving economy in the second half of the year, we currently expect the first quarter adjusted EBITDA of between $1.1 billion and $1.2 billion with a full year 2026 adjusted EBITDA between USD 5 billion and USD 5.3 billion. With the plan that we have in place to invest and grow our business, we remain extremely confident in the future of Smurfit Westrock as the go-to paper and packaging company for customers, for talented employees, for suppliers and, of course, for shareholders in the years ahead. In summary, full year 2025 has been about establishing a strong foundation for future performance and for future success. I thank you all for your attention. And now Ken and I will take any questions on the results before moving on to the medium-term plan. Thank you. Unknown Analyst: Tony, in terms of the -- in terms of the outlook for this year, can you talk to the extent that pricing is already baked into your forecast or not? And then ultimately, recognizing you don't manage the business week by week, month by month, what is the expectation for volume progressions, especially within corrugated, but in box board over the course of the year? Anthony P. J. Smurfit: No, we don't do it week by week, day by day, but Ken, I'll let you take the pricing piece. Our expectation, George, is that we saw a firming up of order books in the latter part of December. We felt that the first part of the fourth quarter was weak, and then that sort of improved as we went through the quarter. And we were seeing a decent order books across most of the businesses in which we operate and countries in which we operate as we progressed in January. That has been somewhat interrupted a little bit by the weather and that will have an effect. We've seen the vast majority of the effects, but they're still -- we're still working through some of the logistics of that disruption as we're even in middle of February. It seems a little bit warmer now than it was, but it's still -- it's only last Saturday that it started to warm up a little bit. So we would see volumes in the latter half of the year, get back to more normalized levels. And certainly, with regard to the stimulus that could be happening here in the United States, we think that, that could be a positive for the business here and in the rest of our businesses. Ken Bowles: George, so the long and the short answer is no. So for the first quarter, clearly not because you wouldn't expect anything anyway. But for the year, no, we haven't baked in any aspect of it because our style, if you like, would be to wait until it's in before we can consider it. I think also you can focus on the price increases, there's outputs there in terms of other paper grades might happen there. So the net-net is we feel comfortable with the 5 to 5.3 based on where everything is now without baking in anything else. Ciaran Potts: Philip? Philip Ng: Phil Ng from Jefferies. Tony, can you give us a little feel for where you are in the process of churning some of these lower loss-making contracts? And you talked about a robust pipeline where you can more than offset that. What does that actually mean? Have you secured contracts? And how does that kind of layer in, I guess, to the puts and takes of those dynamics? Anthony P. J. Smurfit: Phil, that's a great question. I'm going to hand that over to the guy you want to hear from on that, the guy, the coal face, which is Laurent, but basically, I think I am really happy. Most of the bad stuff has gone. We've still got a couple of contracts that will phase out or we might keep or we might lose because we're under contract with really bad volumes there. So -- but the price is so bad, I would expect we'll keep it, but at a much higher margin. But then I'll let you talk, Laurent, about the -- there's a mic there -- about how successful we've been. And I'm really, really happy with how we're doing. Laurent Sellier: So it's something that unravels over time as you can imagine. So the contract when we lose the volume, that tends to go pretty fast because we terminate the volumes and then you need to rebuild. What Tony referred to in terms of pipeline, is you can imagine layers of conversations, one very close to happening; other one, little bit less warm and others that are more like prospects. But the overall perspective and prospect is very encouraging. And that's the reason why we've gone exactly this way. We had very underperforming contracts. We needed to stop them at some point and be ready to take on more volume and very good margin conditions over time. Anthony P. J. Smurfit: The way I'd rephrase it is you're not going to make an omelet unless you break an egg. So therefore, we had to get rid of this stuff. So we have now machine capacity for our people to sell. And you've got a couple of hundred salespeople across the United States who have capacity to sell now. And some of those will be incredibly successful at selling and some of them will be less successful. Those that are less successful won't be in the company longer term and we'll make sure that we are successful because we have capacity to sell and get paid for it. And that's -- when you lock yourself up, Phil, with really bad volume that you can't make any money on, then you're stuck. So we have to break that egg, so to speak. Philip Ng: Just a follow-up to that, Tony. In terms of the approach, I guess, going forward, how is the sales force prospecting these types of customers perhaps differently under your watch versus a year ago? And any more perspective on these contracts that are perceived to be good? Obviously, it's focused on profitability, but any more color in terms of, is it more commoditized versus non-commoditized business, regional versus national accounts? Just give us a little more perspective on what makes a good customer? Anthony P. J. Smurfit: A good customer is a customer you can bring value to and who you can solve their problems. And every customer has a different problem that you need to identify with and a good salesperson is finding those problems and identifying what -- how he can help solve our customers' problems. I mean, we'll talk about it in the medium-term plan, but our suite of tools, our suite of applications is second to none in the world. And so we're able to solve any customer's problem to make them -- help them in their own marketplaces. And that's how we get to the point where we're not selling just a box, we're selling packaging solutions for them. It could be redesigned. It can be supply chain. It can be environmental. It can be whatever they need, and it's up to us to make sure that our sales teams, both regionally and nationally are able to sell. And that's what we've been doing for decades in North America, in Latin America, and it's something that we're just good at, frankly, that -- and we'll bring -- make sure that, that kind of knowledge transfer, both from -- because there are some great things done here in North America. I mean, you want to see some of the designs that are done in our merchandising and display business where we have a great team that's innovating. So the mix of having everything together is incredibly powerful. It doesn't mean to say that it's easy. We're not going to be successful every day with every customer. But over time, with just 20% of the market here, then we can -- we've got 80% to go for. And maybe some of that is lousy, and we don't want it, but a lot of it is pretty good, and we'll get it. Ken Bowles: I think as well, Phil, and Tony has spoke -- we both have spoken about it across the year is that kind of key underpin of quality and service in terms of the customer. I think it's fair to say that in the last year or so OTIF and PPM and all those kind of metrics that are very much part of how we do business and it goes to what we bring to the customer and how we can bring value on time [indiscernible] and quality are kind of the key underpins to that. So to enable Laurent to have the conversations we have has to come back to quality and service. And I think that's been a step change in thinking how you equally approach the customer. Laurent Sellier: And the one thing we've changed in addition is the organization bringing the sales force much closer to the operating units. So that gives a lot of flexibility and also much more direct contact between the sales force and the potential customers, which I think is a great plus. It's still in the making, but that's happening at pace. Anthony P. J. Smurfit: And just one final point before I move off , we also allow our salespeople to entertain our customers, make sure that they can buy them a drink, which was -- nothing was allowed to be done before. They just said just pure sell on price. And that's not what we do. We sell on making sure that we give our customers value for what they have, we can give them. Lewis Roxburgh: I'm Lewis Roxburgh from Goodbody. And just on that value over volume piece. Just wondered sort of how that piece will contribute. Do you think that will translate to pricing outperforming the benchmark or maybe cost takeout from rightsizing and efficiency? Or in terms of volume, we've seen some deliberate drop off this year, just seeing how that -- how you see that sort of evolve? Do you think that will sort of close more towards, as you said, normalized levels of demand towards the end of this year? Anthony P. J. Smurfit: Thanks, Lewis. We will certainly -- I mean, I think if you look at our performance in Europe, for example, we've gained market share because of our real laser-like focus on our ability to serve our customers with high quality, good design and value for the customer. So that's what we've done, and that's where we're gaining market share. If your question is, should we be lapping positively this time next year? The answer is yes. I'll be very disappointed if we're not. And I -- as I've said and as Laurent has said, we've got a lot of irons in the fire with customers, and I would expect to land a lot of those. We have landed a lot, and I've been very, very happy with the momentum of our business. I don't know if anyone wants to add anything? Mark Weintraub: Mark Weintraub at Seaport Research Partners. Thank you, first of all, for the bridges, which you provided kind of on the look back, that's super helpful. And so get a little, ask for a little more. So as we look at the 2026 outlook, pricing, you're not using that as sort of an ingredient on what you have is an improvement '26 over 2025. Presumably, inflation is going to be working against us as it always is. Can you help us, is it -- are these synergies, cost takeouts, I'm assuming the first half of the year on volume is tough, so maybe you're going to be better year-over-year in the second half. Can you help us understand how we can get to better EBITDA in 2026 than 2025 with those drivers? Ken Bowles: Yes. Mark, thank you. Yes, the bridges were -- we appreciate your patients on the bridges, but trust me, they cost us as much frustration as they did you in getting there. So it's a big organization to put together. But thankfully, I think you've got everything you need. In terms of '26 and what's happening there, price and volume will be what it is. We've talked about that. I think if you think about the synergy program, there's still some synergies to come through in 2026 in that program, and that's probably in the range of $40 million to $50 million in reality. In terms of -- energy is probably a net negative in the range of kind of $60 million to $70 million maybe. And then fiber generally is probably about $50 million of a tailwind. So I suppose we're at a place where generally at the start of the year, there's a lot of moving parts. But in terms of certainty pieces based on forward prices, fiber, energy and the synergy piece and probably the fixed pieces in terms of how they might trade out, price and volume will be what it is. But I think it's also -- you talk about inflation, but remember, Laurent, Saverio, Alvaro have very active cost takeout programs that are designed just to offset inflation. So not part of the synergy program because we know that when you wake up on Jan 1, you're already behind in terms of wage inflation, for example, labor inflation. So you know you've got a job to do it before you start. And that's fundamentally built into the budget process and everything else. So we tend to take cost takeout inflation as kind of one bucket at this point. So no, that's our job to kind of sort that out in terms of how we deal with that cost. The other moving parts are price volume for the market and those are kind of discrete items that I can give you now. But the range of 5 to 5.3 is probably designed to give a bit of flex and latitude in terms of how we see the moving parts of early February versus how the year might trade out. I think you're probably correct. I think everybody kind of sees the second half as being progressively better than the first half based on -- and you'd get that anyway from the simple math. So I think that's probably what we're thinking the same way as you, second half is better than the first half. But moving parts, relatively set for some things, but lot to play for the rest. Anthony P. J. Smurfit: Mark, just before you ask your second question, I just want to make a point that Smurfit -- old Smurfit was always about looking for the most optimized way to spend capital as quickly as possible to get the best return. And maybe to your point that you were making yesterday about quick wins... Laurent Sellier: A program that we've rolled out almost at the onset of coming together of the 2 companies, which has identified low-hanging fruits that might not necessarily be very significant amount, but you do send a message in the organization that if you guys have a good return come up and that will be fast tracked in the system. And that message goes around as you can imagine, pretty fast. Mark Weintraub: Great. And so actually just real quick follow-up is just to understand downtime kind of in the thought process because obviously, that was costly this year. Is that a big component of potential upside or now are we going to potentially have a lot more potential there in 2027 and beyond because you're still embedding in a fair bit of downtime for '26? Ken Bowles: I think it's fair to say, to be seen, Mark. I mean, we clearly proactively manage down time. You would have seen that in the fourth quarter and our philosophy, and Tony spoke about it very directly there is the reality is you can ignore the reality of building stocks for no purpose and tying up working capital and external warehouses and the additional incremental cost that goes with that. So our preference would be to manage downtime as we see fit in the context of the external market. I'm not going to predict downtime going forward yet. That's not where we are. But clearly, downtime is worthwhile when you just don't see the demand for the product on the outside, but you're building unnecessary stocks. You don't get a working capital inflow or you don't get a free cash flow results like we have, would have been proactive about the whole picture. And I suppose that the risk sometimes is that you focus on one side of the equation in terms of the EBITDA side, but you have to be willing to take the brave step and say, no, no, actually, the real job here is to manage the inventory in the system and wait for demand to come back and then fill it. So downtime, quarter 1 is always a heavy quarter for maintenance downtime. So that would clearly be there. But beyond that, we'll wait and see how the demand environment picks up. Anthony P. J. Smurfit: I think one of the big opportunities we have is to reduce stocks quite significantly. And we certainly didn't want to build them to then start to work on reducing them. So if you look at what Saverio is doing and we've done in Latin America under Alvaro and now what we're starting to do in North America under Laurent is to really grade optimize our system so that we don't have as many widths. I don't know how many widths have we come down from in Latin America. We've come down from 18 widths down to 3, which creates a little bit more waste in your corrugated plants, but way less working capital needs. But you also have to adjust your working capital at the same time. So that might result in some downtime that we take. In the North America, we're only at the start. Laurent Sellier: The number of indents were very high. And so probably you're starting from a position of 200 different types of options and the objective for -- as the first plan is to bring it down to 40 and then bringing that further. The discipline there is also what matters and getting on board, and we've had incredible support from all sides in the business, understanding how this improves the overall in a very positive manner. Anthony Pettinari: Anthony Pettinari from Citi. Tony, you talked about the consumer business adding a lot to the company. And I guess just with -- in that regard and with the La Tuque announcement, can you just talk a little bit more about kind of the current performance of the North American consumer business, maybe expectations for '26 that are embedded in your guide? And then just generally kind of the dynamic between the 3 grades that you produce, market conditions and what it is that you think that really adds to the company for consumer being there? Anthony P. J. Smurfit: That's a very big question, Anthony. That will take a long time. Well, let me start by saying, we have an incredible consumer business here in the United States with, let's say, 80% of them at the very top of their market. And then the other 20% we still have to -- 20% we have to work with. So we have a very, very strong footprint. We have very strong potential for profitability and cash generation. And so we think this is a very good business on the converting side with very good customers, and there is a very big lean to -- across our customer base where serving our customers with both consumer board and with corrugated is a very big positive for them. And that translates across the region. So we just landed a large contract with a large drinks company, whereby we're going to be serving them on both sides, both continents and much more business now in our corrugated business than we had before because of our consumer relationship. And that's something that Saverio is leveraging off on heavily for the consumer business because we're a very big business in Europe, and our consumer business was very centered on very big accounts in Europe with the exception of the health and beauty, but the -- and so we have a lot of leverage that we are bringing forward to our consumer business to really very much improve those businesses in Europe. And I think we're very happy that, that's a business and area of expansion for us. With regard to mills, that's a very big question. What I would say that -- I don't want to steal your thunder from later on, but we're grade agnostic. We have 3 grades that we produce. I'm going to let Laurent do it because I'm going to steal his thunder for later on. Laurent Sellier: I can do it the second time later on. And this principle that Tony just referred to of being grade agnostic is really central. I mean, a lot of the grades can be interchange, and it's all going to be about visibility on the shelf, brightness. I mean, all sorts of different factors basically that you can play with. And the strengths that we have is operating from a space where we can offer whatever the customer requires as opposed to trying to feed them with something that we would have in excess or in any form or shape driven. And that has created an outstanding response with our customers, addressing their needs and working with them to understand how best to fit their purpose. It's actually -- it goes beyond just within the realm of consumer packaging. And in some instances, we can also offer microflute, for instance, corrugated instead of consumers. So this whole suite of options is really creating very high-quality conversations. And we're in a unique position in that standpoint. Gabe Hajde: Gabe, Wells Fargo. A couple of questions. Just on the downtime, can you remind us what it was for the full year and if you're willing to split it out between the corrugated and the consumer business, so a point of clarification there. But more importantly, you talked about $85 million of downtime. And from your vantage point, what is the optimal asset utilization on the mill side? Like what do you think about? And if you distinguish between U.S. and Europe, that would be great. And then lastly, you talked about, I think, getting half of the 1.2 billion square meters back. Give us a time frame on that? And then does that inform your decision on future asset optimization or those kind of mutually exclusive decisions? Anthony P. J. Smurfit: That's a big one. The -- we are in the process of getting half that business back, and that will be probably all implemented, I would guess, Q1 or latest early part of Q2 of the business that we've lost. We've got half of it back. I would say that the other $1.2 billion that we have in our pipeline, I would expect about half of that to come back in this year and the rest will flow in through the start of next year. But then that's going to be a moving thing. There'll be some come in, some come off, so -- and we're likely to lose some of this other business that's still under contract that's very badly priced. So there's always swings and roundabouts in business coming and going. With regard to downtime... Ken Bowles: Gabe, so for the year, $220 million is the final accounts between being corrugated and consumer for segmented reasons and disclosure reasons. You were 85% in the fourth quarter. In terms of utilization rates, I'm looking at the 2 men who know better than me. But in Europe, 92% in the Bovis, probably where he'd like to be, mid-90s for North America is where he'd like to be generally. And in Europe, clearly, that's easily achieved given the level of integration. So we always operate way [indiscernible] simply because we don't need to do anything else by less on the outside. Laurent is working actively towards the mid-90s for the system. Anthony P. J. Smurfit: So we'll stop right there. If anybody wants to grab a quick coffee, we'll go straight into the medium-term plan. So you want to grab a coffee quickly or order or whatever. [Break] Ciaran Potts: So thank you all. If you could please take your seats again. We'll get started into the medium-term plan presentation. Anthony P. J. Smurfit: Okay. So good morning again, and good afternoon to those of you looking from Europe. Thank you for your attention. As I mentioned a few minutes ago, I'm delighted to be joined by Ken Bowles, our Executive Vice President and Group CFO. Ken is a man with vast experience. And together, we saw off an attack to our independence and successfully created one of the world's largest fiber-based packaging companies. Also in attendance is Laurent Sellier, who you just met, who is CEO of Smurfit Westrock North America, a man who's worked his way up during a 30-year career from Europe to Latin America and now to North America. Saverio Mayer, our CEO of EMEA and APAC, is actually in the business longer than I am. Saverio's career began selling boxes and over a subsequent 40-year period, has held many senior management positions, including 10 years ago when he became CEO of Europe. And I think you'll all agree Europe's performance and indeed, its consistent outperformance during the period speaks to his talent and leadership. And again, last but by no means least, Alvaro Henao, our Latin American CEO. He's been with the company for over 35 years. He's held many financial and operational roles before becoming CEO of our incredible Latin American business. As you'll have gathered from earlier on today, I'm extremely proud of this proven management team as they not only hold the values of the company close to their heart, but more importantly, they instill those values in both existing and new employees in Smurfit Westrock. They are the best reflection of our performance-led culture, which you'll hear about later today. Thank you, guys, for being with us. We are a global leader, delivering value for customers, for employees, and we passionately believe in delivering value for our shareholders. The team presenting today are also very significant shareholders. The plan being presented to you has not been prepared, as I mentioned earlier, top-down by myself and Ken and this team sitting in the office. It presents opportunities identified by the teams with boots on the ground who see and want to grasp those opportunities. That does not mean to say that we'll get everything right, of course, not, all the time. But given a normal market, a normal world, we believe we will execute this plan and deliver the numbers you see on this slide. A key opportunity is significant profit growth in North America as we change and sharpen our operational and commercial focus and introduce new ideas and further investment in this region. EMEA is expected to continue to deliver strong performance against peers, remaining at the top of the tree in innovation, sustainability and adjusted EBITDA margin. In Latin America, our goal is to continue to deliver higher margins and significant growth. This region presents significant opportunity for superior growth, both organically and inorganically. The goal of our plan is to -- is an adjusted EBITDA growth to USD 7 billion by the end of 2030 with an adjusted EBITDA CAGR growth of 7% per annum and margin expansion of over 300 basis points. We expect to generate significant adjusted free cash flow of some $14 billion between 2026 and 2030 with an adjusted free cash flow CAGR of 17%. As part of the plan, subject to the usual caveats, of course, is our Board's and our company's commitment to continue to return capital to shareholders. Assuming our assumptions and market conditions hold, we expect subject to appropriate Board approvals and discretion, dividends of approximately USD 5 billion during the period and to commence share buybacks from 2027 onwards. It is important to note that this plan does not include any pricing momentum. When I took over as CEO of Smurfit Kappa and now Smurfit Westrock, I set out a vision for this company. It is to dynamically deliver and sustainably deliver secure, which means a strong balance sheet; superior, which means outperforming all or the vast majority of our competitors and returns, which aims to deliver long-term value, not at the expense of short-term value for our shareholders. I've always set out that I want Smurfit Westrock to be one of the great companies of the world because great companies attract great people who deliver great performance. Our values are at the core of everything that we do in Smurfit Westrock. First, we must ensure that all of our employees go home safely from their jobs. One accident is too many and our mantra is no job is so important that it cannot be done safely. Loyalty is very important to us as we see it as mutual. We want loyal people who will bring their experience, their knowledge, their talent to the organization. We must have people with the utmost integrity, which we define as doing the right thing even when no one is looking. And we ask for respect throughout the organization for anyone who interacts within the company because our values guide and meaningfully contribute to our performance. Smurfit Westrock is the leader in innovation and sustainable packaging. There is no one like us in the world. With USD 31 billion in sales, we have approximately 97,000 employees operating in 40 countries and our largest region being North America, representing 58% of our sales. What does being the best -- the #1 global player mean? It means we are able to continuously adopt best practice, best transfer of information, best transfer of ideas, best transfer of people, best transfer of knowledge across our world in a seamless way. We can also transfer capital and capacity across regions to continually optimize our asset base and asset efficiency. We've been at this for a long time. We are multicultural, whereas many other companies are not. This is a particular skill set of our company, and it's the culture we've always had during our existence. We operate in 40 countries and the #1 or #2 player in most of those. This strong position allows our customers to work with us easily in any country, supported by clear and constant communication. Whether it's sharing best practice or decisions around capital allocation, we aim to make sure that the lines of communication are as short as possible, not layered with bureaucracy. This is just part of our DNA. Our geographic spread and our ability to serve across regions and countries is highly valued by customers who also operate globally. This team, our team, your team are passionate about what we do, and we have a long and proven track record of superior performance and delivery, which is why we have been around as long as we have been. Our longevity is supported by our product range in both corrugated and consumer packaging. Fiber-based packaging is essential, is growing and is not only a transport medium, but is increasingly a merchandising medium. Fiber-based packaging is and remains the most renewable, the most recyclable, the most biodegradable and the most environmentally friendly sustainable packaging medium that exists today. Smurfit Westrock has an unrivaled geographically balanced and highly integrated packaging solutions business delivering value for customers. Our product range of corrugated and containerboard business covers all areas of this packaging from heavy-duty boxes for chemicals to lightweight packaging for applications such as e-commerce. We also offer specialty printing from digital to litho lamination to preprint to give our customers the widest possible choice. And we're also one of the largest producers globally in the growing and dynamic Bag-in-Box market. Our consumer packaging operations offer our customers even more breadth and depth in fulfilling their packaging needs. Our consumer business provides packaging in primarily food and beverage and health and beauty with bespoke machinery applications. This direct-to-end consumer business adds another strong leg for future performance and growth. Our fiber-based products are complementary and highly valued by our customers, fulfilling both their primary and secondary packaging needs. We bring innovation to life through leading edge technology and a global team of over 2,000 designers interlinked. Every day, they create packaging that helps our customers win in their markets, optimize their supply chains, improve their sustainability credentials. It is global intelligence available delivered locally. Our innovation ecosystem is powered by our digital Inno tools used nearly 1,000 times a day, and we're only starting from Utah to Buenos Aires, from Shanghai to Warsaw, supported by a network of over 34 experience centers, which operate as our innovation hubs, if you will. These AI data-fueled applications win business and ensure we better implement solutions that are possible, profitable, desirable and better for the planet. ShelfSmart AI is an advanced AI tool based on insights from over 400,000 shopper studies to instantly predict on-shelf impact of packaging design. SupplySmart Analyzer uses data from 160,000 supply chains to optimize packaging and logistics, reducing overpackaging and improving efficiency. Innobook with over 2,000 designers inputting share 9,000-plus creative solutions, giving every customer access to the creative power of over 2,000 designers across our world. And Paper to Box AI, a packaging and material design engine powered by machine learning algorithms has over 50 million data points, engineering fit-for-purpose boxes with the right materials and low environmental impact. Innovation is ultimately about delivering better solutions and ensuring they are implemented fast and right first time to create real tangible results for our customers. Our unique Design2Market approach combines our AI-driven Inno tools with our globally connected innovation system to deliver market-ready solutions in weeks instead of months. This approach has proven to be massively successful with a near 50% success rate for new business. So what is our secret sauce, our winning formula in Smurfit Westrock? It begins and ends with our culture, performance-led, customer-centric, which drives both accountability and returns. The first step is attracting, retaining and developing the right people. While you hear everyone say that people are the greatest asset, we clearly believe it, and we invest behind it. In order to make sure we have the talent, not only for today but for the future, our best-in-class development programs, such as our 10-year partnership, our Open Leadership Program with INSEAD where over 700 managers of senior leadership have participated, and they're all aimed at ensuring both our culture and our values are retained. Our company, as I hope you gathered, is completely focused on innovation and quality. This leads to a consistent and relentless focus on creating value for customers through our knowledge base and applications. Our capital allocation framework is proven, disciplined, returns-focused with flexibility and agility built in. We invest to develop world-class assets in a step-by-step disciplined way, avoiding grandiose projects, all the time making sure that our shareholders are rewarded through a progressive dividend policy and maintaining strength and flexibility of our balance sheet. And finally, in order to attract, retain and foster talent, we make sure that our long-term incentive programs are aligned with shareholders. Let me be clear, our global integrated platform is a competitive strength, delivering value for our customers and for our shareholders. I'll now hand you over to Laurent, who's going to explain to you how we're going to unlock the significant value from our North American business. Laurent? Laurent Sellier: Thanks, Tony, and good morning again, everyone. Without a doubt, the North American business, which I have the privilege to run, is the biggest value creation opportunity in our medium-term plan. The region has the scale to move the needle as well as the potential to unlock even more value for shareholders and customers. We're positioning this business to lead the industry, and I feel very excited about the future. The North American region covers the U.S., Mexico and Canada, and we're already starting from a place of leadership, either #1 or #2 in all of our core segments. We're supported by just under 50,000 people across more than 300 locations in the region, which gives us unparalleled geographic presence. We generate $19 billion in revenue and $3 billion in adjusted EBITDA, representing roughly 60% of our company's earnings. We offer an unmatched and fully integrated product range from raw material to paper, to converting in both corrugated and consumer packaging as well as a series of specialty businesses such as machine system, merchandising and display that all contribute to an unrivaled end-to-end offering. This allows us to serve a broad customer base. And no matter what the packaging challenges, we are best positioned to deliver a customer-centric fiber-based solution. Separately, given our position in both paperboard and containerboard, we can support our growth in LatAm and our European business. In our first full year, we acted decisively and effectively and have already made significant progress towards building a stronger foundation. We completed a successful integration effort, exceeding our regional synergy target. We also decluttered the organization and reduced our headcount by more than 4,600 people since the combination. We introduced the owner-operator model, which promotes a performance-led culture that empowers local teams and gives them the space and tools to be successful. Each plant is now a profit center and intercompany transactions between paper and conversion are strictly at arm's length. Commercially, we have focused on value creation. We've made intentional choices that reduce short-term volumes from loss-making accounts, allowing us to rebuild positions at better margins over time. We brought our commercial organization closer to the customers and the plants that serve them. We bolstered the already-strong innovation capabilities of the legacy companies. There is a lot of potential here, which I will expand on in a minute. Since I arrived in North America 18 months ago, I had the opportunity to surround myself with a phenomenal new team of very experienced and determined people who deliver day in, day out, and we will continue to invest to make the team stronger and more impactful. Regarding operations, we've taken decisive actions to shut inefficient capacity, both in paper and in converting. In addition, we have significantly reduced the number of loss-making operations within the region despite a very challenging backdrop. Finally, we invested over $1.2 billion last year in the business, which includes a number of high-return quick wins program with more to come. All these actions are both structural and deliberate. They've simplified how we operate, increased accountability and positioned us for long-term value creation. Despite the progress we've already made, North America still represents the largest opportunity region within our company, as I said. Our strategic plan outlines a path to bring our $3 billion in adjusted EBITDA to $4.2 billion over the next 5 years, which represents around a 7% CAGR, ending the period at over 20% margin. This is a margin enrichment of 400 basis points, 200 of which come from base business investment and 200 coming from strategic actions. We believe that innovation is core to our value creation proposition as emphasized by Tony. The combination of our 3 regions offers a wealth of expertise, and we're determined to shamelessly leverage the European and Latin American knowledge as I am sure they're determined to leverage ours. In particular, the suite of tools that Tony indicated in his presentation is a very powerful way to deliver customer value consistently, delivering growth by solving customers' challenges. Grade restructurings in paperboard and rebalancing our long position in the most exposed grades such as SBS is essential. Monday's announcement of the La Tuque PM4 shutdown is a perfect example. We're present in all grades, intend to remain in all grades, but making the system stronger. I have already seen some significant wins within our SBS business. Strategic investments will cover both conversion, focusing on automation, capabilities and quality. And on paper, focusing on operational excellence, performance packaging and lightweighting, both of which will deliver substantial value. This, of course, is underpinned by significant investments in systems and AI tools that accelerate our progress and make it more sustainable. Finally, we will continue to review our system to optimize our industrial footprint, which will allow us to optimize the cost base of the business. I mentioned customer value creation on the previous slides. One of the key enablers to succeed on that promise is our unique end-to-end fiber-based packaging offering, as I said. Our full suite of containerboard and paperboard grades allows us to be substrate agnostic. In consumer packaging, for instance, we have successfully migrated some packaging from CRB to SBS, from CRB to CUK and so on, purely responding to customer needs. Similarly, in containerboard, the availability of virgin and recycled grades as well as the full range of white containerboard allows us to proactively solve problems with a customer-first mindset. We can also respond to customer requests to move from corrugated to consumer packaging or vice versa. Our range of capabilities allows us to be a one-stop shop, whether the customer is looking for primary packaging, secondary shelf-ready packaging or tertiary logistics packaging, a display solution to increase visibility at point of sale or all of the above, we can help. We can also offer a full suite of options regarding print that allows for unrivaled product visibility, including a state-of-the-art e-commerce and packing experience if needed. And if our customers require machine systems to increase their packing efficiency and automation, we can do that, too. Finally, and once again, we strongly believe in innovation. By increasing profit for customers via top line growth, cost improvements or both, we expand the room for our own margins and gain the right to win. Our innovation capabilities cover performance packaging, supply chain efficiency, plastic substitution, sustainability and on-shelf presence. In addition to our Dallas and Mexico City experience centers, we've recently opened a new one in Richmond next to our paper lab with more to come. These centers are key tools to creating value-centric conversations with our customers and bring to life what makes us unique. In conclusion, I am a strong believer that all these elements make for a winning formula and will create the most compelling proposition in the industry. It will enable us to make our ambition a reality. We have a clear plan. Our progress is already visible, and our momentum is building. I will now hand over to Saverio Mayer, CEO of our EMEA and APAC region. Saverio? Saverio Mayer: Well, thank you, Laurent. And once again, good morning, everybody. I'll now cover EMEA and Asia Pacific. So EMEA and Asia Pacific, we operate as an integrated platform, which is a key competitive advantage in these markets. Our integration starts with the containerboard system covering both recycled and kraftliner, which feeds into our corrugated operation across the region. In parallel, we have now consumer packaging operations in Europe and Asia Pacific, serving a broad range of end markets with differentiated solution and allowing us to have a holistic approach on their packaging needs. In addition, we operate Bag-in-Box platform that is present both Europe and in the Americas, giving us scale, innovation capability and cross-regional leverage in this high-value segment. In 2025, the region generated approximately $11 billion of sales and $1.6 billion of adjusted EBITDA with around 36,000 employees across 27 countries and holds #1 position in corrugated, containerboard and Bag-in-Box with a proven track record of continued outperformance. We believe this level of integration allows us to optimize the system end-to-end, protect and grow margins and respond quickly to customers and market dynamics. We have successfully integrated the consumer packaging business and harmonized in the owner-operator model with P&L ownership, developing cross-selling opportunities across corrugated and consumers where customers are valuing the combined approach between corrugated and consumer, while also delivering ahead of target on the synergy program. We are also recognized as a reference point for both our customers and the wider industry on sustainability, and we hold the highest number of innovation awards in the industry, this reinforcing our leadership position. Over the last number of years, we have delivered on 2 previous strategic plans, which have helped create a structurally stronger player in the market. Even in a challenging environment, the region has grown volumes, gained market share and increased EBITDA by focusing on functional value and differentiation. Innovation has been a key enabler. Our inno tools are now used across all regions, supported by a network of 28 experienced centers and powered by a community of around 1,000 designers and innovators across our plants in EMEA alone. Altogether, this supports our goal of adjusted EBITDA increasing from $1.6 billion in 2025 to around $2.1 billion by 2030 with margins expanding from 14.9% returning to over 16% as reached in the past, and this is based on conservative market assumptions and with upside as conditions improve. So this year, we are starting our new strategic plan for 2026, 2030. Our differentiation strategy, along with the integrated model have been key to driving our margin resilience and creating long-term value. Over the years, we have built a proven playbook that has positioned us for growth, and we will continue to adapt and develop our region into 2030 built around 3 pillars: to be the company of choice through disciplined capital allocation and continuous efficiency improvement in our core markets. A key differentiator here is our proven business model, which allows us to deploy capital at a regional system level rather than at a single asset level. This means we can involve all relevant assets within a region to deliver on a given investment, a unique competitive advantage and one which has the ability to support strong growth with an attractive returns on capital, to be the supplier of choice to our customers by accelerating proven innovation, delivering sustainable, high-performance packaging and provide superior functional value through quality and service. And of course, to be the employer of choice to our people by strengthening engagement, inclusivity and well-being and by empowering strong local leadership across the organization. To support this strategy, we are investing in highly targeted and disciplined way. We invest in new converting technology where we see clear opportunities to create value and strengthen our offer to customers. As an example, let me mention in Bag-in-Box, the greenfield investment in Anderson in the U.S. This is a business we know very well since we already operate 2 Bag-in-Box plants in North America, and it's part of a global platform. We saw a clear opportunity to further develop the U.S. market and the investment builds directly on existing capabilities together with our U.S. colleagues. Through this disciplined approach, we aim to make investments that are well targeted and deliver attractive returns. In summary, EMEA and Asia Pacific provide a stable, high-quality earnings base for the group. The region has consistently delivered margin resilience, strong cash generation and disciplined growth and will play a key role in supporting the group's 2030 value creation targets. Let me now hand over to my colleague, Alvaro Henao, CEO of Latin America. Alvaro Henao: Thanks, Saverio, and good morning to everyone. It's really a privilege to be here with you today and have the opportunity to give you a clear data-driven view of why Latin America is not only a strong contributor to Smurfit Westrock, but a region with extraordinary potential for long-term profitable growth. Actually, I firmly believe we are an absolute gem, not only because of our leadership position in the region in market share and footprint, but because we have great assets and because we have great local management that really knows the markets and the countries in which we operate. Let me begin with our competitive advantage. We are the #1 corrugated supplier across the region with leading positions in Brazil, Colombia and Argentina. And in the region, we also offer the broadest portfolio of paper packaging and full solutions, which includes consumer packaging, sacks, forestry, recycling and both recycling and virgin-based papers, such as our lightweight and eucalyptus-based papers. We are in a region that has higher margins and many growth opportunities. This combination of regional reach, completely integrated process and a broad portfolio of paper-based solutions is unique to Smurfit Westrock and very difficult to replicate. Hence, it is a source of sustainable competitive advantage. As I will explain later, we have a proven track record and what really makes us different and experienced management team, built upon a capacity to attract the best talent in each of the countries in which we operate. Since the combination of Smurfit Kappa and WestRock, we integrated approximately 100,000 tons of paper from North America into our Central America and Caribbean operations, basically converting the whole region into a completely integrated system. This gives us access to a secure supply of North American paper that will allow us to grow in the future in the region organically and inorganically. From a management and sales point of view, the market now only sees Smurfit Westrock, not the legacy companies. Finally, we were able to take advantages of synergies across the Mill and Forestry divisions that we have in both Colombia and Brazil. But let me tell you, the real differentiator in the region now as Smurfit Westrock is that we are fully leveraging on the European corrugated tools that we just -- that was spoken about and practices that have really made us successful and helped us increase our margins. And also that we have a North American mill system that is there to support us. It's really a winning formula for the region. We have an unrivaled footprint. We have the broadest portfolio in the region, offering paper-based packaging solutions such as corrugated, consumer packaging and sacks, which has allowed us to reach more than 4,500 customers from our 44 facilities in 10 countries, a really, really unrivaled footprint. Our current strength is built on a long track record of disciplined execution and the experience and knowledge of having been in the region for more than 80 years. The example to our success in the last 10 years is we have doubled our adjusted EBITDA. We have expanded the adjusted EBITDA margins by more than 500 basis points, reaching 23% and we delivered steady growth with a 4% CAGR in corrugated. This performance reflects our ability to navigate the economic volatility and strengthens our cost position and invest with discipline. And it shows something that is crucial. When we invest, we grow and when we grow, we deliver. Now let's look forward. We have a clear ambition, to grow our adjusted EBITDA with a CAGR of 11%, reaching $800 million by 2030 and increase margins to 28%. We will get there through 4 growth engines. Organic growth and market share expansion. Latin America offers significant opportunities in segments like agribusiness, protein, beverages, consumer goods and export-driven industries, especially in markets where we are not yet leaders. Cost efficiency and operational discipline. We continue to strengthen our competitive cost structure through scale, automation and logistic optimization, additional capacity. We have a well-defined CapEx road map aligned with high-growth geographies, particularly Brazil, the Andean region and Central America. We will invest in consolidating our corrugated and packaging leadership, and we will also invest and continue to lower our costs, further increasing our competitive advantages in the region. Accretive acquisitions. There are meaningful opportunities for strategic acquisitions that we believe can take our number above the adjusted $800 million mark. We want to grow in places where we are one of the leaders, but there is room to increase our market share like Brazil and also target regions where we're still in the process of expanding our business like Central America, Ecuador and Chile. And reinforcing all of this is our value-added proposition, powered by 3 experience centers and more than 150 designers who co-create solutions with our customers from the early stages of product development. We are the only company in the region that can offer a pan-regional footprint if that is what our customers want or if they want local solutions, we have the knowledge and the capabilities to deliver them. In short, we believe we have a clear plan to reach an adjusted EBITDA of $800 million with a margin close to 28%. And if we make some bolt acquisitions not included in these numbers, we will exceed that target. The combination of local market knowledge, experienced management, access to a global network of corrugated and paper tools and knowledge and secured paper availability coming from North America, we believe will allow us to further expand our position as the corrugated and packaging leader in the region. As I expressed before, when we invest, we grow and when we grow, we will deliver. Now I will hand over to Ken, who will explain the financials. Ken Bowles: Thank you, Alvaro. Good morning, everyone. I want to now talk to you about delivering the path to delivering shareholder value over the medium term and why we believe that this path is both credible and executable. What you'll see through the next few slides is not a change in philosophy, but a continuation and most importantly, an acceleration of a business model that has proven itself over many years now applied across a broader global platform. I want to take a step back first, though, for a few minutes to look at the pre-combination performance of Smurfit Kappa and most importantly, our track record. It tells a very clear story, consistent delivery, consistent delivery. Consistent delivery in all market conditions, a period, not unlike today, you might think, with many challenges and macro hurdles, but also a period where we outlined a medium-term plan for the business and more than delivered on that plan. This kind of performance does not happen by accident. It's the product of a proven operating model executed by the leadership team with a deep understanding of our industry and our markets. Over this period, we delivered an adjusted CAGR EBITDA of 6.5%, more than double the peer average. This outperformance isn't the result of any single initiative, but of a disciplined and agile capital allocation strategy, our unique owner-operator culture and a core philosophy of placing the customer at the center of everything we do. Alongside this, we expanded our adjusted EBITDA margin by over 450 basis points, again, significantly ahead of our industry peers. What this demonstrates is not just growth, but consistent profitable growth through the cycle. Over these years, we believe we cemented our position as the most innovative and sustainable packaging company in the world, and this enabled us to deliver significant value for our customers, supported by integrated model, a relentless focus on quality and service and an unrivaled portfolio of value-added packaging solutions. And importantly, our strong financial and operational delivery translated into meaningful returns for our shareholders. Over this period, we returned $2.8 billion to our progressive dividend policy and all the while reducing our net leverage from 2.4x to 1.4x, reflecting our long-standing commitment to balanced, disciplined capital allocation. With the integration of WestRock now complete, we have the platform, capabilities and leadership team in place to replicate and build on that track record going forward. That sound foundation underpins the medium-term plan we're presenting today. And turning now to the plan itself, which really captures the scale of the opportunity ahead of us and how we are positioning the business to deliver on that opportunity. We are setting out specific and actionable financial goals through 2030. These goals are grounded in a detailed bottom-up plan across all our operations. As you can see, by 2030, we aim to deliver approximately $7 billion of adjusted EBITDA and a group adjusted EBITDA margin of approximately 19%. This goal reflects the strength of our global operations, the benefits of our performance-led culture and the earnings quality we're building and maintaining across each of our 3 regions, as mentioned by Laurent, Saverio and Alvaro. A key driver of that progress is a significant growth opportunity in North America, which is a significant lever for value creation in the Smurfit Westrock, but it is not the only one. With the operating model now firmly in place and the heavy lifting of integration complete, our teams are empowered, our assets are better aligned and the actions we've taken already delivering higher margins and higher cash conversion. Over the next 5 years, we aim to generate approximately $14 billion of discretionary free cash flow, reflecting not only the earnings power of the business under conservative top line assumptions, but also the ongoing benefits of our relentless focus on cost control and operational excellence. This level of cash generation provides substantial flexibility to invest in the business, further strengthen the balance sheet and make significant capital returns to our shareholders. At the same time, we see a clear path to delivering a 700 basis point improvement in return on capital employed, driven by margin expansion, improved asset utilization, operating efficiency gains and the advantages of a fully globally integrated system. Return on capital employed has long been a hallmark of our performance and culture and the medium-term opportunity here is significant. And all of this is underpinned by our disciplined capital allocation framework, which I'll outline in a few moments, a framework that is flexible, agile and returns focused at its core. We are focused on continuing to strike the right balance between investing in high-return projects and delivering significant capital returns to shareholders, supported by our continuing strong balance sheet. So let me spend a few moments on the assumptions behind that $7 billion adjusted EBITDA target. Our 2030 targets are supported by a structurally stronger business as our operating model and strategic investments lift the group adjusted EBITDA margin from 16% to 19%. Our plan assumes benign market growth based on third-party sources and through-the-cycle pricing broadly in line with current levels, reflecting a disciplined and conservative approach to our outlook. I once again remind you, it does not include the impact of any recently announced paper price increases in North America. We've assumed market growth of 1.6% in North America, 1.7% in Europe and 2% in Latin America. These market growth rates provide a solid foundation, but it's the actions we are taking within the business that truly drives a step change in our earnings. A key pillar of the plan is that we assume below mid-market paper pricing in Europe and no price increase in North America and paper. In other words, the margin expansion we are targeting is not dependent on a pricing cycle. It is grounded in the operational improvements, the commercial focus and asset optimization actions already underway. As Laurent outlined, we are already successfully executing on our creating value for our customer strategy in North America, a strategy well established in the Smurfit Kappa business. By deepening our customer partnerships, leveraging our innovation offering and driving P&L responsibility at the mill and the box plants, we are enhancing our customer mix, improving quality and service and driving a more resilient earnings model across the group. And as we continue to execute our creating value for our customer strategy and with the alignment of management team's incentives of our strategy, our plan expects all regions to contribute to profitable growth, driving meaningful margin expansion from 16% to 19% by 2030. And while we are confident in the plan as presented, there is potential upside, particularly with respect to the assumptions on growth and pricing as well as choosing to accelerate investment if the right opportunities arise. Our capital allocation framework continues to be one of the most important drivers of long-term value creation and a core element of how we run the business. Over the next 5 years, we expect to deploy $13 billion of total capital expenditure, including maintenance and growth CapEx, with an average annual CapEx spend of about $2.6 billion. This level of investment is fully aligned with our strategy, enabling growth and cost takeout, improving operating efficiency and strengthening our integrated system. Importantly, we expect this investment to contribute to a 7 percentage point improvement in the group return on capital employed to approximately 15%, reflecting the high return nature of the projects we are targeting. As a team with deep industry experience, we continue to view internally deployed capital as the lowest risk and highest quality use of capital, an approach that remains central to the future success of our business. Alongside this, we expect to be able to allocate $10 billion towards, for example, capital returns to shareholders and accretive acquisitions. Dividends remain the cornerstone of our capital return strategy. And as part of this, we anticipate returning about $5 billion in dividends over the next 5 years, subject to the necessary Board approvals and the consideration of a number of economic and other factors. And from 2027 onwards, we expect to have capacity to undertake share repurchases as to be determined by the Board, representing an additional avenue to which we can return value to shareholders and underlining our confidence in our strategy and the cash generation profile of the business. Our approach to M&A will always remain disciplined, focused now on accretive bolt-on opportunities that strengthen our geographic footprint and complement our product portfolio. Underpinning all of this is the balance sheet of significant strength and flexibility, one that supports investment, ensures resilience across cycles and provides the optionality needed to pursue value-enhancing opportunities. Taken together, this framework strikes the right balance between investing for growth and delivering substantial value back to our shareholders. What this next slide highlights is the scale of the value creation opportunity ahead of us and the significant capital we expect to have available for shareholders as we move through 2026 and on to 2030. Over the 5-year period, the earnings power of this business has the potential to generate substantial adjusted EBITDA, which after funding maintenance investment tax and other commitments, leaves us with a significant pool of available capital. From that starting point, we aim to invest behind high-return growth and efficiency projects and fund a progressive, reliable dividend stream. And after doing this, we expect to generate approximately $5 billion of surplus capital. That surplus is a powerful number. It gives us the ability to accelerate investment where we see attractive returns and to introduce buybacks as an additional avenue for value creation. In short, this waterfall speaks directly to the strategic and financial flexibility of Smurfit Westrock. It shows a business capable of investing for growth, driving meaningful returns and still generating significant excess capital. Looking more closely at capital expenditure, and our approach will remain disciplined and consistent. And as mentioned, we expect to deploy $13 billion in cumulative CapEx across North America, EMEA and LatAm. Approximately $9 billion of this is expected to be allocated to maintenance CapEx with, as I mentioned previously, $4 billion invested in growth CapEx. We focus on a high volume of small, high-return projects, which translate into a projected annual CapEx spend of approximately $2.4 billion to $2.8 billion over the plan. We have always believed in being flexible and agile when it comes to capital deployment. And as you will see from the footnote at the bottom of this page, the average CapEx project is less than $4 million. With no project larger than $200 million and important to reiterate, as Tony mentioned earlier on, there are no grandiose projects in here. And as I have mentioned, we expect our organic investments in the business to generate a 700 basis point improvement in return on capital employed. Turning now to the balance sheet. A balance sheet of significant strength and financial flexibility will remain a key underpin to our capital allocation strategy. We ended 2025 with net leverage around 2.6x and net debt just below $13 billion, and we are firmly committed to maintaining a strong investment-grade credit profile. Our long-term target remains net leverage below 2x, and we are pleased to receive a Fitch upgrade to BBB+ with stable outlook. And as we progress towards that leverage target, the strength of our balance sheet gives us both flexibility to return excess capital to shareholders and to invest in growth when opportunities arise. It's a foundation that ensures Smurfit Westrock can continue to deliver for all of our stakeholders. And finally for me, to wrap things up, this slide captures one of the most important elements of our value proposition, the significant and growing capital returns we expect to deliver to our shareholders. As discussed earlier, we have a proven track record of delivering progressive dividends, and that remains a core part of our equity story. Over the 2026 to 2030 period, we expect to return approximately $5 billion through dividends alone, subject to necessary Board approvals and depending on a number of economic and other factors. From 2027 onwards, we see an opportunity for a strong free cash flow generation to provide capacity for share buybacks, supporting our confidence in Smurfit Westrock's long-term value and strategy. In summary, this is a plan built on discipline, operational excellence and growing capital returns. And one we believe positions Smurfit WestRock to deliver sustained value for all shareholders. And with that, I'll pass it back to Tony for some concluding remarks. Anthony P. J. Smurfit: Well, thank you, Ken. As a significant shareholder in Smurfit WestRock, what I and I hope you expect to see is a plan that is ambitious, yet deliverable and a plan that demonstrates a long-term future and a strong foundation to build on. This is what we have presented today. Our competitive strengths include our performance-led culture, owner-operator model with the customer being at the heart of what we are and our global integrated platform with short lines of communication continually networking. We also value our leadership and experience. You'll have already heard from my colleagues, their teams are equally strong and motivated. As a consequence of our management development programs, the next generation of leaders will foster the same culture and values that exist today. Our product portfolio and global reach is unique and unparalleled and allows us to serve customers. We offer innovation, customer centricity, solving their pain, delivering value and helping them win in their own marketplaces. And we do this against the backdrop of continual improvement in our operations through disciplined capital expenditure, emphasizing cash flow and ensuring that we're adequately rewarded for the capital that we have employed. For me, shareholder value and owner-operator mindset go hand-in-hand. It's just not philosophical. It's the person who turns the lights off to reduce the costs. It's the salespeople who makes that call at 6:30 instead of going home and it's the manager who looks at the share price every day because he cares about it. In summary, Smurfit Westrock has been around for 90 years. Many other companies you'll know in our sector have fallen by the wayside, yet we're still here. And we're here because we do as we say and we say as we do. Performance is and always will be the basis of our credibility. We have delivered. We have delivered on acquisitions. We've delivered on our plans. We've delivered because we have a proven track operating model, and we've delivered because we're in a business that is a good business. It's a very resilient business. It's a business that the world needs. It's a business that our customers need, and we've also delivered because we have an unrivaled geographic footprint. The coming together of Smurfit Kappa and WestRock has given us a product portfolio that is unmatched in scale and diversity, which we continue to build on through all the unique applications we've shown you today. This is a world-class management team with a proven track record. And our interest as shareholders are fully aligned with yours. And finally, I want to leave you with this final thought. The plan is not the summit of our ambition. There are many other opportunities to be pursued. And as we did in our previous plans, we'll continually update our thinking. I believe Smurfit Westrock is at the beginning of an incredible journey, an accelerated growth path, a journey that will take us to the decades ahead. We have the magic formula. We have the right culture. We have the right people, and we have the right products. And I hope after today, you see the team, you have the right team to successfully drive this business forward in the years ahead. I thank you all for your attention, both here in the room and on the net, and we look forward to taking any questions from you about this, our ambitious but deliverable plan. Thank you. George Staphos: George Staphos, BofA. One question, right? You got it. Anthony P. J. Smurfit: Others have taken a license, George. So you might slip in a second one, if you want. George Staphos: I'll try to get a part in there. No. So if we look at the progression to $7 billion, $4 billion North America, $2 billion in Europe, $1 billion roughly in South America, can you help us understand how important the evolution of consumer is relative to getting to that target across the segments? Why it seems like you see consumer being married to corrugated makes more sense than what we've seen perhaps past companies have had difficulty getting that effectiveness? And frankly, you've had questions about that when you first put the business together. Why you think it makes sense now? And then the last one related Tell us why South America, even though it's the smallest, Alvaro, it's very profitable. Why are you not worried about all the paper that apparently is coming in from Asia, Klabin starting up PM28, how that fits all in? I'll stop there. Anthony P. J. Smurfit: So George, I look at things quite simply. I said, can we be a very good business in consumer? And the answer is yes. We have some really fantastic businesses within our consumer portfolio that are very unique, very difficult for any competitors to replicate. And we have some very good mills in the consumer business. What we have to continue to do is improve and adapt over the coming months and years to make all of our system good because there's some still work to be done, and you'll know that our CRB bills are not necessarily the best in the world. But at the same time, they are good for purpose for us, and they're highly cash generating and they don't take a lot of capital. So we always have to continually modify our business and invest in the business to make them high-return businesses. And I believe that the consumer business with its market positioning, together with our corrugated business gives us a strategic advantage to sell more, to offer our customers a diversified portfolio, as Laurent has said, and allows us to get better returns over a period of time -- over time. There's still work to do, but we have some really great businesses within that business. And it's a central plank for growth for us. I mean, frankly speaking, in many of the countries in Europe, for example, we can't really grow in corrugated that much because we're too big, but we can grow quite a bit in consumer if we find the right acquisition target that gives us value. So I think it's a very good business, and I don't think we should be throwing away good businesses, and it integrates well with our system. George Staphos: Tony, how much of EBITDA growth is in consumer to your point... Anthony P. J. Smurfit: We don't segment that, George. But I don't think it's materially different to our corrugated businesses. We expect all improvement across all segments, and there might be a bit on one side versus the other, but probably there's a little bit more improvement to get in our corrugated business, a little bit, but it's not material. Ken Bowles: Yes, probably the simplest way, George, I think that is broadly the kind of the profile stays the same true in terms of percentages and scale. Anthony P. J. Smurfit: Alvaro, do you want to take the Latin American question? Alvaro Henao: Sure. On Latin America and the paper side, I think that one of the big advantages that we have is that now that we have access to the North American paper, we're basically isolated from a paper point of view because we are now -- we used to be short, very short when we were Smurfit Kappa. Now our system is completely integrated into North America. So that basically isolates us from any paper swings or scarcity of paper that the region every now and then has. The other issue is that notwithstanding what you have said, the region still continues to be basically supplied by the U.S. We do see every now and then paper coming from different regions, lately from Europe. But when you look at the import numbers into the region, the region main supplier -- sorry, the main supplier of paper into the region is the U.S. So -- and then going into your comment about the growth of Klabin, yes, Klabin invests every now and then in cycles, they invest in their paper mills. Let me say just in Brazil, we have a very nice operation, which is very low cost again. And the internal Brazilian market, whenever they do invest, is able to absorb the majority of those investments. So I mean, I don't foresee any material disruption into the overall paper supply balance and pricing in the region. Anthony P. J. Smurfit: We go back -- forward to back. Phil? Philip Ng: Phil Ng from Jefferies. Laurent, I really appreciate you being here. You're actually a perfect person to ask this question because you came from Europe, you had the history of value selling in Europe. How is that transition in the U.S. just because I think a lot of the customers aren't as accustomed to having some of these solutions that you guys are offering. So how is that journey? Are you talking to the same people in terms of negotiating? Is it procurement guys or marketing guys? Just kind of give us some context, the differences between North America and Europe and the margin difference perhaps on that value solution versus non-value solution? Laurent Sellier: So I think the impression that we're having altogether is that the timing to introduce that particular thinking process is really right and that the market somehow has been expecting out there us to move or other people to move. It just happens -- and the timing is really good. And the engagement that we have, whether it's -- as you rightly pointed, procurement, marketing or other people, they're asking what is going to be the next way to get to the optimal packaging cost in their case, but also function and delivery to their system. And the type of people that we're talking to and Tony and all of us have referred extensively to this concept of experience centers, they're not just buzzwords. They're really places where you put the customer in a position to share with us their pain points, their aspirations, also the type of issues that they have to solve, and they really value in the U.S., and we've had great response both in Dallas, where we have a historical presence that goes before the coming together of the 2 companies, but now in Richmond and same in Mexico, there's been phenomenal response from very large customers of ours. We're really appreciating the type of engagement and the type of discussion. I think really that the timing is right for us to engage in those conversations. And I think it's also feeding the pipeline conversation we're having earlier on. Philip Ng: Any color on the margin difference between the value stuff versus non-value? Laurent Sellier: So this is when I turn to Ken. Ken Bowles: I would say, Phil, that the obviously, if you're giving solutions to customers and you're able to save them money, then you want to share in that benefit. And so typically, if you're doing something for your customer that's winning -- helping him, you tend to get some of that contribution back. So obviously, the more of these that we have, the better it is. But it's more as well that you get given more business. So you're able to optimize your system better. And so it's a -- we're only starting this in the U.S. I mean, Laurent mentioned that we're about to open up the second -- we have a second and we're about to open up a third experience center in our Chicago region, just so that we can cover the U.S. because it's a big country. And our Head of Innovation here in the United States, who's a great guy we just hired in from, where was it, [indiscernible] somewhere like that. He's only with us 9 months now. So it's -- we're really just at the beginning of this journey of value selling here in the U.S. And there's a whole iteration to go through of training of people. But what I've heard, and I haven't experienced myself directly, but what I've heard with the customers that go to the Dallas center, they're just blown away by the opportunities for them to save money. And in that scenario, then everybody wins. Lewis Roxburgh: Lewis Roxburgh from Goodbody. Just on growth CapEx, it seems pretty broad-based across sort of businesses and regions, but just sort of highlight any sort of standout focus there. And then just a clarification, the $4 billion amounts to about $0.8 billion each year and you add that on to depreciation, it's about $3.3 billion. So is the delta there just sort of depreciation coming less? Ken Bowles: No. The depreciation stream will probably stay a little bit more than $2.6 billion, Lewis, over the period. So remember as well as part of our DNA at the moment, post transaction, you've got an amortizing intangible that kind of trails off about $140 million a year. So as you're getting towards the 5 years, you're depreciating 5x $140 million coming out of the base and you're adding back in the new CapEx. So broadly, you could consider D&A to be in that kind of $2.6 billion, $2.7 billion space across the life of the plan as well is probably the simplest way to think about it. Anthony P. J. Smurfit: Lewis, on the capitals, I mean, one of the mantras we have in our company is adaptability. So we talk about this all the time. So Laurent or Alvaro or Saverio might say, this is our plan for next year in a machine and, I don't know, take it France. And then we find out there's a little bit less growth in France, there's a little bit more growth in Germany. So we adapt. And so there's no -- as Ken said, there's no project bigger than $200 million, and that would typically be paper machine, press section, winder, something like that, that will be -- so there's no really big projects, but there's a lot of small projects. And then as Laurent said, the biggest opportunity we continue to see is obviously, as wages have gone up and salaries have increased due to inflation, there is -- and robotics is going to become a bigger thing. We see a lot of opportunity to invest in machines to take away continuing labor costs. And so that's something that is very much top of mind. And as robotics continues to develop, that's something that we'll latch on to. But within this plan, there will always be some flex because we might say that project, we haven't seen the growth we expected to see in Brazil. So therefore, will it go to Colombia or we go from Colombia to Mexico, it just depends on the year. But that's why I said in my opening or in my closing that we're always adaptable and we're always looking, and we continue to keep the strat plan on our -- it's hot on our plate every year. And when we look at our budgets, we'll be looking at how does that sit with regard to the strat plan, et cetera, et cetera. Lewis Roxburgh: On the margin improvement in North America, you talked about going from about 16% to 20%. And then you also include about half of it from base business, half of it from strategic action. So if I look at kind of the column to the right, and we see footprint optimization, obviously, strategic action. What else would be in the strategic action bucket? Most of it would seem to sort of be running the business, the base business better. So maybe if you could help us understand what would be in what type of bucket. Ken Bowles: Yes. I'll let Laurent elaborate a bit further, but think about the kind of the base piece, Mark, as kind of ongoing maintenance CapEx, which you will get a return for, but it's not really the driver of growth there. In terms of the extra 200 basis points, that is growth CapEx, where we see, back to Tony's point, where you can take cost out. where you see growth coming through, whether it's machines or customers or end markets and investing behind that. And indeed, that's part of where that the single biggest project is in there, too. So in the own system. But Laurent, do you want to give more color on how you see the strategic piece? Laurent Sellier: Sure. So basically, what we call base is being a good custodian of your assets, basically making sure that things are in order, what needs to be replaced is replaced. But any time you do that, also looking at ways and manners to generate that little extra bit of capacity money... Anthony P. J. Smurfit: Maybe Laurent talk about the latest mill project we just approved for Hopewell,was it? As an example... Laurent Sellier: Yes. You can do like refurbish, for instance, on a paper machine, your drive and because the drive is obsolete not maintained by the manufacturer or whatever, so you need to upgrade that. And in the process, you gain, I don't know, 3 meters per minute or 10 sheet per minute on the paper machine that just generates that. So it's being good custodian of assets. Then when you look to strategic projects, you're more thinking in terms of pockets of growth either by segments or geography where you think that you can line up more capacity because there is a sales backing or sales opportunity there. And it's potentially redeveloping one particular part in a paper mill that will give you either different types of products or enhanced matching between the products and what the market desires. So anything that goes beyond the simple upkeep of the assets and usually with higher return profiles. So typically, we save 200 basis points on both and you have 2/3 on the maintenance piece and 1/3 on the strategic piece, yielding more or less the same result. Lewis Roxburgh: And just to clarify on that is how to interpret the margin improvement, not just the use of capital, the way you were describing? Saverio Mayer: That's right. Lewis Roxburgh: Okay. And then just as a quick follow-up. Tony, you've talked about in the past how there was a great opportunity in the converting assets in North America, the box businesses. Can you maybe kind of update us on how that's progressing and how big a part of the program achieving those types of goals and how you go about it? Anthony P. J. Smurfit: It's a huge part of it. When we came into this, we had a lot of plants losing a lot of money. And as we've shed some business and adjusted the operating costs of the plants to reflect lower volume, but at the same time, opportunities that have come into the plant as well. You've seen our corrugated business move as a whole from significant loss maker to -- not significant, but somewhat profit-making now. And as I said, we're only at the start of that because as we implement better volume, more valued volume for our customers across our piece and getting rid of bad business, frankly speaking, that you're paying people to run, you shouldn't be paying people to run bad business. So we are bringing in better business, and that will be -- I've said 8% to 12% margins in corrugated is our aspiration, and we will get there because we have the tools, we have the knowledge. So you go from negative a couple of hundred million to let's say, $1 billion, it's a material improvement in the business -- the underlying business. I mean, the best example I can give you is Saverio will talk to you about a plant we have, which was basically 6 or 7 years ago, plus or minus breakeven in the country, and we had another competitor in that country. It's just 2 of us in that country. And our competitor is now closing down and we're making over $1.5 million a month in that country from nothing because we've invested and we brought our tools and we've done all the things that we have to do and our competitors just walked away. And so that's an even bigger opportunity for us. So we're not going to be able to do that everywhere as quickly as we'd like to do it everywhere. But even in one facility we have in Chicago, which is a great well-equipped facility. When I went there the first time, [Mark], I didn't post about it because I was so ticked off about their performance. And then I went back a year later, and they're now making close to $1 million a month because they've changed some things, they've adjusted their costs. They've changed some customers, and you have a really motivated management team now who is really -- but we have to do that in 100 plants. I mean it doesn't happen overnight. But that's -- I don't know if you want to comment. Laurent Sellier: No, I think it's exactly right. Tony talked about flexibility and so it can. And I think we're there saying there are certainly a number of box plants where there are evident issues about equipment. And there's a kind of mantra going around in the company. You need a good corrugator and you need one solid piece of good converting equipment to match your business. And in some cases, we don't have that. So these are fairly obvious places, and it would be built in the plan. But then there's another number of plants that are not performing so well, and it's still unclear whether it's management or whether it's equipment. And rather than rush and put an equipment that would be complicated if you grab new equipment on a bad team, I like you can really make a catastrophe there. So we're taking our time to assess. So they are the fairly obvious ones and the less obvious ones that we'll take the time over the plan to address one and the other. Anthony P. J. Smurfit: Sorry, let's go back to front because -- sorry Gabe, just -- you get next. You can have 2 questions, just for that. Unknown Analyst: Richard Burke with Bloomberg Intelligence. Looking at your projections for 2030, I noticed that the North American EBITDA margin is 20% and Europe is only 16% being kind of more U.S.-centric focused for my career, I'm just trying to understand, is there structural differences that the margins won't get in Europe won't ever get to the U.S.? Or are we at a different point in the cycle? Or just kind of your thoughts behind that? Anthony P. J. Smurfit: Yes, Richard, it's a very good question because we ask ourselves the same question. So thanks for that. I mean the reality is that Europe has always been a couple of points behind Europe, maybe for the embedded costs in Europe. But over time, we have improved ourselves and that number is far away from where we have been before. I mean I think we've been up to 19% in Europe. And frankly speaking, we're putting together what the guys gave us having obviously been reviewed at length by ourselves. And I will be very disappointed in Saverio if he is only 16% margin. So... Ken Bowles: Easy. Easy. I think -- sorry, I think Richard as well, if you flip that down to the balance sheet and capital allocation, you get much more bang for your book in terms of capital going into Europe versus North America from a cost perspective. So in defense of my good friend, Saverio, I'd say that his return on capital employed is probably mid-teens versus where Laurent is. And that's been a sustaining factor for the strong balance sheet. The free cash flow generation has always been much better at Europe, equally working capital, where Saverio would hang out below 10% and Laurent slightly ahead. So it sort of goes back to the fundamental thesis, I think what we're speaking about, which is you take a business across 3 regions and you take the pooled capital and the pooled resource around free cash flow and you allocate and get the returns out, whether it's the returns from an EBITDA perspective and margin or the returns from a cash flow, balance sheet and shareholder return perspective, but it's pooled resources. Anthony P. J. Smurfit: I think another interesting point, and Saverio has mentioned it in his presentation. He's been through 2 strategic processes. And in addition, that Smurfit and Kappa came together in 2005. So we've been spending the last 15 years, 20 years nearly -- 20 years, 21 years, I was never good at accounting and I was never good at accounting. We've been spending the last 21 years making Europe a great organization and investing in Europe and developing our asset base. So we have a fabulous position with fabulous people, with fabulous assets. But 21 years ago, when you came to Smurfit and Kappa, you would have said they weren't such great assets. But now anybody who would look at our company in Europe would say, wow, these are fantastic businesses, fantastic assets, fantastic people and certainly should earn more than 16% EBITDA margins. I agree with you. So Saverio, that's... Saverio Mayer: No, no. It's -- we've been there before. I mean we went to 18%, 19% and this is -- and as I said, this is not including any pricing or market condition that through the cycles, we'll be there again. And so we expect to -- that we can deliver back where we deliver. Today, the 16% mark in Europe, it's an ambitious target. It's a good target, which doesn't mean, as we did in the past, we can not go above that. I mean as situation improves, conditions are improving in general. So we'll get there. Anthony P. J. Smurfit: I think what's interesting is that Europe has been a bit of a funk since the Ukrainian war. I mean, obviously, if you take a view that, that's all going to end, then you could see a very big rebuilding in Europe. It's 380 -- how many million people in Europe... Saverio Mayer: It's 400 million. Anthony P. J. Smurfit: 400 million people. It's a very big economy, and we have #1 and #2 positions in most of the markets there, and we've got the best market position. So it's a really exciting place for us if there's any sort of economic growth. And as I say, we've got an incredible mill system, we've got an incredible paper system -- sorry, corrugated system, and we've got incredible specialty businesses there that are today earning 14%, 15% in a market where most of our competitors are earning next to nothing or very low single digits. Gabe, sorry. Gabe Hajde: Gabe, Wells Fargo. Thank you, Tony. First, give credit where it's due. Initial report card, $4.9 billion of EBITDA, the guide was pretty consistent at least with our expectations, so putting points on the board. When I try to dissect or translate the $1.2 billion in North America and I translate from, I guess, margin to dollars, the margin profile would suggest on the current business about $800 million of improvement. And then the most difficult thing to lock down or pin down has been the 1.6% growth in North America. So if I do the math on that, it suggests about $300 million, $350 million of contribution from market growth. A, is that about right? And then b, would you identify that as the most risky piece of the North American ambition? Anthony P. J. Smurfit: Listen, the market last year was not good. I mean we actually attribute about 3% to 4% of our negative 10% to the market. If you look at the FBA numbers, if you look at our 2 competitors that have reported, they've been 2 -- they're around negative 2%, all of them. And so if you look at that, then you'd sort of say, well, we've lost a little share because of the market -- the business we've given up. So maybe the market -- and they've gained the share, so therefore, the market is 3%, 4% down. And it has specifically hit maybe a company like ours a little bit harder because a lot of the big branded goods, which is where we were selling a lot of have been hurt during the last year. I don't think that's going to continue, Gabe, to be honest. I think that sooner or later, there will be more promotions by a lot of companies. There will be more competition by a lot of our competitors to -- sorry, not competitors, by our customers as they start to go into trying to sell more themselves. And that should actually be good for inflation in the United States and Ergo will be good for box demand in the U.S. So I do believe that this is still a very strong economy in the United States, and I do believe that it will get back to growth. And I do believe that -- and that's what we all believe. And I think that we'll be a big beneficiary of that. So I do believe the numbers that [indiscernible] have put out of 1.5% are doable. And so I would then think that our numbers are going to be possible to make. Ken Bowles: I think, Gabe, maybe to help you thinking slightly is broadly, when we think about 1% volume growth, that generally equates to somewhere around, call it, $60 million of EBITDA for the group. That's probably helpful for your thinking. Unknown Analyst: This is Nico Piccini with Truist Securities. I just wanted to dial in on rebalancing your long SBS position and if that's going to be derived more from converting like CRB business into SBS or if there's further opportunities like the La Tuque closure. And with the converted business, how sticky is that given prices will likely ultimately rebalance between SBS and CRB? Anthony P. J. Smurfit: Laurent? Laurent Sellier: Probably a combination of all the things that you've suggested. I think the work we're doing -- first of all, SBS has undergone secular pressures. But equally, and I mentioned that in my presentation, we're seeing very interesting opportunities on that particular segment. The other thing is SBS, as we said, like this subset agnostic is something that we've really put in motion and is helping. And potentially, ultimately, as we see fit and if required, then further consolidation in one form or the other, it doesn't necessarily have to be related to restructuring, but reducing the exposure on SBS can be part of the solution as well -- so -- and they're all being worked on at the moment. And whenever those projects come to fruition, then we would come back to you with all the information. But it's going to be essentially a combination of all the options that you've indicated. Anthony P. J. Smurfit: I think the switching -- the stickiness is an important point. I think the customers that we've seen that are switching are switching for quality. yes, SBS price coming down is helpful for sure to make them switch. And if there was a massive jump in SBS pricing versus CRB, maybe they'll switch back. But what is fundamental is that the product ranges from CRB to SBS, it's a quality and visual issue. and it's not a price issue anymore because of the price of SBS. Once they go there, will they switch back if the price of SBS goes zooming up or not, I can't say. But they are switching because it's a better product in many instances for the fridge or for the shelf, fridge for CUK because it's all craft based and shelf because it's brighter for SBS. So there is a quality issue. There's also a machine issue that the machines actually run better with regard to SBS or CUK rather than CRB. That's not to say that CRB doesn't have a place. It has a very strong place, too. I mean we are I mean we're grade agnostic. We will work with our customers on exactly what they want, what their belief is if they want recycled board, we have it. We're the #2 producer despite the fact that our mills are not necessarily more modern. We're the #2 producer in the United States of CRB with acceptable mills and good quality that our customers do not want to be locked into any single supplier. So it's a very positive position that we have. And as I say, we're grade agnostic and say, listen, you want this, this or even as Laurent said, which I think is really important to remember, very microflute corrugated, which is an important opportunity as well for them. Okay. Well, I think we've had our time. I really appreciate you all making the effort to come and join us. It's been a privilege to be able to present this plan to you. And we do really thank you for your effort of being here this morning, bright and breezy. And thankfully, we've warmed up New York for you to walk on. So thank you.
Operator: Good day, and welcome to the NetEase Fourth Quarter and Full Year 2025 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Brandi Piacente. Please go ahead. Brandi Piacente: Thank you, operator. Please note that today's discussion will contain forward-looking statements relating to the future performance of the company and are intended to qualify for the safe harbor from liability as established by the U.S. Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and this discussion. A general discussion of the risk factors that could affect NetEase's business and financial results is included in certain filings of the company with the Securities and Exchange Commission, including its annual report on Form 20-F and in announcements and filings on the Hong Kong Stock Exchange's website. The company does not undertake any obligation to update this forward-looking information, except as required by law. During today's call, management will also discuss certain non-GAAP financial measures, which should not be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the fourth quarter and full year 2025 earnings news release issued earlier today. As a reminder, this conference is being recorded. In addition, an investor presentation and a webcast replay of this conference call will be available on the NetEase corporate website at ir.netease.com. Joining us on the call today from NetEase's senior management are Mr. William Ding, Chief Executive Officer; Mr. Hu Zhipeng, Executive Vice President; and Mr. Bill Pang, Vice President of Corporate Development. And I will now turn the call over to Bill, who will read the prepared remarks on William's behalf. Bill Pang: Thank you, Brandi, and thank you, everyone, for participating in today's call. Before we begin, I would like to remind everyone that all percentages are based on RMB. In 2025, our total annual net revenues reached RMB 111.2 -- RMB 112.6 billion, with RMB 92.1 billion from games and value-add services. These metrics represent another milestone for our company, reflecting 23 consecutive years of online games operation revenue growth since we started the business a quarter of a century ago. In our 25 years in the gaming business, our pursuit has always been trying to provide extraordinary player experiences, and we have never stopped investing in continuous exploration of creativity and pushing technical boundaries. In our early years, our proprietary 2D game engine made Fantasy Westward Journey Online the benchmark of its time. When we moved to mobile in the early of 2010s, our flagship in-house engines enabled us to deliver low latency, high-performance experiences on smaller pocket-sized screens. This new capability was instrumental in unleashing the full potential of iconic titles such as Knives Out and Diablo Immortal on mobile devices. Today, as we continue refining these engines to support AAA quality cross-platform experiences, they have laid the indispensable foundation for the success of our recent global transitions like Where Winds Meet. In conjunction with the evolution of our in-house proprietary game engine, we also built our full stack 2 chains that empowers our team to innovate at scale. Drawing on our DNA as an Internet company, we continually scale new technologies that can improve the game development process. We study emerging technological trends determining if they can be harnessed to enhance our game development and developed proprietary solutions to incorporate the solutions -- to incorporate the most impactful ones into our production pipeline. This long-standing practice has enabled us to integrate complex new technologies, substantially boosting productivity over the years. Back in 2017, we saw that artificial intelligence would have transformative impact on our industry. Because AI research is closer to academic science than traditional technology, we set up 2 dedicated research labs: NetEase Fuxi Lab and NetEase Game AI Lab to study AI and explore its real-time real-world applications in gaming. These teams have made exceptional strides over the years in both research and practice winning dozens of AI algorithm competitions, publishing hundreds of papers and securing hundreds of patents. We're now far beyond the experimental phase and the combination of this work is the full integration of our AI technology into the game development process with AI playing an important role across our portfolio. AIGC has accelerated quickly in recent years. We have been monitoring the progress closely and making a substantial effort to embed it into our production pipeline. Importantly, we don't see AI as a replacement for human creativity. We see it as a force multiplier, one that can bring paradigm shifting to the game development process when used responsibly. It can elevate creative work and introduce real change in how games are built. As a new technology with core attributes that are fundamentally different from traditional technologies, such as its probabilistic nature, AI presents unique challenges. Figuring out how to harness it, how to fit it into the sophisticated game software engineering process and how to turn probabilistic AI output into reliable, high-quality components is far from easy. There are very few precedents in the industry of game making. Fortunately, with our many years of game-making experiences, we have deep expertise in building production tool chains, along with data and asset library spanning hundreds of games. Most importantly, we have over 10,000 top-tier developers, which put us in a strong position to approach these challenges pragmatically. Over the past 3 years, our engineers have worked closely with our designers to explore how to unleash the power of AI while building clear guardrails. At the same time, we focus on how to use AI to take on the tedious repetitive noncreative task without getting in the way of human creativity. After many iterations, we believe we have established robust human oversight and feedback loop in place and AI has become a highly effective part of our game development process. Today, we're pleased to report that we have comprehensively integrated AI across our internal workflows, encompassing design, programming, art and QA. This integration is not limited to a few BD teams, it is broadly accessible to developers at NetEase, driving meaningful efficiency across the board. In programming, our self-developed tool, CodeMaker, has evolved from a single AI-powered code completion tool to providing agent-level services. Our internal data shows qualitatively shift in developer habits. They have moved from using AI to complete a line of software code to leveraging AI to solve a complete development task. In art and animation, AI is easily accelerating the early-stage exploration process with our in-house tools, DreamMaker and Danqing turning creative ideas into deliverable outputs in minutes. Our AI animation technologies, including multi-camera motion capture, facial motion capture and generative AI-driven animation tools have significantly reduced the production cost and time required for character movement and expression animation workflows while substantially expanding our animation asset libraries and empowering artists to deliver richer and more expressive virtual characters and worlds. Furthermore, in quality assurance, we utilize AI to model more than 1 million diverse player behaviors to ensure stability in increasingly complex game world. This augments traditional time-consuming manual testing with data-driven validation, providing us with greater mathematically confidence in game balance and stability before public launch. But beyond efficiency, the ultimate goal is gameplay innovation. We have unlocked massive new interactive experiences for our players that were previously out of reach, and we still remain at a relatively early stage in exploring all the possibilities. Our exploration of AI-driven interactive characters began early with Sword of Justice, which pioneered one of the industry's earliest commercial implementation of intelligent NPC systems powered by large language models in a live game environment. This laid important technological groundwork for expanding AI-driven character ecosystem. In Where Winds Meet, we have deployed over 10,000 AI-powered NPCs that engage players with natural language, realistic voices and potential for unexpected story outcomes, creating a level of vivid interaction that was previously impossible. Most importantly, these AI-powered NPCs are not static quest givers. They reflect the shadow of real human existence. Some may be struggling with poverty and resorting to [indiscernible] in village. If a player has the patience to follow them, they could discover sub stories like the hardship of adult life. These NPCs may not always be brilliant or lucky, but they're leaving their lives within their own reality, nearing our own world. This level of detail creates a world that was not just a sandbox but a leading society. This is the essence of the open world we are building, places where every iteration, every interaction feels authentic, unpredictable and deeply immersive. This not only provides players with more depth and in-game experiences, but it has also helped to address the challenge that players consuming content much faster than developers can create it. We're also seeing AI act as a powerful personalized copilot and ecosystem multiplier. In NARAKA: BLADEPOINT mobile game, the voice AI teammate system represent a major inflection point, AI that doesn't just follow, it collaborates. As Copilot teammates, AI provides customized interactive assistant to help players to learn the rules of the game, making the complex high skill-based gameplay more accessible to much broader audience and significantly increase newcomer retention. Meanwhile, The Crew Mode in the Sword of Justice empowers players to direct their own short videos with simple AI workflow, attracting millions of players who have created tens of millions of UGC works. Meanwhile, integrating these tools into Eggy Party toolchain and empowered over 15 million creators to transform a single game into a self-evolving platform driven by collective creativity of its players. Beyond enhancing our existing portfolio, we're also exploring new frontiers in AI native gameplay. Moving beyond fixed presale logic, we're trying to utilize AI as a core engine to dynamically construct the in-game world and tailor real-time elements like missions, events and other content to individual players' unique behaviors, unlocking infinite potential through deep customization. Underpinning this work is our experiment in AI-native production pipelines that leverage integrated toolchains to streamline workflow and significantly accelerate our innovation cycle. 2025 has been a year in which our long-term vision for AI has reached a critical point. We're no longer just talking about the potential of AI. We're seeing the results in the form of enhanced productivity, deeper player engagement and expanded creative boundaries. We're on the threshold of a paradigm shift, and we believe we are well positioned to serve as epic center of industry-defining innovations. We have built a very solid technological foundation, the proprietary engine, the full stack toolchains, which already internalized artificial intelligence capabilities, including AIGC capabilities, and we have seen early results from AI-powered gameplay. What we have achieved in the first 25 years of our game business was unimaginable when we started. We're at the dawn of a new time in our industry where productivity can be much more enhanced and creativity can be much more amplified. As we look ahead, we believe AI will fundamentally empower our creators to transcend the traditional development limits and reshape how interactive entertainment is created and experienced in the years to come. We think this is going to be the best time of the industry. With that, I would like to walk through several recent operational highlights, starting with our global expansion achievements. Where Winds Meet has gained strong global traction through a staged cross-platform launch, surpassing 80 million cumulative players and marking a meaningful milestone in our global expansion. Rooted in Eastern aesthetics and Wuxian storytelling, the game demonstrates how authentic culture content can resonate with players worldwide. Following its global launch, it ranked #2 on Steam's global top sellers chart, won PlayStation's November Players' Choice Award and topped iOS download chart across more than 60 regions. Ongoing live service updates resulted in sustained strong engagement globally and domestically, with the title delivering its highest monthly revenue and daily active user on record in China in December, reinforcing its long-term momentum. Meanwhile, Sword of Justice successfully expanded internationally in November, introducing its next-generation MMO experience to more audiences, topping download chart in multiple key Asian regions. This title is another example that illustrates how AI integrated production pipeline now directly elevate gameplay in large-scale online walls, delivering richer responsiveness, deeper interactivity and more immersive player experiences globally. Domestically, player engagement remains strong, supported by innovative live events and culturally grounded content that continues to deepen community resonance. Marvel Rivals, our superhero team-based PVP shooter, continues to build strong global momentum. The title earned broad industry recognition, including being named one of Time's Best Video Games of 2025, winning the Grand Award at PlayStation Partner Award of 2025 and ranking Steam's Platinum tier of Best of 2025. Continued seasonal update on new character releases has sustained strong player engagement with Season 6 featuring Deadpool, propelling the game to #2 globally and #1 in multiple markets, including the United States and Canada. A rapid expanding international player community is further reinforcing the long-term durability of this growing franchise. Looking ahead, we continue to strengthen our pipeline to support the next wave of global growth. Sea of Remnants began technical testing across China and selected global markets earlier this month, featuring a distinctive art style and richly imagined open wall. This ambitious original title aims to deliver a deeply immersive exploration experience with extensive player freedom where every naval journey feels unique. Development is also progressing steadily on ANANTA, our highly anticipated urban open wall title. Building on our available insight from previous testing, the team is diligently refining core systems and content to meet high expectations from our global community. Shifting to our domestic portfolio. Our long-standing franchises continue to demonstrate strong vitality supported by continuous content innovation and deeply engaged player communities. These titles remain a testament of our ability to operate a large-scale live service ecosystem over decades. Now in its 23rd year of operation, Fantasy Westward Journey Online delivered record high annual revenue in 2025, driven by historical peak revenue in the fourth quarter. Its ecosystem continues to evolve through innovative content designed to meet diverse player needs while preserving the classic mechanics cherished by long-term fans. The unlimited server, which is streamlined accessible gameplay, has been particularly effective at reigniting player enthusiasm. Fantasy Westward Journey Mobile also maintained strong momentum, delivering record high annual revenue in 2025. Diversified server models and ongoing content initiatives reinforce its leadership position within the MMO category. Beyond these legacy franchises, several established titles continue to deliver stable engagement and underscore the breadth of our diversified portfolio. Identity V is strengthening its global e-sports ecosystem through a major competitive events and ongoing content updates. Eggy Party maintains strong player engagement, supported by expanding gameplay modes and continued investment in its fast-growing UGC ecosystem. Infinite Borders continue to drive long-term retention through innovative gameplay updates and specialized server models that deepen strategic complexity. NARAKA: BLADEPOINT is expanding its global community and e-sports presence, highlighted by the successfully hosting the J-Cup World Championship and active content road map updates designed to sustain long-term player engagement. Beyond the games we developed in-house, we also continue to expand our ecosystem through strategic partnerships. Original titles have driven sustained engagements for the past year, achieving a record high revenue in China and reaffirming our long-term commitment to the market. The launch of World of Warcraft's, China-exclusive Titan Reforged server on November 14 sparked strong excitement among domestic players and interest from international influencers. World of Warcraft too once again saw enthusiastic support from Chinese players and set a new record in daily active users in China. Through close collaboration with our partners and shared commitment to putting player first, we remain focused on delivering high-quality experiences while strengthening our long-term global gaming ecosystem. We're also committed to delivering exceptional user experiences across our other business lines. Youdao continued to advance its AI-native strategy in 2025, driving healthy business development and achieving its first ever net cash inflow from operating activities. Its Learning Services segment delivered robust growth through ongoing iterations of its tutoring features, while online marketing services applied to improve advertisement, effectiveness and streamline advertising production. Smart Devices segment was supported by ongoing popularity of Youdao tutoring pen products. NetEase Cloud Music continued to advance the high-quality development of its ecosystem. Platform enriched its differentiated music catalog through both copyright collaborations and our in-house music production, while introducing new features and experience upgrades that enhance music discovery and listening. In 2025, the platform delivered steady year-over-year growth in both its active user base and overall engagement. Yanxuan continued to strengthen its positioning as a private label brand known for premium quality product across its key categories, supported by an expanded product lineup and enhancement to key products. In closing, the results and operational milestones we have discussed highlight a clear trajectory. NetEase is not merely adapting to the AI era. We are advancing it through industrial application of technologies we have been building for years. Our large-scale integration of AI is a natural extension of our long-standing strategy and leadership in technological innovation. By embedding AI into the core of our production pipelines and product design from the living breathing world of our games to intelligent productivity tools of Youdao and the personalized discovery algorithm of NetEase Cloud Music, we are exploring and shaping what's possible to future user experiences across a range of scenarios. Looking ahead, we remain focused on advancing technology and creative innovation to drive sustained growth. We view AI not as a replacement but a powerful amplifier of human ingenuity, enabling us to deliver to our users worldwide what was previously out of reach. By staying at the epicenter of this technical paradigm shift, we're uniquely positioned to unlock unprecedented long-term value for our users, creators and all of our stakeholders. That concludes William's comments. I will now provide a brief review of our 2025 annual results with a focus on the fourth quarter. Given the limited time on today's call, I will present some financial highlights in a streamlined manner. We encourage you to read through our press release issued earlier today for further details. As a reminder, all amounts are in RMB unless otherwise stated. Our total net revenue for 2025 were RMB 112.6 billion or USD 16.1 billion, representing a 7% increase year-over-year. For the fourth quarter, total revenues were RMB 27.5 billion or USD 3.9 billion. In 2025, net revenues from games and related value-added services reached RMB 92.1 billion, up 10% from 2024. In the fourth quarter, net revenues grew 3% year-over-year to RMB 22 billion. Specifically, net revenues from online games were RMB 89.6 billion for the full year, up 11% from 2024. In the fourth quarter, online game net revenues increased 4% year-over-year to RMB 21.3 billion. The quarter-over-quarter decrease in online games net revenue reflected the fact that the prior quarter benefited more -- benefited from the seasonal trends of more events triggering the summer holidays. The year-over-year growth in the fourth quarter was attributable to higher net revenues from self-developed games such as Fantasy Westward Journey Online and the newly launched games like Where Winds Meet and Marvel Rivals. Youdao's net revenues from 2025 increased approximately 5% year-over-year to RMB 5.9 billion. In the fourth quarter, net revenues rose 17% year-over-year to RMB 1.6 billion and were broadly stable quarter-over-quarter. The year-over-year increase in the fourth quarter was due to increased net revenues from Youdao's online marketing services and learning services. NetEase Cloud Music net revenue decreased 2% year-over-year to RMB 7.8 billion for the full year. In the fourth quarter, net revenues were RMB 2 billion, representing a 5% year-over-year increase and remaining broadly stable quarter-over-quarter. The year-over-year growth in the fourth quarter was driven by continued healthy growth in membership subscriptions. Revenue from social entertainment services and others, however, remained lower compared with the same period of last year. Net revenues from innovative business and others totaled RMB 6.8 billion for the full year. In the fourth quarter, net revenues were RMB 2 billion, representing a 10% decrease year-over-year, while increasing 42% quarter-over-quarter. The year-over-year decrease reflected an increase in certain intersegment transaction eliminations. The quarter-over-quarter increase was led by increased net revenues from Yanxuan advertising services and several other businesses included within that segment. For the year, our total gross profit margin was 64.3%. In the fourth quarter, our gross profit margin increased year-over-year to 64.2% from 60.8% in the year before. Looking ahead at the fourth quarter margins in more detail. Gross profit margin was RMB 17.5 billion for our games and related VAS compared with 66.7% in the same period of last year. The improvement reflects changes in product mix, including a lower proportion of net revenues from licensed games, which generally have lower margins than our self-developed titles. Our gross profit margin for Youdao was 45.1% compared with 47.8% in the same period of last year. The decrease was primarily driven by higher net revenue contribution from online marketing services, which has lower gross profit margin. Gross profit margin for NetEase Cloud Music was 34.7% in the fourth quarter versus 31.9% in the same period a year ago, primarily driven by steady growth in its core online music business. For innovative business and others, gross profit margin was 39.6% compared with 37.8% in the fourth quarter of 2024. The improvement was primarily driven by margin expansion in certain innovative business within the segment, along with the impact of certain intersegment elimination. Our total operating expenses for the fourth quarter were RMB 9.4 billion or 34% of our net revenues. Taking a closer look at our cost composition. Our selling and marketing expenses accounted for 14.1% of the total net revenue in the fourth quarter. For the full year 2025, the ratio was 13%, remaining broadly in line with prior year. Our R&D expenses remained stable at 16.1% of total net revenues in the fourth quarter. For the full year 2025, the ratio was 15.7%, broadly in line with 2024, reflecting our continued and consistent investment into content creation and product development. The effective tax rate was 14.8% for the full year and 16.4% for the fourth quarter. As a reminder, the effective tax rate is presented on an accrual basis and the tax credit vary across each of our entities at different time periods depending on applicable policies and our operations. Our non-GAAP net income attributable to shareholders for the fourth quarter totaled RMB 7.1 billion or USD 1 billion, down 27% year-over-year. Non-GAAP basic earnings per ADS for the quarter was USD 1.58 or USD 0.32 per share. For the full year, non-GAAP net income attributable to shareholders was up 11% to RMB 37.3 billion or USD 5.3 billion, which is USD 8.38 per ADS or USD 1.68 per share. Additionally, our cash position remains strong. As of year-end, our net cash position was about RMB 163.5 billion compared with RMB 131.5 billion at the end of 2024. In accordance with our dividend policy, we are pleased to report that our Board of Directors has approved a dividend of USD 0.232 per share or USD 1.16 per ADS. Lastly, our current USD 5 billion share repurchase program, we have repurchased approximately 22.1 million ADS at the end of December 31, 2025, for a total cost of approximately USD 2 billion. Thank you for your attention. We would now like to open the call to your questions. Operator, please. Operator: [Operator Instructions] Your first question comes from Jialong Shi with Nomura. Jialong Shi: [Foreign Language] I will translate my question. [Interpreted] Management has touched upon this AI topic in your opening remarks. I would like to explore a bit deeper into the impact of AI on the online gaming industry. We noticed Google's recent Project Genie, which some media claimed is the DeepSeek moment. Yes, some people believe AI tools like Google were for game development and therefore, accelerate the entry of new game developers. I mean, what's the impact of AI on the competitive landscape for the online industry? My follow-up question is we saw many Chinese Internet companies have decided to ramp up investments in both AI foundation models and computing power. Just wonder where NetEase primarily focused its AI investments? William Ding: [Foreign Language] Bill Pang: [Foreign Language] [Interpreted] Okay. Thank you, William. I will help on the translation. Yes. So first, you asked about the Genie, this -- regarding the potential impact of AI on the competitive landscape to our industry. First of all, we believe the market has largely misinterpreted Genie's impact on the gaming industry. Talking about lower barriers, we can look at what happened in other industry. For example, the handheld -- from the handheld cameras to smartphones, the barrier of video shooting has been continually lowered. However, the threshold for producing Hollywood level of movie has continued to rise. AI does lower the barriers on entry of game development. However, it has also significantly raised the success threshold for top-tier games. Surely, the widespread adoption of AI tools will help the explosion of creative content. However, the core barrier for commercial blockbuster hit has transited from pure production into integration capabilities, specifically how to seamlessly integrate AI technology with complex numeric system, long-term economies of the games and engaging social ecosystems. This requires extensive design, expertise and operational experiences, which create a deep moat that newcomers can hardly cross. In the year of AI, production cost is falling, but soft skills has becoming scarce -- more scarce and more valuable than ever, including the judgment -- the sense of judgment on high-level gameplay designs, insights into players' demand and refined aesthetic taste. On the other hand, we believe that the greater value of the Wan model is to inspire brand-new type of entertainment that differ from traditional games. Currently, Wan models are still far away from practical application. Today's games are built on certainty, predefined rules, strict events and logics. However, Wan model are probabilistic where every step is based on inference. The advantage is that they provide extremely high degree of freedom for creativity, while the disadvantage is their high uncertainty and difficult to control, making them unsuitable for traditional games. Furthermore, they currently face issues like severe latencies and high cost. Of course, we see the rapid iteration and evolution of these models, and it's just the beginning. We believe that it will be a real opportunity for action teams. NetEase will also actively embrace these cutting-edge technologies to explore brand-new interactive experiences. Regarding the focus on investment, we don't bluntly pursue general large language models. Instead, we aim at building AI expertise who understand the game best and achieve highly efficient AI applications through comprehensive and deep integration. In vertical areas, high-quality private data is more important than computing power with application scenarios more important than parameter scales. In terms of differentiated competitive advantages, data and proprietary vertical model is very important. Vertical models trained on our years of gaming data can improve our internal industrialization efficiency more accurately than general ones. Focus on -- and also focus on user experiences and commercialization. We focus on how AI translates into player experience. Currently, AI-native gameplay intelligence such as intelligent NPCs and also UGC tools implemented in several titles have effectively improved user retention, proving our capability to translate technology into commercial value. And we also have a group of versatile talent who are highly skilled in our industry. They're not only proficient in algorithm and graphic engines, but also they have deep understanding of game design. This cross-discipline capabilities is the key to ensure AI technology truly leads, truly lands and generate funds. We believe that the explosion of AI technology will accelerate the industry's integration process of the so-called survivor of the fittest process. We'll continue to maintain high-intensity investment vertical models on AI-native gameplay and talent nurturing process, leveraging AI technology to further expand our advantages in high-quality game development and long-term operations. Thank you. Operator: Your next question comes from Alicia Yap with Citigroup. Alicis a Yap: [Foreign Language] [Interpreted] My question is related to Where Winds Meet. The game has recently been a game of a very positive feedback among the overseas users. Could management share the retention rate of this overseas user? And also, what are the key factors contributing to the game's strong performance in abroad? And then furthermore, what unique gameplay mechanics or the content have particularly resonated with and attracted the international players? William Ding: [Foreign Language] Bill Pang: [Foreign Language] [Interpreted] Thank you, William. I will do the translation. Where Winds Meet, the overseas version launched on November 15. And after its global launch, it quickly gained overwhelming popularity and positive review rates across multiple markets. With continuous operation, it topped various global chart for multiple times, and it demonstrated outstanding performance in various operational metrics, including retention rate. Where Winds Meet has received widespread acclaim from global players for its immersive high-quality Wuxian open-world experience and with its low-pressure, high-freedom gameplay experience raised by separating single player and multiplayer models and its operational focus of free-to-play, high-frequency updates and custom-based monetization. At the same time, the cross-platform availability accommodates modern players' diverse habits and meet the varied needs from different type of players. Where Winds Meet features of Chinese Wuxian built a vivid and high-film Jianghu from multiple experience dimensions, including narrative comeback exploration. The combination of Eastern Wuxian-styled martial arts, likely in its skill system and open-world experiences deliver a fresh, deeply immersive experience for players. The combination of single player and multiplayer modes ensure that both those who enjoy immerse -- in-part exploration and players who enjoy social cooperation can find content they love at the same time. The continuous update of new maps, new Dungeons and competitive gameplay, along with constantly expanding huge and casual gameplay, it caters to a wide range of player preference, including single player, multiplayer combat and casual experiences. Thank you. Operator: Your next question comes from Alex Liu with Bank of America. Alex Liu: [Foreign Language] [Interpreted] Given the recent success of FWJ PC Unlimited server, can the management discuss whether this business model will be replicated across other legacy titles? And if that's the case, how should we think about the pace of rolling out of that gameplay? William Ding: [Foreign Language] Bill Pang: [Interpreted] Thank you, William. I will do the translation. In quick summary, Fantasy Westward Journey Online, the unlimited server has done 3 things: first is restore the most classic gameplay experience while providing a differentiated gameplay experience at the same time. The second is restructure the economy system while keeping the most important free trading. The third one is to comprehensively optimize the gaming process, specifically for the unlimited servers. And the classic experience lowers the entry barrier for players and differentiated experience that allow the overall player base to expand. The feasibility of this approach has been validated in this unlimited server. Our product team always maintain close interaction with the player community and listens to players' voice. We believe we'll continue to introduce updates across more titles, provide richer and smoother fresh experiences while restoring the confidence. Operator: The next question comes from Yang Liu with Morgan Stanley. Yang Liu: [Foreign Language] [Interpreted] Let me translate my question. My question is about Sea of Remnants, this new game. Could management update us in terms of the current development status and the feedback in the recent testing? And what is -- what will be the commercialization method? And what is the expected timing to launch the game, whether it's possible to launch that in summer this year and whether it will be a cross-platform global launch? Unknown Executive: [Foreign Language] Bill Pang: [Interpreted] Yes. Currently, the development is fully on track, and our plan is to launch that officially in Q3. In the current round of technical test that started on February 5, we are pleased to see active participation from players. Our second promotional video for word-of-mouth creepy MS to more than 10 million views on Bilibili. Based on the initial feedback, we're glad to see positive feedback regarding product quality and reputations from various parties. We're still observing and collecting player feedbacks, and we'll carry out targeted improvement on optimizations to further enhance the gaming experience and prepare for the official launch later this year. Thank you. Operator: The next question comes from Ritchie Sun with HSBC. Ritchie Sun: [Foreign Language] [Interpreted] First of all [indiscernible] in January. So how is the testing feedback? And how far away in terms of number of months before the launch? And do we have any plans to launch it in different market as well as different [indiscernible]. Secondly, regarding our plans to launch Auto Chess titles, there are 2 Auto Chess titles under testing [indiscernible] game license. Given that there has been some very top competitor in this genre, so what is the rationale and strategic thinking behind also entering this market? And how does NetEase product differentiate against the experienced competitor? Unknown Executive: [Foreign Language] Bill Pang: [Interpreted] Yes. The data and feedback from the closed test in January both met our expectations, first of all. The retention rate and player feedback on the content have both proved that the current product direction is sufficiently innovative and attractive. Currently, our product is still undergoing continuous refinement, aiming to deliver a higher degree of completion and richer content when it meets the market and launch as scheduled. We're targeting a simultaneous global launch across all platforms, including PC, mobile and console. Thank you. And William will answer the next -- the Auto Chess question. William Ding: [Foreign Language] Bill Pang: [Interpreted] So yes, the Auto Chess category is a mature category, and we are doing an elevation and differentiation within this proven category. We select the Chinese Demon and Ghost culture, making it unique in this genre. It inherently contains strong narrative tension and aesthetic potential. We aim to build a high-quality Auto Chess game that belongs to the domestic players and also building on the traditional classic of our historically proven high-quality development capabilities. Thank you. Operator: Your next question comes from Yang Bai with CICC. Yang Bai: [Foreign Language] [Interpreted] I will translate by myself. The company has made remarkable progress in the game globalization in recent years with early successes such as NARAKA and Marvel Rivals followed by titles like Where Winds Meet. I would like to ask the management -- in terms of overseas expansion strategies, can we see that the company has developed a replicable path to success? Regarding game render expansion, how does the company plan its product pipeline for high potential markets such as U.S. and Europe? About talent, what is company's global team structure and the future talent strategy? William Ding: [Foreign Language] Bill Pang: [Interpreted] Yes, sure. Our developed market expansion starting from 2018, starting from Lifestyle success in Japan. And now as you mentioned, we have NARAKA and we have Marvel Rivals and Where Winds Meet, all of them are very successful in Western market. And we have to say this success is not easily got. We spent a lot of efforts to make that happen. That reflects the company with the most R&D capabilities we have started to grasp a sense of the core success element in overseas market in Japan and Western market. And we believe we'll be able to produce more titles to be successful in this market in the future. And also regarding the question on talent, we believe China possesses the world's deepest talent pool in game development. And we are fully committed to cultivating top-tier creative minds to deliver premium games that resonate on a global scale. Thank you. Operator: Your next question comes from Lincoln Kong with Goldman Sachs. Lincoln Kong: [Foreign Language] [Interpreted] So the first question is about Marvel Rivals. So now that it has been alive for a year, how is the team evaluating its future life cycle? So what strategy are in place to sustain its momentum and continued product innovation here? My second question is a follow-up on AI. Basically, the AI application in the gaming industry is primarily focused on R&D assistance and NPC interaction at the moment. So as the capability continue to evolve, how does management view the potential for AI in gameplay design, content generation and long-term live service? So do we see any opportunity for AI-driven as a core gameplay to become the next major growth engine for the industry? So is planning any products where all those AI as a core-driven gameplay is in place? And additionally, how should we think about those personalized or service-oriented monetization model based on AI? William Ding: [Foreign Language] Bill Pang: [Interpreted] Yes. So first, we answered the Marvel Rivals question. First of all, Marvel Rivals rivals remain stable after 1 year of its launch, and our team continues to deliver innovative content and gameplay. Our recently launched Season 6 that will the first triple row hero has been widely welcomed by players. We believe that only excellent content with innovative experiences can sustain player engagement. Therefore, while maintaining our regular updates, we will continue to explore innovative experiences driven by new heroes, new gameplay modes and social interactions. So that's the question for Marvel Rivals. And regarding the question on AI. Yes, AI has been comprehensively integrated into our production workflow, becoming an indispensable asset in that significantly enhanced art programming and QA. The -- regarding AI's potential to deliver transformative player experiences, we are certain of this impact. It will happen. We believe NetEase is a pioneer in this field and is one of the companies and most well positioned to explore this opportunity, and we will aggressively to explore this opportunity. We have built a robust pipeline of R&D reserves for this next generation of AI-driven gameplay. Thank you. Operator: And that concludes the question-and-answer session. I would like to turn the conference back over to Brandi Piacente for any additional or closing comments. Brandi Piacente: Thank you once again for joining us today. If you have any further questions, please feel free to contact us directly. Have a great day. And for those listening from China, we wish you a Happy New Year. Thank you, everyone. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]
Conversation: Ciaran Potts: Good morning, everyone, and thank you for joining us today for our fourth quarter and full year 2025 results. As a reminder, statements in today's press releases and presentations and the comments made by management during this call may be considered forward-looking statements. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, the factors identified in the earnings release and in our SEC filings as well as those discussed in our investor update presentation on our medium-term plan. The company undertakes no obligation to revise any forward-looking statements. Today's remarks also refer to certain non-GAAP financial measures. Where applicable, reconciliations to the most comparable GAAP measures are included in today's earnings release and in the appendix to the accompanying presentation, which are available at investors.smurfitwestrock.com. In addition, today's remarks include statements about Smurfit Westrock's medium-term financial goals and capital allocation priorities. These goals are aspirational and actual performance may differ, possibly materially, and no guarantees are made that these goals will be met. For additional information, please refer to our medium-term plan related presentation. Tony will now present an abridged version of our fourth quarter results, after which we will take some questions before moving on to the medium-term plan. You'll note the additional level of disclosure in the appendix to the fourth quarter results presentation facilitating that shorter discussion. In the interest of time, I request those asking questions to restrict themselves to one. I'll now hand you over to Tony Smurfit, CEO of Smurfit Westrock. Anthony P. J. Smurfit: Thank you, Ciaran, and good morning or good afternoon to everyone from a warming up New York City. Today, I'm joined by Ken Bowles, our Executive Vice President and Group CFO, along with Saverio Mayer, Laurent Sellier and Alvaro Henao, who run our regions as we'll be presenting, as you know, the medium-term plan later. Before I get into the quarter, you'll have seen our recent announcement on the closure of our SBS machine in La Tuque, Quebec, which is another step in our portfolio optimization. Decisions such as this, while always difficult, are always carefully considered and any further portfolio optimizations will be done in an equally considered manner. In the context of what were difficult market conditions across many of our countries, I am very pleased with the performance we've delivered during the quarter and, of course, for the year. In the quarter, we reported USD 1.172 billion of adjusted EBITDA and an adjusted EBITDA of USD 4.939 billion for the year. This is, by far, the largest outturn by any packaging company in the world. And I'm incredibly proud of the performance of everyone in the company who has contributed towards this. In addition, in our first full year of operation, we have focused on cash, generating USD 679 million of adjusted free cash flow for the quarter and over USD 1.5 billion for the year. I view this as a key metric of our success. Finally, while this is far away from the summit of our ambitions, our adjusted margin at 15.5% for the quarter and a similar number for the year provides a great launching pad for our future success. Looking now at the results by region for the quarter. Our adjusted EBITDA in North America was down modestly year-on-year at $651 million and a margin of 14.7%. Conversely, our European margins expanded during the quarter to over 16% and an adjusted EBITDA of $438 million. And lastly, but by no means least, once again, we had a very strong performance in our Latin American region, with margins of over 24% and an adjusted EBITDA of over $130 million. With regard to volumes, you will see a sharp fall in our North American volume with stable volumes in Europe and a stronger growth in our Latin American region. We'll talk to these figures in a few moments as I go through the regions. Turning now to the group and regional highlights. I am very proud of the medium-term plan that we have created and will be presenting to you very shortly. This has been the accumulation of a year-long effort that has been done bottom up. While all of us here steered the direction of the plan every individual operating unit within the company has developed their ideas for the future and the outcomes of which you'll see shortly. During the first full year, the group continued to put its balance sheet on an ever more positive footing with successful refinancings and associated redemptions of bonds pushing the next maturity out to 2028 with an average interest rate of 4.64%. It is a fundamental philosophy of all of us in the group to have balance sheet strength. And you will see at year-end, we have reduced our leverage to 2.6x moving towards our target of 2x. Reflecting the confidence we have, we continue to have a progressive dividend. And again, as was noted last week, we have increased our dividend by a further 5%. Smurfit Westrock as was the case in Smurfit Kappa continued to see the dividend as a key pillar of our capital allocation framework. This was evidenced quite clearly during the COVID years when others cut or delayed their dividend but we paid in full. Turning now to the regions. Let me start with North America. When we arrived in the legacy WestRock organization and following our first 6 months, we identified there was business in our portfolio that was heavily loss-making for the company and for the individual operating units. Our fundamental philosophy, and that is why we have successfully stood the test of time is that every unit must be able to justify its own existence. As such, we have shared uneconomic business, which will be replaced. To give you and me confidence, half of the 1.2 billion square meters we have lost has already been replaced and is in the process of being implemented in our system. And our prospects in what we call our pipeline significantly exceed the business that has been lost, both in terms of volume and quality. The short-term effect of the low volume loss is the need for us to take additional downtime in the mill system, which we've taken in Q4 amounting to a cost of about $85 million. A hallmark of this company, our company, has always been working capital management and cash generation. So this action has been necessary to make sure we optimize our system. In the year gone by, we have significantly reduced the number of loss makers already within the organization. We have also optimized our footprint with some closures, which we will continue to proactively evaluate reflecting our recent announcement and other closures during 2025. We've already started implementing our investment programs, and most importantly, we've been putting in place the right people to take our North American business forward. With regard to EMEA and APAC, we have a very, very good business in this region, and our margins reflect that. If you consider how the rest of the whole industry is performing and you see where we currently sit, I'm sure you'll recognize that our positioning in this area is indeed very strong. What is also very interesting is that our consumer business is adding a lot to our offering, to our strong customer base as we -- and we'll talk about this shortly, as we see nothing but opportunities to continue to progress this business alongside our strong corrugated business. Of course, in light of the current paper market situation, we are looking at our footprint with a continuing focus on portfolio optimization. Our Latin American business remains incredibly strong with great margins and a seamless integration achieved between both legacy Smurfit Kappa and WestRock. I'll let Alvaro reflect on this in a few moments. As I stated at the outset, our full year -- our first full year of operation, integration and development at Smurfit Westrock has been truly outstanding, notwithstanding that the general economic environment has been as difficult as I have seen in my lifetime for such an extended period of time. Our significant achievements, which everyone in the company is proud of as it sits within our vision is that we have been recognized by Forbes, Fortune and Time Magazine as a leader and one of the world's great companies. Our designers continue to meet and exceed our customers' needs and our operations continue to deliver superior performance in quality and service. And this is regularly recognized with over 230 awards received by customers and suppliers. Our consistent improvement in quality, productivity and utilization and on-time and full delivery for customers, is what is driving many of the recognitions and awards we have received. In closing out the year, we recognize that we have well overachieved our initial synergy target of $400 million. And while this is -- much of this is masked by the general economic activity we see, we believe this sets us up to be a much more efficient and leaner organization into the future. And lastly, as I mentioned, our improved balance sheet of 2.6x levered has been recognized by Fitch with an upgrade to BBB+. Finally, turning to our outlook, notwithstanding that we've had significant weather events, both in Europe and, of course, here in the United States, and we're continuing to work through the impact of these, the year has begun with a generally better industry operating environment. Given our progress of developing new and high-quality business, the enthusiasm of our teams and our expectation for an improving economy in the second half of the year, we currently expect the first quarter adjusted EBITDA of between $1.1 billion and $1.2 billion with a full year 2026 adjusted EBITDA between USD 5 billion and USD 5.3 billion. With the plan that we have in place to invest and grow our business, we remain extremely confident in the future of Smurfit Westrock as the go-to paper and packaging company for customers, for talented employees, for suppliers and, of course, for shareholders in the years ahead. In summary, full year 2025 has been about establishing a strong foundation for future performance and for future success. I thank you all for your attention. And now Ken and I will take any questions on the results before moving on to the medium-term plan. Thank you. Unknown Analyst: Tony, in terms of the -- in terms of the outlook for this year, can you talk to the extent that pricing is already baked into your forecast or not? And then ultimately, recognizing you don't manage the business week by week, month by month, what is the expectation for volume progressions, especially within corrugated, but in box board over the course of the year? Anthony P. J. Smurfit: No, we don't do it week by week, day by day, but Ken, I'll let you take the pricing piece. Our expectation, George, is that we saw a firming up of order books in the latter part of December. We felt that the first part of the fourth quarter was weak, and then that sort of improved as we went through the quarter. And we were seeing a decent order books across most of the businesses in which we operate and countries in which we operate as we progressed in January. That has been somewhat interrupted a little bit by the weather and that will have an effect. We've seen the vast majority of the effects, but they're still -- we're still working through some of the logistics of that disruption as we're even in middle of February. It seems a little bit warmer now than it was, but it's still -- it's only last Saturday that it started to warm up a little bit. So we would see volumes in the latter half of the year, get back to more normalized levels. And certainly, with regard to the stimulus that could be happening here in the United States, we think that, that could be a positive for the business here and in the rest of our businesses. Ken Bowles: George, so the long and the short answer is no. So for the first quarter, clearly not because you wouldn't expect anything anyway. But for the year, no, we haven't baked in any aspect of it because our style, if you like, would be to wait until it's in before we can consider it. I think also you can focus on the price increases, there's outputs there in terms of other paper grades might happen there. So the net-net is we feel comfortable with the 5 to 5.3 based on where everything is now without baking in anything else. Ciaran Potts: Philip? Philip Ng: Phil Ng from Jefferies. Tony, can you give us a little feel for where you are in the process of churning some of these lower loss-making contracts? And you talked about a robust pipeline where you can more than offset that. What does that actually mean? Have you secured contracts? And how does that kind of layer in, I guess, to the puts and takes of those dynamics? Anthony P. J. Smurfit: Phil, that's a great question. I'm going to hand that over to the guy you want to hear from on that, the guy, the coal face, which is Laurent, but basically, I think I am really happy. Most of the bad stuff has gone. We've still got a couple of contracts that will phase out or we might keep or we might lose because we're under contract with really bad volumes there. So -- but the price is so bad, I would expect we'll keep it, but at a much higher margin. But then I'll let you talk, Laurent, about the -- there's a mic there -- about how successful we've been. And I'm really, really happy with how we're doing. Laurent Sellier: So it's something that unravels over time as you can imagine. So the contract when we lose the volume, that tends to go pretty fast because we terminate the volumes and then you need to rebuild. What Tony referred to in terms of pipeline, is you can imagine layers of conversations, one very close to happening; other one, little bit less warm and others that are more like prospects. But the overall perspective and prospect is very encouraging. And that's the reason why we've gone exactly this way. We had very underperforming contracts. We needed to stop them at some point and be ready to take on more volume and very good margin conditions over time. Anthony P. J. Smurfit: The way I'd rephrase it is you're not going to make an omelet unless you break an egg. So therefore, we had to get rid of this stuff. So we have now machine capacity for our people to sell. And you've got a couple of hundred salespeople across the United States who have capacity to sell now. And some of those will be incredibly successful at selling and some of them will be less successful. Those that are less successful won't be in the company longer term and we'll make sure that we are successful because we have capacity to sell and get paid for it. And that's -- when you lock yourself up, Phil, with really bad volume that you can't make any money on, then you're stuck. So we have to break that egg, so to speak. Philip Ng: Just a follow-up to that, Tony. In terms of the approach, I guess, going forward, how is the sales force prospecting these types of customers perhaps differently under your watch versus a year ago? And any more perspective on these contracts that are perceived to be good? Obviously, it's focused on profitability, but any more color in terms of, is it more commoditized versus non-commoditized business, regional versus national accounts? Just give us a little more perspective on what makes a good customer? Anthony P. J. Smurfit: A good customer is a customer you can bring value to and who you can solve their problems. And every customer has a different problem that you need to identify with and a good salesperson is finding those problems and identifying what -- how he can help solve our customers' problems. I mean, we'll talk about it in the medium-term plan, but our suite of tools, our suite of applications is second to none in the world. And so we're able to solve any customer's problem to make them -- help them in their own marketplaces. And that's how we get to the point where we're not selling just a box, we're selling packaging solutions for them. It could be redesigned. It can be supply chain. It can be environmental. It can be whatever they need, and it's up to us to make sure that our sales teams, both regionally and nationally are able to sell. And that's what we've been doing for decades in North America, in Latin America, and it's something that we're just good at, frankly, that -- and we'll bring -- make sure that, that kind of knowledge transfer, both from -- because there are some great things done here in North America. I mean, you want to see some of the designs that are done in our merchandising and display business where we have a great team that's innovating. So the mix of having everything together is incredibly powerful. It doesn't mean to say that it's easy. We're not going to be successful every day with every customer. But over time, with just 20% of the market here, then we can -- we've got 80% to go for. And maybe some of that is lousy, and we don't want it, but a lot of it is pretty good, and we'll get it. Ken Bowles: I think as well, Phil, and Tony has spoke -- we both have spoken about it across the year is that kind of key underpin of quality and service in terms of the customer. I think it's fair to say that in the last year or so OTIF and PPM and all those kind of metrics that are very much part of how we do business and it goes to what we bring to the customer and how we can bring value on time [indiscernible] and quality are kind of the key underpins to that. So to enable Laurent to have the conversations we have has to come back to quality and service. And I think that's been a step change in thinking how you equally approach the customer. Laurent Sellier: And the one thing we've changed in addition is the organization bringing the sales force much closer to the operating units. So that gives a lot of flexibility and also much more direct contact between the sales force and the potential customers, which I think is a great plus. It's still in the making, but that's happening at pace. Anthony P. J. Smurfit: And just one final point before I move off , we also allow our salespeople to entertain our customers, make sure that they can buy them a drink, which was -- nothing was allowed to be done before. They just said just pure sell on price. And that's not what we do. We sell on making sure that we give our customers value for what they have, we can give them. Lewis Roxburgh: I'm Lewis Roxburgh from Goodbody. And just on that value over volume piece. Just wondered sort of how that piece will contribute. Do you think that will translate to pricing outperforming the benchmark or maybe cost takeout from rightsizing and efficiency? Or in terms of volume, we've seen some deliberate drop off this year, just seeing how that -- how you see that sort of evolve? Do you think that will sort of close more towards, as you said, normalized levels of demand towards the end of this year? Anthony P. J. Smurfit: Thanks, Lewis. We will certainly -- I mean, I think if you look at our performance in Europe, for example, we've gained market share because of our real laser-like focus on our ability to serve our customers with high quality, good design and value for the customer. So that's what we've done, and that's where we're gaining market share. If your question is, should we be lapping positively this time next year? The answer is yes. I'll be very disappointed if we're not. And I -- as I've said and as Laurent has said, we've got a lot of irons in the fire with customers, and I would expect to land a lot of those. We have landed a lot, and I've been very, very happy with the momentum of our business. I don't know if anyone wants to add anything? Mark Weintraub: Mark Weintraub at Seaport Research Partners. Thank you, first of all, for the bridges, which you provided kind of on the look back, that's super helpful. And so get a little, ask for a little more. So as we look at the 2026 outlook, pricing, you're not using that as sort of an ingredient on what you have is an improvement '26 over 2025. Presumably, inflation is going to be working against us as it always is. Can you help us, is it -- are these synergies, cost takeouts, I'm assuming the first half of the year on volume is tough, so maybe you're going to be better year-over-year in the second half. Can you help us understand how we can get to better EBITDA in 2026 than 2025 with those drivers? Ken Bowles: Yes. Mark, thank you. Yes, the bridges were -- we appreciate your patients on the bridges, but trust me, they cost us as much frustration as they did you in getting there. So it's a big organization to put together. But thankfully, I think you've got everything you need. In terms of '26 and what's happening there, price and volume will be what it is. We've talked about that. I think if you think about the synergy program, there's still some synergies to come through in 2026 in that program, and that's probably in the range of $40 million to $50 million in reality. In terms of -- energy is probably a net negative in the range of kind of $60 million to $70 million maybe. And then fiber generally is probably about $50 million of a tailwind. So I suppose we're at a place where generally at the start of the year, there's a lot of moving parts. But in terms of certainty pieces based on forward prices, fiber, energy and the synergy piece and probably the fixed pieces in terms of how they might trade out, price and volume will be what it is. But I think it's also -- you talk about inflation, but remember, Laurent, Saverio, Alvaro have very active cost takeout programs that are designed just to offset inflation. So not part of the synergy program because we know that when you wake up on Jan 1, you're already behind in terms of wage inflation, for example, labor inflation. So you know you've got a job to do it before you start. And that's fundamentally built into the budget process and everything else. So we tend to take cost takeout inflation as kind of one bucket at this point. So no, that's our job to kind of sort that out in terms of how we deal with that cost. The other moving parts are price volume for the market and those are kind of discrete items that I can give you now. But the range of 5 to 5.3 is probably designed to give a bit of flex and latitude in terms of how we see the moving parts of early February versus how the year might trade out. I think you're probably correct. I think everybody kind of sees the second half as being progressively better than the first half based on -- and you'd get that anyway from the simple math. So I think that's probably what we're thinking the same way as you, second half is better than the first half. But moving parts, relatively set for some things, but lot to play for the rest. Anthony P. J. Smurfit: Mark, just before you ask your second question, I just want to make a point that Smurfit -- old Smurfit was always about looking for the most optimized way to spend capital as quickly as possible to get the best return. And maybe to your point that you were making yesterday about quick wins... Laurent Sellier: A program that we've rolled out almost at the onset of coming together of the 2 companies, which has identified low-hanging fruits that might not necessarily be very significant amount, but you do send a message in the organization that if you guys have a good return come up and that will be fast tracked in the system. And that message goes around as you can imagine, pretty fast. Mark Weintraub: Great. And so actually just real quick follow-up is just to understand downtime kind of in the thought process because obviously, that was costly this year. Is that a big component of potential upside or now are we going to potentially have a lot more potential there in 2027 and beyond because you're still embedding in a fair bit of downtime for '26? Ken Bowles: I think it's fair to say, to be seen, Mark. I mean, we clearly proactively manage down time. You would have seen that in the fourth quarter and our philosophy, and Tony spoke about it very directly there is the reality is you can ignore the reality of building stocks for no purpose and tying up working capital and external warehouses and the additional incremental cost that goes with that. So our preference would be to manage downtime as we see fit in the context of the external market. I'm not going to predict downtime going forward yet. That's not where we are. But clearly, downtime is worthwhile when you just don't see the demand for the product on the outside, but you're building unnecessary stocks. You don't get a working capital inflow or you don't get a free cash flow results like we have, would have been proactive about the whole picture. And I suppose that the risk sometimes is that you focus on one side of the equation in terms of the EBITDA side, but you have to be willing to take the brave step and say, no, no, actually, the real job here is to manage the inventory in the system and wait for demand to come back and then fill it. So downtime, quarter 1 is always a heavy quarter for maintenance downtime. So that would clearly be there. But beyond that, we'll wait and see how the demand environment picks up. Anthony P. J. Smurfit: I think one of the big opportunities we have is to reduce stocks quite significantly. And we certainly didn't want to build them to then start to work on reducing them. So if you look at what Saverio is doing and we've done in Latin America under Alvaro and now what we're starting to do in North America under Laurent is to really grade optimize our system so that we don't have as many widths. I don't know how many widths have we come down from in Latin America. We've come down from 18 widths down to 3, which creates a little bit more waste in your corrugated plants, but way less working capital needs. But you also have to adjust your working capital at the same time. So that might result in some downtime that we take. In the North America, we're only at the start. Laurent Sellier: The number of indents were very high. And so probably you're starting from a position of 200 different types of options and the objective for -- as the first plan is to bring it down to 40 and then bringing that further. The discipline there is also what matters and getting on board, and we've had incredible support from all sides in the business, understanding how this improves the overall in a very positive manner. Anthony Pettinari: Anthony Pettinari from Citi. Tony, you talked about the consumer business adding a lot to the company. And I guess just with -- in that regard and with the La Tuque announcement, can you just talk a little bit more about kind of the current performance of the North American consumer business, maybe expectations for '26 that are embedded in your guide? And then just generally kind of the dynamic between the 3 grades that you produce, market conditions and what it is that you think that really adds to the company for consumer being there? Anthony P. J. Smurfit: That's a very big question, Anthony. That will take a long time. Well, let me start by saying, we have an incredible consumer business here in the United States with, let's say, 80% of them at the very top of their market. And then the other 20% we still have to -- 20% we have to work with. So we have a very, very strong footprint. We have very strong potential for profitability and cash generation. And so we think this is a very good business on the converting side with very good customers, and there is a very big lean to -- across our customer base where serving our customers with both consumer board and with corrugated is a very big positive for them. And that translates across the region. So we just landed a large contract with a large drinks company, whereby we're going to be serving them on both sides, both continents and much more business now in our corrugated business than we had before because of our consumer relationship. And that's something that Saverio is leveraging off on heavily for the consumer business because we're a very big business in Europe, and our consumer business was very centered on very big accounts in Europe with the exception of the health and beauty, but the -- and so we have a lot of leverage that we are bringing forward to our consumer business to really very much improve those businesses in Europe. And I think we're very happy that, that's a business and area of expansion for us. With regard to mills, that's a very big question. What I would say that -- I don't want to steal your thunder from later on, but we're grade agnostic. We have 3 grades that we produce. I'm going to let Laurent do it because I'm going to steal his thunder for later on. Laurent Sellier: I can do it the second time later on. And this principle that Tony just referred to of being grade agnostic is really central. I mean, a lot of the grades can be interchange, and it's all going to be about visibility on the shelf, brightness. I mean, all sorts of different factors basically that you can play with. And the strengths that we have is operating from a space where we can offer whatever the customer requires as opposed to trying to feed them with something that we would have in excess or in any form or shape driven. And that has created an outstanding response with our customers, addressing their needs and working with them to understand how best to fit their purpose. It's actually -- it goes beyond just within the realm of consumer packaging. And in some instances, we can also offer microflute, for instance, corrugated instead of consumers. So this whole suite of options is really creating very high-quality conversations. And we're in a unique position in that standpoint. Gabe Hajde: Gabe, Wells Fargo. A couple of questions. Just on the downtime, can you remind us what it was for the full year and if you're willing to split it out between the corrugated and the consumer business, so a point of clarification there. But more importantly, you talked about $85 million of downtime. And from your vantage point, what is the optimal asset utilization on the mill side? Like what do you think about? And if you distinguish between U.S. and Europe, that would be great. And then lastly, you talked about, I think, getting half of the 1.2 billion square meters back. Give us a time frame on that? And then does that inform your decision on future asset optimization or those kind of mutually exclusive decisions? Anthony P. J. Smurfit: That's a big one. The -- we are in the process of getting half that business back, and that will be probably all implemented, I would guess, Q1 or latest early part of Q2 of the business that we've lost. We've got half of it back. I would say that the other $1.2 billion that we have in our pipeline, I would expect about half of that to come back in this year and the rest will flow in through the start of next year. But then that's going to be a moving thing. There'll be some come in, some come off, so -- and we're likely to lose some of this other business that's still under contract that's very badly priced. So there's always swings and roundabouts in business coming and going. With regard to downtime... Ken Bowles: Gabe, so for the year, $220 million is the final accounts between being corrugated and consumer for segmented reasons and disclosure reasons. You were 85% in the fourth quarter. In terms of utilization rates, I'm looking at the 2 men who know better than me. But in Europe, 92% in the Bovis, probably where he'd like to be, mid-90s for North America is where he'd like to be generally. And in Europe, clearly, that's easily achieved given the level of integration. So we always operate way [indiscernible] simply because we don't need to do anything else by less on the outside. Laurent is working actively towards the mid-90s for the system. Anthony P. J. Smurfit: So we'll stop right there. If anybody wants to grab a quick coffee, we'll go straight into the medium-term plan. So you want to grab a coffee quickly or order or whatever. [Break] Ciaran Potts: So thank you all. If you could please take your seats again. We'll get started into the medium-term plan presentation. Anthony P. J. Smurfit: Okay. So good morning again, and good afternoon to those of you looking from Europe. Thank you for your attention. As I mentioned a few minutes ago, I'm delighted to be joined by Ken Bowles, our Executive Vice President and Group CFO. Ken is a man with vast experience. And together, we saw off an attack to our independence and successfully created one of the world's largest fiber-based packaging companies. Also in attendance is Laurent Sellier, who you just met, who is CEO of Smurfit Westrock North America, a man who's worked his way up during a 30-year career from Europe to Latin America and now to North America. Saverio Mayer, our CEO of EMEA and APAC, is actually in the business longer than I am. Saverio's career began selling boxes and over a subsequent 40-year period, has held many senior management positions, including 10 years ago when he became CEO of Europe. And I think you'll all agree Europe's performance and indeed, its consistent outperformance during the period speaks to his talent and leadership. And again, last but by no means least, Alvaro Henao, our Latin American CEO. He's been with the company for over 35 years. He's held many financial and operational roles before becoming CEO of our incredible Latin American business. As you'll have gathered from earlier on today, I'm extremely proud of this proven management team as they not only hold the values of the company close to their heart, but more importantly, they instill those values in both existing and new employees in Smurfit Westrock. They are the best reflection of our performance-led culture, which you'll hear about later today. Thank you, guys, for being with us. We are a global leader, delivering value for customers, for employees, and we passionately believe in delivering value for our shareholders. The team presenting today are also very significant shareholders. The plan being presented to you has not been prepared, as I mentioned earlier, top-down by myself and Ken and this team sitting in the office. It presents opportunities identified by the teams with boots on the ground who see and want to grasp those opportunities. That does not mean to say that we'll get everything right, of course, not, all the time. But given a normal market, a normal world, we believe we will execute this plan and deliver the numbers you see on this slide. A key opportunity is significant profit growth in North America as we change and sharpen our operational and commercial focus and introduce new ideas and further investment in this region. EMEA is expected to continue to deliver strong performance against peers, remaining at the top of the tree in innovation, sustainability and adjusted EBITDA margin. In Latin America, our goal is to continue to deliver higher margins and significant growth. This region presents significant opportunity for superior growth, both organically and inorganically. The goal of our plan is to -- is an adjusted EBITDA growth to USD 7 billion by the end of 2030 with an adjusted EBITDA CAGR growth of 7% per annum and margin expansion of over 300 basis points. We expect to generate significant adjusted free cash flow of some $14 billion between 2026 and 2030 with an adjusted free cash flow CAGR of 17%. As part of the plan, subject to the usual caveats, of course, is our Board's and our company's commitment to continue to return capital to shareholders. Assuming our assumptions and market conditions hold, we expect subject to appropriate Board approvals and discretion, dividends of approximately USD 5 billion during the period and to commence share buybacks from 2027 onwards. It is important to note that this plan does not include any pricing momentum. When I took over as CEO of Smurfit Kappa and now Smurfit Westrock, I set out a vision for this company. It is to dynamically deliver and sustainably deliver secure, which means a strong balance sheet; superior, which means outperforming all or the vast majority of our competitors and returns, which aims to deliver long-term value, not at the expense of short-term value for our shareholders. I've always set out that I want Smurfit Westrock to be one of the great companies of the world because great companies attract great people who deliver great performance. Our values are at the core of everything that we do in Smurfit Westrock. First, we must ensure that all of our employees go home safely from their jobs. One accident is too many and our mantra is no job is so important that it cannot be done safely. Loyalty is very important to us as we see it as mutual. We want loyal people who will bring their experience, their knowledge, their talent to the organization. We must have people with the utmost integrity, which we define as doing the right thing even when no one is looking. And we ask for respect throughout the organization for anyone who interacts within the company because our values guide and meaningfully contribute to our performance. Smurfit Westrock is the leader in innovation and sustainable packaging. There is no one like us in the world. With USD 31 billion in sales, we have approximately 97,000 employees operating in 40 countries and our largest region being North America, representing 58% of our sales. What does being the best -- the #1 global player mean? It means we are able to continuously adopt best practice, best transfer of information, best transfer of ideas, best transfer of people, best transfer of knowledge across our world in a seamless way. We can also transfer capital and capacity across regions to continually optimize our asset base and asset efficiency. We've been at this for a long time. We are multicultural, whereas many other companies are not. This is a particular skill set of our company, and it's the culture we've always had during our existence. We operate in 40 countries and the #1 or #2 player in most of those. This strong position allows our customers to work with us easily in any country, supported by clear and constant communication. Whether it's sharing best practice or decisions around capital allocation, we aim to make sure that the lines of communication are as short as possible, not layered with bureaucracy. This is just part of our DNA. Our geographic spread and our ability to serve across regions and countries is highly valued by customers who also operate globally. This team, our team, your team are passionate about what we do, and we have a long and proven track record of superior performance and delivery, which is why we have been around as long as we have been. Our longevity is supported by our product range in both corrugated and consumer packaging. Fiber-based packaging is essential, is growing and is not only a transport medium, but is increasingly a merchandising medium. Fiber-based packaging is and remains the most renewable, the most recyclable, the most biodegradable and the most environmentally friendly sustainable packaging medium that exists today. Smurfit Westrock has an unrivaled geographically balanced and highly integrated packaging solutions business delivering value for customers. Our product range of corrugated and containerboard business covers all areas of this packaging from heavy-duty boxes for chemicals to lightweight packaging for applications such as e-commerce. We also offer specialty printing from digital to litho lamination to preprint to give our customers the widest possible choice. And we're also one of the largest producers globally in the growing and dynamic Bag-in-Box market. Our consumer packaging operations offer our customers even more breadth and depth in fulfilling their packaging needs. Our consumer business provides packaging in primarily food and beverage and health and beauty with bespoke machinery applications. This direct-to-end consumer business adds another strong leg for future performance and growth. Our fiber-based products are complementary and highly valued by our customers, fulfilling both their primary and secondary packaging needs. We bring innovation to life through leading edge technology and a global team of over 2,000 designers interlinked. Every day, they create packaging that helps our customers win in their markets, optimize their supply chains, improve their sustainability credentials. It is global intelligence available delivered locally. Our innovation ecosystem is powered by our digital Inno tools used nearly 1,000 times a day, and we're only starting from Utah to Buenos Aires, from Shanghai to Warsaw, supported by a network of over 34 experience centers, which operate as our innovation hubs, if you will. These AI data-fueled applications win business and ensure we better implement solutions that are possible, profitable, desirable and better for the planet. ShelfSmart AI is an advanced AI tool based on insights from over 400,000 shopper studies to instantly predict on-shelf impact of packaging design. SupplySmart Analyzer uses data from 160,000 supply chains to optimize packaging and logistics, reducing overpackaging and improving efficiency. Innobook with over 2,000 designers inputting share 9,000-plus creative solutions, giving every customer access to the creative power of over 2,000 designers across our world. And Paper to Box AI, a packaging and material design engine powered by machine learning algorithms has over 50 million data points, engineering fit-for-purpose boxes with the right materials and low environmental impact. Innovation is ultimately about delivering better solutions and ensuring they are implemented fast and right first time to create real tangible results for our customers. Our unique Design2Market approach combines our AI-driven Inno tools with our globally connected innovation system to deliver market-ready solutions in weeks instead of months. This approach has proven to be massively successful with a near 50% success rate for new business. So what is our secret sauce, our winning formula in Smurfit Westrock? It begins and ends with our culture, performance-led, customer-centric, which drives both accountability and returns. The first step is attracting, retaining and developing the right people. While you hear everyone say that people are the greatest asset, we clearly believe it, and we invest behind it. In order to make sure we have the talent, not only for today but for the future, our best-in-class development programs, such as our 10-year partnership, our Open Leadership Program with INSEAD where over 700 managers of senior leadership have participated, and they're all aimed at ensuring both our culture and our values are retained. Our company, as I hope you gathered, is completely focused on innovation and quality. This leads to a consistent and relentless focus on creating value for customers through our knowledge base and applications. Our capital allocation framework is proven, disciplined, returns-focused with flexibility and agility built in. We invest to develop world-class assets in a step-by-step disciplined way, avoiding grandiose projects, all the time making sure that our shareholders are rewarded through a progressive dividend policy and maintaining strength and flexibility of our balance sheet. And finally, in order to attract, retain and foster talent, we make sure that our long-term incentive programs are aligned with shareholders. Let me be clear, our global integrated platform is a competitive strength, delivering value for our customers and for our shareholders. I'll now hand you over to Laurent, who's going to explain to you how we're going to unlock the significant value from our North American business. Laurent? Laurent Sellier: Thanks, Tony, and good morning again, everyone. Without a doubt, the North American business, which I have the privilege to run, is the biggest value creation opportunity in our medium-term plan. The region has the scale to move the needle as well as the potential to unlock even more value for shareholders and customers. We're positioning this business to lead the industry, and I feel very excited about the future. The North American region covers the U.S., Mexico and Canada, and we're already starting from a place of leadership, either #1 or #2 in all of our core segments. We're supported by just under 50,000 people across more than 300 locations in the region, which gives us unparalleled geographic presence. We generate $19 billion in revenue and $3 billion in adjusted EBITDA, representing roughly 60% of our company's earnings. We offer an unmatched and fully integrated product range from raw material to paper, to converting in both corrugated and consumer packaging as well as a series of specialty businesses such as machine system, merchandising and display that all contribute to an unrivaled end-to-end offering. This allows us to serve a broad customer base. And no matter what the packaging challenges, we are best positioned to deliver a customer-centric fiber-based solution. Separately, given our position in both paperboard and containerboard, we can support our growth in LatAm and our European business. In our first full year, we acted decisively and effectively and have already made significant progress towards building a stronger foundation. We completed a successful integration effort, exceeding our regional synergy target. We also decluttered the organization and reduced our headcount by more than 4,600 people since the combination. We introduced the owner-operator model, which promotes a performance-led culture that empowers local teams and gives them the space and tools to be successful. Each plant is now a profit center and intercompany transactions between paper and conversion are strictly at arm's length. Commercially, we have focused on value creation. We've made intentional choices that reduce short-term volumes from loss-making accounts, allowing us to rebuild positions at better margins over time. We brought our commercial organization closer to the customers and the plants that serve them. We bolstered the already-strong innovation capabilities of the legacy companies. There is a lot of potential here, which I will expand on in a minute. Since I arrived in North America 18 months ago, I had the opportunity to surround myself with a phenomenal new team of very experienced and determined people who deliver day in, day out, and we will continue to invest to make the team stronger and more impactful. Regarding operations, we've taken decisive actions to shut inefficient capacity, both in paper and in converting. In addition, we have significantly reduced the number of loss-making operations within the region despite a very challenging backdrop. Finally, we invested over $1.2 billion last year in the business, which includes a number of high-return quick wins program with more to come. All these actions are both structural and deliberate. They've simplified how we operate, increased accountability and positioned us for long-term value creation. Despite the progress we've already made, North America still represents the largest opportunity region within our company, as I said. Our strategic plan outlines a path to bring our $3 billion in adjusted EBITDA to $4.2 billion over the next 5 years, which represents around a 7% CAGR, ending the period at over 20% margin. This is a margin enrichment of 400 basis points, 200 of which come from base business investment and 200 coming from strategic actions. We believe that innovation is core to our value creation proposition as emphasized by Tony. The combination of our 3 regions offers a wealth of expertise, and we're determined to shamelessly leverage the European and Latin American knowledge as I am sure they're determined to leverage ours. In particular, the suite of tools that Tony indicated in his presentation is a very powerful way to deliver customer value consistently, delivering growth by solving customers' challenges. Grade restructurings in paperboard and rebalancing our long position in the most exposed grades such as SBS is essential. Monday's announcement of the La Tuque PM4 shutdown is a perfect example. We're present in all grades, intend to remain in all grades, but making the system stronger. I have already seen some significant wins within our SBS business. Strategic investments will cover both conversion, focusing on automation, capabilities and quality. And on paper, focusing on operational excellence, performance packaging and lightweighting, both of which will deliver substantial value. This, of course, is underpinned by significant investments in systems and AI tools that accelerate our progress and make it more sustainable. Finally, we will continue to review our system to optimize our industrial footprint, which will allow us to optimize the cost base of the business. I mentioned customer value creation on the previous slides. One of the key enablers to succeed on that promise is our unique end-to-end fiber-based packaging offering, as I said. Our full suite of containerboard and paperboard grades allows us to be substrate agnostic. In consumer packaging, for instance, we have successfully migrated some packaging from CRB to SBS, from CRB to CUK and so on, purely responding to customer needs. Similarly, in containerboard, the availability of virgin and recycled grades as well as the full range of white containerboard allows us to proactively solve problems with a customer-first mindset. We can also respond to customer requests to move from corrugated to consumer packaging or vice versa. Our range of capabilities allows us to be a one-stop shop, whether the customer is looking for primary packaging, secondary shelf-ready packaging or tertiary logistics packaging, a display solution to increase visibility at point of sale or all of the above, we can help. We can also offer a full suite of options regarding print that allows for unrivaled product visibility, including a state-of-the-art e-commerce and packing experience if needed. And if our customers require machine systems to increase their packing efficiency and automation, we can do that, too. Finally, and once again, we strongly believe in innovation. By increasing profit for customers via top line growth, cost improvements or both, we expand the room for our own margins and gain the right to win. Our innovation capabilities cover performance packaging, supply chain efficiency, plastic substitution, sustainability and on-shelf presence. In addition to our Dallas and Mexico City experience centers, we've recently opened a new one in Richmond next to our paper lab with more to come. These centers are key tools to creating value-centric conversations with our customers and bring to life what makes us unique. In conclusion, I am a strong believer that all these elements make for a winning formula and will create the most compelling proposition in the industry. It will enable us to make our ambition a reality. We have a clear plan. Our progress is already visible, and our momentum is building. I will now hand over to Saverio Mayer, CEO of our EMEA and APAC region. Saverio? Saverio Mayer: Well, thank you, Laurent. And once again, good morning, everybody. I'll now cover EMEA and Asia Pacific. So EMEA and Asia Pacific, we operate as an integrated platform, which is a key competitive advantage in these markets. Our integration starts with the containerboard system covering both recycled and kraftliner, which feeds into our corrugated operation across the region. In parallel, we have now consumer packaging operations in Europe and Asia Pacific, serving a broad range of end markets with differentiated solution and allowing us to have a holistic approach on their packaging needs. In addition, we operate Bag-in-Box platform that is present both Europe and in the Americas, giving us scale, innovation capability and cross-regional leverage in this high-value segment. In 2025, the region generated approximately $11 billion of sales and $1.6 billion of adjusted EBITDA with around 36,000 employees across 27 countries and holds #1 position in corrugated, containerboard and Bag-in-Box with a proven track record of continued outperformance. We believe this level of integration allows us to optimize the system end-to-end, protect and grow margins and respond quickly to customers and market dynamics. We have successfully integrated the consumer packaging business and harmonized in the owner-operator model with P&L ownership, developing cross-selling opportunities across corrugated and consumers where customers are valuing the combined approach between corrugated and consumer, while also delivering ahead of target on the synergy program. We are also recognized as a reference point for both our customers and the wider industry on sustainability, and we hold the highest number of innovation awards in the industry, this reinforcing our leadership position. Over the last number of years, we have delivered on 2 previous strategic plans, which have helped create a structurally stronger player in the market. Even in a challenging environment, the region has grown volumes, gained market share and increased EBITDA by focusing on functional value and differentiation. Innovation has been a key enabler. Our inno tools are now used across all regions, supported by a network of 28 experienced centers and powered by a community of around 1,000 designers and innovators across our plants in EMEA alone. Altogether, this supports our goal of adjusted EBITDA increasing from $1.6 billion in 2025 to around $2.1 billion by 2030 with margins expanding from 14.9% returning to over 16% as reached in the past, and this is based on conservative market assumptions and with upside as conditions improve. So this year, we are starting our new strategic plan for 2026, 2030. Our differentiation strategy, along with the integrated model have been key to driving our margin resilience and creating long-term value. Over the years, we have built a proven playbook that has positioned us for growth, and we will continue to adapt and develop our region into 2030 built around 3 pillars: to be the company of choice through disciplined capital allocation and continuous efficiency improvement in our core markets. A key differentiator here is our proven business model, which allows us to deploy capital at a regional system level rather than at a single asset level. This means we can involve all relevant assets within a region to deliver on a given investment, a unique competitive advantage and one which has the ability to support strong growth with an attractive returns on capital, to be the supplier of choice to our customers by accelerating proven innovation, delivering sustainable, high-performance packaging and provide superior functional value through quality and service. And of course, to be the employer of choice to our people by strengthening engagement, inclusivity and well-being and by empowering strong local leadership across the organization. To support this strategy, we are investing in highly targeted and disciplined way. We invest in new converting technology where we see clear opportunities to create value and strengthen our offer to customers. As an example, let me mention in Bag-in-Box, the greenfield investment in Anderson in the U.S. This is a business we know very well since we already operate 2 Bag-in-Box plants in North America, and it's part of a global platform. We saw a clear opportunity to further develop the U.S. market and the investment builds directly on existing capabilities together with our U.S. colleagues. Through this disciplined approach, we aim to make investments that are well targeted and deliver attractive returns. In summary, EMEA and Asia Pacific provide a stable, high-quality earnings base for the group. The region has consistently delivered margin resilience, strong cash generation and disciplined growth and will play a key role in supporting the group's 2030 value creation targets. Let me now hand over to my colleague, Alvaro Henao, CEO of Latin America. Alvaro Henao: Thanks, Saverio, and good morning to everyone. It's really a privilege to be here with you today and have the opportunity to give you a clear data-driven view of why Latin America is not only a strong contributor to Smurfit Westrock, but a region with extraordinary potential for long-term profitable growth. Actually, I firmly believe we are an absolute gem, not only because of our leadership position in the region in market share and footprint, but because we have great assets and because we have great local management that really knows the markets and the countries in which we operate. Let me begin with our competitive advantage. We are the #1 corrugated supplier across the region with leading positions in Brazil, Colombia and Argentina. And in the region, we also offer the broadest portfolio of paper packaging and full solutions, which includes consumer packaging, sacks, forestry, recycling and both recycling and virgin-based papers, such as our lightweight and eucalyptus-based papers. We are in a region that has higher margins and many growth opportunities. This combination of regional reach, completely integrated process and a broad portfolio of paper-based solutions is unique to Smurfit Westrock and very difficult to replicate. Hence, it is a source of sustainable competitive advantage. As I will explain later, we have a proven track record and what really makes us different and experienced management team, built upon a capacity to attract the best talent in each of the countries in which we operate. Since the combination of Smurfit Kappa and WestRock, we integrated approximately 100,000 tons of paper from North America into our Central America and Caribbean operations, basically converting the whole region into a completely integrated system. This gives us access to a secure supply of North American paper that will allow us to grow in the future in the region organically and inorganically. From a management and sales point of view, the market now only sees Smurfit Westrock, not the legacy companies. Finally, we were able to take advantages of synergies across the Mill and Forestry divisions that we have in both Colombia and Brazil. But let me tell you, the real differentiator in the region now as Smurfit Westrock is that we are fully leveraging on the European corrugated tools that we just -- that was spoken about and practices that have really made us successful and helped us increase our margins. And also that we have a North American mill system that is there to support us. It's really a winning formula for the region. We have an unrivaled footprint. We have the broadest portfolio in the region, offering paper-based packaging solutions such as corrugated, consumer packaging and sacks, which has allowed us to reach more than 4,500 customers from our 44 facilities in 10 countries, a really, really unrivaled footprint. Our current strength is built on a long track record of disciplined execution and the experience and knowledge of having been in the region for more than 80 years. The example to our success in the last 10 years is we have doubled our adjusted EBITDA. We have expanded the adjusted EBITDA margins by more than 500 basis points, reaching 23% and we delivered steady growth with a 4% CAGR in corrugated. This performance reflects our ability to navigate the economic volatility and strengthens our cost position and invest with discipline. And it shows something that is crucial. When we invest, we grow and when we grow, we deliver. Now let's look forward. We have a clear ambition, to grow our adjusted EBITDA with a CAGR of 11%, reaching $800 million by 2030 and increase margins to 28%. We will get there through 4 growth engines. Organic growth and market share expansion. Latin America offers significant opportunities in segments like agribusiness, protein, beverages, consumer goods and export-driven industries, especially in markets where we are not yet leaders. Cost efficiency and operational discipline. We continue to strengthen our competitive cost structure through scale, automation and logistic optimization, additional capacity. We have a well-defined CapEx road map aligned with high-growth geographies, particularly Brazil, the Andean region and Central America. We will invest in consolidating our corrugated and packaging leadership, and we will also invest and continue to lower our costs, further increasing our competitive advantages in the region. Accretive acquisitions. There are meaningful opportunities for strategic acquisitions that we believe can take our number above the adjusted $800 million mark. We want to grow in places where we are one of the leaders, but there is room to increase our market share like Brazil and also target regions where we're still in the process of expanding our business like Central America, Ecuador and Chile. And reinforcing all of this is our value-added proposition, powered by 3 experience centers and more than 150 designers who co-create solutions with our customers from the early stages of product development. We are the only company in the region that can offer a pan-regional footprint if that is what our customers want or if they want local solutions, we have the knowledge and the capabilities to deliver them. In short, we believe we have a clear plan to reach an adjusted EBITDA of $800 million with a margin close to 28%. And if we make some bolt acquisitions not included in these numbers, we will exceed that target. The combination of local market knowledge, experienced management, access to a global network of corrugated and paper tools and knowledge and secured paper availability coming from North America, we believe will allow us to further expand our position as the corrugated and packaging leader in the region. As I expressed before, when we invest, we grow and when we grow, we will deliver. Now I will hand over to Ken, who will explain the financials. Ken Bowles: Thank you, Alvaro. Good morning, everyone. I want to now talk to you about delivering the path to delivering shareholder value over the medium term and why we believe that this path is both credible and executable. What you'll see through the next few slides is not a change in philosophy, but a continuation and most importantly, an acceleration of a business model that has proven itself over many years now applied across a broader global platform. I want to take a step back first, though, for a few minutes to look at the pre-combination performance of Smurfit Kappa and most importantly, our track record. It tells a very clear story, consistent delivery, consistent delivery. Consistent delivery in all market conditions, a period, not unlike today, you might think, with many challenges and macro hurdles, but also a period where we outlined a medium-term plan for the business and more than delivered on that plan. This kind of performance does not happen by accident. It's the product of a proven operating model executed by the leadership team with a deep understanding of our industry and our markets. Over this period, we delivered an adjusted CAGR EBITDA of 6.5%, more than double the peer average. This outperformance isn't the result of any single initiative, but of a disciplined and agile capital allocation strategy, our unique owner-operator culture and a core philosophy of placing the customer at the center of everything we do. Alongside this, we expanded our adjusted EBITDA margin by over 450 basis points, again, significantly ahead of our industry peers. What this demonstrates is not just growth, but consistent profitable growth through the cycle. Over these years, we believe we cemented our position as the most innovative and sustainable packaging company in the world, and this enabled us to deliver significant value for our customers, supported by integrated model, a relentless focus on quality and service and an unrivaled portfolio of value-added packaging solutions. And importantly, our strong financial and operational delivery translated into meaningful returns for our shareholders. Over this period, we returned $2.8 billion to our progressive dividend policy and all the while reducing our net leverage from 2.4x to 1.4x, reflecting our long-standing commitment to balanced, disciplined capital allocation. With the integration of WestRock now complete, we have the platform, capabilities and leadership team in place to replicate and build on that track record going forward. That sound foundation underpins the medium-term plan we're presenting today. And turning now to the plan itself, which really captures the scale of the opportunity ahead of us and how we are positioning the business to deliver on that opportunity. We are setting out specific and actionable financial goals through 2030. These goals are grounded in a detailed bottom-up plan across all our operations. As you can see, by 2030, we aim to deliver approximately $7 billion of adjusted EBITDA and a group adjusted EBITDA margin of approximately 19%. This goal reflects the strength of our global operations, the benefits of our performance-led culture and the earnings quality we're building and maintaining across each of our 3 regions, as mentioned by Laurent, Saverio and Alvaro. A key driver of that progress is a significant growth opportunity in North America, which is a significant lever for value creation in the Smurfit Westrock, but it is not the only one. With the operating model now firmly in place and the heavy lifting of integration complete, our teams are empowered, our assets are better aligned and the actions we've taken already delivering higher margins and higher cash conversion. Over the next 5 years, we aim to generate approximately $14 billion of discretionary free cash flow, reflecting not only the earnings power of the business under conservative top line assumptions, but also the ongoing benefits of our relentless focus on cost control and operational excellence. This level of cash generation provides substantial flexibility to invest in the business, further strengthen the balance sheet and make significant capital returns to our shareholders. At the same time, we see a clear path to delivering a 700 basis point improvement in return on capital employed, driven by margin expansion, improved asset utilization, operating efficiency gains and the advantages of a fully globally integrated system. Return on capital employed has long been a hallmark of our performance and culture and the medium-term opportunity here is significant. And all of this is underpinned by our disciplined capital allocation framework, which I'll outline in a few moments, a framework that is flexible, agile and returns focused at its core. We are focused on continuing to strike the right balance between investing in high-return projects and delivering significant capital returns to shareholders, supported by our continuing strong balance sheet. So let me spend a few moments on the assumptions behind that $7 billion adjusted EBITDA target. Our 2030 targets are supported by a structurally stronger business as our operating model and strategic investments lift the group adjusted EBITDA margin from 16% to 19%. Our plan assumes benign market growth based on third-party sources and through-the-cycle pricing broadly in line with current levels, reflecting a disciplined and conservative approach to our outlook. I once again remind you, it does not include the impact of any recently announced paper price increases in North America. We've assumed market growth of 1.6% in North America, 1.7% in Europe and 2% in Latin America. These market growth rates provide a solid foundation, but it's the actions we are taking within the business that truly drives a step change in our earnings. A key pillar of the plan is that we assume below mid-market paper pricing in Europe and no price increase in North America and paper. In other words, the margin expansion we are targeting is not dependent on a pricing cycle. It is grounded in the operational improvements, the commercial focus and asset optimization actions already underway. As Laurent outlined, we are already successfully executing on our creating value for our customer strategy in North America, a strategy well established in the Smurfit Kappa business. By deepening our customer partnerships, leveraging our innovation offering and driving P&L responsibility at the mill and the box plants, we are enhancing our customer mix, improving quality and service and driving a more resilient earnings model across the group. And as we continue to execute our creating value for our customer strategy and with the alignment of management team's incentives of our strategy, our plan expects all regions to contribute to profitable growth, driving meaningful margin expansion from 16% to 19% by 2030. And while we are confident in the plan as presented, there is potential upside, particularly with respect to the assumptions on growth and pricing as well as choosing to accelerate investment if the right opportunities arise. Our capital allocation framework continues to be one of the most important drivers of long-term value creation and a core element of how we run the business. Over the next 5 years, we expect to deploy $13 billion of total capital expenditure, including maintenance and growth CapEx, with an average annual CapEx spend of about $2.6 billion. This level of investment is fully aligned with our strategy, enabling growth and cost takeout, improving operating efficiency and strengthening our integrated system. Importantly, we expect this investment to contribute to a 7 percentage point improvement in the group return on capital employed to approximately 15%, reflecting the high return nature of the projects we are targeting. As a team with deep industry experience, we continue to view internally deployed capital as the lowest risk and highest quality use of capital, an approach that remains central to the future success of our business. Alongside this, we expect to be able to allocate $10 billion towards, for example, capital returns to shareholders and accretive acquisitions. Dividends remain the cornerstone of our capital return strategy. And as part of this, we anticipate returning about $5 billion in dividends over the next 5 years, subject to the necessary Board approvals and the consideration of a number of economic and other factors. And from 2027 onwards, we expect to have capacity to undertake share repurchases as to be determined by the Board, representing an additional avenue to which we can return value to shareholders and underlining our confidence in our strategy and the cash generation profile of the business. Our approach to M&A will always remain disciplined, focused now on accretive bolt-on opportunities that strengthen our geographic footprint and complement our product portfolio. Underpinning all of this is the balance sheet of significant strength and flexibility, one that supports investment, ensures resilience across cycles and provides the optionality needed to pursue value-enhancing opportunities. Taken together, this framework strikes the right balance between investing for growth and delivering substantial value back to our shareholders. What this next slide highlights is the scale of the value creation opportunity ahead of us and the significant capital we expect to have available for shareholders as we move through 2026 and on to 2030. Over the 5-year period, the earnings power of this business has the potential to generate substantial adjusted EBITDA, which after funding maintenance investment tax and other commitments, leaves us with a significant pool of available capital. From that starting point, we aim to invest behind high-return growth and efficiency projects and fund a progressive, reliable dividend stream. And after doing this, we expect to generate approximately $5 billion of surplus capital. That surplus is a powerful number. It gives us the ability to accelerate investment where we see attractive returns and to introduce buybacks as an additional avenue for value creation. In short, this waterfall speaks directly to the strategic and financial flexibility of Smurfit Westrock. It shows a business capable of investing for growth, driving meaningful returns and still generating significant excess capital. Looking more closely at capital expenditure, and our approach will remain disciplined and consistent. And as mentioned, we expect to deploy $13 billion in cumulative CapEx across North America, EMEA and LatAm. Approximately $9 billion of this is expected to be allocated to maintenance CapEx with, as I mentioned previously, $4 billion invested in growth CapEx. We focus on a high volume of small, high-return projects, which translate into a projected annual CapEx spend of approximately $2.4 billion to $2.8 billion over the plan. We have always believed in being flexible and agile when it comes to capital deployment. And as you will see from the footnote at the bottom of this page, the average CapEx project is less than $4 million. With no project larger than $200 million and important to reiterate, as Tony mentioned earlier on, there are no grandiose projects in here. And as I have mentioned, we expect our organic investments in the business to generate a 700 basis point improvement in return on capital employed. Turning now to the balance sheet. A balance sheet of significant strength and financial flexibility will remain a key underpin to our capital allocation strategy. We ended 2025 with net leverage around 2.6x and net debt just below $13 billion, and we are firmly committed to maintaining a strong investment-grade credit profile. Our long-term target remains net leverage below 2x, and we are pleased to receive a Fitch upgrade to BBB+ with stable outlook. And as we progress towards that leverage target, the strength of our balance sheet gives us both flexibility to return excess capital to shareholders and to invest in growth when opportunities arise. It's a foundation that ensures Smurfit Westrock can continue to deliver for all of our stakeholders. And finally for me, to wrap things up, this slide captures one of the most important elements of our value proposition, the significant and growing capital returns we expect to deliver to our shareholders. As discussed earlier, we have a proven track record of delivering progressive dividends, and that remains a core part of our equity story. Over the 2026 to 2030 period, we expect to return approximately $5 billion through dividends alone, subject to necessary Board approvals and depending on a number of economic and other factors. From 2027 onwards, we see an opportunity for a strong free cash flow generation to provide capacity for share buybacks, supporting our confidence in Smurfit Westrock's long-term value and strategy. In summary, this is a plan built on discipline, operational excellence and growing capital returns. And one we believe positions Smurfit WestRock to deliver sustained value for all shareholders. And with that, I'll pass it back to Tony for some concluding remarks. Anthony P. J. Smurfit: Well, thank you, Ken. As a significant shareholder in Smurfit WestRock, what I and I hope you expect to see is a plan that is ambitious, yet deliverable and a plan that demonstrates a long-term future and a strong foundation to build on. This is what we have presented today. Our competitive strengths include our performance-led culture, owner-operator model with the customer being at the heart of what we are and our global integrated platform with short lines of communication continually networking. We also value our leadership and experience. You'll have already heard from my colleagues, their teams are equally strong and motivated. As a consequence of our management development programs, the next generation of leaders will foster the same culture and values that exist today. Our product portfolio and global reach is unique and unparalleled and allows us to serve customers. We offer innovation, customer centricity, solving their pain, delivering value and helping them win in their own marketplaces. And we do this against the backdrop of continual improvement in our operations through disciplined capital expenditure, emphasizing cash flow and ensuring that we're adequately rewarded for the capital that we have employed. For me, shareholder value and owner-operator mindset go hand-in-hand. It's just not philosophical. It's the person who turns the lights off to reduce the costs. It's the salespeople who makes that call at 6:30 instead of going home and it's the manager who looks at the share price every day because he cares about it. In summary, Smurfit Westrock has been around for 90 years. Many other companies you'll know in our sector have fallen by the wayside, yet we're still here. And we're here because we do as we say and we say as we do. Performance is and always will be the basis of our credibility. We have delivered. We have delivered on acquisitions. We've delivered on our plans. We've delivered because we have a proven track operating model, and we've delivered because we're in a business that is a good business. It's a very resilient business. It's a business that the world needs. It's a business that our customers need, and we've also delivered because we have an unrivaled geographic footprint. The coming together of Smurfit Kappa and WestRock has given us a product portfolio that is unmatched in scale and diversity, which we continue to build on through all the unique applications we've shown you today. This is a world-class management team with a proven track record. And our interest as shareholders are fully aligned with yours. And finally, I want to leave you with this final thought. The plan is not the summit of our ambition. There are many other opportunities to be pursued. And as we did in our previous plans, we'll continually update our thinking. I believe Smurfit Westrock is at the beginning of an incredible journey, an accelerated growth path, a journey that will take us to the decades ahead. We have the magic formula. We have the right culture. We have the right people, and we have the right products. And I hope after today, you see the team, you have the right team to successfully drive this business forward in the years ahead. I thank you all for your attention, both here in the room and on the net, and we look forward to taking any questions from you about this, our ambitious but deliverable plan. Thank you. George Staphos: George Staphos, BofA. One question, right? You got it. Anthony P. J. Smurfit: Others have taken a license, George. So you might slip in a second one, if you want. George Staphos: I'll try to get a part in there. No. So if we look at the progression to $7 billion, $4 billion North America, $2 billion in Europe, $1 billion roughly in South America, can you help us understand how important the evolution of consumer is relative to getting to that target across the segments? Why it seems like you see consumer being married to corrugated makes more sense than what we've seen perhaps past companies have had difficulty getting that effectiveness? And frankly, you've had questions about that when you first put the business together. Why you think it makes sense now? And then the last one related Tell us why South America, even though it's the smallest, Alvaro, it's very profitable. Why are you not worried about all the paper that apparently is coming in from Asia, Klabin starting up PM28, how that fits all in? I'll stop there. Anthony P. J. Smurfit: So George, I look at things quite simply. I said, can we be a very good business in consumer? And the answer is yes. We have some really fantastic businesses within our consumer portfolio that are very unique, very difficult for any competitors to replicate. And we have some very good mills in the consumer business. What we have to continue to do is improve and adapt over the coming months and years to make all of our system good because there's some still work to be done, and you'll know that our CRB bills are not necessarily the best in the world. But at the same time, they are good for purpose for us, and they're highly cash generating and they don't take a lot of capital. So we always have to continually modify our business and invest in the business to make them high-return businesses. And I believe that the consumer business with its market positioning, together with our corrugated business gives us a strategic advantage to sell more, to offer our customers a diversified portfolio, as Laurent has said, and allows us to get better returns over a period of time -- over time. There's still work to do, but we have some really great businesses within that business. And it's a central plank for growth for us. I mean, frankly speaking, in many of the countries in Europe, for example, we can't really grow in corrugated that much because we're too big, but we can grow quite a bit in consumer if we find the right acquisition target that gives us value. So I think it's a very good business, and I don't think we should be throwing away good businesses, and it integrates well with our system. George Staphos: Tony, how much of EBITDA growth is in consumer to your point... Anthony P. J. Smurfit: We don't segment that, George. But I don't think it's materially different to our corrugated businesses. We expect all improvement across all segments, and there might be a bit on one side versus the other, but probably there's a little bit more improvement to get in our corrugated business, a little bit, but it's not material. Ken Bowles: Yes, probably the simplest way, George, I think that is broadly the kind of the profile stays the same true in terms of percentages and scale. Anthony P. J. Smurfit: Alvaro, do you want to take the Latin American question? Alvaro Henao: Sure. On Latin America and the paper side, I think that one of the big advantages that we have is that now that we have access to the North American paper, we're basically isolated from a paper point of view because we are now -- we used to be short, very short when we were Smurfit Kappa. Now our system is completely integrated into North America. So that basically isolates us from any paper swings or scarcity of paper that the region every now and then has. The other issue is that notwithstanding what you have said, the region still continues to be basically supplied by the U.S. We do see every now and then paper coming from different regions, lately from Europe. But when you look at the import numbers into the region, the region main supplier -- sorry, the main supplier of paper into the region is the U.S. So -- and then going into your comment about the growth of Klabin, yes, Klabin invests every now and then in cycles, they invest in their paper mills. Let me say just in Brazil, we have a very nice operation, which is very low cost again. And the internal Brazilian market, whenever they do invest, is able to absorb the majority of those investments. So I mean, I don't foresee any material disruption into the overall paper supply balance and pricing in the region. Anthony P. J. Smurfit: We go back -- forward to back. Phil? Philip Ng: Phil Ng from Jefferies. Laurent, I really appreciate you being here. You're actually a perfect person to ask this question because you came from Europe, you had the history of value selling in Europe. How is that transition in the U.S. just because I think a lot of the customers aren't as accustomed to having some of these solutions that you guys are offering. So how is that journey? Are you talking to the same people in terms of negotiating? Is it procurement guys or marketing guys? Just kind of give us some context, the differences between North America and Europe and the margin difference perhaps on that value solution versus non-value solution? Laurent Sellier: So I think the impression that we're having altogether is that the timing to introduce that particular thinking process is really right and that the market somehow has been expecting out there us to move or other people to move. It just happens -- and the timing is really good. And the engagement that we have, whether it's -- as you rightly pointed, procurement, marketing or other people, they're asking what is going to be the next way to get to the optimal packaging cost in their case, but also function and delivery to their system. And the type of people that we're talking to and Tony and all of us have referred extensively to this concept of experience centers, they're not just buzzwords. They're really places where you put the customer in a position to share with us their pain points, their aspirations, also the type of issues that they have to solve, and they really value in the U.S., and we've had great response both in Dallas, where we have a historical presence that goes before the coming together of the 2 companies, but now in Richmond and same in Mexico, there's been phenomenal response from very large customers of ours. We're really appreciating the type of engagement and the type of discussion. I think really that the timing is right for us to engage in those conversations. And I think it's also feeding the pipeline conversation we're having earlier on. Philip Ng: Any color on the margin difference between the value stuff versus non-value? Laurent Sellier: So this is when I turn to Ken. Ken Bowles: I would say, Phil, that the obviously, if you're giving solutions to customers and you're able to save them money, then you want to share in that benefit. And so typically, if you're doing something for your customer that's winning -- helping him, you tend to get some of that contribution back. So obviously, the more of these that we have, the better it is. But it's more as well that you get given more business. So you're able to optimize your system better. And so it's a -- we're only starting this in the U.S. I mean, Laurent mentioned that we're about to open up the second -- we have a second and we're about to open up a third experience center in our Chicago region, just so that we can cover the U.S. because it's a big country. And our Head of Innovation here in the United States, who's a great guy we just hired in from, where was it, [indiscernible] somewhere like that. He's only with us 9 months now. So it's -- we're really just at the beginning of this journey of value selling here in the U.S. And there's a whole iteration to go through of training of people. But what I've heard, and I haven't experienced myself directly, but what I've heard with the customers that go to the Dallas center, they're just blown away by the opportunities for them to save money. And in that scenario, then everybody wins. Lewis Roxburgh: Lewis Roxburgh from Goodbody. Just on growth CapEx, it seems pretty broad-based across sort of businesses and regions, but just sort of highlight any sort of standout focus there. And then just a clarification, the $4 billion amounts to about $0.8 billion each year and you add that on to depreciation, it's about $3.3 billion. So is the delta there just sort of depreciation coming less? Ken Bowles: No. The depreciation stream will probably stay a little bit more than $2.6 billion, Lewis, over the period. So remember as well as part of our DNA at the moment, post transaction, you've got an amortizing intangible that kind of trails off about $140 million a year. So as you're getting towards the 5 years, you're depreciating 5x $140 million coming out of the base and you're adding back in the new CapEx. So broadly, you could consider D&A to be in that kind of $2.6 billion, $2.7 billion space across the life of the plan as well is probably the simplest way to think about it. Anthony P. J. Smurfit: Lewis, on the capitals, I mean, one of the mantras we have in our company is adaptability. So we talk about this all the time. So Laurent or Alvaro or Saverio might say, this is our plan for next year in a machine and, I don't know, take it France. And then we find out there's a little bit less growth in France, there's a little bit more growth in Germany. So we adapt. And so there's no -- as Ken said, there's no project bigger than $200 million, and that would typically be paper machine, press section, winder, something like that, that will be -- so there's no really big projects, but there's a lot of small projects. And then as Laurent said, the biggest opportunity we continue to see is obviously, as wages have gone up and salaries have increased due to inflation, there is -- and robotics is going to become a bigger thing. We see a lot of opportunity to invest in machines to take away continuing labor costs. And so that's something that is very much top of mind. And as robotics continues to develop, that's something that we'll latch on to. But within this plan, there will always be some flex because we might say that project, we haven't seen the growth we expected to see in Brazil. So therefore, will it go to Colombia or we go from Colombia to Mexico, it just depends on the year. But that's why I said in my opening or in my closing that we're always adaptable and we're always looking, and we continue to keep the strat plan on our -- it's hot on our plate every year. And when we look at our budgets, we'll be looking at how does that sit with regard to the strat plan, et cetera, et cetera. Lewis Roxburgh: On the margin improvement in North America, you talked about going from about 16% to 20%. And then you also include about half of it from base business, half of it from strategic action. So if I look at kind of the column to the right, and we see footprint optimization, obviously, strategic action. What else would be in the strategic action bucket? Most of it would seem to sort of be running the business, the base business better. So maybe if you could help us understand what would be in what type of bucket. Ken Bowles: Yes. I'll let Laurent elaborate a bit further, but think about the kind of the base piece, Mark, as kind of ongoing maintenance CapEx, which you will get a return for, but it's not really the driver of growth there. In terms of the extra 200 basis points, that is growth CapEx, where we see, back to Tony's point, where you can take cost out. where you see growth coming through, whether it's machines or customers or end markets and investing behind that. And indeed, that's part of where that the single biggest project is in there, too. So in the own system. But Laurent, do you want to give more color on how you see the strategic piece? Laurent Sellier: Sure. So basically, what we call base is being a good custodian of your assets, basically making sure that things are in order, what needs to be replaced is replaced. But any time you do that, also looking at ways and manners to generate that little extra bit of capacity money... Anthony P. J. Smurfit: Maybe Laurent talk about the latest mill project we just approved for Hopewell,was it? As an example... Laurent Sellier: Yes. You can do like refurbish, for instance, on a paper machine, your drive and because the drive is obsolete not maintained by the manufacturer or whatever, so you need to upgrade that. And in the process, you gain, I don't know, 3 meters per minute or 10 sheet per minute on the paper machine that just generates that. So it's being good custodian of assets. Then when you look to strategic projects, you're more thinking in terms of pockets of growth either by segments or geography where you think that you can line up more capacity because there is a sales backing or sales opportunity there. And it's potentially redeveloping one particular part in a paper mill that will give you either different types of products or enhanced matching between the products and what the market desires. So anything that goes beyond the simple upkeep of the assets and usually with higher return profiles. So typically, we save 200 basis points on both and you have 2/3 on the maintenance piece and 1/3 on the strategic piece, yielding more or less the same result. Lewis Roxburgh: And just to clarify on that is how to interpret the margin improvement, not just the use of capital, the way you were describing? Saverio Mayer: That's right. Lewis Roxburgh: Okay. And then just as a quick follow-up. Tony, you've talked about in the past how there was a great opportunity in the converting assets in North America, the box businesses. Can you maybe kind of update us on how that's progressing and how big a part of the program achieving those types of goals and how you go about it? Anthony P. J. Smurfit: It's a huge part of it. When we came into this, we had a lot of plants losing a lot of money. And as we've shed some business and adjusted the operating costs of the plants to reflect lower volume, but at the same time, opportunities that have come into the plant as well. You've seen our corrugated business move as a whole from significant loss maker to -- not significant, but somewhat profit-making now. And as I said, we're only at the start of that because as we implement better volume, more valued volume for our customers across our piece and getting rid of bad business, frankly speaking, that you're paying people to run, you shouldn't be paying people to run bad business. So we are bringing in better business, and that will be -- I've said 8% to 12% margins in corrugated is our aspiration, and we will get there because we have the tools, we have the knowledge. So you go from negative a couple of hundred million to let's say, $1 billion, it's a material improvement in the business -- the underlying business. I mean, the best example I can give you is Saverio will talk to you about a plant we have, which was basically 6 or 7 years ago, plus or minus breakeven in the country, and we had another competitor in that country. It's just 2 of us in that country. And our competitor is now closing down and we're making over $1.5 million a month in that country from nothing because we've invested and we brought our tools and we've done all the things that we have to do and our competitors just walked away. And so that's an even bigger opportunity for us. So we're not going to be able to do that everywhere as quickly as we'd like to do it everywhere. But even in one facility we have in Chicago, which is a great well-equipped facility. When I went there the first time, [Mark], I didn't post about it because I was so ticked off about their performance. And then I went back a year later, and they're now making close to $1 million a month because they've changed some things, they've adjusted their costs. They've changed some customers, and you have a really motivated management team now who is really -- but we have to do that in 100 plants. I mean it doesn't happen overnight. But that's -- I don't know if you want to comment. Laurent Sellier: No, I think it's exactly right. Tony talked about flexibility and so it can. And I think we're there saying there are certainly a number of box plants where there are evident issues about equipment. And there's a kind of mantra going around in the company. You need a good corrugator and you need one solid piece of good converting equipment to match your business. And in some cases, we don't have that. So these are fairly obvious places, and it would be built in the plan. But then there's another number of plants that are not performing so well, and it's still unclear whether it's management or whether it's equipment. And rather than rush and put an equipment that would be complicated if you grab new equipment on a bad team, I like you can really make a catastrophe there. So we're taking our time to assess. So they are the fairly obvious ones and the less obvious ones that we'll take the time over the plan to address one and the other. Anthony P. J. Smurfit: Sorry, let's go back to front because -- sorry Gabe, just -- you get next. You can have 2 questions, just for that. Unknown Analyst: Richard Burke with Bloomberg Intelligence. Looking at your projections for 2030, I noticed that the North American EBITDA margin is 20% and Europe is only 16% being kind of more U.S.-centric focused for my career, I'm just trying to understand, is there structural differences that the margins won't get in Europe won't ever get to the U.S.? Or are we at a different point in the cycle? Or just kind of your thoughts behind that? Anthony P. J. Smurfit: Yes, Richard, it's a very good question because we ask ourselves the same question. So thanks for that. I mean the reality is that Europe has always been a couple of points behind Europe, maybe for the embedded costs in Europe. But over time, we have improved ourselves and that number is far away from where we have been before. I mean I think we've been up to 19% in Europe. And frankly speaking, we're putting together what the guys gave us having obviously been reviewed at length by ourselves. And I will be very disappointed in Saverio if he is only 16% margin. So... Ken Bowles: Easy. Easy. I think -- sorry, I think Richard as well, if you flip that down to the balance sheet and capital allocation, you get much more bang for your book in terms of capital going into Europe versus North America from a cost perspective. So in defense of my good friend, Saverio, I'd say that his return on capital employed is probably mid-teens versus where Laurent is. And that's been a sustaining factor for the strong balance sheet. The free cash flow generation has always been much better at Europe, equally working capital, where Saverio would hang out below 10% and Laurent slightly ahead. So it sort of goes back to the fundamental thesis, I think what we're speaking about, which is you take a business across 3 regions and you take the pooled capital and the pooled resource around free cash flow and you allocate and get the returns out, whether it's the returns from an EBITDA perspective and margin or the returns from a cash flow, balance sheet and shareholder return perspective, but it's pooled resources. Anthony P. J. Smurfit: I think another interesting point, and Saverio has mentioned it in his presentation. He's been through 2 strategic processes. And in addition, that Smurfit and Kappa came together in 2005. So we've been spending the last 15 years, 20 years nearly -- 20 years, 21 years, I was never good at accounting and I was never good at accounting. We've been spending the last 21 years making Europe a great organization and investing in Europe and developing our asset base. So we have a fabulous position with fabulous people, with fabulous assets. But 21 years ago, when you came to Smurfit and Kappa, you would have said they weren't such great assets. But now anybody who would look at our company in Europe would say, wow, these are fantastic businesses, fantastic assets, fantastic people and certainly should earn more than 16% EBITDA margins. I agree with you. So Saverio, that's... Saverio Mayer: No, no. It's -- we've been there before. I mean we went to 18%, 19% and this is -- and as I said, this is not including any pricing or market condition that through the cycles, we'll be there again. And so we expect to -- that we can deliver back where we deliver. Today, the 16% mark in Europe, it's an ambitious target. It's a good target, which doesn't mean, as we did in the past, we can not go above that. I mean as situation improves, conditions are improving in general. So we'll get there. Anthony P. J. Smurfit: I think what's interesting is that Europe has been a bit of a funk since the Ukrainian war. I mean, obviously, if you take a view that, that's all going to end, then you could see a very big rebuilding in Europe. It's 380 -- how many million people in Europe... Saverio Mayer: It's 400 million. Anthony P. J. Smurfit: 400 million people. It's a very big economy, and we have #1 and #2 positions in most of the markets there, and we've got the best market position. So it's a really exciting place for us if there's any sort of economic growth. And as I say, we've got an incredible mill system, we've got an incredible paper system -- sorry, corrugated system, and we've got incredible specialty businesses there that are today earning 14%, 15% in a market where most of our competitors are earning next to nothing or very low single digits. Gabe, sorry. Gabe Hajde: Gabe, Wells Fargo. Thank you, Tony. First, give credit where it's due. Initial report card, $4.9 billion of EBITDA, the guide was pretty consistent at least with our expectations, so putting points on the board. When I try to dissect or translate the $1.2 billion in North America and I translate from, I guess, margin to dollars, the margin profile would suggest on the current business about $800 million of improvement. And then the most difficult thing to lock down or pin down has been the 1.6% growth in North America. So if I do the math on that, it suggests about $300 million, $350 million of contribution from market growth. A, is that about right? And then b, would you identify that as the most risky piece of the North American ambition? Anthony P. J. Smurfit: Listen, the market last year was not good. I mean we actually attribute about 3% to 4% of our negative 10% to the market. If you look at the FBA numbers, if you look at our 2 competitors that have reported, they've been 2 -- they're around negative 2%, all of them. And so if you look at that, then you'd sort of say, well, we've lost a little share because of the market -- the business we've given up. So maybe the market -- and they've gained the share, so therefore, the market is 3%, 4% down. And it has specifically hit maybe a company like ours a little bit harder because a lot of the big branded goods, which is where we were selling a lot of have been hurt during the last year. I don't think that's going to continue, Gabe, to be honest. I think that sooner or later, there will be more promotions by a lot of companies. There will be more competition by a lot of our competitors to -- sorry, not competitors, by our customers as they start to go into trying to sell more themselves. And that should actually be good for inflation in the United States and Ergo will be good for box demand in the U.S. So I do believe that this is still a very strong economy in the United States, and I do believe that it will get back to growth. And I do believe that -- and that's what we all believe. And I think that we'll be a big beneficiary of that. So I do believe the numbers that [indiscernible] have put out of 1.5% are doable. And so I would then think that our numbers are going to be possible to make. Ken Bowles: I think, Gabe, maybe to help you thinking slightly is broadly, when we think about 1% volume growth, that generally equates to somewhere around, call it, $60 million of EBITDA for the group. That's probably helpful for your thinking. Unknown Analyst: This is Nico Piccini with Truist Securities. I just wanted to dial in on rebalancing your long SBS position and if that's going to be derived more from converting like CRB business into SBS or if there's further opportunities like the La Tuque closure. And with the converted business, how sticky is that given prices will likely ultimately rebalance between SBS and CRB? Anthony P. J. Smurfit: Laurent? Laurent Sellier: Probably a combination of all the things that you've suggested. I think the work we're doing -- first of all, SBS has undergone secular pressures. But equally, and I mentioned that in my presentation, we're seeing very interesting opportunities on that particular segment. The other thing is SBS, as we said, like this subset agnostic is something that we've really put in motion and is helping. And potentially, ultimately, as we see fit and if required, then further consolidation in one form or the other, it doesn't necessarily have to be related to restructuring, but reducing the exposure on SBS can be part of the solution as well -- so -- and they're all being worked on at the moment. And whenever those projects come to fruition, then we would come back to you with all the information. But it's going to be essentially a combination of all the options that you've indicated. Anthony P. J. Smurfit: I think the switching -- the stickiness is an important point. I think the customers that we've seen that are switching are switching for quality. yes, SBS price coming down is helpful for sure to make them switch. And if there was a massive jump in SBS pricing versus CRB, maybe they'll switch back. But what is fundamental is that the product ranges from CRB to SBS, it's a quality and visual issue. and it's not a price issue anymore because of the price of SBS. Once they go there, will they switch back if the price of SBS goes zooming up or not, I can't say. But they are switching because it's a better product in many instances for the fridge or for the shelf, fridge for CUK because it's all craft based and shelf because it's brighter for SBS. So there is a quality issue. There's also a machine issue that the machines actually run better with regard to SBS or CUK rather than CRB. That's not to say that CRB doesn't have a place. It has a very strong place, too. I mean we are I mean we're grade agnostic. We will work with our customers on exactly what they want, what their belief is if they want recycled board, we have it. We're the #2 producer despite the fact that our mills are not necessarily more modern. We're the #2 producer in the United States of CRB with acceptable mills and good quality that our customers do not want to be locked into any single supplier. So it's a very positive position that we have. And as I say, we're grade agnostic and say, listen, you want this, this or even as Laurent said, which I think is really important to remember, very microflute corrugated, which is an important opportunity as well for them. Okay. Well, I think we've had our time. I really appreciate you all making the effort to come and join us. It's been a privilege to be able to present this plan to you. And we do really thank you for your effort of being here this morning, bright and breezy. And thankfully, we've warmed up New York for you to walk on. So thank you.
Operator: Ladies and gentlemen, thank you for holding, and welcome to Suzano's conference call to discuss the results for the fourth quarter of 2025. [Operator Instructions] They would be addressed CEO, Mr. Beto Abreu and other executive officers. This call will be presented in English with simultaneous translation to Portuguese. [Operator Instructions] Before proceeding, please be aware that any forward-looking statements are based on the beliefs and assumptions of Suzano's management and on information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events and therefore, depend on circumstances that may or may not occur in the future. You should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Suzano and could cause results to differ materially from those expressed in such forward-looking statements. Now I will turn the conference over to Mr. Beto Abreu. Please, you may begin your presentation. João Fernandez de Abreu: Thank you, and welcome, everyone, for our fourth quarter results call. I would like to cover mainly 3 highlights related to the -- our results in the fourth quarter and also our results for 2025. Let me start highlighting the strong shipment in pulp during the fourth quarter. This is record volumes for Suzano, and it's absolutely related to our supply chain team on the operational excellence side. So flawless execution in our process. So the team here is very glad of what the supply chain team was able to deliver. On the paper business unit, we also had a strong volume. But the point that I would like to highlight here is the continuous improvement of the Pine Bluff operation in U.S. We have been doing a great job over there, learning a lot and showing how our management skills and competence can add value from assets also outside Brazil. We are learning a lot of things that for sure will be used during our K-C operation in the future. On the side of cost, cash costs came absolutely in line with the plan. On the other side, I would like to ask you to pay attention to the DTO -- sorry, the TDO of Suzano, I would consider 2025 as an inflection point. So what we can expect for 2026 and for the coming years is a new trend in terms of TDO, and this is absolutely in line with our agenda of increasing and improving our level of competitiveness. We also saw a strong operational cash flow in the fourth quarter and also free cash flow, even on the lower price, I would say, cycle. And for me, the message here is the level of resilience of our business, resilience and competitiveness. So this is a business that's going to be even stronger in the future in terms of competitiveness to face any kind of business environment. So that's the summary for me for the first quarter, volume, cost and the capacity of the business to generate cash in any kind of business scenario. Having said that, I'd like to hand over to Fabio that will cover the Paper and Packaging business. Fabio Almeida Oliveira: Thanks, Beto, and good morning, everyone. Please let's turn to the next page on the presentation. During the fourth quarter of 2025, our Paper and Packaging business unit delivered strong volumes from its operations in Brazil and also in U.S. Favorable seasonality helped to lift volumes in the quarter, while we continue to see paper prices declining in export markets. In U.S., Suzano Packaging continued to be a positive highlight with stable prices quarter-over-quarter and a solid 21% increase year-over-year. During the quarter, we also had our annual maintenance downtimes for both Suzano and Limeira. Despite the outage in Limeira -- during the outage in Limeira, we finalized important upgrades at the mill, which will improve cash cost competitiveness as explained in our last Suzano Day. Looking at our markets in Brazil, print and write demand according to IBA increased by 1% in the first 2 months of the fourth quarter compared to the same period of last year, led by uncoated paper demand due to seasonality. Demand for cut size and coated paper remained relatively stable year-over-year. International markets remained weak with declining demand and oversupply. Latin America demand has been more resilient when compared to the U.S. and Europe, but the region has seen an income of inflows of Asian papers at very low prices. Now looking at paperboard, demand in Brazil grew 2% in the first 2 months of the Q4 compared to the same period of last year, also showing the same improvement versus last quarter. In the U.S. market, according to FP&A data, SBS shipments on the fourth quarter were stable quarter-over-quarter and year-over-year, but production was up 2% with the ramp-up of new capacity. New capacity has put pressure in operating rates, mainly in folding box and foodservice market segments, while liquid packaging board remains more insulated. Looking now at EBITDA performance, the 10% increase over Q4 was driven by the ongoing turnaround of Suzano Packaging, which delivered improved EBITDA quarter-over-quarter and year-over-year. Our EBITDA from our Brazilian operations took a hit from lower prices and FX despite higher volumes in the quarter on a year-over-year and quarter-over-quarter basis. The maintenance downtimes performed at Suzano and Limeira mills were on time and on budget, but also had an impact on our costs. Looking ahead to Suzano's Paper and Packaging business performance, sales volumes from our Brazil and U.S. operations will be lower in Q1 compared to last quarter, following the normal seasonality of the period. We also expect prices to improve with the phased implementation of the price increases we have announced in Brazil and export markets. Price for Suzano package should remain stable in dollars since the majority of our volumes are under contracts with pre-agreed prices. On the cost performance, since there are no planned downtimes in Q1, we expect an improvement in our cash cost in our Brazilian operations. For Suzano Packaging, we continue to work to reduce our cash cost, but we could see some pressure in Q1 due to the winter conditions in the region and much higher natural gas prices than expected. As a final note, I would like to share that in January, we made the decision to cease our paper operations at our Rio Verde mill. This small site was our only nonintegrated mill and was producing around 50,000 tonnes of paper annually. This mill had the highest cash cost in our asset portfolio. And with this closure, we expect a positive impact to our 2026 results by reallocating its products to the more competitive Suzano and Limeira mills and adjusting our commercial strategy. Now I'll hand it over to Leo, who will present our pulp business results. Leonardo Grimaldi: Thanks, Fabio, and good morning, everyone. Let's now turn to our pulp business unit, where I'd like to highlight the key developments from the fourth quarter of 2025. This past quarter was marked by price recovery in all markets due mainly to a higher demand of hardwood pulp in China and Asia in general as well as a more pressured cost base for wood in Asia, consequently increasing cash costs of those producers as anticipated in our Investors Day. In China, paper and board production according to SCI, posted a 17% increase in Q4 '25 when compared to Q4 '24, and the full year analysis presents another positive year with 3% growth in paper and board production and with highlights to Ivory Board, which posted 8% growth in tissue with a 6% growth in 2025. This has reflected in a higher demand of pulp, having pulp imports grown 1.7 million tonnes in 2025 according to Chinese custom statistics, of which 1.4 million tonnes of hardwood pulp. Purchases of hardwood pulp have been further incentivized by softwood fiber substitution trend and also by players in the textile markets increasing their purchases of paper-grade pulp, mostly hardwood. Our order intake during the quarter was above expectations, meaning that despite a very strong quarter in terms of invoicing, we are still carrying backlogs of deliveries to markets where we invoice directly out of Brazil, like China, Southeast Asia and the Middle East. Looking at our price performance in Q4 '25, the $538 per tonne that you see on the slide, although higher than previous quarter, is a backward-looking figure. Market prices are already above that level, as you know, but our reported prices in Q4 was impacted by invoicing backlogs. All incoming orders during the quarter and in all regions in the world were captured at a higher price set point, fully aligned with our price increase announcements with a strong month after month order intake, a trend that is still ongoing. We sold record volumes in Q4 and above our production output during the period, meaning year-end inventories or bringing year-end inventories to very low levels and placing pressure on our logistics operations as inventories fell below optimum operational levels. Looking at the right side of the slide, the BRL 4.8 billion in EBITDA, up 8% quarter-over-quarter was supported by higher volumes and better prices in U.S. dollar terms. Now looking forward, I would like to highlight the following points. In China, following a strong production pace of paper and board producers in Q4 '25, January has posted upbeat figures according to SCI, even slightly above the strongest production month in 2025, which was December and 27% higher when compared to January '25. Importantly, this increase has not led to paper inventories build up at paper producers compared to the past month's levels. And just to connect that to pulp demand, as an example, these figures translate into an additional consumption of 250,000 tonnes of pulp compared to Jan '25 just for Chinese tissue producers. Also in January, order intake from our customers continued quite strong with full implementation of the announced price increase. Our announced price increase were also implemented in all Western markets. As the year began, news on the supply side of the equation have positively affected short and midterm price perspectives. First, news about the Indonesian government revoking forestry permits covering an area of over 1 million hectares, including plantations for industrial users such as pulp and paper on top of the 500,000 hectares that had that permit revoked during 2025. This brings 2 tailwinds to pulp markets as Indonesia currently produces over 4.5 million tonnes of market hardwood pulp, of which 3.5 million tonnes are exported to China. One of them is that a key pulp producer has promptly announced an immediate and unexpected curtailment of 150,000 tonnes of market pulp for February and March combined. Another is that according to our market intelligence analysis, Indonesians are likely intensifying their wood chip purchases mostly from Vietnam, placing upward pressure on wood chip prices. This would affect not only Indonesian costs, but also Chinese and Japanese pulp producers who are major offtakers of Vietnamese wood chips. Even before the developments in Indonesia, we had been observing rising imported wood chip prices into China, which, as I have shared in our last Investor Day, represents roughly 50% of the wood furnace for Chinese pulp and paper industry. Separately from that and very important, APP has announced the delay of the OQ 2 project start-up from early Q2 to mid-Q4 2026. As this was the only market pulp capacity addition considered for 2026, now no incremental market pulp capacity is expected to reach markets this year. The addition of positive paper production figures in China with their gradual price increases in Tissue and Ivory board grades added to unforeseen news on the supply side of the equation, results in a positive short-term dynamic for hardwood pulp, way better than we had expected for the beginning of the year. We don't believe that this trend is short-lived, and we expect that it should continue post February. For Suzano, Q1 and Q2 '26 concentrate most of our planned maintenance downtime program for the year, as you saw on our previous earnings release. Therefore, we now need to ensure the proper inventory buildup in Q1 after the record Q4 '25 invoicing performance, focused on recovering our global inventories to optimum operational levels, which will reflect in improved logistics efficiency and also service levels to our customers. We also need to especially prepare our inventories for Q2 when our planned maintenance downtimes will peak, resulting in almost 300,000 tonnes of lower output compared to Q2 '25 according to our production plan. This requires ensuring that our inventories are strategically positioned to serve contracted customers in line with their agreed inventory policies. As a consequence, we have lower pulp availability to be sold to customers who purchase directly out of Brazilian ports, such as China, Asia markets, Middle East and Africa, meaning that our volumes will remain constrained in the coming months and with 0 allocation to spot markets and customers. To finish my presentation, I would also like to call your attention to the fact that despite price increase implementations during recent months and taking the latest China PIX indexes as a reference, just yesterday night, updates from Hawkins Wright presents that an equivalent to approximately 7 million tonnes of bleached chemical pulp are currently loss-making, and this is still clearly unsustainable. With that said, I would now like to invite Aires to address our cash cost performance during the past quarter. Aires Galhardo: Thank you, Leo. Good morning, everyone, and move to the cash cost slide. We closed the fourth quarter confirming the cost path we had anticipated at the beginning of last year, reaching the lowest level of 2025 with a cash cost of BRL 778 per tonne. Compared with the third quarter '25, the 3% reduction was mainly driven by lower input costs, supported by stronger operational stability across our mills and by lower prices for key energy and chemical items such as natural gas and caustic soda. Fixed costs also declined driven by lower labor costs, while wood costs benefited from a shorter average radius and better wood quality, which in turn reduced the specific consumption in the pulp production. In addition, higher energy export volumes and more appreciated FX contributed positively to cash cost performance in the period. Fourth quarter '25 marks our best cash cost performance since 2021 with the lowest nominal level since fourth quarter '21 and even better performance in real terms as it represents the lowest level since first quarter '21. For 2026, we expect the average cash production cost of pulp to be broadly in line with the fourth quarter '25. The partner should mirror 2025, meaning a more pressure first quarter versus fourth quarter '25 due to planned maintenance and nonrecurring events such as 2 turbines overhaul, followed by a gradual decline in cash cost over the course of the year. Moving on to the next slide. As I recently shared with you at our latest Investor Day, Suzano is implementing a comprehensive multiyear program to improve its competitiveness with a clear focus on reducing what we call total operation disbursement or TOD. As you can see on the slide, the 2025 TOD reached BRL 2,060 per tonne, improving on year-over-year base and reinforcing the downward trend toward our 2025 guidance also shared with the market at our Investor last December -- Investor Day last December. Now I turn the floor over to Marcos, who will continue the presentation. Marcos Assumpcao: Thank you, Aires, and good morning, everyone. Moving to the next slide, I will start commenting about the positive free cash flow generation of $400 million in 4Q 2025. even in a scenario of pressured pulp prices. This cash flow generation contributed to reduce our net debt to $12.6 billion by the end of 2025. And as a result, our leverage in dollar terms declined to 3.2x. On liability management, I would like to emphasize that last week, we renewed our revolving credit facility with 20 banks. And the result of that was that we upsized the line from $1.3 billion to $1.8 billion, and we were also able to reduce the cost of this new line. Moving to the next slide. I would like to highlight our financial discipline by 3 key metrics. First, we delivered our 2025 CapEx in line with our guidance. Second, we are reducing our 2026 CapEx guidance by nearly 20% year-on-year. And third, we are maintaining a very healthy portfolio of FX hedges. By December 2025, we had a $6.2 billion portfolio with an interval of BRL 5.83 to BRL 6.73 per dollar. So as reported in this big orange box, the expected cash adjustments for our zero-cost collars portfolio, if the FX remains at BRL 5.50, which was the level at the closing of 2025, we would receive positive cash adjustments of BRL 2.7 billion. If BRL remains at BRL 5.20, for example, which was close to the level of yesterday's closing, our adjustment would surpass BRL 4 billion in the upcoming 24 months. Now moving to the last slide. I'd like to update you with our shareholder remuneration program. Last week, we paid BRL 1.4 billion in dividends, which equates to more than 2% of dividend yield. We also concluded our fifth buyback program on February 9, in which we acquired 15 million shares. And we announced yesterday a new buyback program to acquire up to 40 million shares in the upcoming 18 months. Now I would like to turn it over to Beto for his final remarks. João Fernandez de Abreu: Thank you, Marcos. As we just hear, I think a couple of things to clarify when we look ahead. From Leo's presentation, what we saw is a more constrictive business environment for 2026, and this was related to clear and concrete events that somehow has changed the supply and demand balance. On the cash, Aires also had a chance to share the level of ambition that he has for the cash cost during 2026. We also expect the same level of trend when we look for the TOD. We still see opportunities on the sustaining CapEx and also on this logistic infrastructure and cost. And this will also allow us to keep reducing our net debt in line with our deleverage objective for the business. And I also would like to highlight that our JV with K-C is progressing absolutely as planned for closing in mid-2026. The level of liquidity that we have today is also considering the payment in the third quarter for our JV. So having said that, I will hand over to the group to hear all the questions for the Q&A. Thank you very much. Operator: [Operator Instructions] Our first question is from Mr. Rodolfo Angele from JPMorgan. Rodolfo De Angele: I have 2 questions for you. First, I think the main discussions with investors have been on what Leo has discussed in his remarks. So I just wanted to dig a little bit deeper on that front. Aside from all the topics that you mentioned, Leo, can you talk a little bit more about what do you see in China? You mentioned that paper demand is strong, but I would like to hear a bit more what do you see on the pulp side? Any updates, any change in the trend that we were seeing of increased production out of China? Any risks to the numbers that you presented on the Investor Day of close to 6 million tonnes of distance. So that's my first question. And my second question is to Marcos. I think the message from Beto was very clear on the trends on the cost side. But I wanted to hear from you a little bit on CapEx, especially if we look ahead, not for this year, but the trends, especially into '27. We believe there is a case for lowering CapEx through time. We don't need a hard number, but if you could comment on at least the trend, that would be great. Leonardo Grimaldi: Rodolfo, thank you for your question. This is Leo here answering regarding pulp. And just to review, right, in our Investors Day, we give a 5-year road map of what we're seeing in terms of further verticalization or upstream verticalization in China despite not disclosing the year-over-year numbers. But I will do that here for 2025 and 2026, just to make my answer clear. In 2025, all our very detailed mapping of upstream verticalization in China pointed out to roughly 2 million tonnes of new pulp capacity coming to market. And that 2 million tonnes were almost all, if not all, compensated by lower operating rates of the mills at the beginning, plus the Chenming effect, negative effect when you compare their shutdown in '25 compared to '24 and also to the fact that several integrated pulp-to-paper players and buyers have swapped hardwood pulp volumes especially in Q3 when pulp prices reached the minimum. So we saw a net zero effect of verticalization in 2025. And that explains why we see a very positive imports of hardwood and growth of over 1.7 million tonnes or 1.4 million tonnes, sorry, into China, as I mentioned in my opening speech. For 2026, we have mapped closely a new addition of upstream verticalization. The number is a bit even bigger than in 2025. It's roughly 2.8 million to 3 million tonnes of capacity. But different than last year, all of these projects with an exception of one are starting or supposed to start in Q4 2026 and one starts in Q3 2026. So we should see no effect of that in the beginning of the year, maybe in the end of -- very most end of 2026, if nothing is delayed. So that's very much concentrated in the latest part of the year. That's why we see even stronger fundamentals for the short-term dynamics in hardwood. Marcos Assumpcao: Rodolfo, thank you for your question regarding CapEx. Yes, there are a lot of moving parts on CapEx, including inflation for sure. But we see a couple of nonrecurring items that we will have to pay on our CapEx in 2026. To give you a couple of examples, first, we are -- we have our SAP upgrading version. We also have the Pangea Deal that we did, which was the wood swap with Eldorado, which had a payment in the first quarter of 2026. We even had an additional investment at Cerrado regarding the bonus for the productivity that we had over the initial 12 months of the project. And we also had a spillover payments from a couple of industrial projects that we concluded in the second half of 2025. So considering all of those nonrecurring items, let's say, there is room for us to see a lower number on CapEx, but I would not like to give you that as a guidance, okay? Operator: Our next question is from Mr. Caio Ribeiro from Bank of America. Caio Ribeiro: So my first question is on buyback execution, right? I'm just wondering if you could talk a little bit about the mentality and the process that goes behind deciding whether to execute the buyback or not, particularly as you look at the previous program execution versus the new one that was announced. Looking at the past program, I'm wondering if the M&A transactions that were announced by the company impacted the magnitude or pace of execution of the buyback program. And going forward, as the company focuses on absorbing those assets acquired and assuming that no more M&A is carried out, does it make sense to execute a higher portion of the new buyback program or fully executed? And then my second question is on potential divestments, I just wanted to see if you could share a little bit more color on how this divestment lever could be used to accelerate the deleveraging progress of the company? What assets you could consider as potential divestments and what the timing would be? And if there is a targeted leverage level for the company? Marcos Assumpcao: Okay. Caio, remember that at our Suzano Day, we mentioned that we have an ambition to reduce our net debt to $11 billion, okay? That's the most important priority here for the company. So connecting your question on the buybacks, the focus of the company remains on deleveraging its balance sheet. But we try to be very opportunistic on our buyback program. There are a lot of variables that we look when we are doing the buybacks or when we are more active on the buybacks, including leverage, but also our view for the share price, our views for pulp price outlook in the short term, our view for the currency outlook as well. So there are a lot of variables that we consider, and we try to be as opportunistic as possible in order to create value for shareholders. Regarding divestments, as we mentioned also in the Suzano Day, this is a very small portion of the free cash flow expectations for 2026. This is just like a changing mentality for the company, looking for opportunities that are not core business for the company and eventually divesting. The most -- the opportunities that we see are mainly on the forestry business in which we could do the high best use of the land. Sometimes we're using a land for our forestry plantations, but that land is probably more valued for other crops or for other businesses, and we could eventually transform that into cash by converting that land into other businesses. So I would say that this is the most likely event that we will see in terms of divestments. And this, as I mentioned, is not a relevant portion of our free cash flow generation expectations for 2026. João Fernandez de Abreu: Caio, I just want to complement what Marcos just said. The deleverage plan for the company, it's not related to any divestment. The deleverage will come from the operational side. That's our plan here. If there's any specific opportunity in terms of generating value for the shareholder with a specific assets, this is something that we will consider. Operator: Our next question is from Mr. Marcio Farid from Goldman Sachs. Marcio Farid Filho: Two questions on my side. Maybe the first one to Leo. Leo, very clear message on the pulp markets. Maybe the missing link there is paper prices in China, which have either been under historical lows or have not performed as good as pulp. So maybe the question is, does it matter at all, right? Obviously, the upstream and downstream markets have their own supply-demand dynamics. They tend to correlate to each other. But does it matter that paper prices are not moving? Are you confident that they are going to be moving? Does it matter at all for the pulp price direction from here? And how do you see the relationship between hardwood and softwood at this point because the gap has narrowed quite significantly with hardwood performing a lot better, right? Just trying to understand those 2 topics also important to try and build the pulp mill as well. And secondly, to Fabio. Fabio, obviously, great momentum on the U.S. Packaging side. And obviously, internally, it seems that you are progressing quite well in terms of operational efficiency and also renegotiating some of the contracts with suppliers and clients as well. We look at your global peers and especially the major -- the largest ones in Europe and the U.S. And after earnings quarter, they pointed to quite negative outlook on -- especially on demand side as well in the case of Europe with competition with imports. So just trying to understand how do we make that up? I mean, can you perform well in this current market environment? If you have any comment in terms of what you're seeing for your specific products in the U.S., obviously, a more protected region as well. So if you can comment a little bit on the broader market view as well and the progress around U.S. packaging business, that would be great. Leonardo Grimaldi: Marcio, thank you for your question on the pulp side and how that correlates to paper prices in China as well as softwood. First part of the question, we see -- obviously, the main line that drives our business is tissue, and we see quite on average margins as we speak. We saw the beginning of a price recovery for those grades, but we track that with the current fiber mix that they're using. And obviously, as they are also focusing on this fiber transitioning agenda, moving a bigger part of their purchases to hardwood that also helps offset their cost structure. And in most cases and in several times of the cycle or in most times of the cycles, we see pulp prices pushing paper prices and not the other way around. So Obviously, the margins and the prices of paper in China are one of the factors that we use in our decision-making process, but not the only one that we use to decide what we're going to do. And also just in line with that we have been supportive in a way. Our last price moves were at a lower range, let's say, closer to $20 a month price increases with time, and that has obviously also the objective to give time to our paper customers to adjust their prices in market. But again, that's not the only variable that we take into consideration. Your question on the hardwood-softwood gap. Obviously, everyone noticed that we were trending at above $200 in China. Now this number is closer to $100 in other regions in the world is over $100, but I use the $100 as a reference. As we have more and more customers engaging with the fiber-to-fiber agenda and understanding how to better blend and use hardwood pulp, I think that what we see today is paper producers everywhere in the world having a lot of pressure in their margins, and everyone will try to capture margin despite the gap is $170, $150 or $200. The agenda is of a much bigger knowledge in terms of how to utilize hardwood. And I believe that this trend is not stopping despite if the gap is lower or higher. Fabio Almeida Oliveira: Marcio, this is Fabio. Thank you for your question. I will address your question about packaging market. You're right. Global packaging market is undergoing a major challenge with lots of oversupply in most of the grades of packaging papers and also some weak demand, especially in Europe. In the U.S., I don't think demand is the main issue here. What's happening, the market is kind of insulated with the tariffs. What's happened is that we have a new capacity that come to market this year and also last year. And this is causing some imbalance in the supply and demand curve and the operating rates for SBS has gone down. So when you look at the major results for the players that have announced their results, there's some concerns about this imbalance and impact on prices. But this has happened mainly on the open market for SBS, which is Folding Box Board and also food service market. We are kind of insulated from that. You know that our production here at Suzano Packaging, 80%, 85% of that goes into liquid packaging in a market which we have a very large market share. And we are -- we have a 2- to 3-year contract with our major customers. In that 80% to 85% of our exposure, we are protected. Demand is quite stable. Our prices are covered and protected under our contract. And on the 15%, 20% that we sell to the market, that's the type of pressure that we feel momentaneously from the market. But we're confident that there's still some costs that we can take out of our operation here and the resilience of the liquid packaging market in 80% of our business is going to help us to survive well during these tough market conditions here. The U.S. markets have adjusted themselves in terms of supply and demand imbalances, and we have started to see some capacity closures as well. So I expect operating rates to come back to normal in the near future. Operator: Our next question is from Mr. Daniel Sasson from Itau BBA. Daniel Sasson: Congrats on the results. My first question is related to the cost front. Aires, you mentioned that you do want to have a better performance on average in 2026 versus 2025, but you're already running at 5% below the average of 2025 in the 4Q. I know it's not a straight line, but if you could compare your current performance at the margin with your total disbursement operation guidance or maybe let us quantify a little bit the sort of improvement that you expect in 2026, if the 4Q '25 is a good proxy. I think that would help us think about the evolution from now until your guidance in 2027. And my second question, Leo, it was great to hear you say that the order intakes that you've received so far this year have had prices above the average of the 4Q for all regions. But can you please comment a little bit if you're seeing any changes at the margin over the past few weeks, maybe? My question is more related to the decline in resale prices that we've seen or the fact that you guys are trying to increase prices by $10 per tonne this time around and not by $20 per tonne as you had been doing since the end of last year. I mean, are you seeing any weakness or signs at all? And if you could comment a little bit about the current wood price or wood cost for Chinese producers in China, the domestic wood and the import wood chips mainly from Vietnam, which have also shown a slight decline in prices or in that case, cost for Chinese producers, that would be great. Aires Galhardo: Daniel, thanks for your question. As I mentioned, we intend to work on average of 2026 roughly in the level that we operate in the fourth quarter 2025 when we closed BRL 778 per tonne. If you consider our average in the year 2025 of BRL 817 per tonne, it's close to what you said 5% in reduction. But of course, we have a challenge in the first 2 quarters, especially because our stoppage that we have scheduled. In the first quarter, we have Imperatriz, [indiscernible], Veracel, and Aracruz Linha A that put a lot of pressure in our cost, especially because of Ribas performance that will bring our cost below. And in the second quarter, we have Tres Lagoas, 2 lines that put pressure in the same way. Then our trend is a proxy of we have last year when we start the first quarter with a higher probably cash cost when we compare with the fourth quarter, but a trend to reduce in the coming quarters, close the effort in the same level that we achieved in the fourth quarter of 2025. Leonardo Grimaldi: Okay. Good. Daniel, this is Leo here. I'm going to answer the several questions on pulp together. First, just to rephrase, I mentioned that our order intake in Q4, all months of Q4 had prices higher than our Q4 delivered and invoiced prices. And obviously, January follows the same trend. So even what we were able to capture month-over-month in Q4 had price at points higher than the $538 price that you saw in our release. In terms of how we are seeing the margin or the market going forward, already talking a bit about February. As I mentioned, January is quite strong. We see no changes at all. We -- despite this calendar of the Chinese New Year, where our customers will be leaving for holidays on this weekend and probably returning closer to Feb 23, 24. Prior to leaving all of our customers have confirmed purchasing intentions or numbers. We are just finalizing the details and most will be finalized indeed after the Chinese New Year. We didn't see absolutely no customer in China and in Asia skipping their purchases or what they expect to purchase in February, meaning that we see no changes in this habit or pattern that we have been observing for the last several months. Our decision of not pushing a higher price increase in February was much more related to the calendar of the month because as most of negotiations will be concluded in a very short time period due to the return of the holidays, we didn't want to be opening any spread of negotiation with customers. So our increase of February is unnegotiable. We will implement it at all costs. Resale, your question on resale, we believe that this should react post Chinese New Year. Today is trending roughly $10 to $15 below the imported PIX prices references. And our certainty comes to the fact that we also, as I have mentioned in previous calls, we also are always tracking and selling in our customer portfolio in China, integrated pulp and paper producers and also traders who are big markers of price in the resale market. And I can confirm to you today that already all major traders in China have purchased volumes at higher set points than the resale prices that you see on screen. So we have an expectation that you should -- that we should see some reaction on this index post Chinese New Year. Now on wood costs. Wood costs, we saw on the end of last year, an increase on the wood cost base for China, increasing their cash costs, as we have commented and talked about during Suzano's Investors Day. On the end of the year and early '26, we saw different movements. We saw imported wood chip prices increasing at a range of 12% to 15%, while Chinese wood falling at a range of 10% to 12%. And if you consider that the Chinese industry uses half-half imported and local, I would say that today, our view is that these wood costs are quite stable to what we had on the end of last year, the higher cost basis that we saw at the end of last year, imported wood compensating the -- a bit lower cost of Chinese wood. This precedes all the news on the floods and revocations of licenses in Indonesia. Just to make it clear, Vietnam, which is a major supplier of wood chips to the region, 70% of that wood chip goes to China. roughly 25%, 23% goes to Japan and currently 7% goes to Indonesia. And our market intelligence analysis show that with this latest revocation of lands and we correlate that to the pulp and paper industry, we believe that Indonesia will push for a higher demand that their needs could reach almost 20% of the available wood chips from Vietnam. So you can imagine the pressure that will put on the markets, on the wood chip markets going forward. So our expectation is that especially this imported base will have a higher cost point looking forward. Operator: Our next question is from Mr. Rafael Barcellos from Bradesco BBI. Rafael Barcellos: Congratulations for the results. The first question is just like a follow-up and a wrap-up on these discussions on the pulp market. So Leonardo, sorry, one more question. But just to wrap up everything you have just said during the call, I mean, there was a clear positive tone, particularly when we compare with our last interactions, right? So I just wanted to understand what was the key development that has made you change the tone. I mean if you just -- if you can just like wrap up and just comment, I mean, what was the key development that has made you change the tone? And secondly, Beto, I mean, when we look at the Paper division, there were like 3 important developments in 2025, right? I mean there was the acquisition of K-C, the first positive EBITDA in your paperboard assets in the U.S. and the new Tissue mill in Brazil. So that said, I mean, what do you believe should be the highlights for the division in 2026? Leonardo Grimaldi: Okay. Good. So Rafael, let me share with you what made us change the tone from our last interactions. First is the intensification of the revoking of forestry licenses in Indonesia. now affecting directly the pulp and paper industry. At the end of last year, when we had summed up almost 500,000 tonnes of hectares with license revoked, we didn't correlate any of that directly to the pulp and paper industry. Now that's not more the case. So that is one major factor happening and already affecting directly one of the key producers and an immediately -- an immediate curtailment of 150,000 tonnes in 2 months only of market pulp and how that can affect all the wood dynamics, as I mentioned in my last answer to Daniel. Second and major change is the delay of OKI from April to the fourth quarter last -- this year. meaning that in terms of pulp coming into market, we should see no new volumes in 2026. This is a major change. It's also important. It's not only that OKI also started or APP also started a board machine -- is expected to start this board machine over 1 million tonnes in Indonesia now in March, meaning that the plan was, as we understand, to be integrated with OKI 2. But now as OKI 2 was delayed, you have a double effect of less market pulp in the market or no additional supply of market pulp in 2026. At the same time, they're going to need to feed up this new machine and our expectation is that they're going to need roughly 350,000 tonnes of pulp in 2026, meaning that their system should be even tighter to run 2026. So I would say that the major changes have been really on the supply side of the equation. And just to sum up and wrap up, this has changed market dynamics completely and on a very fast-moving pace, as I mentioned in my opening speech. João Fernandez de Abreu: Thank you, Leo. Regarding the questions for 2026, what do we expect from K-C paper business in U.S. and also the tissue after the investment that we made in Aracruz, as you mentioned, on the tissue side, we are expecting to increase the level of return of the business. Firstly, we were able to deliver another project on time and on budget. That was the case of [indiscernible]. She is in Aracruz. And we expect to now in 2026, extract the right level of value that we expect from this investment. So in the end of the day, we expect to have a better ROIC in this business with a lower cash cost and higher volume. On the Pine Bluff business in the U.S., I want to highlight again the great turnaround that the local team were able to implement. We have now a positive EBITDA differently from the asset that we have received it, but we are looking to generate cash with the business. So we still a journey in this process of not only generating positive EBITDA, but of course, generating cash with the business. So that's what we expect for 2026 is to keep moving forward on this direction of having assets that can generate value for the shareholders. On the K-C JV, I think there are 2 main elements that we must consider for 2026. One, of course, is the carve-out is finalized, the carve-out in all countries on time. So that's not a simple process. It's complex, consider the amount of countries that we have. We are on track, but still a lot to do. So finalizing this process on time is absolutely key. So keep working very close the 2 clean teams to make sure that we will deliver this on time. On the other side, we also have the value creation stream. So making sure that we have all the details regarding, let's say, the levers that we must consider in the beginning of this operation to start generating value as soon as we can is also the second priority. So by the way, we are glad on how the both teams are working together in this process. And -- but for 2026, we would like to see value being created in the JV in the beginning and the carve-out being finalized on time. So again, I think the bottom line of everything is what I have been saying this, which is 2026, we must extract value from the investment that we have made in the past. Operator: Our next question is from Ms. Eugenia Cavalheiro from Morgan Stanley. Eugenia Cavalheiro: If possible, I would like to understand better where do you expect the cost reductions in the pulp business to come from? So I mean, you already disclosed a bit the level that you expect for the year, but just to understand what are the levers for that cost reduction? Aires Galhardo: We gave some drive for this year. We are not hoping for coming years, just in TDO (sic) [ TOD ] that we presented in our last Investor Day. And for this year, our intention is to work in the same level that we closed the fourth quarter 2025, roughly BRL 780 per tonne. That's the idea for the average of 2026. Operator: The Q&A session is over. We would like to hand the floor back to Mr. Beto Abreu for his final remarks. João Fernandez de Abreu: Thank you very much for everyone. Thank you for the questions. If still any doubt, as you know, our IR team is always available. So thank you very much, and see you in the next quarter call. Bye. Operator: The Suzano S.A. Fourth Quarter of 2025 Conference Call is concluded. The Investor Relations department is available to answer further questions you may have. Thank you, and have a good day.
Operator: Good day, and welcome to the Hansa Biopharma Fourth Quarter and Full-Year 2025 Financial Results Conference Call. [Operator Instructions]. Please note that this event is being recorded. I would now like to turn the conference over to Hansa Biopharma's CEO, Renee Aguiar-Lucander. Please go ahead. Renee Aguiar-Lucander: Thank you. Good afternoon, and good morning. Welcome to the Hansa Biopharma conference call to review Q4 and the results for the full-year of 2025. I'm Renee Aguiar-Lucander, CEO of Hansa Biopharma. Joining me today is Evan Ballantyne, Chief Financial Officer; Richard Philipson, Chief Medical Officer; and Maria Tornsen, Chief Operating Officer and President, U.S. Please turn to Slide 2. Please allow me to draw your attention to the fact we'll be making forward-looking statements during this presentation, and you should therefore apply appropriate caution. Please turn to Slide 3 and today's agenda. Let's move on to Page 4, please. In terms of key achievements in Q4, Q4 saw strong growth over the same quarter last year, with product revenue growth of almost 140% and total revenue growth of 135%. Total revenues for the year amounted to SEK 222.3 million or about $25 million, a growth of 46% compared to total revenues in 2024. In Q4, we successfully also closed an equity round of SEK 671.5 million or about USD 71 million, which will fund operations into 2027. As planned, we submitted our BLA application to the FDA in December of 2025, and we await their decision to accept the filing and communicate a PDUFA date, which we expect to receive shortly. We also announced the planned development for HNSA-5487, which we plan to take into GBS, Guillain-Barre in a late-stage trial before the end of this year. Finally, we also reorganized the European commercial organization as part of a broader initiative to improve transparency, accountability across the organization. Please turn to Slide 5. 2025 really was a year of transformation for the company. Driven by senior leadership changes, several initiatives were successfully implemented to strengthen the organization and make it fit for purpose in a competitive global environment. We renegotiated the existing debt facility, strengthened the senior management team and brought in key expertise, restructured the organization and streamlined reporting lines. We also clarified the positioning of HNSA-5487 and financed the company with 2 equity capital raises, ensuring runway into 2027. Please turn to Slide 6. A recent area of focus has been the European commercial organization. As I pointed out previously, the launch in Europe was quite unusual as there was very limited clinical data as well as clinical experience in Europe at the time. The challenge of launching a product under these circumstances with a large Phase III trial is well ongoing should not be underestimated. I believe that the upcoming European Phase III readout in combination with the presentation of the ConfIdeS data and expected real-world data publications from Europe will positively impact this situation. In addition, we've launched a number of initiatives, which are being rolled out this quarter. I expect this to impact performance to some extent as all change management implementation tends to do this. I would therefore expect a relatively weak development of revenues in Q1, complemented by a strong second half 2026 as these changes take effect. Please turn to Slide 7. In the U.S., we're faced with a very different landscape to that of Europe. We recently read out the very successful ConfIdeS trial, and we're expecting additional data to become available, as I've already covered. We have a well-researched and data-backed plan for our pre-commercial activities managed by a highly experienced and well-integrated team. Structurally, the U.S. market is quite different from the European market in terms of organ allocation systems, pricing and reimbursement, patient advocacy and data availability. We believe that we're well-positioned to successfully launch the product into the market later this year, subject to approval. With that, I will hand over to Maria, who will provide some more details on these topics. Maria Tornsen: Great. Thank you very much, Renee. Next slide, please. Before I comment on our progress in Europe and international markets, I would like to take a moment to discuss the opportunity in front of us. In Europe, we have up to 11,000 highly sensitized patients waiting for a kidney transplant. Most of these patients have waited for years, sometimes up to as long as 12 years. When Idefirix was conditionally approved a few years ago, it was the first and only treatment approved for desensitization of highly sensitized patients. This is still the case, and Idefirix has no competition in this space. Over the years since launch, we have more than 200 patients treated with Idefirix across 40 centers at the same time, as the company has been running a large Phase III study with 50 patients, the PAES study. Today, we are in a different position with significant additional data being released for Idefirix. In September, we released the U.S. ConfIdeS data, which European KOLs are showing great interest in. We have also published our 5-year data in November in Transplant International, and we are expecting more data to become available in 2026, in particular, the readout from the PAES study and real-world evidence from European transplant centers as well as additional data from the U.S. ConfIdeS study. All of these clinical data combined puts us in a good position to continue to progress the commercial adoption across Europe. Please turn to the next slide. As Renee mentioned, we delivered solid growth in Q4 with SEK 61.1 million product sales and 139% growth versus the same quarter 2024. The sales came from multiple European markets, but it is worth noting that we had sales in all 5 large European countries, including Germany, where, as you know, faced some challenges in 2025. I will comment more on the German situation shortly. As mentioned in last quarter's report, we have been working on securing regional reimbursement in some key regions and one of them being Catalonia in Spain. In December, we received positive news that the temporary funding for Idefirix has been approved by the Catalent Pharmacy department. They are currently setting up the logistical and invoicing process, and we expect this to take a couple of months. In the meantime, we know that there are already several Idefirix requests that have been sent in from hospitals in Catalonia to CatSalut, the Catlan Health Service. We are, as a result, cautiously optimistic that we will see improved sales from Spain in 2026. From a market access perspective, we also gained reimbursement in Slovakia in Q4, bringing the total number of countries reimbursed to 24. In addition, we learned in November that the French ANSM made the decision to reimburse Idefirix for use in connection with lung transplants. As you know, Idefirix is only approved for use in kidney transplantation, and this decision to reimburse in lung transplantation is a result of the French lung transplant KOL community driving the process and asking the ANSM to provide special reimbursement for use in this patient population. As I mentioned on the previous slide, having access to clinical data is critical to drive further adoption of Idefirix. In November, we arranged a large scientific event with 72 transplant experts from 17 countries. This meeting created a forum for the KOLs to discuss the latest data and facilitate best practice sharing between centers and countries. In Germany, we faced some challenges in 2025, as mentioned in the last couple of quarterly reports. Germany decided to pause the participation in the Eurotransplant Priority Program for highly sensitized patients. We have worked diligently across public affairs and medical affairs to understand how, and if, and when this program can potentially be reinstated. At this point in time, it is our assessment that it will take some time before the German Bundesrat [indiscernible] has decided whether to continue participating in this program or not. We do not believe there is a path for us to speed up this process as it is an administrative process driven by the Bundesrat [indiscernible]. At the same time, we also know that the majority, approximately 2/3 of highly sensitized patients are on the normal ECA waitlist in Germany, and German transplant centers can transplant patients with Imlifidase in this program. In Q4, German KOLs started writing new guidelines for the ECA program. We hope that these guidelines will be published in the first half of 2026 to help guide German transplant centers on how to delist highly sensitized patients to enable transplantation with Idefirix. The German KOLs believe that this is the best path forward to facilitate future transplants. Finally, we made some operational changes to our European organization in Q4. In December, we appointed Max Sakajja to lead our European and international organization. We have also made some other changes to our operations in Europe, which we believe will, in the long term, enable the region to perform better. Please turn to the next slide for the U.S. market. Turning to the U.S. market and the opportunity in front of us, assuming FDA approval. We know that there is a high unmet need in the U.S., as there is currently no approved desensitization therapy for highly sensitized patients. These patients wait for years to have a match in kidney, which may never arrive. In the U.S., there are approximately 15,000 patients who are highly sensitized, meaning, they have a cPRA over 80%. In the category above 98% cPRA, there are 7,000 patients. In the most highly sensitized patients, the population studied in ConfIdeS, there are 3,500 patients waiting for a transplant today. Each year, thousands of patients die or become too sick to transplant and the waitlist continues to grow, again, confirming the unmet need that exists in this population. We know this not only from published statistics, but also from both KOLs and patients as they reach out to our medical affairs and patient advocacy team almost on a weekly basis to ask when Imlifidase will be available in the U.S. It is with these patients in mind that we move swiftly to prepare for a potential U.S. launch and bring Imlifidase to the U.S. market. Please turn to Slide 11. Our launch preparations are ongoing, and we will be launch ready at PDUFA. There are 200 transplant centers in the U.S., and 100 of these centers drive 80% of the transplant volume and the 25 centers who participated in ConfIdeS represent 25% of the volume. From a launch perspective, our current assumption is that the initial uptake will come from larger centers with clinical experience, and we believe, we are in a great position with the clinical knowledge that exists already today in the U.S. From a reimbursement and access perspective, Imlifidase will be an inpatient treatment covered by the patient's medical insurance. Hospitals are reimbursed via DRG payments and outlier payments for kidney transplants. That is something that they are familiar with today. We will apply for NTAP, New Technology Add-on Payment, which if granted, will provide a separate Medicare payment to hospitals when Imlifidase is used. Most large academic hospitals have experience in this form of reimbursement from adopting new therapies such as the CAR-Ts for the inpatient setting. Our market access leader is very experienced, and he is in the process of bringing in a field access team in Q1. This team will be charged with working with the transplant centers, financial stakeholders to ensure access for patients post approval. We also have U.S. pricing research ongoing, and we are in the process of defining our supply and distribution network. In addition to our access team, we are also expanding our field-based medical team in Q1. Our current team have significant transplant experience, and we are looking to add additional team members with similar expertise. Finally, on the commercial side, we hired a Senior Vice President in December, and she joined the organization in January. She joined Hansa with transplant and nephrology experience, and she will be charged with building up our commercial team prior to PDUFA. With that, I would like to hand it over to our Chief Medical Officer, Richard Philipson, who will provide an update on our pipeline. Richard? Richard Philipson: Thanks very much, Maria. I'd like to take a few minutes today to summarize the outcomes of the company's Phase III study in anti-GBM disease or Goodpasture disease. I'll also briefly discuss next steps for the project. Next slide, please. As a brief recap, this Phase III clinical trial was conducted at 48 centers in 14 countries in Europe, the U.K. and the U.S. Enrollment began in the second quarter of 2023, and all patients were enrolled by the fourth quarter of 2024. The study recruited patients aged 18 years or older with a diagnosis of anti-GBM disease based on serological testing of anti-GBM antibody levels with an eGFR of <20 mL/min calculated using the modified diet and renal disease formula. Patients with a diagnosis of anti-GBM disease more than 10 days prior to randomization were excluded. A total of 50 patients were randomized in a 1:1 ratio to 1 of 2 treatment arms. Patients randomized to the control arm started treatment with plasma exchange or PLEX within 24 hours of randomization. Subsequent treatment with PLEX was determined based on anti-GBM antibody levels and using a schedule defined in the study protocol. In addition, cyclophosphamide was administered for a minimum of 6 cycles and a maximum of 10 cycles and glucocorticoids were also given. For patients randomized to the Imlifidase treatment arm, Imlifidase was administered as a single intravenous infusion as soon as possible after randomization, along with cyclophosphamide and corticosteroids. After an interval of at least 48 hours, patients started treatment with PLEX using the same approach as described for the control arm. The primary endpoint in the study is function as evaluated by eGFR at 6 months, and the key secondary endpoint is the proportion of patients functioning kidneys at 6 months, defined as no dialysis events within 4 weeks prior to the assessment. Next slide, please. Now moving on to the results. A total of 50 subjects were randomized to the study. However, one subject was excluded from the efficacy analysis following a diagnosis of Hantavirus infection as the primary cause of illness made after randomization. Therefore, 49 subjects were included in the full analysis set for the evaluation of efficacy, and of these, 47 subjects or 96% completed the trial. In brief, 49% of subjects were male, 88% were white and the mean age of the trial population was 59 years. At the time of enrollment, 45% of subjects were dialysis dependent and 57% had a history of smoking. Next slide, please. Turning to the study outcomes. The primary endpoint, which was eGFR at 6 months and the key secondary endpoint, which was proportion of patients with functioning kidney at 6 months were not statistically significant. There was no difference in treatment arms in the proportion of patients with end-stage kidney disease or death within 6 months. It is noteworthy that anti-GBM antibodies declined as expected following Imlifidase treatment and the safety profile was in line with previous clinical trial experience in anti-GBM disease and other patient populations. Next slide, please. Since the announcement of the results of the study at the end of last year, we have taken time to understand the study outcomes in more detail. That work is ongoing, and we're particularly interested in determining whether any particular subgroup of patients derive benefit from the treatment. It's clear that the control arm of the study, the design of which reflected from regulatory authorities performed much better than [indiscernible]. This likely reflects the rigorous administration of standard therapies including PLEX in the study and may not be achievable in real-world medical practice. We do not plan any further clinical trials in anti-GBM disease, but we'll, of course, present the outcomes of the study at a forthcoming conference. With that, I'd now like to hand over to our Chief Financial Officer, Evan Ballantyne. C. Ballantyne: Thank you very much, Richard. Next slide, please. Sales performance. For the fourth quarter, total revenue reached SEK 222.3 million, up 30% or SEK 51 million year-over-year. Full-year product sales were SEK 204.7 million, representing a 46% increase or SEK 64.6 million compared to the prior year of SEK 104.1 million. Fourth quarter performance was particularly strong with total revenue of SEK 76 million, up 135% or SEK 43.7 million year-over-year. Idefirix product sales in Q4 were SEK 61.1 million, increasing 139% or SEK 35.5 million compared to the same period last year. Fourth quarter contract sales, primarily from AskBio were SEK 14.9 million. As we've previously noted, while full-year Idefirix sales were strong, quarterly results can fluctuate due to the inherent variability of the European kidney allocation systems. Next slide, please. SG&A expense. SG&A expense totaled approximately SEK 101.6 million for the fourth quarter compared to SEK 88 million in the fourth quarter of 2024, representing an increase of SEK 14 million or 15%. On a full-year basis, SG&A expense of SEK 357 million was SEK 13 million or 4% higher compared to the same period a year ago of SEK 344 million. Excluding a SEK 21 million restructuring charge recorded in the second quarter of 2025, SG&A expenses were slightly favorable compared to the full-year 2024. R&D expense. 2025 R&D expense totaled approximately SEK 304.7 million for the full-year compared to SEK 346 million in 2024. This represents an improvement of approximately SEK 71 million or 19% compared to the prior year. In the fourth quarter of 2025, R&D expense of SEK 74.4 million was SEK 27 million or 26% favorable compared to the fourth quarter in 2024 of SEK 101 million. With the completion of enrollment for both the ConfIdeS and the PAES clinical trials, R&D expense should continue to decline. Operating loss. For the full-year 2025, the company's operating loss of SEK 521 million was an improvement of SEK 116 million or 18% compared to the operating loss of SEK 637 million in 2024. In the fourth quarter, the operating loss of approximately SEK 125 million was an improvement of SEK 49 million or 28% compared to the same period in 2024 of SEK 174 million. The year-over-year improvement in operating results is driven by strong revenue growth and a continued focus on controlling operating expenses. Next slide, please. Cash. Cash used in operations for the fourth quarter totaled SEK 149 million and SEK 149 million for the full-year ended December 31. As previously mentioned, the company completed a direct share issue of approximately SEK 671.5 million or approximately USD 71.3 million for the fourth quarter. At December 31, 2025, cash and cash equivalents totaled SEK 701 million. Now I'd like to turn the call back to Renee for closing remarks and Q&A. Renee Aguiar-Lucander: Thank you, Evan. Please turn to the next page. In summary, during 2025, we have built a strong foundation to capitalize on the strong science, competitive advantage and deep expertise in Hansa Biopharma. We've developed a clear road map with clear strategic imperatives, reflecting the many key inflection points in 2026. This includes the communication of our PDUFA date, readout of the PAES trial, presentation and publication of ConfIdeS data, agreement with the FDA regarding our development program in GBS and the potential approval of Imlifidase in the U.S., and launch into the U.S. market as well as the filing for full approval in Europe. The entire organization is now highly focused on execution, leveraging the agility, clarity of vision and mission, strong expertise and highly integrated cross-functional teams. We value accountability, transparency and strong horizontal communication. We are driven by our overarching ambition to deliver novel treatment solutions to patients with unmet medical needs. Please turn to the next slide. I cannot emphasize enough the value of the highly experienced team in Hansa. This is only the most senior level on this page, but I can assure you that the level of experience and expertise runs deep in the organization. I truly believe that the importance and value of highly motivated and clearly aligned human resources cannot be overestimated in this industry. We all look forward to delivering on our hopes and dreams in 2026, and we hope that you will continue to support us on this journey. With that, I will hand over for Q&A. Operator: [Operator Instructions]. The first question today comes from Farzin Haque with Jefferies. Farzin Haque: For the U.S. launch, you talked about the launch preps underway. It's a bit early, but do you have any initial feedback from payers on what reimbursement policies could potentially look like? Then on EU commercial operations quickly, you provided some color on the broader impact going forward based on operational changes, but any color on revenue guidance for the year? Renee Aguiar-Lucander: We are not going to provide any revenue guidance for the year at this stage. I will hand over to Maria to address the question on reimbursement. Maria Tornsen: Sure. Thank you for the question. As I mentioned before, this is a well-established pathway in the U.S. It's an inpatient drug. covered by the patient's medical insurance, and we know that the majority of patients are on Medicare in the U.S. The concept of getting reimbursed for kidney transplant with the DRG code is well established, and so is also the outlier payment that the hospitals can apply for anything not covered by the DRG. The other path we are taking is, as I mentioned, the NTAP path. We're going to apply for NTAP that would allow, if approved, an extra payment for Medicare. That pathway has been well established with the CAR-Ts. The pathway itself is not really an unknown thing for U.S. for the healthcare system. As part of the pre-launch work, what we are doing is obviously engaging with each hospital's financial stakeholders to understand their particular expertise in doing this. If they have expertise, as an example, in applying the NTAP from CAR-Ts. That's some of the work that is ongoing currently, but it's not a new reimbursement pathway. I think that's the best way I can answer it. The work is ongoing at the moment to really understand on the center-by-center, what is their expertise and experience in doing this. Operator: The next question comes from Suzanne van Voorthuizen with Kempen. Suzanne van Voorthuizen: This is Suzanne from Kempen. Looking a bit ahead on the potential launch of Imlifidase in the U.S., can you elaborate a bit more on the opportunity? One, if you can help drill down the actual addressable patient population on an annual basis?. You mentioned a couple of thousand patients in the highest CPA subset on the waitlist, but there's also a certain number of transplantations that occur in any given year at targeted centers. Second, on the pricing, what kind of flexibility you see there for the U.S., noting that there is a price point in Europe and there is, of course, the most face with nation element? Last, how do you believe we should think about the trajectory of sales in the first years of a launch? Renee Aguiar-Lucander: I'll start -- why don't you start, Maria, and take the question in terms of the market opportunity, and I will address some of the questions around [ MFN ], etc. Maria Tornsen: Sure. The big benefit we have in the U.S. is that the data available in terms of how many patients are at each center is remarkable. We know center-by-center, how many patients are listed for kidney transplant, how many are highly sensitized, their cPRA score, how long they have been on the waitlist. That is data that is readily available in the U.S. That, again, gives us a lot of confidence as we approach the launch. If you want to think about the addressable patients on a national level, you have 15,000 patients on the waitlist today above 80% cPRA. As I mentioned, if you go up to 98%, you have 7,000 patients. In the most sensitized patients, the population we studied in ConfIdeS, there are today 3,500 patients in the U.S. in that group. As I mentioned, we know where they are center-by-center. The other thing I would say that each year in the U.S., there are 27,000 transplants going on. Again, we know also center-by-center how many transplants are happening at each center. That goes back to my comment earlier on 100 centers represent 80% of the volume, and we know that from statistics. I think at the end of the day, we don't know what our label will look like, but if you look at how the product has been used in Europe, where we don't have any cutoff on the cPRA, it's been used down to 80% as well. I think we'll see when we get the final label. Again, the market opportunity is significant in the U.S. Renee, do you want to comment on the pricing in MFN maybe? Renee Aguiar-Lucander: Yes. I'll certainly take the MFN question and maybe you can address something around kind of the launch expectations. I guess one of the things I just want to add is obviously that today, as Maria said, there are 100,000 patients on this waiting list, but we also know, obviously, that this particular patient category really quite a few of the nephrologists or physicians may not put these patients on the waiting list today at all, because they would say, what is the point of putting you on the waiting list? We know already that you're not going to get an organ offer. It's very, very difficult for you to do that. I think that there is a gray area there in terms of which we are not going to really know much more about until we actually have an approved product and can launch this into the market, but I'd like you to keep that in mind. Secondly, obviously, we know that there are about 45,000 or so patients added to this list every year, and about 20% of those are highly sensitized. Again, you're having a very significant number of additional patients being added. That is, again, obviously without having a real sense of what that potential gray area looks like today. With regards to MFN, I mean, I guess that the price point in Europe today in terms of list price across most of these countries in Europe is around $350,000 per treatment. As you also know, obviously, these prices are really based on health economic analysis and are considered to be either cost neutral or cost savings to the systems since they are set by the actual countries themselves and not by the company. Knowing obviously that dialysis and comorbidities and other costs in the system in the U.S. are probably higher than what they are in Europe. We would not expect to have a price or have a price in the U.S. that are lower than what it is in Europe. However, as Maria said, we are having price discussions, pricing research is ongoing. Obviously, we'll take all of that into account before we actually set a price in the U.S. With regards to MFN, I guess my view would be that I think that without getting into any political statements, I do think that MFN is probably not the thing that I worry about the most in terms of this particular rare disease area with limited patient populations really that have really no alternatives today at all and who face the most severe consequences of not being treated. I'm sure, we'll hear more about this in the future. Again, I don't think that this is the area that would be initially addressed or even be considered to be relevant to address them in the first or even second or third wave of any kind of future discussions on MFN. Do you want to talk a little bit, Maria, about potential expectations around the launch or what we think. Maria Tornsen: Sure. I would start by saying, there's a lot of learnings we can take from Europe in terms of the launch that happened several years ago, but there's also some differences, obviously, in the U.S. market. Let's first look at the number of transplant centers. You have 200 centers. As I mentioned, 100 of those represent 80% of the volume. Our initial focus with the market access and medical team will be those top 100 centers. What we will do is going back to what I mentioned before, we will both understand the reimbursement pathway and their expertise, who are the people in each center that are involved in applying those outlier payments and managing the reimbursement for kidney transplant. Then the other path we will also obviously examine with our medical team is their clinical knowledge. Do they have awareness of desensitization? Are they doing that today to what extent? Our initial focus will be on those 100 centers. I think the key learning is that having clinical experience will matter. That's why I made a comment earlier that we believe that the initial uptake will come from high-volume centers that are used to doing many transplants and that have clinical experience. Going back to the fact that we have 25 centers in the U.S. that have participated in ConfIdeS, I would expect those centers to be among the early adopters, but not limited to those 25, obviously. I think that's the way we're currently looking at the market is focused on those 100 centers and those that have a clear knowledge of the reimbursement pathway and clinical knowledge, I think, will be the early adopters. I think what we need to keep in mind also is that we are launching into a new space. There is no other product in the U.S. approved for desensitization that have the same mechanism of action as Imlifidase and can do the same thing. There's a lot of interest from KOLs and from the patient community. I mentioned it earlier that we get multiple requests already today from the community around when will the drug become available, when can I have access? I have a patient that I'm thinking about. I think the potential is clearly there, but as I mentioned, we'll take a very focused approach as we prepare for launch in the U.S. Operator: The next question comes from Douglas Tsao with H.C. Wainwright. Douglas Tsao: I guess just in terms of following up on the reimbursement, Maria, you mentioned both the opportunity -- this will obviously largely be reimbursement in DRG for Medicare patients and the access of both eventually wanted to get applied from the NTAP. I agree with you, institutions are generally very familiar with it. I'm just curious, you did note that before the NTAP that hospitals will be able to access the outlier payments. How much would those or that outlier payment cover the DRG -- or cover the cost of Imlifidase early go? Maria Tornsen: A very good question. First, I would say that the concept of outlier payment exists already today. As you know, the DRG codes are like an amount that has a retrospective look back at the cost for kidney transplant. Hospitals are today applying the outlier payment for anything additional that they may be doing for these patients. Then when it comes to how much will they be covered, that's a quite interesting mathematical exercise that it really depends on multiple factors, where the hospital is based, the cost of living of that state as an example. It also depends on what they are submitting to CMS. A hospital could, in reality, submit a long list of things that they think they need coverage for and say, I need an outlier payment for this. The CMS then has a mathematical formula that they apply, again, going back to, as an example, in which state the hospital is located and look at what they determine are the appropriate costs for all of these things that the hospital have submitted for. Then they will do their mathematical calculation, and they will go back to the hospital and say, "You know what, this is what we will reimburse you for." It's hard to say, it's not a precise number. It depends on what they charge CMS for, and this mathematical formula. As I said, that is something hospitals are doing today. They do outlier payments for the DRG type Medicare reimbursements. I can't answer fully the question, but I hope I gave you some insight into how it works. Douglas Tsao: No. I mean, because this is a kidney transplant with complication from in terms of the DRG and they submit a lot. I mean when you think about the typical DRGs or the outlier payments because I think the CMS typically buckets them or think of them roughly in the same range, do you think you'd be able to cover a fair amount with Imlifidase? Then I guess just as a follow-up, to the extent that there are patients in the early going who maybe reimbursement is not easily accessible, how are you thinking about free goods and just the value of getting clinicians used to using the product in that early clinical experience versus maybe not having optimizing revenues in the early going? Obviously, free goods would impact your gross to net. Maria Tornsen: Yes. I was the first answer your question on getting outlier payments to cover our drug. I would say that I'm confident that we will work with the hospitals to ensure that they can use Imlifidase. As I mentioned, as part of the pre-launch work we're doing right now is to understand what are they doing today, what does their P&T committee look like today. I would not say that, that is going to be something that is going to prevent us from having a successful launch. We will make that work. I think one of the early learnings is that, that may look different from center-to-center in terms of how they today manage DRG payments and outlier payments. I would not say that, that is something that is going to prevent us. Then your comment on free goods, we don't have a policy for that right now. I think that is something that we would assess as we come to launch. I'm obviously aware of the fact that companies tend to have a policy around access to free drugs when they launch, and we'll have that as well when we have Imlifidase hopefully approved in the U.S. Renee Aguiar-Lucander: One of the things I would just add is obviously just the Medicare reimbursement received for hospital is not tapped at DRG, right? DRG is a guaranteed base payment that the hospital can expect to receive. If you actually look at something like CAR-T, which I think is a fairly good analog here, if you look at [indiscernible], it was launched with a price of, I believe, just under $500,000 per treatment and the assigned DRG had a base payment rate of $36,000 at that time. There was a pretty robust uptake of that. I think certainly, even hospitals were reporting that they were profitable when they were providing CAR-T treatment. Again, I think that there is certainly familiarity with the hospitals around these situations. I don't think that we should get too carried away with the actual DRG number per se, because it is more of a guaranteed minimum, I would say, than a kind of -- this is the amount that the hospital actually receives because I would probably bet you that, that is probably not what a lot of the hospitals receive at the end of the day, depending on the patient, what they have to use and again, as Maria said, the way the CMS looks at this. Hopefully, we've covered that for you. Operator: The next question comes from Thomas Smith with Leerink Partners. Thomas Smith: Congrats on the progress. Just on the U.S. commercial launch preparations, you referred to some work you're doing refining the supply and distribution plans for Idefirix in the U.S. Can you just elaborate on that? Update us on the manufacturing and how you're thinking about distribution of the drug product in the states? Then as a follow-up, I was hoping you could elaborate a bit on this interesting decision in France to expand reimbursement to include lung transplant. Are you expecting that we could see similar decisions in other European countries? When it comes to the U.S., how are you thinking about potential adoption in other solid organ settings beyond kidney transplant? Renee Aguiar-Lucander: You want to start off, Maria, on supply? Maria Tornsen: Sure. Some more details on supply and distribution. Our drug, Imlifidase is manufactured in Europe. The work that we're doing now is selecting our 3PL and also deciding on our specialty distributors and what the network is going to look like. Really, the question that we're solving for is how do we get the drug into the U.S. Then when it comes into the U.S. to 3PL, what is the distribution network going to look like, which specialty distributors are we going to use? Then how are they going to purchase -- the hospitals are going to purchase the drug from the SD. That's a very typical U.S. launch prep that we're doing. When it comes to France, and the lung transplant program, there is a KOL in France that has, I think, a few years ago used Imlifidase in a compassionate use in a lung transplant patient. That is really how it started that obviously saw the benefit of using this despite the fact that we don't have an indication in lung transplant. This KOL and the other KOLs in the lung transplant community in France, they went to ANSM in France and asked them to consider a special reimbursement for lung transplant. I would say that, that particular pathway is has happened for other drugs in France as well. ANSM has this pathway to -- if a drug is approved in one indication, they can approve special reimbursement in other indications. That's what happened. Obviously, this is not an approved indication for us. We haven't generated any clinical data, but that is the pathway that has been established in France since November. You asked also about U.S. adoption across other transplants. I think that is a bit too early to say. I think if you -- Renee may want to comment on it, but if you look at the mechanism of action, you can understand why the French KOL decided to try Imlifidase. I think it's something that is hard to tell at this point in time in the U.S. There is another publication from a center in the U.S. that used Imlifidase in heart and liver transplant that is a published case study. It's hard to judge at this point in time how and if it will be used. I don't know, Renee, if you want to comment anything further on that other organ transplant. Renee Aguiar-Lucander: Sure. Yes. I mean, as Maria said, I mean, this is tricky to discuss off-label use when we don't really have an approved product at this point in time. I would say, subsequent to potential approval, obviously, it would make sense for us to revisit this whole area of potential label broadening with the FDA in terms of understanding what would they like to see, how do they look at this? Is there anything that we should do, could do to try and facilitate some of this. I think it will depend a lot on what regulatory advice we get regarding this potentially. I think for now, we're really just focused on getting the approval and launching in kidney, which is a very, very substantial opportunity. We are aware, obviously, that there's a lot of can perceive unmet medical need in all of these transplant settings. I think we will take one step at a time at this point. Operator: The next question comes from David Nierengarten with Wedbush Securities. David Nierengarten: I just had one on the future GBS study or similarities or differences or other guidelines you could point to with other trials in the field, like Axonal and GBS and just if there were key differences or similarities you were looking for when you talk with the FDA about that design. Renee Aguiar-Lucander: I guess I'll have Richard comment on this shortly. I guess that we're internally at this stage, we are looking at a variety of different options to bring to the FDA, and we will very shortly decide upon which way we're going to take this forward. Obviously, in all of these conversations with KOLs, various trials have come up. Also, most drugs and most trials, they all have their benefits and drawbacks. We should all learn from each other in terms of how to best optimize for the benefit of the patient. Richard, I don't know if you have any specific comments on that. Richard Philipson: Sure. I think there clearly are opportunities to learn other development programs, other clinical trials that are being conducted in the field, as Renee says. I mean, we're still at the stage of looking at different development options, different clinical trial options. I think it's also important that we do have evidence from our mechanism from a previous study that we did. I think that's provides us with useful information that we can use when we are designing our program molecule 5487. I think that's an equally important area of information that we're using along with, as Renee said, and you have indicated learning from what other companies have done. I think the critical step really is to take our preferred design option, which we will very shortly identify and take that for discussion with regulatory authorities, in particular, the FDA. I think that feedback will be critical in terms of determining the way forward. Operator: The next question comes from Richard Ramanius with Redeye. Richard Ramanius: I have one question. When do you recognize revenue? How long on average does it take to convert the conversion from into cash? Renee Aguiar-Lucander: Evan, do you want to take that question? C. Ballantyne: Yes. Sure. Great question. We recognize revenue, as you would guess, under IFRS 15. We recognize revenue when the product ownership has been transferred from Hansa to the hospital. As you're probably aware, some of the hospitals pay us based on an actual transplant and some hospitals pay us in terms could be 30, 60 or 90 days later. There is sometimes a timing difference between revenue recognition and the collection of cash in accounts receivable. Operator: The next question comes from Erik Hultgard with Carnegie. Erik Hultgard: Congrats on the quarter. Two quick questions, if I may. First, on the Sarepta collaboration, you say in the report that you're actively reviewing the data and discussing the next steps. When will you expect to communicate the outcome of these discussions? Then a short one for Evan on the annual cost for the full U.S. organization when reps have been onboarded. What's the rough number for that full organization? Renee Aguiar-Lucander: Thanks for that. In terms of the Sarepta collaboration, as I'm sure you're aware, I mean, Sarepta is having quite a lot of regulatory interactions at the moment with regards to their core business. That's really where their focus is at the moment. I think that the only thing that I can say is that we are continuing to have very constructive and good interactions, but we're also mindful of the fact that this program is probably not at the very top of the list at the moment for Sarepta. It's difficult for me to give you an exact timing of when we'll be able to fully communicate exactly what the next steps are going to look like. That really is not, unfortunately, not really under my control at the moment. I can assure you as soon as we do, we will communicate it. As I said, I mean, we're in ongoing discussions and communication and conversation. It is hard to give an exact time at this point in time. That has nothing to do with the interest in the program or any kind of anything else. I think it's just really a matter of priorities at Sarepta at this point in time. Evan, do you want to take the second part? C. Ballantyne: Yes. Sorry, you broke up on that second part. Could you repeat that question, the second question? Erik Hultgard: My second question related to the annual costs for the full U.S. organization when the 20 reps have been onboarded. C. Ballantyne: Yes. We baked that into our budget. As Renee mentioned earlier, we have cash into 2027. We've anticipated those costs. We haven't reported them or broken them out specifically, but the U.S. is a very, very large market. I think to address that work with 18 to 20 different reps is a really good use of capital. Erik Hultgard: Sorry, Evan, my question was more about how we should model costs on an annual basis when you have the full organization in place. C. Ballantyne: Yes. You should model them. I think including the 15 to 20 different reps we'll have on the commercial team under Maria, we'll probably have an equal number of support staff, including some SG&A and MSLs in the organization. Then I would take an average salary and wage for U.S. employee. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to CEO, Renee Aguiar-Lucander, for any closing remarks. Renee Aguiar-Lucander: Thank you very much. Thank you, everybody, for listening in to this presentation, and we hope to see you again soon. Thank you. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Ladies and gentlemen, welcome to the Voestalpine Publication Third Quarter Business Year 2025-2026 Conference Call. I am Mathilde, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Peter Fleischer, Head of IR. Please go ahead. Peter Fleischer: Good afternoon, ladies and gentlemen, and a warm welcome to our first quarter to third quarter results of the business year '25, '26, the first 9 months of the actual business year. With me is Herbert Eibensteiner, our CEO; and Gerald Mayer, our CFO, who will give you a brief overview of what has happened in the first 9 months, and we will be happy to answer your question afterwards. Herbert, please feel free to go ahead. Herbert Eibensteiner: Thank you, Peter. Good afternoon, ladies and gentlemen, also from my side. I would jump right into the presentation. And for those who are not so familiar with Voestalpine, I would like to give a brief introduction. Voestalpine is a global special metals and steel company and an industrial group, and we combine this steel and metal production with processing and engineering competence. And from this expertise, we develop this special high-quality solutions that offer our customers the competitive advantages. And we are a leading partner for high-tech industries with high entry barriers such as aerospace, automotive, or railway systems, and we are stock listed since 1995 and committed to value creation for our shareholders. So what was happened in this first 9 months when it comes to the global economic environment. Let me start with Europe, which is the biggest market for Voestalpine. In one word, relatively weak. So we had from the beginning of the business year, relatively subdued economic development. And only in the last weeks or days, we see a slight upturn in industrial production in Europe. And when we come to North America, you know all the action around tariffs. We have still a robust economic growth, but we know that this is mostly driven by this high investment in the tech sector in Industry growth is by far weaker. And when we go to -- or look to Asia, in particular, China, we see a relatively stable economic development, and this is supported mostly by exports into the rest of the world also because even more because of tariffs and South America, which is Brazil, the biggest market for us, we see a reduction in economic sentiment, why we have this increase in interest rates and we see strong competition from Chinese imports knowing that Brazil is not protecting its borders and trade flows. Let me come to the highlights of the first 3 quarters. We have very solid results in the first 9 months in a relatively challenging environment. I have mentioned that. And I'm -- I think it's very positive that we have a very, very strong financial position. Gerald will present it in his part of the presentation. And for me, it's very important that we can show again strong cash flow development also in the last quarter. And our markets, railway infrastructure, aerospace and warehouse and rack solutions unchanged, positive, good development, and I would say, the best to describe the rest of the markets is that it's a stable demand at low level in mechanical engineering construction industries. And we have a mixed development in automotive industry on the one hand, steel flat still, which is very positive, mainly driven through gaining more market share and the automotive components business is a bit weaker. And so coming from all these restructuring measures we have implemented, we see also a decreased number of employees compared to previous year. So what is still our strategic focus is these 3 pillars. The first is more short term. We have this reorganization measures in place. We do also portfolio optimization, portfolio management. You know we have sold in high-performance metals. And I think in the last days, you have heard that we have also divested BOHLER Profil in January, which is signed but not closed so far. And I think the biggest part of reorganization is automotive components with all its sites worldwide, but also in high-performance metals, again, streamlining the warehouse structure, streamlining the sales structure and also in all those activities, focus is efficiency, efficiency, efficiency. And we are quite good on the way and all the programs in time. So we do not forget our growth activities, which are strategically is railway systems, tubes and section, warehouse solutions and aerospace. And we are focusing also in new regions for us in attractive regions. And this is India. I will come afterwards in the presentation with a bit more information. And the third pillar is this decarbonization projects we are running in -- on 2 sites in Austria, so where we want to replace 2 out of 5 blast furnaces by electric arc furnaces, EUR 1.5 billion. And I think all these projects are in time and on budget. And so we -- in a year from today's on, we will start the ramp-up, for instance, in both activities for this greentec projects. Let me come to the 3 highlights. I think I want to give you some positive impressions what we are doing or what we have done. You know that Railway Systems is a very international business where we do business all over the world, but also in the small Austrian railway market. So we have recently closed the project in Austria, Koralmbahn, which is a 35-kilometer long tunnel, one of the longest worldwide, and we provided for this project, 290 kilometers rail and 235 turnouts and all the digital monitoring system, I think that's a quite positive project for Voestalpine. And we have numerous other international railway projects all over the world, very important for us. Warehouse and Rack Solutions, a bit smaller as a business, but also with very positive projects. Currently, we are working on a hybrid warehouse in Turkey, the biggest we have ever built, 230 meters long, 80 wide and 40 meters high with thousands of pallet places and a similar project in Czech Republic for a tire producer. This is with 50 meters, even the highest we have ever built. So you see even in a very traditional business, there is every year new demand in bigger and more complex projects all over the world. And I have mentioned India before. So for us, at the moment, a relatively small market. We have only EUR 190 million revenue. There are 5 location production sites with 1,000 FTEs. And we have already a turnout activity there, but we want to expand this engineering and design capabilities in India with a couple of people in India, which are training the local guys to improve our footprint there. First production site is planned in special tubes, special sections. Most of you know that we have a standard procedure for that 20,000 square feet building, then adding 3, 4 machines after 5 years, we fill up this facility. And then we think of the next steps, we will start that next year, I think. And we are growing in aerospace supplies in India, so where we have seen more and more activities for delivery to the OEMs, and we have achieved the first important approval so we can deliver to the producers of aerospace airplane parts. And also, we have a welding consumables facility there. We want to expand that. The market is growing. So 2 topics, railway very important for us, warehouse very important for us. And geographically, India is small, but will develop steadily in the years to come. So let me come to a quick view on the divisions. Steel division, very, very strong performance in a relatively weak economic environment. And we faced a very good demand from the automotive industry. I've mentioned before that I think that we gained market share when it comes to higher quality steel sheets and also in the energy sector, which is mostly heavy plates. And in all the other markets, mechanical engineering, building and so on, I have mentioned it before with a relatively stable and on a lower level demand. Market segments -- or sentiment in the steel sector improved after the announcement of the EU safeguard measures and CBAM. I think we will discuss that for sure when we come to your questions with a positive outlook for the remainder of the year and into -- especially into next year to come. And when you look at the EBITDA figure with more than 13%, I think considering the time we are in a very good result. High Performance Metals, a bit different with a very weak economy and uncertain market condition with a high import pressures -- import pressure, especially when it comes to tooling and industrial parts. Oil and gas was impacted by this low rig count -- with low exploration. Aerospace, on the other hand, very strong development in Europe. And in the course of the year, we see a very good improvement from the demand of Boeing. And we have got additional volumes, additional contracts in this segment. And High Performance Metals is a very important part of our reorganization plans. And we see this first positive results out of that when you consider decreasing volumes and the results remain steady. So we -- for me that the reorganization and restructuring is working. And we -- as I mentioned before, we built a new sales organization and most of that is already implemented, and we will see the positive results into next year. And even in this difficult situation, we have this 7.6% EBITDA margin. Metal Engineering, Railway Systems, the biggest part of Metal Engineering is Railway Systems with a good performance. We have typical seasonal effects in the winter months this year, maybe a bit more. And Industrial Systems show different performance when it comes to welding, relatively stable on satisfying levels. On the other hand, we have tubulars, which is heavily impacted by the U.S. tariffs. This is OCTG business and half of the business is U.S. business. So we have again reduced our volumes there. And wire is operating in a very weak market environment. But in the course of the year, we have at least increased the volumes on the price side. We are working actively and the efficiency. In all these activities, we have implemented efficiency programs and everything is well in place and on schedule and we look at the figure. The division has 8.7% EBITDA. And we have promised you that we'll give you a deeper insight of the Railway Systems unit, which is the biggest part of the Metal Engineering division. It's a very important driver also for our long-term growth ambition. And in this business, we are a full service provider globally of railway infrastructure solutions. The biggest part is turnout systems with more than 60% of sales. And we have very good development in all markets globally. It's not only replacement and maintenance. It's also new projects, new activities and rail technology. Rail is a bit below 30% of sales with ongoing solid performance. Main market is Europe. Fixation, new business for us, but again, a very positive development, especially in Central and Eastern Europe. This is a part of the business we want to grow in the future as well. And signaling has grown quite significantly in the last years. Again, already 6% of our sales, a very good development, and we are delivering at a very good level. And you see -- when you see this 10.3% in EBITDA margin, you are aware that this is the most important part of this Metal Engineering division. Metal Forming, as I mentioned before, automotive components compared to that what we see in the Steel division is weaker. So we are mostly focusing on European carmaker. So in Europe, we see this 12 million cars and not more. And even the U.S. tariffs had an impact in our North American market, our business in automotive components. And as I mentioned before, we are in a deep reorganization part. And it's clear that we have -- there is a way to go, but we are sticking to our plan. And so far on time. And also, we see here the first positive results. Also, we have an outflow of money or cost for restructuring in this area. So Tubes and Sections, overall solid performance. We had a slowdown in the second half of the year after the summer because of some delayed projects. We will see that in the fourth quarter, more or less good results with a bit lower volume. Precision Strip has improved in the course of the year also profitability-wise and Warehouse and Rack Solutions have touched it very strong demand, long order book also for the next year and even in 2027. EBITDA margin here because of the weakness of automotive component with 6.3%. So this was a very brief overview of the divisional development, and I would ask Gerald to guide us through the figures. Gerald Mayer: Thank you, Herbert. So after this, as Herbert said, brief overview, I would say it was even comprehensive. I would like to share with you how this is reflected in our financials. So we have in front of us our table here with our key KPIs. You see there that revenues are down roughly EUR 600 million, EUR 450 million out of this EUR 600 million are referring to lower prices, and other EUR 50 million are referring to a weaker U.S. dollar, in particular, we had higher volumes. So this came with plus EUR 120 million. And then you remember that we sold last year, Buderus Edelstahl, and they had an impact last year of EUR 220 million. So this is a reduction, which we have, of course, then in the first 9 months of '25-'26. Talking about our profitability, you see that all the lines are in green lights on. So we are up in all of these line items. So EBITDA is at EUR 1 billion, a little bit above EUR 1 billion compared to EUR 970 million last year. EBIT is up EUR 470 million compared to EUR 390 million last year. So in particular, strong, as also Herbert explained, was our Steel division operationally. We are up in HPM division and in Metal Forming division also, of course, partly driven by negative one-offs last year. We talked about restructuring efforts in our automotive components business unit. I talked about the sale of -- or the divestment of Buderus Edelstahl last year. This had a positive impact this year. Metal Engineering was a little bit weaker compared to last year. I will talk about that in some moments. What is interesting here on this table is profit before tax. It's significantly up. There is one main reason between EBIT and between profit before tax, it's our financial income. We reduced our net debt by roughly EUR 300 million, if I compare an average the first 9 months last year to the first 9 months this year. And also interest rates are down, as you know, and this had this impact of, yes, a significant impact this year. And so therefore, EUR 120 million up. On the other side, talking about profit after tax, you will realize immediately that we had quite a higher, let's say, perhaps an unexpected high tax rate. And last year, it was very positive, a very low one. Talking about last year, the main impact was that we recognized taxes for prior years last year, about EUR 20 million. And this year, it's the other way around. We had tax losses, as I talked about that also in our half year presentation in Brazil and Germany, in particular, where we did not recognize tax losses. And therefore, the tax rate is above 30% for the first 9 months. Talking about the first bridge, EUR 968 million to EUR 1 billion roughly. So you see here the significant impact of lower prices in the first half and positively compensated at least partly by lower raw materials. So the gross margin is down EUR 137 million, roughly 60% attributable there to our Steel division and 75% to our Metal Engineering division. And out of the EUR 75 million in our Metal Engineering, I can share with you that a stake of EUR 50 million refers to simply higher tariffs to the U.S. tariff situation in our tubulars business in Metal Engineering. Yes, higher volume and mix effect, which is positive there with EUR 73 million. So in particular, in our Steel division, we have had a super capacity utilization rate in the first 9 months. So we came with 300,000 tonnes higher volumes. So this is more than EUR 100 million. The mix effect is a little bit negative there in Steel division. And in HPM division, we lost some volumes compared to last year. So this had a negative impact there. But in total, for the group, as I said, EUR 73 million plus. In Miscellaneous, also, as I mentioned here, the part of miscellaneous plus EUR 134 million. We had, of course, the impact of Buderus. We had the impact last year of our restructuring or reorganization efforts we had in automotive components. On the other side, inflationary effects were compensated by our cost, let's say, efforts we had all over our group, and this is in brief bridge #1. And bridge # 2, I share with you the deviations of the respective Voestalpine divisions. You see there that we had this positive development in steel. As I mentioned before, higher volumes, lower prices, negative mix effect, but positive also optimized cost effects ended up in EUR 50 million plus. And as you know, also last year was still -- was a very positive one. And here, we are doing even better. So we are very proud of the performance here of our Steel division. HPM, as also Herbert said, reorganization is on track. We have positive effects there, which compensated for the lower volumes. We still have been facing headwinds in HPM's there. It's turning a little bit at the moment, and we think we bottomed out the last months were a little bit better in terms of order intake and also in terms of turnover. So we see some slight improvements there at the moment. But market-wise, in the first 9 months, it was weaker compared to prior year. We also -- we talked about reorganization of several logistics sites there, we reduced manning. So this will have also a positive impact in future and had a positive and first positive impact in our first 9 months here. Metal Engineering, I mentioned, this is the only division where we lost a little bit ground, at least when we talk about the results compared to prior year. So we are down EUR 79 million. In particular, I would say -- and it's obvious. So the main part there is the tariff situation in the U.S. We published that we reduced manning in our tubulars business unit in Austria. And this is simply the only reason there is lower tariffs and a little bit, of course, also the rig counts Herbert mentioned before. In the business unit while also we are facing headwinds from the markets, very solid is our welding business unit in Metal Engineering. And we also were talking about Railway Systems before, which is strong, stays strong, very solid. And of course, we also have some cyclicality or seasonality in there, but very solid, and we have, for sure, a prosperous future in front of us in Railway Systems. Metal Forming division, last but not least, plus EUR 21 million. If you look here at the business -- at our business units, we are a little bit weaker in Tubes and Sections, which is the biggest business units there compared to prior years. I would say, in total, it is solid, but also some headwinds in the first 9 months, but we expect also a good future there. Automotive components was touched by Herbert. We closed Birkenfeld. We have now 200 people less just because of that. And very positive is Precision Strip and Warehouse and Racks as Herbert shared with you some moments ago. Very positive cash flow situation. What you see here is the summary. Actually, cash flow from results is EUR 873 million. I would like to add here the EUR 228 million from change in working capital. So if you add this up, we are above our EBITDA level. It's clear so that we had very positive impacts there from working capital initiatives. And yes, I think, yes, we did a good job there. We had some negative effects also in there because we had volumes picking up, for example, in Steel division on the other side, positively. We optimized and we continue to optimize in HPM, also in Metal Engineering, and there is more to come also in Metal forming. Investing activities, you see here that we are exactly at the level of our prior year. You know our guidance of EUR 1.1 billion for the full year. So you immediately can see that we are not at the run rate for, let's say, what you would expect perhaps for the first 9 months. Our guidance stays at EUR 1.1 billion at the moment as our big investment projects are up and running and are on time and on budget actually. Of course, it is milestone driven and you never know exactly do you have a cash out then end of March or is it beginning of April or whenever it is. So it is -- but we stick to this EUR 1.1 billion in terms of guidance. What you also have to take into account, if I talk a little bit about guidance, and I would like to do that now here that in the fourth quarter, we always have our cash outs for our CO2 certificates, ETS cash outs, which we pay normally in Jan. This is extra EUR 180 million roughly, which you do not see in the first 9 months and the additional cash out for CapEx, as I mentioned before. So this leads to the guidance of EUR 1.1 billion or another EUR 350 million to go until end of our business year, but it should stay a positive free cash flow, and we also expect a slight positive free cash flow in our fourth quarter. Talking about our solid balance sheet, about our financial structure there. What you see here, and I share with you that we reduced since the beginning of the year, net debt by another EUR 200 million roughly. Our equity position is right now 50% or EUR 7.6 billion and gearing is down to 1.0 net debt to EBITDA or 19%. So very solid. I think -- we think given the big projects which we have in front of us, given the idea also Herbert shared with you talking about strategic things that we have some growth segments in front of us, a lot of uncertainty. We are convinced that the strong balance is a good, let's say, a good and necessary foundation at times like this. So this was my summary, and Herbert will now continue with the outlook. Herbert Eibensteiner: So I think the outlook is not really a surprise for you. So we think that the global economy has more or less adapted to the -- after the imposing of these tariffs in the U.S. and we think that more or less the trends will continue what we have seen before. Automotive industry remains on current levels. As I mentioned before, this 12 million cars a year, construction, mechanical engineering, consumer goods, more or less stable at current levels. Demand from the conventional energy sector for pipelines will remain strong in this fiscal year. And -- but we see no pickup in exploration activities, which would positively -- would be positive for OCTG. So stable situation, but we see still this positive momentum in railway infrastructure with a good order book in aerospace and also warehouse and rack solutions, we can say that we are booked quite well. And all this implementation of reorganization works quite well. So we can confirm the guidance of EBITDA between EUR 1.4 billion and EUR 1.55 billion. So that was our outlook, and we are happy to answer your questions now. Operator: [Operator Instructions] The first question comes from the line of Alain Gabriel from Morgan Stanley. Alain Gabriel: I have 2 questions from my side. The first one is starting with the guidance since you -- since that was the closing remarks, your steel business is highly levered to the improving spreads in Europe. The guidance for Q4 may not have fully captured the extent of the price action that we have been seeing recently in Europe. Can you help us better understand the drivers between volumes, pricing and costs as we look at your steel business beyond Q4, i.e., into Q1 fiscal '27 and beyond? That would be my first question. Herbert Eibensteiner: Yes, to a certain extent that the most recent pickups are in our pricing because we have it in our yearly contracts in and also here and there in quarterly business. But when you ask beyond Q4, we have all this picture in mind where we have CBAM now in -- since January, we have these safeguards in front of us. We think that safeguards will be implemented in -- with 1st of July. And all the infrastructure programs, we -- in Germany, maybe the first defense spending is in front of us. And surprisingly, the commission is talking about -- or discussing about how we proceed with the free allowances, CO2 allowances. So I think that's quite a positive momentum into next year. But we have to say there are 2 scenarios; a scenario with a quick pickup of prices and there is a scenario with a steady development of steel prices. I would say we think of the steady development in the course of the year, considering that safeguards will be into effect in July and also the infrastructure measures, we think and I have presented this also in last quarter, we think that the first bigger projects will come during the summer or after the summer. So I think -- and we have with this -- with our -- how should I say, our contract structure, we have a certain time lag. So we are now locked in with our quarterly -- with our yearly business where we have achieved a certain improvement, but we are then locked in. We have half year -- this is 40% of our business, 40% of our business is quarterly business. So we are closer to the market and the rest is then half year business. So we will see a certain time lag. So we will see improve -- we will see improved prices in the course of the year with this before mentioned time lag of Voestalpine. And I think it will improve, but this is how we see our guidance in the course of the year. And we know that we have into next year this project business in heavy plate, which is -- and we have some delays in projects. We know that into 2027, there are big projects again. So I think we will come through this year 2026 with slightly improving prices for Voestalpine, maybe a bit behind the market because of the things I mentioned, but we will then fully benefit in 2027 from all these positive effects. Alain Gabriel: That's clear. And the second question is on HPM, which has been a drag on the business for the last few quarters. You are clearly doing a lot of efforts and progress in restructuring the business, but ultimately, we may need to see an improvement in, let's say, automotive tooling, industrial CapEx and other end markets. Are you seeing any early signs of restocking or improved order intake? I appreciate the outlook for the business may not be -- may not look great now, but at least any signs of green shoots that you are seeing? Or do you do expect a more prolonged demand trough? And then an extension to the question, what utilization rates are you currently running at for that business? Herbert Eibensteiner: The utilization rate is relatively low, I would say, at 80%. And so there is room to improve. That's the reason why we make this efficiency measures. I would say, there was a sentence in our presentation, slight improvement, but that we see a quicker recovery. I think it's not the case. We see good products in China. We see this better projects in aerospace, but we see this improvement in results are mostly coming from the restructuring part. Gerald Mayer: I would like to add one sentence there. I think we also -- we're also really working hard in reducing working capital. And by doing that, of course, we produce also less. So we expect also a positive impact there next year. And in the last months, in particular, step by step, we saw some small signs. And you were asking about small signs of improvement in tooling. Yes, we do see that. So in my opinion, we bottomed out there, and it should go up, at least this is our take as of today, means restructuring is going as planned. And I would say we will also see a higher level of production. And so we clearly expect an improvement there for next year. And you were asking the last times, what is this midterm, long-term outlook there. We stick to that. So in 3 years, we will have this EUR 400 million level of EBITDA. Operator: The next question comes from the line of Tristan Gresser from BNP Paribas. Tristan Gresser: First, on the EBITDA guidance, I was wondering why you did not refine a bit more the full year guidance now that we have only 1 quarter left. Put another way, what would drive the EBITDA to the low end of the guidance? And what do you think would drive it to the high end? And at this stage, with the visibility you have, do you think the top end of the guidance is more than likely? Gerald Mayer: Tristan, I think a fair question. And we were really thinking about it. You saw that we signed to sell one of our companies in HPM division. And our guidance simply covers both scenarios. Do we close or not close this deal? And if we close this deal, we are more at the upper side. If we don't close it, we are more at the lower side of our guidance. So this is actually the take there. And you could split it. Is it EUR 1.4 billion to EUR 1.475 or is it EUR 1.475 billion to EUR 1.55 billion. So it is -- and we simply don't know if closing will happen or not. Tristan Gresser: All right. No, that's very clear. And then on the auto contract negotiations, I think you mentioned it, I just wanted to see if you could add a bit more color. So they have concluded -- the vast majority of it has concluded already. You're still not negotiating. Were you able to recoup the kind of loss -- the year-on-year loss you had last year? Or is it going to be more -- the increase you managed to lock in? Is it more type of a mid-double-digit increase for this calendar year as well. And then also, if you can share some outlook for auto demand and volumes, not necessarily for fiscal Q4, but for the calendar year 2026. Herbert Eibensteiner: Yes. I think we will be fully -- and I think we talk about Steel division. I think we will be fully booked in our automotive business. We have these contracts. We have achieved -- we do not everything in January. So we have also in April and June and even in the fourth quarter negotiation -- in the third quarter negotiations. But when you put everything together, the bigger part is negotiated in January. And yes, we achieved a plus in our auto -- yearly auto contracts. And I think volume-wise, we got a bit better mix. That's always the third part. We are talking about volumes, mix and prices. And yes, we achieved a better mix. And I think we are fully booked in auto. So I think that's the overall picture. When you would consider negotiations in October, we would have a reduction and with the improvement and the announcements of safeguards and whatever, we could achieve a plus in our auto contracts. Tristan Gresser: All right. That's very clear. And maybe a last question, if I can squeeze that in. The heavy plate business that's been really successful in fiscal 2026 on the energy side. You mentioned some delays. So should we expect the performance in fiscal 2027 to be not as good as what you've seen in 2026? Herbert Eibensteiner: Yes. We are fully booked till the end of the year, more or less. And in the second half of this -- of 2027, we see some delays or postponing of projects into 2027. So this will be the difference between 2027 and 2026. Tristan Gresser: Okay. So it's more of an issue of maybe volumes rather than the margins themselves? Herbert Eibensteiner: No, it's no margin squeeze. So this is a project business and we -- either you get the project or it's postponed or not available. In this case, it's postponed into 2027. And we think it's not lost so far. This is the reason why we are for 2027 quite -- 2027-'28 quite optimistic. Operator: We now have a question from the line of Dominic O'Kane from JPMorgan. Dominic O'Kane: I have one question. So if I just think about the interplay between your EBITDA, your cash flow and your balance sheet. So as we enter calendar 2026, I think there's a runway over the next couple of years where it's reasonable we can start thinking about maybe a EUR 2 billion a year continuing EBITDA profile. And obviously, with the Capital Markets Day in October, you unveiled a new dividend policy and gave more details around your thoughts on the balance sheet. So -- my question is, given what you've reported this morning, we're now seeing a situation where you have 1x net debt EBITDA. Should we start to think about potential deleveraging of the balance sheet from this point forward? And therefore, how should we think about your use of the balance sheet as we look into 2026 and '27? Gerald Mayer: Yes, let me take this question. I think what we said in our Capital Markets Day, nothing really changed. So we are on track to all we said. So we really try our best to deliver there, and I think we are well on track there. And talking about the next years, we'll see what really will come. So I think Herbert explained a little bit our view and our take there. And I think we have to wait and see a little bit how things actually are really developing. In terms of debt level in our balance sheet, I think, in particular, in times like that, where uncertainty is high, it's better to have a little bit more deleverage perhaps balance sheet, but we are more or less there where we should be. So -- and there is also some room for growth in there. This is also clear. And I think we also talked about the 3 areas where we want to grow, and we simply want to be also ready for that. So I think everything unchanged. Our policy in terms of capital allocation is as presented, including dividends, as presented during our Capital Markets Day. So no real change. We simply deliver what we promised. So this is our take there. Dominic O'Kane: If I could just maybe just ask one additional question. So do you have -- you've provided us with kind of free cash flow projections for FY '26. Is it too early to say whether we could think about a similar number for 2027? Gerald Mayer: What I can share here at the moment, we are right now preparing our business plan for the next year and our budget. But our take there is we -- next year, one thing is clear. We will have, I would say, in terms of CapEx or cash flow from investing, we will have a similar level of -- like we have this year, EUR 100 million, EUR 150 million is still our guidance for next year in terms of cash flow from investing activities. In addition to that, we know that we have to rely in the blast furnace, for example, and Donawitz in our plant. So there are some extraordinary things which lead to some cash out. But our clear plan is to deliver again a positive free cash flow. Will it be at the same level as this year? I would say it is a little bit more limited to optimize working capital in addition to what we did the last 18 months. I think we achieved a lot there. And we will not see the same magnitude again. This is not realistic in my opinion, but it should stay a positive free cash flow, in particular, driven by the 2 divisions, which did not contribute that much in the last year means this is in particular now Metal Forming and HPM division. And for the reasons I just mentioned for Metal Engineering, I expect here a little bit less contribution and also from Steel division here also we are peaking in terms of cash outs for our investing activities. Operator: The next question comes from the line of Bastian Synagowitz from Deutsche Bank. Bastian Synagowitz: Maybe I'll bring one question forward given that we are already on the topic of capital allocation. Maybe just following up on CapEx specifically. I guess, at the Capital Markets Day, you gave this guidance for EUR 1.15 billion CapEx, and you said that, that also is a good assumption for the midterm. But of course, there's the EUR 400 million decarb CapEx, which will start to fade over time. My understanding is that you may have sharpened your midterm plans on CapEx a little. So could you just please update us on what your CapEx thinking is once the decarb burden eases? And then briefly also on buybacks, I guess, given your balance sheet, given that you do expect another positive cash contribution next year as well, and I guess the outlook generally looks quite positive. Would you still consider buybacks as well if the time is right and balance sheet and cash flow do allow it? Gerald Mayer: So we did not make our mind about buybacks and so on. It still stays, as I said, I simply would like to confirm what we said at our Capital Markets Day and let us start to present and to deliver something for the next year. In terms of midterm outlook, in terms of capital expenditure, very similar to what we said before EUR 100 million, EUR 150 million for next year is what we assume, EUR 1.1 billion for this year, as I think we also shared with you last time. And then I would expect it goes more to EUR 1 billion or a little bit below EUR 1 billion for the future. And this is then roughly at the level of our future depreciation when we start to depreciate also the new projects. So this is roughly how we see it at the moment. And of course, we need some room for perhaps some maneuvers in the future. Bastian Synagowitz: Understood. Okay. No, absolutely understood. I think you should probably provision for a bit of flexibility. And then maybe just lastly on, I guess, the demand also in the rail business, which obviously is a business where people turned quite positive a year ago. Could you just go a bit more into detail what you're seeing there? I guess the last calendar quarter is always a bit weaker, but do you now start to see more activity coming through in the German market as well? Herbert Eibensteiner: We got this frame -- again, a frame contract in Germany. And so it was a bit weaker in autumn, I would say, October, November, the management change and all those things, I guess, that was the result. And what we see now is that steadily, I would say, steadily new demand is coming into this frame contract. So I assume that the Deutsche Bahn is well aware that repair measures will also be very important in the future. So I think it will be a normal business year in Germany. And everybody who thinks that Deutsche Bahn has stopped repairing the railway infrastructure is for sure wrong. So we will get this project on stream, not immediately, with a certain time lag. And as I said, this infrastructure projects will then come more in the course of the year. Operator: [Operator Instructions] We now have a question from the line of Tommaso Castello from Jefferies. Tommaso Castello: I got one left. Maybe if you could spend a few words on your capacity utilization rate at your steel operations. And I'm referring especially to the capacity of displacing potential lack of volumes coming from imports should as the estimates say, the import level would be reduced by around 10 million tonnes given the new trade measures and CBAM into the future. Is that something that you are confident in? Herbert Eibensteiner: I think this is a good figure. So we know that the cutoff of this quota regulations is around 12 million tonnes, which is 10% of the actual production in Europe roughly. I would say that would lead to this higher capacity rate in Europe and maybe we will see some -- or the expectation is that the prices are rising. I think that's a very strong trade measure safeguard and it's not finally decided, but we will see it in July. And in combination with CBAM and all the other topics I mentioned infrastructure, maybe the first defense spends, this will improve the economy in Europe. So all in all, in the next 2 years, I would say, very positive, especially 2027. And that -- and our utilization was relatively high. There is always room to -- for different capacity, but this will be around, I would say, 300,000 tonnes, which is always possible to produce more. And I think we will fill up our capacity in our steel mill relatively quickly. Tommaso Castello: Okay. Sorry. So just to confirm, so you can add 300 kilotonnes to 400 kilotonnes per annum should the market demand that volumes? Herbert Eibensteiner: Yes. Operator: [Operator Instructions] We have a follow-up question from the line of Tristan Gresser from BNP Paribas. Tristan Gresser: It's just on -- there's been a lot of news flows and news around the potential reform of the ETS system and potentially the extension of the free allocations for industrial players in Europe. I was wondering if you could share your position. It does seem that a year, 1.5 years ago, that was not even part of the debate and now it seems that there is strong momentum building around it. So how likely do you think this will be some sort of relief in terms of free allocation? What do you think could be the options that the commission is looking at? And eventually, if it comes to that and you receive more free allocation or for longer, will that change how you approach decarbonization spending? And can you spread out maybe your decarb project on a longer time period? Herbert Eibensteiner: I think it's -- as I mentioned before, it was really a surprise that we started -- or the commission started this discussion. All over Europe, all the CO2 emitting companies, chemical industry, steel industry, we are fiercely asking the environmental ministers to ask the commission to prepare something how we can design this free allocation ETS system to a more pragmatic approach. And so this was the start of this discussion. I think this -- for us, it's positive. We are under allocated. And I think -- and I was always of the opinion that in the time we are investing in CO2 reduction, we cannot, in addition, pay for CO2 allowances. And I think that's true and it's considered from the commission, we will see how the options are. Is it then a 100% dedication to CO2 reduction or a certain percentage. I think this is -- everything is in discussion. But at the end, when it would be -- come into action, it would be a relief for our future capital expenditure or cash management. Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Peter Fleischer for any closing remarks. Peter Fleischer: Thank you very much for your time -- for spending the time with us and for this very interesting discussions. However, if there come up any questions or if you need any additional information, please feel free to drop either Gerald or myself a line, we will be happy to answer. Thank you very much, and have a good day. Operator: Ladies and gentleman, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
Operator: Good day, and welcome to the NetEase Fourth Quarter and Full Year 2025 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Brandi Piacente. Please go ahead. Brandi Piacente: Thank you, operator. Please note that today's discussion will contain forward-looking statements relating to the future performance of the company and are intended to qualify for the safe harbor from liability as established by the U.S. Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and this discussion. A general discussion of the risk factors that could affect NetEase's business and financial results is included in certain filings of the company with the Securities and Exchange Commission, including its annual report on Form 20-F and in announcements and filings on the Hong Kong Stock Exchange's website. The company does not undertake any obligation to update this forward-looking information, except as required by law. During today's call, management will also discuss certain non-GAAP financial measures, which should not be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the fourth quarter and full year 2025 earnings news release issued earlier today. As a reminder, this conference is being recorded. In addition, an investor presentation and a webcast replay of this conference call will be available on the NetEase corporate website at ir.netease.com. Joining us on the call today from NetEase's senior management are Mr. William Ding, Chief Executive Officer; Mr. Hu Zhipeng, Executive Vice President; and Mr. Bill Pang, Vice President of Corporate Development. And I will now turn the call over to Bill, who will read the prepared remarks on William's behalf. Bill Pang: Thank you, Brandi, and thank you, everyone, for participating in today's call. Before we begin, I would like to remind everyone that all percentages are based on RMB. In 2025, our total annual net revenues reached RMB 111.2 -- RMB 112.6 billion, with RMB 92.1 billion from games and value-add services. These metrics represent another milestone for our company, reflecting 23 consecutive years of online games operation revenue growth since we started the business a quarter of a century ago. In our 25 years in the gaming business, our pursuit has always been trying to provide extraordinary player experiences, and we have never stopped investing in continuous exploration of creativity and pushing technical boundaries. In our early years, our proprietary 2D game engine made Fantasy Westward Journey Online the benchmark of its time. When we moved to mobile in the early of 2010s, our flagship in-house engines enabled us to deliver low latency, high-performance experiences on smaller pocket-sized screens. This new capability was instrumental in unleashing the full potential of iconic titles such as Knives Out and Diablo Immortal on mobile devices. Today, as we continue refining these engines to support AAA quality cross-platform experiences, they have laid the indispensable foundation for the success of our recent global transitions like Where Winds Meet. In conjunction with the evolution of our in-house proprietary game engine, we also built our full stack 2 chains that empowers our team to innovate at scale. Drawing on our DNA as an Internet company, we continually scale new technologies that can improve the game development process. We study emerging technological trends determining if they can be harnessed to enhance our game development and developed proprietary solutions to incorporate the solutions -- to incorporate the most impactful ones into our production pipeline. This long-standing practice has enabled us to integrate complex new technologies, substantially boosting productivity over the years. Back in 2017, we saw that artificial intelligence would have transformative impact on our industry. Because AI research is closer to academic science than traditional technology, we set up 2 dedicated research labs: NetEase Fuxi Lab and NetEase Game AI Lab to study AI and explore its real-time real-world applications in gaming. These teams have made exceptional strides over the years in both research and practice winning dozens of AI algorithm competitions, publishing hundreds of papers and securing hundreds of patents. We're now far beyond the experimental phase and the combination of this work is the full integration of our AI technology into the game development process with AI playing an important role across our portfolio. AIGC has accelerated quickly in recent years. We have been monitoring the progress closely and making a substantial effort to embed it into our production pipeline. Importantly, we don't see AI as a replacement for human creativity. We see it as a force multiplier, one that can bring paradigm shifting to the game development process when used responsibly. It can elevate creative work and introduce real change in how games are built. As a new technology with core attributes that are fundamentally different from traditional technologies, such as its probabilistic nature, AI presents unique challenges. Figuring out how to harness it, how to fit it into the sophisticated game software engineering process and how to turn probabilistic AI output into reliable, high-quality components is far from easy. There are very few precedents in the industry of game making. Fortunately, with our many years of game-making experiences, we have deep expertise in building production tool chains, along with data and asset library spanning hundreds of games. Most importantly, we have over 10,000 top-tier developers, which put us in a strong position to approach these challenges pragmatically. Over the past 3 years, our engineers have worked closely with our designers to explore how to unleash the power of AI while building clear guardrails. At the same time, we focus on how to use AI to take on the tedious repetitive noncreative task without getting in the way of human creativity. After many iterations, we believe we have established robust human oversight and feedback loop in place and AI has become a highly effective part of our game development process. Today, we're pleased to report that we have comprehensively integrated AI across our internal workflows, encompassing design, programming, art and QA. This integration is not limited to a few BD teams, it is broadly accessible to developers at NetEase, driving meaningful efficiency across the board. In programming, our self-developed tool, CodeMaker, has evolved from a single AI-powered code completion tool to providing agent-level services. Our internal data shows qualitatively shift in developer habits. They have moved from using AI to complete a line of software code to leveraging AI to solve a complete development task. In art and animation, AI is easily accelerating the early-stage exploration process with our in-house tools, DreamMaker and Danqing turning creative ideas into deliverable outputs in minutes. Our AI animation technologies, including multi-camera motion capture, facial motion capture and generative AI-driven animation tools have significantly reduced the production cost and time required for character movement and expression animation workflows while substantially expanding our animation asset libraries and empowering artists to deliver richer and more expressive virtual characters and worlds. Furthermore, in quality assurance, we utilize AI to model more than 1 million diverse player behaviors to ensure stability in increasingly complex game world. This augments traditional time-consuming manual testing with data-driven validation, providing us with greater mathematically confidence in game balance and stability before public launch. But beyond efficiency, the ultimate goal is gameplay innovation. We have unlocked massive new interactive experiences for our players that were previously out of reach, and we still remain at a relatively early stage in exploring all the possibilities. Our exploration of AI-driven interactive characters began early with Sword of Justice, which pioneered one of the industry's earliest commercial implementation of intelligent NPC systems powered by large language models in a live game environment. This laid important technological groundwork for expanding AI-driven character ecosystem. In Where Winds Meet, we have deployed over 10,000 AI-powered NPCs that engage players with natural language, realistic voices and potential for unexpected story outcomes, creating a level of vivid interaction that was previously impossible. Most importantly, these AI-powered NPCs are not static quest givers. They reflect the shadow of real human existence. Some may be struggling with poverty and resorting to [indiscernible] in village. If a player has the patience to follow them, they could discover sub stories like the hardship of adult life. These NPCs may not always be brilliant or lucky, but they're leaving their lives within their own reality, nearing our own world. This level of detail creates a world that was not just a sandbox but a leading society. This is the essence of the open world we are building, places where every iteration, every interaction feels authentic, unpredictable and deeply immersive. This not only provides players with more depth and in-game experiences, but it has also helped to address the challenge that players consuming content much faster than developers can create it. We're also seeing AI act as a powerful personalized copilot and ecosystem multiplier. In NARAKA: BLADEPOINT mobile game, the voice AI teammate system represent a major inflection point, AI that doesn't just follow, it collaborates. As Copilot teammates, AI provides customized interactive assistant to help players to learn the rules of the game, making the complex high skill-based gameplay more accessible to much broader audience and significantly increase newcomer retention. Meanwhile, The Crew Mode in the Sword of Justice empowers players to direct their own short videos with simple AI workflow, attracting millions of players who have created tens of millions of UGC works. Meanwhile, integrating these tools into Eggy Party toolchain and empowered over 15 million creators to transform a single game into a self-evolving platform driven by collective creativity of its players. Beyond enhancing our existing portfolio, we're also exploring new frontiers in AI native gameplay. Moving beyond fixed presale logic, we're trying to utilize AI as a core engine to dynamically construct the in-game world and tailor real-time elements like missions, events and other content to individual players' unique behaviors, unlocking infinite potential through deep customization. Underpinning this work is our experiment in AI-native production pipelines that leverage integrated toolchains to streamline workflow and significantly accelerate our innovation cycle. 2025 has been a year in which our long-term vision for AI has reached a critical point. We're no longer just talking about the potential of AI. We're seeing the results in the form of enhanced productivity, deeper player engagement and expanded creative boundaries. We're on the threshold of a paradigm shift, and we believe we are well positioned to serve as epic center of industry-defining innovations. We have built a very solid technological foundation, the proprietary engine, the full stack toolchains, which already internalized artificial intelligence capabilities, including AIGC capabilities, and we have seen early results from AI-powered gameplay. What we have achieved in the first 25 years of our game business was unimaginable when we started. We're at the dawn of a new time in our industry where productivity can be much more enhanced and creativity can be much more amplified. As we look ahead, we believe AI will fundamentally empower our creators to transcend the traditional development limits and reshape how interactive entertainment is created and experienced in the years to come. We think this is going to be the best time of the industry. With that, I would like to walk through several recent operational highlights, starting with our global expansion achievements. Where Winds Meet has gained strong global traction through a staged cross-platform launch, surpassing 80 million cumulative players and marking a meaningful milestone in our global expansion. Rooted in Eastern aesthetics and Wuxian storytelling, the game demonstrates how authentic culture content can resonate with players worldwide. Following its global launch, it ranked #2 on Steam's global top sellers chart, won PlayStation's November Players' Choice Award and topped iOS download chart across more than 60 regions. Ongoing live service updates resulted in sustained strong engagement globally and domestically, with the title delivering its highest monthly revenue and daily active user on record in China in December, reinforcing its long-term momentum. Meanwhile, Sword of Justice successfully expanded internationally in November, introducing its next-generation MMO experience to more audiences, topping download chart in multiple key Asian regions. This title is another example that illustrates how AI integrated production pipeline now directly elevate gameplay in large-scale online walls, delivering richer responsiveness, deeper interactivity and more immersive player experiences globally. Domestically, player engagement remains strong, supported by innovative live events and culturally grounded content that continues to deepen community resonance. Marvel Rivals, our superhero team-based PVP shooter, continues to build strong global momentum. The title earned broad industry recognition, including being named one of Time's Best Video Games of 2025, winning the Grand Award at PlayStation Partner Award of 2025 and ranking Steam's Platinum tier of Best of 2025. Continued seasonal update on new character releases has sustained strong player engagement with Season 6 featuring Deadpool, propelling the game to #2 globally and #1 in multiple markets, including the United States and Canada. A rapid expanding international player community is further reinforcing the long-term durability of this growing franchise. Looking ahead, we continue to strengthen our pipeline to support the next wave of global growth. Sea of Remnants began technical testing across China and selected global markets earlier this month, featuring a distinctive art style and richly imagined open wall. This ambitious original title aims to deliver a deeply immersive exploration experience with extensive player freedom where every naval journey feels unique. Development is also progressing steadily on ANANTA, our highly anticipated urban open wall title. Building on our available insight from previous testing, the team is diligently refining core systems and content to meet high expectations from our global community. Shifting to our domestic portfolio. Our long-standing franchises continue to demonstrate strong vitality supported by continuous content innovation and deeply engaged player communities. These titles remain a testament of our ability to operate a large-scale live service ecosystem over decades. Now in its 23rd year of operation, Fantasy Westward Journey Online delivered record high annual revenue in 2025, driven by historical peak revenue in the fourth quarter. Its ecosystem continues to evolve through innovative content designed to meet diverse player needs while preserving the classic mechanics cherished by long-term fans. The unlimited server, which is streamlined accessible gameplay, has been particularly effective at reigniting player enthusiasm. Fantasy Westward Journey Mobile also maintained strong momentum, delivering record high annual revenue in 2025. Diversified server models and ongoing content initiatives reinforce its leadership position within the MMO category. Beyond these legacy franchises, several established titles continue to deliver stable engagement and underscore the breadth of our diversified portfolio. Identity V is strengthening its global e-sports ecosystem through a major competitive events and ongoing content updates. Eggy Party maintains strong player engagement, supported by expanding gameplay modes and continued investment in its fast-growing UGC ecosystem. Infinite Borders continue to drive long-term retention through innovative gameplay updates and specialized server models that deepen strategic complexity. NARAKA: BLADEPOINT is expanding its global community and e-sports presence, highlighted by the successfully hosting the J-Cup World Championship and active content road map updates designed to sustain long-term player engagement. Beyond the games we developed in-house, we also continue to expand our ecosystem through strategic partnerships. Original titles have driven sustained engagements for the past year, achieving a record high revenue in China and reaffirming our long-term commitment to the market. The launch of World of Warcraft's, China-exclusive Titan Reforged server on November 14 sparked strong excitement among domestic players and interest from international influencers. World of Warcraft too once again saw enthusiastic support from Chinese players and set a new record in daily active users in China. Through close collaboration with our partners and shared commitment to putting player first, we remain focused on delivering high-quality experiences while strengthening our long-term global gaming ecosystem. We're also committed to delivering exceptional user experiences across our other business lines. Youdao continued to advance its AI-native strategy in 2025, driving healthy business development and achieving its first ever net cash inflow from operating activities. Its Learning Services segment delivered robust growth through ongoing iterations of its tutoring features, while online marketing services applied to improve advertisement, effectiveness and streamline advertising production. Smart Devices segment was supported by ongoing popularity of Youdao tutoring pen products. NetEase Cloud Music continued to advance the high-quality development of its ecosystem. Platform enriched its differentiated music catalog through both copyright collaborations and our in-house music production, while introducing new features and experience upgrades that enhance music discovery and listening. In 2025, the platform delivered steady year-over-year growth in both its active user base and overall engagement. Yanxuan continued to strengthen its positioning as a private label brand known for premium quality product across its key categories, supported by an expanded product lineup and enhancement to key products. In closing, the results and operational milestones we have discussed highlight a clear trajectory. NetEase is not merely adapting to the AI era. We are advancing it through industrial application of technologies we have been building for years. Our large-scale integration of AI is a natural extension of our long-standing strategy and leadership in technological innovation. By embedding AI into the core of our production pipelines and product design from the living breathing world of our games to intelligent productivity tools of Youdao and the personalized discovery algorithm of NetEase Cloud Music, we are exploring and shaping what's possible to future user experiences across a range of scenarios. Looking ahead, we remain focused on advancing technology and creative innovation to drive sustained growth. We view AI not as a replacement but a powerful amplifier of human ingenuity, enabling us to deliver to our users worldwide what was previously out of reach. By staying at the epicenter of this technical paradigm shift, we're uniquely positioned to unlock unprecedented long-term value for our users, creators and all of our stakeholders. That concludes William's comments. I will now provide a brief review of our 2025 annual results with a focus on the fourth quarter. Given the limited time on today's call, I will present some financial highlights in a streamlined manner. We encourage you to read through our press release issued earlier today for further details. As a reminder, all amounts are in RMB unless otherwise stated. Our total net revenue for 2025 were RMB 112.6 billion or USD 16.1 billion, representing a 7% increase year-over-year. For the fourth quarter, total revenues were RMB 27.5 billion or USD 3.9 billion. In 2025, net revenues from games and related value-added services reached RMB 92.1 billion, up 10% from 2024. In the fourth quarter, net revenues grew 3% year-over-year to RMB 22 billion. Specifically, net revenues from online games were RMB 89.6 billion for the full year, up 11% from 2024. In the fourth quarter, online game net revenues increased 4% year-over-year to RMB 21.3 billion. The quarter-over-quarter decrease in online games net revenue reflected the fact that the prior quarter benefited more -- benefited from the seasonal trends of more events triggering the summer holidays. The year-over-year growth in the fourth quarter was attributable to higher net revenues from self-developed games such as Fantasy Westward Journey Online and the newly launched games like Where Winds Meet and Marvel Rivals. Youdao's net revenues from 2025 increased approximately 5% year-over-year to RMB 5.9 billion. In the fourth quarter, net revenues rose 17% year-over-year to RMB 1.6 billion and were broadly stable quarter-over-quarter. The year-over-year increase in the fourth quarter was due to increased net revenues from Youdao's online marketing services and learning services. NetEase Cloud Music net revenue decreased 2% year-over-year to RMB 7.8 billion for the full year. In the fourth quarter, net revenues were RMB 2 billion, representing a 5% year-over-year increase and remaining broadly stable quarter-over-quarter. The year-over-year growth in the fourth quarter was driven by continued healthy growth in membership subscriptions. Revenue from social entertainment services and others, however, remained lower compared with the same period of last year. Net revenues from innovative business and others totaled RMB 6.8 billion for the full year. In the fourth quarter, net revenues were RMB 2 billion, representing a 10% decrease year-over-year, while increasing 42% quarter-over-quarter. The year-over-year decrease reflected an increase in certain intersegment transaction eliminations. The quarter-over-quarter increase was led by increased net revenues from Yanxuan advertising services and several other businesses included within that segment. For the year, our total gross profit margin was 64.3%. In the fourth quarter, our gross profit margin increased year-over-year to 64.2% from 60.8% in the year before. Looking ahead at the fourth quarter margins in more detail. Gross profit margin was RMB 17.5 billion for our games and related VAS compared with 66.7% in the same period of last year. The improvement reflects changes in product mix, including a lower proportion of net revenues from licensed games, which generally have lower margins than our self-developed titles. Our gross profit margin for Youdao was 45.1% compared with 47.8% in the same period of last year. The decrease was primarily driven by higher net revenue contribution from online marketing services, which has lower gross profit margin. Gross profit margin for NetEase Cloud Music was 34.7% in the fourth quarter versus 31.9% in the same period a year ago, primarily driven by steady growth in its core online music business. For innovative business and others, gross profit margin was 39.6% compared with 37.8% in the fourth quarter of 2024. The improvement was primarily driven by margin expansion in certain innovative business within the segment, along with the impact of certain intersegment elimination. Our total operating expenses for the fourth quarter were RMB 9.4 billion or 34% of our net revenues. Taking a closer look at our cost composition. Our selling and marketing expenses accounted for 14.1% of the total net revenue in the fourth quarter. For the full year 2025, the ratio was 13%, remaining broadly in line with prior year. Our R&D expenses remained stable at 16.1% of total net revenues in the fourth quarter. For the full year 2025, the ratio was 15.7%, broadly in line with 2024, reflecting our continued and consistent investment into content creation and product development. The effective tax rate was 14.8% for the full year and 16.4% for the fourth quarter. As a reminder, the effective tax rate is presented on an accrual basis and the tax credit vary across each of our entities at different time periods depending on applicable policies and our operations. Our non-GAAP net income attributable to shareholders for the fourth quarter totaled RMB 7.1 billion or USD 1 billion, down 27% year-over-year. Non-GAAP basic earnings per ADS for the quarter was USD 1.58 or USD 0.32 per share. For the full year, non-GAAP net income attributable to shareholders was up 11% to RMB 37.3 billion or USD 5.3 billion, which is USD 8.38 per ADS or USD 1.68 per share. Additionally, our cash position remains strong. As of year-end, our net cash position was about RMB 163.5 billion compared with RMB 131.5 billion at the end of 2024. In accordance with our dividend policy, we are pleased to report that our Board of Directors has approved a dividend of USD 0.232 per share or USD 1.16 per ADS. Lastly, our current USD 5 billion share repurchase program, we have repurchased approximately 22.1 million ADS at the end of December 31, 2025, for a total cost of approximately USD 2 billion. Thank you for your attention. We would now like to open the call to your questions. Operator, please. Operator: [Operator Instructions] Your first question comes from Jialong Shi with Nomura. Jialong Shi: [Foreign Language] I will translate my question. [Interpreted] Management has touched upon this AI topic in your opening remarks. I would like to explore a bit deeper into the impact of AI on the online gaming industry. We noticed Google's recent Project Genie, which some media claimed is the DeepSeek moment. Yes, some people believe AI tools like Google were for game development and therefore, accelerate the entry of new game developers. I mean, what's the impact of AI on the competitive landscape for the online industry? My follow-up question is we saw many Chinese Internet companies have decided to ramp up investments in both AI foundation models and computing power. Just wonder where NetEase primarily focused its AI investments? William Ding: [Foreign Language] Bill Pang: [Foreign Language] [Interpreted] Okay. Thank you, William. I will help on the translation. Yes. So first, you asked about the Genie, this -- regarding the potential impact of AI on the competitive landscape to our industry. First of all, we believe the market has largely misinterpreted Genie's impact on the gaming industry. Talking about lower barriers, we can look at what happened in other industry. For example, the handheld -- from the handheld cameras to smartphones, the barrier of video shooting has been continually lowered. However, the threshold for producing Hollywood level of movie has continued to rise. AI does lower the barriers on entry of game development. However, it has also significantly raised the success threshold for top-tier games. Surely, the widespread adoption of AI tools will help the explosion of creative content. However, the core barrier for commercial blockbuster hit has transited from pure production into integration capabilities, specifically how to seamlessly integrate AI technology with complex numeric system, long-term economies of the games and engaging social ecosystems. This requires extensive design, expertise and operational experiences, which create a deep moat that newcomers can hardly cross. In the year of AI, production cost is falling, but soft skills has becoming scarce -- more scarce and more valuable than ever, including the judgment -- the sense of judgment on high-level gameplay designs, insights into players' demand and refined aesthetic taste. On the other hand, we believe that the greater value of the Wan model is to inspire brand-new type of entertainment that differ from traditional games. Currently, Wan models are still far away from practical application. Today's games are built on certainty, predefined rules, strict events and logics. However, Wan model are probabilistic where every step is based on inference. The advantage is that they provide extremely high degree of freedom for creativity, while the disadvantage is their high uncertainty and difficult to control, making them unsuitable for traditional games. Furthermore, they currently face issues like severe latencies and high cost. Of course, we see the rapid iteration and evolution of these models, and it's just the beginning. We believe that it will be a real opportunity for action teams. NetEase will also actively embrace these cutting-edge technologies to explore brand-new interactive experiences. Regarding the focus on investment, we don't bluntly pursue general large language models. Instead, we aim at building AI expertise who understand the game best and achieve highly efficient AI applications through comprehensive and deep integration. In vertical areas, high-quality private data is more important than computing power with application scenarios more important than parameter scales. In terms of differentiated competitive advantages, data and proprietary vertical model is very important. Vertical models trained on our years of gaming data can improve our internal industrialization efficiency more accurately than general ones. Focus on -- and also focus on user experiences and commercialization. We focus on how AI translates into player experience. Currently, AI-native gameplay intelligence such as intelligent NPCs and also UGC tools implemented in several titles have effectively improved user retention, proving our capability to translate technology into commercial value. And we also have a group of versatile talent who are highly skilled in our industry. They're not only proficient in algorithm and graphic engines, but also they have deep understanding of game design. This cross-discipline capabilities is the key to ensure AI technology truly leads, truly lands and generate funds. We believe that the explosion of AI technology will accelerate the industry's integration process of the so-called survivor of the fittest process. We'll continue to maintain high-intensity investment vertical models on AI-native gameplay and talent nurturing process, leveraging AI technology to further expand our advantages in high-quality game development and long-term operations. Thank you. Operator: Your next question comes from Alicia Yap with Citigroup. Alicis a Yap: [Foreign Language] [Interpreted] My question is related to Where Winds Meet. The game has recently been a game of a very positive feedback among the overseas users. Could management share the retention rate of this overseas user? And also, what are the key factors contributing to the game's strong performance in abroad? And then furthermore, what unique gameplay mechanics or the content have particularly resonated with and attracted the international players? William Ding: [Foreign Language] Bill Pang: [Foreign Language] [Interpreted] Thank you, William. I will do the translation. Where Winds Meet, the overseas version launched on November 15. And after its global launch, it quickly gained overwhelming popularity and positive review rates across multiple markets. With continuous operation, it topped various global chart for multiple times, and it demonstrated outstanding performance in various operational metrics, including retention rate. Where Winds Meet has received widespread acclaim from global players for its immersive high-quality Wuxian open-world experience and with its low-pressure, high-freedom gameplay experience raised by separating single player and multiplayer models and its operational focus of free-to-play, high-frequency updates and custom-based monetization. At the same time, the cross-platform availability accommodates modern players' diverse habits and meet the varied needs from different type of players. Where Winds Meet features of Chinese Wuxian built a vivid and high-film Jianghu from multiple experience dimensions, including narrative comeback exploration. The combination of Eastern Wuxian-styled martial arts, likely in its skill system and open-world experiences deliver a fresh, deeply immersive experience for players. The combination of single player and multiplayer modes ensure that both those who enjoy immerse -- in-part exploration and players who enjoy social cooperation can find content they love at the same time. The continuous update of new maps, new Dungeons and competitive gameplay, along with constantly expanding huge and casual gameplay, it caters to a wide range of player preference, including single player, multiplayer combat and casual experiences. Thank you. Operator: Your next question comes from Alex Liu with Bank of America. Alex Liu: [Foreign Language] [Interpreted] Given the recent success of FWJ PC Unlimited server, can the management discuss whether this business model will be replicated across other legacy titles? And if that's the case, how should we think about the pace of rolling out of that gameplay? William Ding: [Foreign Language] Bill Pang: [Interpreted] Thank you, William. I will do the translation. In quick summary, Fantasy Westward Journey Online, the unlimited server has done 3 things: first is restore the most classic gameplay experience while providing a differentiated gameplay experience at the same time. The second is restructure the economy system while keeping the most important free trading. The third one is to comprehensively optimize the gaming process, specifically for the unlimited servers. And the classic experience lowers the entry barrier for players and differentiated experience that allow the overall player base to expand. The feasibility of this approach has been validated in this unlimited server. Our product team always maintain close interaction with the player community and listens to players' voice. We believe we'll continue to introduce updates across more titles, provide richer and smoother fresh experiences while restoring the confidence. Operator: The next question comes from Yang Liu with Morgan Stanley. Yang Liu: [Foreign Language] [Interpreted] Let me translate my question. My question is about Sea of Remnants, this new game. Could management update us in terms of the current development status and the feedback in the recent testing? And what is -- what will be the commercialization method? And what is the expected timing to launch the game, whether it's possible to launch that in summer this year and whether it will be a cross-platform global launch? Unknown Executive: [Foreign Language] Bill Pang: [Interpreted] Yes. Currently, the development is fully on track, and our plan is to launch that officially in Q3. In the current round of technical test that started on February 5, we are pleased to see active participation from players. Our second promotional video for word-of-mouth creepy MS to more than 10 million views on Bilibili. Based on the initial feedback, we're glad to see positive feedback regarding product quality and reputations from various parties. We're still observing and collecting player feedbacks, and we'll carry out targeted improvement on optimizations to further enhance the gaming experience and prepare for the official launch later this year. Thank you. Operator: The next question comes from Ritchie Sun with HSBC. Ritchie Sun: [Foreign Language] [Interpreted] First of all [indiscernible] in January. So how is the testing feedback? And how far away in terms of number of months before the launch? And do we have any plans to launch it in different market as well as different [indiscernible]. Secondly, regarding our plans to launch Auto Chess titles, there are 2 Auto Chess titles under testing [indiscernible] game license. Given that there has been some very top competitor in this genre, so what is the rationale and strategic thinking behind also entering this market? And how does NetEase product differentiate against the experienced competitor? Unknown Executive: [Foreign Language] Bill Pang: [Interpreted] Yes. The data and feedback from the closed test in January both met our expectations, first of all. The retention rate and player feedback on the content have both proved that the current product direction is sufficiently innovative and attractive. Currently, our product is still undergoing continuous refinement, aiming to deliver a higher degree of completion and richer content when it meets the market and launch as scheduled. We're targeting a simultaneous global launch across all platforms, including PC, mobile and console. Thank you. And William will answer the next -- the Auto Chess question. William Ding: [Foreign Language] Bill Pang: [Interpreted] So yes, the Auto Chess category is a mature category, and we are doing an elevation and differentiation within this proven category. We select the Chinese Demon and Ghost culture, making it unique in this genre. It inherently contains strong narrative tension and aesthetic potential. We aim to build a high-quality Auto Chess game that belongs to the domestic players and also building on the traditional classic of our historically proven high-quality development capabilities. Thank you. Operator: Your next question comes from Yang Bai with CICC. Yang Bai: [Foreign Language] [Interpreted] I will translate by myself. The company has made remarkable progress in the game globalization in recent years with early successes such as NARAKA and Marvel Rivals followed by titles like Where Winds Meet. I would like to ask the management -- in terms of overseas expansion strategies, can we see that the company has developed a replicable path to success? Regarding game render expansion, how does the company plan its product pipeline for high potential markets such as U.S. and Europe? About talent, what is company's global team structure and the future talent strategy? William Ding: [Foreign Language] Bill Pang: [Interpreted] Yes, sure. Our developed market expansion starting from 2018, starting from Lifestyle success in Japan. And now as you mentioned, we have NARAKA and we have Marvel Rivals and Where Winds Meet, all of them are very successful in Western market. And we have to say this success is not easily got. We spent a lot of efforts to make that happen. That reflects the company with the most R&D capabilities we have started to grasp a sense of the core success element in overseas market in Japan and Western market. And we believe we'll be able to produce more titles to be successful in this market in the future. And also regarding the question on talent, we believe China possesses the world's deepest talent pool in game development. And we are fully committed to cultivating top-tier creative minds to deliver premium games that resonate on a global scale. Thank you. Operator: Your next question comes from Lincoln Kong with Goldman Sachs. Lincoln Kong: [Foreign Language] [Interpreted] So the first question is about Marvel Rivals. So now that it has been alive for a year, how is the team evaluating its future life cycle? So what strategy are in place to sustain its momentum and continued product innovation here? My second question is a follow-up on AI. Basically, the AI application in the gaming industry is primarily focused on R&D assistance and NPC interaction at the moment. So as the capability continue to evolve, how does management view the potential for AI in gameplay design, content generation and long-term live service? So do we see any opportunity for AI-driven as a core gameplay to become the next major growth engine for the industry? So is planning any products where all those AI as a core-driven gameplay is in place? And additionally, how should we think about those personalized or service-oriented monetization model based on AI? William Ding: [Foreign Language] Bill Pang: [Interpreted] Yes. So first, we answered the Marvel Rivals question. First of all, Marvel Rivals rivals remain stable after 1 year of its launch, and our team continues to deliver innovative content and gameplay. Our recently launched Season 6 that will the first triple row hero has been widely welcomed by players. We believe that only excellent content with innovative experiences can sustain player engagement. Therefore, while maintaining our regular updates, we will continue to explore innovative experiences driven by new heroes, new gameplay modes and social interactions. So that's the question for Marvel Rivals. And regarding the question on AI. Yes, AI has been comprehensively integrated into our production workflow, becoming an indispensable asset in that significantly enhanced art programming and QA. The -- regarding AI's potential to deliver transformative player experiences, we are certain of this impact. It will happen. We believe NetEase is a pioneer in this field and is one of the companies and most well positioned to explore this opportunity, and we will aggressively to explore this opportunity. We have built a robust pipeline of R&D reserves for this next generation of AI-driven gameplay. Thank you. Operator: And that concludes the question-and-answer session. I would like to turn the conference back over to Brandi Piacente for any additional or closing comments. Brandi Piacente: Thank you once again for joining us today. If you have any further questions, please feel free to contact us directly. Have a great day. And for those listening from China, we wish you a Happy New Year. Thank you, everyone. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]
Operator: Greetings, and welcome to the Bolsa Americana de Valores Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Ramón Güémez. Please go ahead, sir. Ramón Sarre: Thank you. Good morning, and welcome to Bolsa Mexicana de Valores Fourth Quarter 2025 Earnings Conference Call. Before proceeding, I would like to provide a brief safe harbor statement. This presentation contains forward-looking statements and information related to Bolsa that are based on the analysis and expectations of its management as well as assumptions made and information currently available at Bolsa. Such statements reflect the current views of Bolsa related to future events and are subject to risks and uncertainties. Many factors could cause the current results, performance or achievements to be somewhat different from any future results or performance that may be expressed or implied by such forward-looking statements, including, among others, changes in general economic, political, governmental and business conditions, both in a global scale and in the individual countries in which Bolsa does business, such as changes in monetary policies, inflation rates, prices, business strategy and various other factors. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may vary considerably from those described herein as anticipated, estimated, expected or targeted. Bolsa does not intend and does not assume any obligation to update these forward-looking statements. This call is intended for the financial community only, and the floor will be open at the end to address any questions you may have. Joining us for today's call are Jorge Alegria, CEO; Claudio Vivian, Chief Information Officer; Gabriel Rodriguez, SIF ICAP CEO; Alfredo Guillén, Managing Director of Equity Markets; José Miguel De Dios, Managing Director of Derivatives Markets; Luis René Ramón, Chief Commercial Officer; Hanna Rivas, FP&A and IR Director; and myself, Ramón Güémez, CFO. With that, I'd like to turn the call over to our CEO, Jorge Alegria. Jorge Formoso: Thank you, Ramón, and good morning, everyone. Yesterday evening, we released our earnings results, including a detailed review of our fourth quarter 2025 performance. The press release and slide deck are available on bmv.com.mx, in the Investor Relations section. Before turning to our ongoing initiatives, I'd like to briefly frame where we are headed as a group. Our focus is clear, positioning the company as a market leader through innovation, supported by advanced technology and a stronger infrastructure that enables expansion, access to new markets and long-term value creation. We remain committed to disciplined capital allocation that supports our strategy while maintaining shareholder returns. As mentioned and communicated since 2024, our strategic plan contemplates higher investment levels to support growth initiatives. Accordingly, in 2025, we invested over MXN 250 million to maintain the competitiveness of our core systems and advance toward NASDAQ platforms, making the start of a multiyear investment cycle with CapEx declining from 2027 onwards. In 2026, we are planning an additional investment of approximately MXN 500 million, supporting a data-driven business, the expansion of our debt CCP, enhanced surveillance, cybersecurity, cloud migration and stronger continuity and recovery plans. Initial deliveries are expected with the completion of the derivatives platform under the Nasdaq Eqlipse solution, followed by the repo CCP, both this same year towards 4Q '26. While executing a significant investment program, we continue to balance this investment program with our shareholder return. So we are maintaining a dividend of MXN 2.05 per share and a buyback program of at least MXN 160 million, implying a distribution of 81% of 2025 net income with flexibility to complement this objective through an extraordinary dividend towards year-end if required. In 2026, our focus will be on the execution of our initiatives, laying the groundwork for revenue-generating initiatives that we are expecting to see generating revenues and contributing from 2027 onwards. Let us begin also with a brief overview of the quarter's most relevant initiatives. We continue advancing on our new bond services for our CCP. November 2025 marked a significant milestone for the Mexican market with the launch of the first central counterparty for fixed income bonds. The first live transactions cleared by 5 banks through 2 interdealer brokers confirm the successful launch of the CCP. While participation is not mandatory and adoption is expected to be gradual, its introduction lays the foundation for the debt markets transition from a traditionally voice-based environment to a fully electronically centrally clear marketplace. Experience from other markets shows the impact of combining centralized clearing and electronic trading. Mexican equities, as an example, experienced a nearly 20-fold increase in activity over 2 decades, while U.S. Treasury volumes expanded by roughly tenfold after adoption. These examples show how CCPs and electronic trading support growth across asset classes. And in this context, the Mexican bond market is a pivotal point. With an average trading daily volume of around $6 billion, the introduction of a CCP and the shift toward electronic trading are setting the stage for higher volumes, more access and greater liquidity. Consistent with our road map, the initiative is to advance for a second phase, the repo service on our CCP. This is expected to be completed by the end of 2026. And unlike the initial phase, adoption is expected to be faster given strong market demand and benefit. With approximately USD 100 billion daily trading volumes, the repo segment materially expands the scope of centralized clearing and sets the stage of a third phase extending to securities lending. On our data agenda, we are defining a unified data infrastructure strategy. This includes designing the target architecture to support the new trading and clearing platforms for derivatives, along with data requirements across the rest of the business. A core element is the transition from an on-premise setup to a cloud-based model, which will support advanced analytics, customizable reporting, data-driven products and coordination with MexDer and Asigna. New data product releases are planned for late 2026, aligned with the launch of the new derivatives platform. I would also like to briefly update you on our efforts and progress in market data. As part of our long-term strategy initiated several years ago, we have focused on increasing the international visibility of the Mexican markets by reducing access barriers and bringing market information closer to global participants. Complementing this solution, during 2025, we further evolved our access model through the deployment of the global access network product, a fully virtualized colocation solution now operating in production and under this model, Bolsa provides the core access and connectivity infrastructure, enabling a scalable framework for direct market access. This architecture enables more competitive pricing, faster time to market. As adoption gains traction, the existing client pipeline supports a potential 5% uplift in market data revenues for 2026. Turning to derivatives. We see growth potential for MexDer given that substantial share of activity in the derivatives market remains in the OTC. This creates an opportunity to keep migrating volume towards listed and clear products over time. To address this, we are focusing on 3 levers: international exposure, retail product expansion such as seeing the stock derivatives and SIC options and also supporting institutional participation through the Asigna liquidity alternative framework. At the same time, we are advancing the migration of our transactional services to Nasdaq Eclipse trading solution, which essentially -- and this is essential to provide the scalability required for the long-term growth in the listed derivatives marketplace. As mentioned regarding the liquidity alternatives initiative for Asigna, progress is still being made. Gradual but continuous. We have 3 major banks advancing in their implementation, while regulators are working on aligning the legal framework. From Asigna side, the infrastructure is already in place and the initiative is expected to materialize in the coming months. In parallel, equity listing activity resumed with the IPOs announced in the prior quarter materializing through Essentia, Aeromexico and Fibra Next, the follow-on transactions. This reflected an improvement in market conditions after several years of inactivity with momentum continuing beyond the quarter. Currently, there are 4 companies actively exploring potential IPOs on a confidential basis. In parallel, the IPC index has reached historical highs and equity valuations have improved. So together, all these factors reflect the strengthening equity market conditions and growing interest in public markets as a source of capital. Beyond the recovery in equity listings, market activity is also strengthening across other asset classes with record levels in 2025 as total financing reached MXN 755 billion, a 24% increase compared to 2024. Demand for debt listings is increasing across short- and long-term maturities, supported by a pipeline of approximately more -- MXN 80 billion for the first 2 months of the year with high-profile transactions that increase visibility. Most of these issues are expected to be listed on BMV. Finally, structured products are also showing strengthening activity with higher demand for listed warrants driven by private banking and wealth management participation. Following on, the simplified listing initiative remains an ongoing long-term initiative. The same confidential company is still in process alongside with our ongoing efforts to promote the regime and build market awareness. This is a constant effort that -- with adoption expected to be gradual. Turning to our equity fee schedule. And as noted last quarter, we received the regulatory authorization to adjust our fees. However, implementation remains our discretion with no requirement regarding timing our application. Currently, we are not planning any changes on our fees. Let me now move to our key financial highlights in the following slides. Please keep in mind that all figures are expressed in Mexican pesos. On Slide 3 and 4, for the key 2025 financial highlights, Q4 2025 revenues were flat at MXN 1.1 billion, while operating expenses rose 15% due to our accelerated strategic investments. This pressure operating leverage, driving a 9% EBITDA decline to MXN 608 million and with a 900 basis point margin contraction to 54%. Net income fell 20%. And at the full year level, revenues grew 7% to MXN 4.5 billion, Operating expenses increased 11% and EBITDA rose 5% to MXN 2.5 billion. Despite the investment cycle, margins remained strong at 56%, only 198 basis points below 2024 as expected. Net income showed resilience, easing 2% year-over-year. Taken together, Q4 reflects the timing of our accelerated and planned investments, not a change in the business structural profitability. The full year results provide the right lens with solid revenue growth, higher EBITDA in absolute terms and structurally strong margins. Let's turn to the next slide, please. Revenues by business line across both 4Q 2025 and the full year. Top line behavior followed the same pattern and was driven by revenue mix. Growth consistently came from equity and derivatives trading, MXN 7 million and MXN 4 million and for equity clearing, MXN 10 million. Information Services, MXN 19 million and capital formation were MXN 8 million. Steady growth in central securities depository Indeval of MXN 10 million, and these gains were partially offset in both periods, seeing declines in the derivatives clearing space for MXN 19 million and our OTC trading for MXN 6 million. Top line in both periods reflected a similar mix of strong growth segments and areas of softness, highlighting our model of stability of the business fundamentals. Turning to the next slide on equity trading and clearing activity. We see on 4Q 2025 equity trading activity strengthened. Average daily trading value increased 10% versus Q4 '24. This performance was driven mostly by growth across local and global markets. In addition, global markets transaction rose 23%, reflecting higher investor participation. BMV's market share remained stable, ranging between 78% and 80%. In the clearing businesses, revenues increased 19% in Q4 '25, reaching the highest fourth quarter level and delivering a strong year-over-year increase. Meanwhile, equity segment revenues rose 10%, reflecting a solid year-over-year recovery and remaining broadly stable compared to the previous quarter. Let us go on the next slide to review derivatives. MexDer posted 16% year-over-year revenue growth. However, this increase was offset by a significant decline in the derivatives clearing business, resulting in a 19% increase in quarterly revenues for the Derivatives segment. Against this, trading dynamics remain active, particularly in dollar futures, where the average daily notional value increased 68% and open interest grew 1.2x compared to 2024. Regarding margin deposits in Asigna, year-to-date average balance in 2025 decreased by 15% compared to the prior year. On Slide 9, we can see OTC trading results moving to SIF ICAP. OTC trading revenue declined 4% year-over-year. Both Mexico and Chile experienced an appreciation of their currencies. So Mexico revenue grew 6% and Chile decreased 8%. The performance in Chile was driven by lower market interest rates combined with volume discounts. On Slide 10, we have figures for our Capital Formation segment, where revenue increased by 6%, mainly driven by a 58% increase in medium- and long-term debt listing activity. As a result of this record-breaking issuance base, total outstanding long-term listings rose 8% year-over-year, reaching 546 issuers as of December of 2025. While the equity market has shown renewed activity, as previously noted, the debt market continues to strengthen. In 2025, BMV financed MXN 636 billion. This represents an 8% year-over-year increase. This momentum has been further reinforced by the addition of new high-profile participants such as CFE, AMH and SAC. Moving to the Central Securities depository. Slide 11 shows Indeval revenue increased by 3%, driven by more dynamic cross-border activity and higher assets under custody across both domestic and global markets. This is compensated in part by FX. During 4Q 2025, total assets under custody reached MXN 45 trillion, representing a 13% increase compared to our 4Q '24. Custody volumes increased across all segments, led by a strong growth on SIC listed ETFs and debt securities. This higher level of activity was also reflected in settlement metrics with the average daily value settled increased by 4%. And additionally, following the recent retail tariff adjustment, operations in this segment grew by more than 50%. Let's move to Slide 12 for Information Services. Information Services revenue increased 9%, driven primarily by market data, which grew 13% compared with the fourth quarter of 2024 and accounted for 72% of the total revenue. At Valmer, our quarterly revenues remained flat, while FX movements had a negative impact on our results. Let us now take a look at our operating expenses on Slide 13 and 14. 4Q '25, the 15% expenses reflects a clear reinvestment and execution phase. As Grupo BMV accelerated its strategic initiatives and advanced its modernization agenda, expenses grew across key categories, led by personnel on $22 million, technology, $23 million and depreciation, $21 million. The evolution of expenses through 2025 was concentrated in the same key categories, all directly linked to the implementation of the strategic plan. The expansion of teams in priority areas strengthened internal capabilities, while the increase in technology and depreciation reflects sustained investments in infrastructural renewal, particularly in storage and cyber. The expense level reached in the fourth quarter establishes the new cost baseline for 2026, which clearly reflects a phase of strategic execution and modernization. With this, I would like to thank you for connecting today and listening to my remarks. Here and alongside with my colleagues, we will gladly address any questions you may have. Thank you very much. Operator: [Operator Instructions] And our first question will come from Yuri Fernandes with JPMorgan. Yuri Fernandes: Maybe if you can explore more a high-level guidance and view regarding the investments in technology, like the OpEx, how much should we see on growth on that line? And maybe an update on CapEx. I guess the last message for 2026 was for CapEx to increase some 50%. 50%, 75% over 2025. So just checking if we -- it was clear from Mr. Alegria that we should see more investments this year, right? But if you can provide more color, how much -- just for us to quantify this. So basically, OpEx, CapEx and maybe if you want to discuss a little bit the margins, what should we expect for EBITDA margin here for the company? Ramón Sarre: Yes, Yuri, as you say, we are expecting CapEx for 2026 to be close to MXN 500 million. It should come down for 2027. We don't have an exact number yet, but it will still be above MXN 300 million for 2027 and then decrease further for 2028. For operating expenses, we're expecting a high single-digit increase for 2026. We're expecting margins to be stable. Maybe revenues are hard to estimate. But I would say a stable plus/minus 1% for EBITDA margins. That would be our expectations for 2026. Yuri Fernandes: Just on the margins, if I may, just a clarification. When you say stable or maybe down 1 point, are you referring to the fourth quarter margin of 54%? Are you referring to the full year margin around 56%? Just to be clear here. Ramón Sarre: I'm referring to the full year margin of 56%. Operator: And our next question comes from Daniela Miranda with Santander. Daniela Miranda: Just a very quick one on financial income in 2026. I mean assuming additional 50 basis points cut in reference rates from current levels, how should we think about financial income next year or this year? Could you help us frame approximately like how sensitive is financial income under that scenario? Ramón Sarre: Daniela, we didn't fully understand, but I understand you're asking about financial income. We're expecting less according to the reduction of interest rates. So that's something that's definitely going to affect us. And we're also taking steps to reduce the variability on the FX gain loss. So you should have an impact from the reduced interest rates and less -- and we're working towards less volatility in FX gain and loss. Operator: [Operator Instructions] And we'll go next to Carlos Gomez with HSBC. Carlos Gomez-Lopez: Going back to the expenses, you ended up growing them 10.6% this year. Was that more or less than you initially expected? I think it's a little bit more. On the CapEx, can you also remind us the average life of the CapEx that you're introducing and therefore, the amortization rate? And should we expect your depreciation charges, which were up 14% this year to increase significantly in the next couple of years? And finally, can you remind us your sensitivity to exchange rate? Ramón Sarre: Carlos, the -- I would say the increase in expenses came in line with our expectations. We had -- a year ago, we had said that we expected a decrease in margins for this -- for 2025. Revenues were higher at the beginning of the year, but expenses came in line where we had expected them. Regarding your second question, average depreciation is done between 7 and 10 years for the technological evolution program that we're calling these new platforms, we're thinking about 10 years. You should start seeing most of the impact in 2028. That's when we'll begin to amortize the full investment. Regarding your third question, our sensitivity to the FX, as a rule of thumb because it varies depending on market conditions, it's about MXN 50 million in EBITDA for MXN 1 of depreciation. As I said, it can vary, and with the new -- it will surely vary with the new expenses that we're acquiring, which are more related to the FX. But as of now, take that rule of thumb. Carlos Gomez-Lopez: Okay. So it hasn't changed. It's still a $50 million in EBITDA for the 5% move in the currency? Ramón Sarre: Yes. Carlos Gomez-Lopez: And I don't think the queue is too long. So I'm going to throw another question. You are buying the systems from NASDAQ. As you have seen, because of the impact of AI, the market has interpreted that pricing for those -- that type of software is going to decrease. As an acquirer of these products of cloud services, of software services, have you seen any change in pricing over the last year that you can say is the impact of NASDAQ? And do you expect any changes in the coming years? Ramón Sarre: We haven't seen any changes. We are -- let me say, we're still in the process of ending negotiations on some of the services we're acquiring. But we haven't seen any changes, and we would love to see a decrease in some of them. Carlos Gomez-Lopez: I would imagine, but you haven't so far. Ramón Sarre: Sorry. No, we have not. Operator: And our next question will come from Ernesto Gabilondo with Bank of America. Ernesto María Gabilondo Márquez: My first question will be a follow-up in terms of FX and interest rates. Just wondering what are your expectations for the FX and interest rates for this year? And if you are evaluating any kind of hedge to mitigate the impact? And looking into the first half of this year, it seems it will be a tough comp considering the strong peso appreciation and rates. So just wondering what are you deciding to do on that? And then my second question is also related, a follow-up in terms of your investment phase and OpEx. So just wondering, for this year, should we expect OpEx growing at a higher pace when compared to revenues? If you can provide if there will be some seasonality in expenses throughout this year? And also, can you walk us through the timing of the investments this year? And when do you think the revenues will start showing up, I think, will be very helpful. And I also remember you were expecting Indeval to be at the cloud by 2027. So just wondering how should we expect OpEx, as you were saying, it should be declining in 2027, but maybe not at the lows that could be at 2028. Just wondering if 2027 will continue to have some of the Indeval investments or other investments in 2027. Ramón Sarre: Ernesto, we thought we were going to have to do without the pleasure of your questions. Regarding your first question, FX and interest rates, interest rates are coming down, so we're expecting less financial income there. And FX, we've been working to hedge to reduce our exposure to the FX gain loss that we have. So we're expecting less financial income and a little less impact from the FX gain loss. For OpEx, for this year, we're expecting it to be high single digits, somewhat in line with what we're expecting in revenues. So you're asking timing, when we would expect to see -- if there's going to be seasonality in the expenses. Yes, there's always some seasonality. It's usually -- they start slower towards the first half and tend to lean a little more. We try to even the math throughout the year, but there is usually some seasonality. We expect to see revenues from our initiatives in 2027, especially with the launching of the repo services in our CCP. We're expecting to see some revenues from the bond clearing for this year, but really nothing significant, nothing that moves the needle. So expect them for 2027 with the launching of the repo services. And regarding Indeval in the cloud, yes, we're expecting to have our -- the new platform for Indeval towards the end of 2027. So it will be fully operational in 2028. We would expect to start seeing, let me say, some -- we'll have double expenses while we take out the old platforms and the old technology. So we would expect to see a reduction in revenues -- sorry, a reduction in expenses for 2028 and downward, at least from an overall point of view. Operator: And this now concludes our question-and-answer session. I would like to turn the floor back over to Jorge Alegria. Please go ahead. Jorge Formoso: Thank you. Thank you very much again to everyone. We had a very, very active -- I think we may have another question, sorry. Ramón Sarre: Apparently, we have one more person lining up. Operator: Okay. Yes. We have a question from Pablo Ordóñez with GBM. Jorge Formoso: Okay. Go ahead. I'll keep my remarks for later. Pablo Ordóñez Peniche: Can you hear me? Ramón Sarre: Yes, Pablo. Pablo Ordóñez Peniche: Just quickly, how should we think in terms of the payout for dividends and buybacks for the next 3 years? And are you considering using some part of the MXN 3.7 billion that you're still holding in your balance sheet for dividends and buybacks in this cycle of CapEx? And also a second question is maybe if you can help us with some magnitude of how should we think of the additional revenues for the debt CCP once that you start rolling out the repos business in 2027? Ramón Sarre: Thank you, Pablo. For the dividend, this year, we're -- our distribution is going to be a dividend of 71% of net income, and we're doing a buyback of at least another 10%. This -- we will keep -- we'll try to keep our -- this cash distribution at this 80% level of net income. That's at least, let's say, our guideline. And we estimate that in spite of the investments we're doing, that's fully achievable. And this will be for next year and after that as well. We could have additional -- on buybacks, yes, but let's take the guideline as at least or around 80% of distribution. Regarding your second question on the additional revenues from the repo services, we don't have an estimate on that yet. It's a big market. It's about MXN 100 billion in average daily -- $100 billion in daily volume. So we're still working on the fee to get that. But when we have additional information on that, we'll let you know. Operator: And this does conclude the question-and-answer session, Jorge? Jorge Formoso: Now it's my turn again. Thank you very much. And again, this 2025 proved to be a year where we realized and started to operate on our strategic plan for the next 3, 4, 5 years. This year, we are going to be focusing on the execution of the plan, providing value to our shareholders, and we look forward for an exciting 2026 and onwards. So thank you very much, and talk to you soon. Operator: Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.
Operator: Good morning, ladies and gentlemen, and welcome to the Intact Financial Corporation Q4 2025 Results Conference Call. [Operator Instructions] Also note that this call is being recorded on February 11, 2026. And now I would like to turn the conference over to Geoff Kwan, Chief Investor Relations Officer. Please go ahead. Geoff Kwan: Thank you, Sylvie. Hello, everyone, and thank you for joining the call to discuss our fourth quarter financial results. A link to our live webcast and materials for this call have been posted on our website at intactfc.com under the Investors tab. Before we start, please refer to Slide 2 for a disclaimer regarding the use of forward-looking statements, which form part of this morning's remarks and Slide 3 for a note on the use of non-GAAP financial measures and other terms used in this presentation. To discuss our results today, I have with me our CEO, Charles Brindamour; our CFO, Ken Anderson; and Patrick Barbeau, our Chief Operating Officer. We will begin with prepared remarks followed by Q&A. And with that, I will turn the call over to Charles. Charles Brindamour: Good morning and thank you for joining us. Last night, we announced another very strong quarter. Net operating income per share for the quarter was up 12% to $5.50 and for the full year was up 33% to $19.21. This brings our compounded annual net operating income per share growth to 18% over the last 3 years and 12% over the past decade, exceeding our 10% growth objective. This track record is driven by 3 levers: solid organic growth, margin expansion and accretive capital deployment. And as I look ahead, given our opportunity set has expanded by a factor of 10 in the last decade, I see plenty of runway for each of these levers. The strength of these results is driven by a combined ratio for Q4 of 85.9%, a 0.6-point improvement from last year and the full year combined ratio of 88.2% improved by 4 points. This underwriting performance is a function of our superior risk selection machine and our unique market positions where we have a massive scale advantage in Canada and a Commercial and Specialty lines portfolio that is 70% in the SME and mid-market space. And our capital generation is impressive. Yet despite a very strong capital base, the operating ROE reached 19.5%, another proof point that our ROE has structurally shifted in the upper teens. It is strong in both absolute and relative terms. Indeed, at the end of the third quarter of 2025, we estimate that our ROE outperformance reached 750 basis points, well above our 500-basis points objective. And when I look at our growth profile, I'm encouraged to see that we were outperforming the industry in Q3 on top line growth in Personal lines in Canada and in Commercial lines across North America. As I look ahead to 2026, I expect the platform overall to continue to deliver top line industry outperformance. Let me provide some color on the results and outlook by line of business, starting with Canada. In personal auto, premiums grew 9% in the quarter, including a 2% increase in units. Profitability for the industry remains challenged with the combined ratio above 100% for the first 9 months ended September. As a result, we expect hard market conditions to persist. Our underlying loss ratio improved 1.3 points year-over-year despite severe winter conditions. The overall combined ratio of 94.2% is very strong results as Q4 is a higher seasonality quarter. With our full year combined at 93.3%, we met our sub-95 guidance, and we remain well positioned to continue delivering on that objective. Moving to personal property. Premium growth was 6% in the quarter. Growth was supported by a 2% increase in units but was offset by a nearly 3-point drag from a one-time item in our affinity and travel business. We do expect a similar one-time but unrelated impact on our Q1 growth. Adjusting for this, growth is running in the upper single-digit range, a level we expect to return to in Q2. At 76.4%, the combined ratio is strong, and we're positioned to deliver a sub-95% combined ratio even with severe weather. And our 10-year average combined ratio is still solid sub-90%. Overall, in Personal lines, which is nearly half of our business, we expect to see industry growth in the high single-digit to low double-digit range over the next 12 months, driven by continued industry profitability challenges. And we're well placed to continue to gain market share in this environment while also outperforming on combined ratio. In Commercial lines in Canada, premium growth was 1% in the quarter. Although top line growth is being tempered by elevated competition in large accounts and an average reduction in account size as a result, our growth initiatives in the SME and mid-market space continue to gain traction, and we're growing our customer base in this environment. In fact, in Commercial P&C, competed quotes are up 24% and new business is up 8% year-over-year. We expect industry premium growth in the low to mid-single-digit range over the next 12 months. Profitability was really excellent with a combined ratio of 77.1% in the quarter. Our pricing and risk selection advantage, which includes our investments in data and AI, allow us to grow while maintaining margins. We remain well positioned to deliver a low 90s or better combined ratio going forward. Moving now to our UK&I business. Premiums in the quarter were 2% lower year-over-year, but that's a 3-point improvement from the past 2 quarters as expected. We see top-line growth continue to improve in '26 as we unite the Commercial lines business under the Intact brand and as the remediation of the direct line book tapers off. We expect industry premium growth in the low to mid-single-digit range over the next 12 months. The combined ratio in the U.K. was 93.5% in the quarter. This business is on track to evolve towards 90% over the next 12 months. In the U.S., premiums were up 5% year-over-year, driven by our growth initiatives as new business increased 11%. Our diversified product range, coupled with progress in expanding and deepening our broker relationships is really paying off. While we see industry premium growth for U.S. Specialty lines in the mid-single digit over the next 12 months, our growth initiatives position us to outperform. The combined ratio of 82.8% in the quarter in the U.S. improved by more than 3 points year-over-year, reflecting a very strong underwriting discipline. Our strategy there is to grow faster in our most profitable lines and customer profile. In 2025, our business lines with a sub-90 combined ratio grew 7 points faster than those with a combined ratio above 90%. This focus on profitable growth helped us deliver the 10th quarter in a row with a sub-90 combined ratio in the U.S. Overall, across the platform, our team continues to execute on our strategic priorities. Let me highlight a few achievements in Q4. First, we aim to be a global leader in leveraging data and AI. And up to now, our teams have deployed AI models generating north of $200 million of recurring benefits with a primary focus on pricing and risk selection. At this pace, we're on track to exceed our ambition of at least $0.5 billion by 2030. Our AI investments continue to be concentrated where they move the needle the most. In '26, for example, we're investing in 4 distinct areas: advancing our risk selection advantage as we have in the last decade, improving customer journeys to drive organic growth, significantly accelerating software development and improving operational efficiency. In software engineering, for instance, we've increased our output by close to 20% per dollar of investment in less than 24 months. Within the UK&I, we seek to deliver a leading broker and customer experience as well as optimize underwriting and claims to drive outperformance. In the U.K., we launched 3 new products in the quarter. In addition, Intact Insurance was voted by brokers as the #1 insurer in the U.K. for commercial claims. This is a recognition of the improvements we've made in customer and broker service, which coupled with expanding our distribution footprint will really help us achieve our ambition of doubling the size of the business by 2030. In Global Specialty lines, our strategy focuses on having a profitable and growing mix of verticals. During the quarter, we launched a number of products, including a new marine cargo quota share offering in the London market. This allows us, for instance, to offer a comprehensive solution in cargo, thereby making it easier for brokers and customers to do business with us. This is an example of the types of initiatives that help support our goal of reaching $10 billion in direct written premium by 2030 while sustaining a sub-90s combined ratio. The strength of our '25 results, coupled with our confidence in delivering our financial objectives, means that we're pleased to increase dividends by 11% to $1.47 per quarter, our 21st annual dividend increase. Our quarterly and full year results demonstrate the strength and resilience of our platform. In 2025, we generated mid-single-digit top line growth, margin improvement, double-digit earnings growth and a 20% ROE. Sitting here today, we're very confident in our ability to sustain annual ROE in the upper teens and deliver at least 500 basis points of ROE outperformance every year. And there is no doubt we'll continue to deliver double-digit net operating income per share growth on an annual basis in the next decade. Before concluding, I want to thank our employees for their exceptional dedication and execution this past year. Your disciplined commitment and drive to do better every day has positioned us to continue to deliver in the years ahead. With that, I'll turn the call over to our CFO, Ken Anderson. Kenneth Anderson: Thanks, Charles, and good morning, everyone. We've ended 2025 on a very strong note. Fourth quarter performance was excellent with a combined ratio of 85.9%, driving a 12% increase in net operating income per share to $5.50. Operating ROE was 19.5% over the past 12 months, which fueled a 16% increase in book value per share to $107.35. Let me add some color to our fourth quarter results. The underlying current accident year loss ratio improved by 0.5-point year-over-year to 55.9% in the fourth quarter. This measure was particularly strong across North America where the ratio was 1.4 points better in Canada and 1.7 points better in the U.S. In the UK&I, improvements in the direct line portfolio were tempered by higher large losses in Specialty lines, which can be volatile quarter-to-quarter. Fourth quarter favorable prior year development was 5.5% and aligned with our expectation of hovering around the upper end of our 2% to 4% guidance in the near term. Our long track record of favorable PYD reflects the ongoing prudent approach we take in reserving the current accident year, which continued throughout 2025. And this is why we assess overall underlying performance by focusing on the total of the current accident year loss ratio and the prior year development ratio. On this measure for the full year across IFC, we delivered close to 1 point improvement. And in Commercial and Specialty lines globally, we have seen year-over-year improvement for the past 12 quarters. This illustrates the margin expansion the platform is producing. Catastrophe losses in the quarter totaled $69 million and $844 million for the full year. Looking ahead to 2026, reflecting longer-term trends, the revision to our catastrophe event threshold as well as growth in our premium base, we are maintaining our overall annual catastrophe loss expectations at $1.2 billion for the year ahead, with 75% allocated to Canada, of which 70% is in Personal lines. Mentioning catastrophes, I'll provide an update on reinsurance. The January 1 renewals were favorable. We maintained our cat retentions at similar levels to 2025 while improving our aggregate coverage for multiple loss events. Our approach to reinsurance remains unchanged. We use it to protect our balance sheet from tail risk. Moving to expenses. The consolidated expense ratio was 34.4% for the quarter, a 0.8-point increase versus last year. This was driven by higher variable broker commissions and higher incentive compensation, reflecting our profitability in North America. This also contributed to the full year expense ratio of 34%, which is aligned with our annual guidance of 33% to 34%. Operating net investment income increased 4% to $415 million in the quarter, reflecting higher assets and special distributions. For 2026, we expect investment income to be more than $1.6 billion as growth in invested assets should offset reinvestment yields, being slightly below our current book yield. Distribution income decreased 5% in the quarter. BrokerLink remained very active across 2025, completing over 20 transactions and acquiring $570 million in premiums to surpass the $5 billion mark. Overall distribution income growth was tempered by the favorable weather throughout 2025, which meant financial results at our countercyclical on-site restoration operation were lower compared to 2024. Our distribution income has grown at a compounded annual growth rate in the mid-teens over the last 5 and 10 years. And while quarterly results may vary, we expect at least 10% annual growth in distribution in 2026 and beyond. In non-operating results, we reported nonoperating losses of $55 million for the quarter and $139 million for the year, a significant improvement compared to the prior period. In 2026, we expect acquisition, integration and restructuring costs to be lower than 2025 as U.K. rebranding as well as RSA and DLG integration activities will be largely behind us. Moving to our balance sheet. Our financial position has never been stronger. In 2025, total capital margin grew by $800 million to $3.7 billion, while our adjusted debt to total capital ratio improved by almost 3 points to 16.5%. All this while delivering close to a 20% operating ROE. Our capital management framework is robust, and the balance sheet is positioned to deal with any external shocks while also providing significant capacity to support both organic and inorganic growth opportunities, which remain our priority. Within our framework, we will be renewing our normal course issuer bid on February 17, allowing us to repurchase up to 3% of shares outstanding. Capital generation is very strong, and we will utilize our share buyback program opportunistically when we see our shares as significantly undervalued as we do currently. In the last 6 months, we deployed $200 million for share buybacks, and we will remain active and prepared to do more. But with the attractive opportunity set we see on the M&A front in the near term, both in manufacturing and distribution, we are content to maintain dry powder, especially given our improving ROE outperformance trajectory. In conclusion, I want to thank our team for the rigorous execution in 2025. Your drive for outperformance has delivered results which showcase our capacity to drive earnings growth. It has also shifted our operating ROE into the upper teens. We are proud to be a leader among our global peer group, having amongst the highest ROE and the lowest ROE volatility. It is a testament to the platform we have built and the successful execution of our profitable growth strategy. This positions the organization to continue to deliver on our financial objectives to compound net operating income per share growth by 10% annually over time and exceed industry ROE by at least 500 basis points every year. With that, I'll turn it back to Geoff. Geoff Kwan: Thank you, Ken. [Operator Instructions] So Sylvie, we're ready to take questions now. Operator: [Operator Instructions] And the first question comes from the line of John Aiken at Jefferies. John Aiken: Charles, recently, there's been a lot of speculation about AI and disruption in the industry. Now you guys have been very vocal about the benefits that you're receiving in terms of deploying AI in your systems. But can you discuss the impact or maybe the lack of impact that AI may have in terms of the manufacturers of insurers, if not in Canada than globally? Charles Brindamour: Did you say the manufacturing of insurers? John Aiken: Manufacturing of insurance, AI disrupting the current players. Charles Brindamour: Yes. I think, indeed, John, we've been very focused on AI for about a decade. And we've made massive investments in the risk selection side of things. And as I mentioned in my remarks, we're doubling down on that, but we're also deploying AI in the digital funnel in software engineering as well as in efficiency. I do think that large language models will certainly have an impact on our ability to capture traffic and shopping in the digital channel. This is an area that we're very focused on at this stage. In terms of manufacturing the product per se, keep in mind that the purpose of the organization is to get people back on track. And we've created probably 1/3 of our ROE advantage coming out of getting people back on track. And I see -- this is happening in the physical world. I see a little change there. But I would say when it comes to predicting risk, AI is a fair bit of upside. And I think the nature of advice will evolve over time. And I think we've been focused on disruption in distribution for over a decade. This is one more source of potential change that we need to keep an eye on, and we're very focused on that. We want to make sure as a firm that through LLMs, people find our leading brands first, in particular in retail insurance, and that we win in that channel as well as we win in other channels. Operator: Question is from Stephen Boland at Raymond James. Stephen Boland: I guess I'll ask this question since I'm at the front of the queue. But you mentioned now for a couple of quarters about obviously competition in large account. I'm just -- as the sector kind of is under pressure, how -- is there a buffer of that softness? Does it move into the middle or the SME space that you mostly play in? And if yes or no, like why or why not, I guess, is the question? Charles Brindamour: Yes. Stephen, thanks for your question. I think if you look at the earnings base of Intact, half of it is Personal lines, and we're in a hard pricing environment, and you see us outperform from both top and bottom-line point of view. When you then look at the rest of the platform, which is Commercial lines and Specialty lines, about 70% of the portfolio is in the SME and mid-market space. So in large account, there is ongoing pressure. And then as you move from the smallest account to the largest account in the SME and mid-market space, competition is uneven as well. This is not a new phenomenon. This is something we've seen over the past decades. And the nature of that business tends to be far more service-oriented, speed-oriented and ease of doing business oriented and as a result, tends to be stickier. We've got 2 advantages. First, we're a big leader in that space in Canada. Second, in our Specialty lines operation, in particular, in North America, we can pick and choose where we decide to grow. Some segments are more competitive than other segments. And that's another, I think, big advantage. So could it come down. I mean we're seeing that the competition in the SME and mid-market space is highly uneven, but it's nowhere near what we see in the large accounts. And if I judge by our experience in the past 20 years, this is far less sensitive, and I'm not losing much sleep over that, Stephen. I think one of the things that is important when you look, say, at the Canadian growth in Commercial lines, which was about 1%, you have 2 to 3 points of change in mix. That is the average size of account, it's not rates, it's mix. It's the average size of account is down a bit. That is a function of the fact that from small to very large, competition increases as you go up the size curve. We have tools to figure out where we grow. This changes mix is not just a change in size. It's also a change in profitability profile. And while it puts pressure on the top line, we think this is very good for our bottom line and margins. And frankly, when you look at our performance, you get a sense that our risk selection strategy is working really well. Stephen Boland: Okay. That's great. I appreciate that. And maybe just a second question on personal auto. We all track the filings that happen here in Ontario. The pace of rate increases has slowed. So -- and your guidance remains like it's going to be a firm to hard market for 2026. So I'm just curious about the confidence that it continues to be firm, and there were a couple of insurers that got rate decreases approved. So I'm just wondering if you could talk about that, please. Charles Brindamour: Yes. Stephen, Canada is a big country. And I understand when we're based in Toronto, we look at Ontario, and I think it's important. I'll give -- Patrick, maybe Patrick can give his perspective on where the automobile market is going in aggregate. And go ahead, Patrick. Patrick Barbeau: Yes. Well, overall, when we look at the first 3 quarters of 2025, which is information we have about the industry, it grew by high single digits overall Canada-wide. And the combined ratio if I look both at 2024 for the industry was above 100% and was still above 100% in the first quarter -- first 3 quarters of 2025. When we look at specific regions, there might be fluctuations 1 quarter to -- especially on -- from a rate approval perspective. But overall, there's still pressure in the system. We've talked about Alberta, in particular, where we see pressure in the Liability lines. There's a reform that will come on Jan 1. But until then, there's pressure on the Alberta market. So overall, the combination of the industry not being profitable overall, inflation stabilizing in the 5 or mid-single-digit type of range overall for the country is no means that the industry overall will need to continue to take rates to be profitable. Charles Brindamour: Yes. I think our outlook in personal automobile, I mean, there's not -- it's simple math. Combined ratio above 100%, inflation 5, if you want to bring back the industry in a reasonable zone, I mean the industry needs to grow in the upper single-digit sort of range. And our view is that this is true for the next 12 months. Now you have reforms coming in 2027. And in Alberta, in particular, I think that will be really important because that's a market that is that is dragging the industry's performance more so than Ontario at the moment. And I would very much welcome in '27 an industry performance that would be better, and we'll see what it does to the environment. But for the next 12 months, I think we're in a hard market environment in auto. Operator: Next question will be from Paul Holden at CIBC. Paul Holden: Just want to ask on the expense ratio. We don't -- and I'm referring to the general expense ratio. We don't talk about that ratio too much. And I'm just -- I'm asking for -- about it because it's been roughly around the same level for 3 years now despite strong premium growth. So I might expect from particularly an Intact with your scale advantages that, that is a ratio that might improve over time. So maybe 2 parts to the question. One is like why is it not improving? Is it just simply investments in technology or otherwise? And should we expect it to improve at some point in time as you continue to grow top line? Kenneth Anderson: Yes. Thanks, Paul. Maybe just a few comments near term, and then we can look a bit more longer term. We've guided towards 33 to 34 zone at the overall IFC level for -- I guess, that's the combination of Gen Ex and commission. Overall, for Q4, I would say, and the full year, a bit higher than last year. But again, driven by variable commission and variable comp, which really is reflecting the improved profitability. So you are seeing as the profitability profile has improved over time, the Gen Ex is picking up a variable comp component in that. It's equally true, I would say, on the commission ratio as well. I think it is fair to say, as you look over time, particularly in Canada, I would say that as we've scaled up, you will see an improvement in the Gen Ex ratio. I think in the U.S., it's a bit different because you have different lines of business depending on whether you're dealing with MGAs or dealing with regular brokers, the level of internal costs that you will have versus external will also be a factor. So I think the shift in the lines of business within specialty is certainly a driver in the U.S., I would say. And in the U.K., we know that we're investing in technology. There's a need to renew the technology stack there. So that's going to show up in that Gen Ex ratio in the U.K. Charles Brindamour: So Paul, I guess you're saying you're closing '25 with 14.6 Gen Ex, you closed '24 at 14.6 Gen Ex. You closed '23 at 14.6, '22 at 14.2%, what are you guys doing? And I think it's a fair statement. And frankly, we're challenging ourselves to do that. But I do think, Paul, that the strong growth in the direct channel is putting upward pressure on Gen Ex more so than anything else. And as Ken is saying, the strong -- the lines that are growing the fastest in Specialty and Commercial lines would put upward pressure as well on Gen Ex. That's why I'm very focused myself on the combined ratio and the combination of both. That being said, we've given ourselves internally a number of pretty steep performance improvement targets in terms of expenses and productivity in the next 3 years. And I'm certainly hoping that this ratio is coming down. Paul Holden: Understand. That's helpful. Part of the reason I asked the question is just kind of should we really be looking at the K-ratio, as you call it, ex-expense ratio? Because it seems like there's a little bit of puts and takes there, and I think part of your answer helps answer that like mix, right? So Specialty lines might have a lower loss ratio, but maybe a higher expense ratio. And so maybe I should be paying more attention to the total combined, either way lines is getting better. Charles Brindamour: Yes. No, exactly. And on the theme of investments in technology and all of that, I mean, the reality, Paul, is we've been investing massively in technology and AI over the last decade. And frankly, we're making trade-offs. I mean if you're investing more in technology, you have to manage your investment envelope. And I don't expect that this will put meaningful pressure prospectively and as Ken is saying, we're working really hard on the U.K. combined ratio following the focus -- following the fact that we've refocused that business on Commercial lines completely where we think we can win. Paul Holden: Okay. Okay. And then my second question, Charles, you talked about a structurally higher ROE a number of times in your prepared remarks. I guess my follow-on question there, just so I completely understand that. I get that mix has changed over time and mix has changed favorably. Is there also an argument that your, let's call it, legacy businesses or traditional businesses, you've also been able to expand your ROE advantage. Is that second point fair also? Charles Brindamour: Absolutely, Paul. I think -- I mean you look at the Canadian outperformance at Q3, I've never seen that level of outperformance. It's 2 points from a top line point of view, but 8 points of combined ratio. And frankly, in my mind, it is a function of the massive investments we've made in bringing science, the latest science in the field when it comes to risk prediction and the fact that the claims muscle is making a big difference. And so yes, the mix itself with GSL, Global Specialty lines representing a much bigger portion of the pie, and that's running sub-90 solid, that is a higher ROE business to start with. But I think the investments we've made in risk selection and in claims are also helping the trajectory of our, what you call legacy business and what I would call outstanding businesses that we want to grow as much as we can. Operator: Next question will be from Tom MacKinnon at BMO Capital. Tom MacKinnon: My question is around -- you used to give an industry ROE outlook. It was around 10% for the last couple of quarters. I assume that, that is still your outlook for the industry ROE. Charles Brindamour: Go ahead, Ken. Kenneth Anderson: Yes, Tom, you're correct. In the MD&A, we used to give a perspective on the industry ROE. We streamlined a bit our disclosure around that, but there's no real change in our expectation of it being around 10%. And I would just call out that we refined -- it's refined disclosure, and we feel that speculating on where the industry ROE is going forward is a bit challenging. As you know, there can be nonoperating items that goes into the ROE, very difficult to project where they will end up. But I go back to at September after 3 quarters outperformance, 750 basis points. So the trajectory and we talk about expanding the ROE outperformance beyond the 10-year track record of 650 basis points, that's certainly the zone that we're in after 9 months, and we would expect to be in as we close out the year. Tom MacKinnon: Yes. Just following up on that. I noticed that if you kind of look at the outlook, premium growth outlook since this time last year, you've lowered it for essentially every line of business. But if I look at the industry ROE outlook, you've increased it from high single digits to being around 10, are you suggesting then that despite the fact that we're getting pressure in terms of industry premium growth that the industry still should be able to maintain an ROE around 10, which is, in fact, higher than what you would have suggested before you started revising down these premium growth outlooks. Just curious as to what your thinking is around that. Kenneth Anderson: Yes. Well, I would say, Tom, when it comes to the industry ROE, that's an all-in measure. It picks up premium, combined ratio and also investment income, but also investment gains and losses. And again, those can be lumpy. We look at where the industry unrealized position is and assess how much of that will come through the P&L over time to form our view on where the industry ROE will be. But our view is focused on our own margins, and we talked about our own ability to expand margins and also to grow and outperform the industry on growth. Charles Brindamour: Yes. And I think, Tom, let's just not forget that in Personal lines, you have an industry that is running above 100%, we expect that to come down. And so it's a blend of things. But I think to start putting point estimate or a weighted average of industry's performance where we operate, we think is we want to streamline our guidance there. Tom MacKinnon: Yes. Okay. And you've talked about wanting to and exceed the industry ROE by at least 500 basis points for decades now. And you've accomplished that. And now you've moved into this mid-teens to higher. You've moved up higher. Why not suggest that this number would not be 500, but might be 600 or something like that or broaden out this outlook? Thoughts there? Charles Brindamour: Yes. I think it's a very valid point, Tom, and one we probably should debate one more time inside. On one hand, you're right. I mean, the track record and the machine is spitting out more than 500 basis points in the long run. I mean that's just a fact. This is an objective that says every year, you need to be 50% more profitable than the industry, if you assume the industry is in 9% to 10% range. And we're in the U.S. for less than a decade. We're in the U.K. and Europe for less than 5 years. We think we're starting to really understand what's going on in those places, but we want to outperform there as well, which we now do. I think we just want to make sure that we're -- we have objectives that are really stretched compared to our peers. But at the same time, we want to master those markets a bit more. But I won't hide the fact, Tom, that it's a live debate whether that 500-basis point ROE outperformance objective is -- should be more stretched. Operator: Next question will be from Jaeme Gloyn at National Bank Capital Markets. Jaeme Gloyn: I wanted to go back to the Investor Day where you talked about 8% organic growth, about 6 points from premium growth, about 2 points from operating margin, but there's flexibility to optimize that. And so as you're thinking about the current market and maybe this ongoing softening in some areas, how do you think about optimizing that roughly 8% organic growth you would expect to achieve through 2030? Charles Brindamour: Ken, do you want to provide a perspective? Kenneth Anderson: Yes. Well, I guess if you look at this year, growth is in the mid-single-digit range. The margin expansion has been beyond, I would say, the 2 points that we've signaled. So I think heading into 2026, we certainly see growth in the zone of what we've signaled as a longer-term objective. Clearly, on margin expansion with the initiatives we're doing in terms of deploying our pricing and risk selection capabilities, improving our claims operation, the ability to deliver 2-plus points of margin expansion is clearly there. In fact, I think that's where we have opportunity to leverage that pricing sophistication to reinvest in the top line growth. So that's why, Jaeme, when you look at how we described it at Investor Day, we did combine the 6 of growth and 2 of margin into an overall view of 8 points. And I think that certainly the machine is set up to deliver that 8 points. Then with distribution roll-up that we're doing in BrokerLink and we're now looking at in the MGA space in North America, that's giving at least another point. And as we've said, in a in a worst-case scenario, the buybacks would deliver a further point. Again, to be very clear, the M&A outlook is quite strong, and that's what pushes us beyond that 10% zone overall. But all in, I think the 8 points of organic is organic plus margin delivering that 8 points is well set up. Charles Brindamour: Yes. I think that's exactly right. I mean it's not -- historically, if you go back a decade, it was more 4, 4, 4 when you break down the 12% track record. I think our sandbox is 10x bigger today than it was at the start of the last decade. That's why I think from an organic growth point of view, the odds of beating what we've done historically, I think, are pretty good. But we're really finding out that the investments we've made in risk selection are paying off a bit more than what we thought even a year ago. And so we'll ride on all these levers. And as Ken says, I mean, the capital deployment lever in what I think is a very constructive M&A environment bodes well to outperform the 10 points of earnings growth in the next decade. Jaeme Gloyn: Great. And then as you -- as you talk about the higher -- structurally higher ROE in the upper teens, the balance sheet today currently is underlevered as I can remember. How much of that upper teens ROE is dependent on that balance sheet deployment? Can you achieve that upper teens base case with a leverage ratio of sub 17%? Charles Brindamour: Well, we are there now. But our target is 20% debt to total cap, and we'll get there as soon and as fast as we can when we find a highly accretive transaction. And we'll buy back shares in the meantime. Kenneth Anderson: Exactly. 19.5% operating ROE is with the balance sheet that's -- that's, as you said, underoptimized, if you want, from a leverage point of view. So -- and that's the lens we look at when we say that we're comfortable and happy to hold dry powder on the M&A front to be able to continue to outperform north of -- well north of the 500 basis points and maintain the dry powder for -- on the M&A side. That's the equation, if you like, that we look at when we assess where the balance sheet is positioned. Charles Brindamour: Jaeme, my pedestrian perspective on this is that when you look at '25, we printed an OROE of 20% -- 19.5% and we printed an adjusted ROE of 21%. I think the cats came in a bit below guidance. And then our balance sheet is stronger than our target makeup of the capital base. And those 2 things largely offset each other is my take. And therefore, the guidance of upper teens, we don't sweat when we put that guidance out. Operator: Next question will be from Doug Young at Desjardins. Doug Young: Ken, Charles, you both have talked just about a constructive M&A environment right now. Ken, I think you talked about manufacturing and on the distribution side. I'm hoping you can unpack what you're seeing there. Is it more on the manufacturing, more on the distribution side? And maybe what has been the impediment to more M&A right now, specifically in the -- maybe in the Canadian market? Charles Brindamour: I think the distribution environment is active, very active. BrokerLink has been very active. Some of the broker -- the consolidators we support in consolidation are also very active. I would say the competitive pressure, the demand for assets and distribution is probably down compared to what it was a year ago. And therefore, this is a place where we continue to deploy capital meaningfully. On the manufacturing front, it is a constructive environment in my mind, globally. You've seen a number of transactions. I do think that there will be near-term opportunities here, true in the U.S., true on the other side of the pond. And I think in Canada, as well, maybe not as near term as I can see in some of the other jurisdictions, but I think that this is a highly fragmented marketplace. Strategies are changing with the owners of some of these assets, and you'll see more consolidation in Canada. Now we're patient and strategic as a buyer. And therefore, we find the opportunities at the best moments. And the position we're in today, Doug, which we've never really been in before is the fact that we can fish in the U.S., we can fish in the U.K. and Europe as well as Canada. Why? Because outperformance exists. pretty much everywhere at this stage. And that's why I'm thrilled about the M&A prospects, and it's an environment that is constructive. No doubt about that. People are open to talk. Doug Young: Okay. And so just on the European side, I mean, the UK&I division, I mean, if you look at it on a current accident year basis, it's -- and there's been some challenges there. I guess the question I often get from people is you're comfortable doing, like I think Global Specialty MGAs, Canada, obviously, but would you do something more specifically in the U.K. on the M&A side near term? Charles Brindamour: I think the performance in U.K. and Europe is not bad. It's not where we want it to be to be clear. But 93.5% for that business, given where it was when we took it, I like the trajectory. You have an expense ratio drag there that comes from the fact that we have taken a multiline business, and we've made it a Commercial lines business, which we love as an environment. We like the trajectory. So would we put more capital there? Yes, no doubt. The only caveat, Doug, is that in the U.K. Commercial lines business, we are integrating the acquisition of Direct Line, which we've done in '24. And it is the real first acquisition by my team in the U.K. I'd be careful to drop a second integration because, by the way, it's not just that they're integrating Direct Line, we're investing massively in systems, we're investing in risk selection techniques and data, we're investing in our claims strategy. And there's so much bandwidth an organization can have to deliver the goods in an acquisition. But as an attractive marketplace, I would put capital in the U.K. Commercial lines, yes. Ken, that was a high-level perspective. I don't know if you want to add some color. Kenneth Anderson: Well, no, I mean, certainly not on the M&A front. But just on the quarterly performance, the 93.5% was solid. cats were slightly lower by 2 points. But on the other side, we had the large losses. And those large losses didn't reach the cat threshold. So that's kind of part of the story why the current accident year loss ratio was a bit higher. But overall, as you've said, we're in the 92%, 93% zone, so broadly in line with expectations, but not where we're aiming to get to, which is trending down towards that 90% over the next 12 or so months. Charles Brindamour: And Doug, I'll take you back to 2022 when that business ran at [indiscernible] Q4 93.4%, 95% for the year. That's why I'm saying I like the trajectory there. And I think performance might be lumpy a bit, but I like where this is going, and I like the dynamic of that marketplace. Doug Young: Perfect. And just one last one, just, Ken, probably for you. Like what is the deployable capital you have right now? I can do the math on how much debt you could raise. But what's -- not the capital margin, but what's the amount that you could use for buybacks? Kenneth Anderson: Well, we have $3.7 billion of capital margin at the end of the year. And obviously, then from a look-forward point of view, significant capital generation in the year ahead, net of dividends and even regular distribution roll-up investments. If you think about the capital margin, you're right, it's there to cover volatility. And from that point of view, you can think of $2.5 billion to $3 billion of that margin would be retained in order to deal with volatility. The excess over that is certainly deployable. Of course, we're also underlevered. So when we think about deployable capital from an M&A point of view, you start to get up into the $4 billion, $5 billion zone in terms of the capital or the M&A size that we can execute on before we would need to raise equity. Charles Brindamour: Yes. We've never been in that position, Doug. And I'm glad the M&A environment is constructive, but this is serious deployable capital before we issue shares. And I think at the end of the day, Doug, when I wake up in the morning and show up to work, I look at the ROE. And so we balance ROE, the intrinsic value of our share price, the M&A environment. And I think everything is attractive today. And therefore, we're thrilled with our prospects to deploy capital, including our own shares. Doug Young: Yes, I would echo and I just say like you're sitting on excess capital. So it's not that you're only underlevered, but you also have excess capital, which weighs on ROE. But -- no, I appreciate all the color. Operator: Next question will be from Bart Dziarski at RBC Capital Markets. Bart Dziarski: I wanted to ask around the margin expansion dynamics. So you called it out as one of the factors of the NOIPS growth track record and AI is helping you with margin expansion and then commercial has got 12 quarters in a row. And we seem to keep underestimating the positive impact on PYD. So is it not time to revisit that 2% to 4% sort of guidance? Or are there other factors that keep you from doing so? Charles Brindamour: Yes. Go ahead, Ken. Kenneth Anderson: Yes. Well, thanks, Bart. Going back to the PYD, first and foremost, the favorable PYD is a function of the prudent reserving of the current accident year. 5.5% in the quarter, I would say, aligned with expectations around being at the upper end of the 2% to 4% range that you mentioned. And again, reflective of that current accident year prudence that we've been taken over many years. If you look in the recent past 3 and 5 years, it's hovered around 5%. And again, when we look out near term, we're saying not to be surprised if we're in that 4%, 5% range. It's more when you look out longer term, very difficult to predict where things will be 5-plus years out. And that's why the long-term average of 2% to which if you go back and look over 15 years, that's where we are. And that's why we maintain the 2% to 4% range. But certainly, looking in the recent past, we're hovering around the upper end. And that's why we -- and we think -- and as we look out in the near term, 12, 24 months, that's the zone we're expecting to be in. Charles Brindamour: Yes. We're not that surprised by the sort of PYD we're seeing this quarter. And Bart, when we say -- when you look at results, don't strip the PYD, look at the combined, this is not just because it's convenient for us. It's because that's how the math works. When you build reserves, the actuary looks at the current accident year and they put reserves aside and they make sure that for the prior years, the reserves are adequate. But the PYD really is a function of how much reserves you build in the current accident year. And so when we say, guys, you should look at both combined, it's because we think that our actuaries have not changed their approach on the current accident year compared to what they used to do. And therefore, our view is look at both combined. Yes, the track record in recent years has been above the top end of the range. We think it will be above the top end of the range in the near to midterm. But one really should look at both combined. And when that changes, we'll be explicit about that as we have been over the past decades. Bart Dziarski: Okay. Great. That's helpful color. And then just on the UK&I, minus 2% sounds like it's turning a corner. Is there a rough time frame as to when you would expect that growth to resume to the industry growth outlook of, call it, low to mid-single digits? Charles Brindamour: In '26, I mean, Bart, we told you guys it would be gradual. We had -- we were in the minus 5-ish sort of zone. Q4 came in at minus 2%. That's where we're wanting to see it. And then in '26, you need to be in positive territory. And frankly, I think that's where this is headed. Our work is not done in the U.K., to be clear, there might be lumpiness and so on. But I think we'll be in positive territory this year and not too far from the industry as the year closes. Operator: Next question will be from Mario Mendonca at TD Securities. Mario Mendonca: Charles, as you can tell from the nature of the questions, capital is on everybody's mind. And the context, of course, is that every other large-cap financial services company in Canada is fairly actively buying back stock, while they also talk about potential M&A opportunities. So it's with that background that I want to just pursue this a little further. The $800 million in capital that was generated in the year that added to the capital margin, was that a special number? Or is $800 million doable for Intact on a go-forward basis? Kenneth Anderson: Well, yes, not a special number. And to be clear, that's net of a $200 million buyback, which we actually did in -- over the last 6 months. So we talked at Investor Day about the capital generation of the capital that we're generating between organic growth and dividends, we consume about half of the capital that we're generating. And that includes the ongoing roll-up that BrokerLink is doing on the distribution side as well. So to answer your question specifically, no, not a specific number and probably it's net, as I say, of the buybacks that we've done. Charles Brindamour: So Mario, I'll give you my holistic perspective on this, and I might be wrong, and we have debates about that all the time and with the Board again yesterday. When I look at our track record in share buyback over the last decade, I think the return on that capital deployed hover depending on the buyback in the 12% to 15-ish percent zone, which is good. I mean no debate there. When I look at the track record of the capital deployed in M&A, that was north of 20% and frankly, when I look at the environment in which we operate today, I think there will be opportunities to deploy in that zone, trying to strike that balance. And then lastly, I do think Intact as a firm has a range of opportunities to deploy capital inorganically that is unmatched compared to what we're being compared against in the Canadian landscape. Our footprint is 10x what it was, and we largely outperformed everywhere. I take your point. It's an important point, and it's one we'll keep debating. But at least you get my perspective on this sitting here today. Mario Mendonca: Yes, I do. And I think those are all important points. The reason why it's so topical right now is the market just doesn't share your enthusiasm for the robustness of the results, like not this quarter, frankly, not over the last few quarters. And I think that's why it's become so topical because of that dichotomy between arguably one of your strongest quarters and then the market's reaction to it. But let me flip over to something a little different. Charles Brindamour: I agree with you on that. We'll keep that under advice. Mario Mendonca: Understood. Sort of a different question is early -- I think the first question on this call was about AI and disruption. And I think you got part of the way there to answering the question. But let me be a little more direct. The U.K. market was harmed, if you will. I mean it hurt a lot of the manufacturers. When distribution became -- essentially, the brokers became disintermediated, the manufacturers were impacted. The question is, the market is concerned that AI could do precisely the same thing to Canada, to the U.S. Are there structural or regulatory reasons why that wouldn't be the case? Or is it entirely plausible? Charles Brindamour: I think one big difference with the U.K., and we spend a lot of time looking at Personal lines in the U.K. is that the manufacturers just went along with it, basically, and the relationship shifted with the distributor. I do think that the brand and the credibility of our offers in Personal lines and the importance of getting people back on track in backing those brands for me, is a big differentiator between the U.K. market and what's happening here in North America. I do think that this will change the nature of advice. I do think that this contributes -- could contribute to the fact that the direct world today is growing faster than the broker distributed world in Personal lines, but we built optionality to win on both sides. For me, this is a potential disruptor, but I think that the manufacturers, their brand and their value proposition does not disappear here. Distribution might shift as a result of that. But I think the opportunity for strong manufacturers is really there. Mario Mendonca: And are you doing anything right now to make sure that you don't become a victim the way the U.K. manufacturers did? Charles Brindamour: 100%, I mean Mario, we've been focused on that sort of disruption for over a decade. That's why we have built the brands we've built. That's why we've invested massively in the physical world. And that's why we're investing also heavily in our digital channel, which have been our fastest-growing channels in the past 24 months. And right now, we're doing a fair bit of work to make sure that when it comes to search that we show up prominently in all channels, including in GEO or in LLM distribution channels. Operator: Thank you. Ladies and gentlemen, this is all the time we have today. I would like to turn the call back over to Geoff Kwan. Geoff Kwan: Thank you, everyone, for joining us today. Following the call, a telephone replay will be available for 1 week, and the webcast will be archived on our website for 1 year. A transcript will also be available on our website in the Financial Reports section. Of note, our 2026 first quarter results are scheduled to be released after market close on Tuesday, May 5, with the earnings call starting at 11:00 a.m. Eastern the following day. Thank you again, and this concludes our call. Operator: Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.
Operator: Ladies and gentlemen, welcome to Western Forest Products' Fourth Quarter 2025 Results Conference Call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. [Operator Instructions] During this conference call, Western's representatives may make forward-looking statements within the meaning of applicable securities laws. These statements can be identified by words like anticipate, plan, estimate, will and other references to future points. Although these forward-looking statements reflect management's reasonable beliefs, expectations and assumptions, they are subject to inherent uncertainties and actual results may differ materially. There are many factors that could cause actual outcomes to be different, including those factors described under risks and uncertainties in the company's annual MD&A, which can be accessed on SEDAR and is supplemented by the company's quarterly MD&A. Forward-looking statements are based only on the information currently available to Western and speak only as of the date on which they are made. Except as required by law, Western undertakes no obligation to update forward-looking statements. Accordingly, listeners should exercise caution in relying on forward-looking statements. I would now like to turn the meeting over to Mr. Steven Hofer, President and CEO of Western Forest Products. Mr. Hofer, please go ahead. J. Hofer: Thank you, Galen, and good morning, everyone. I'd like to welcome you to Western Forest Products 2025 Fourth Quarter Conference Call. Joining me on the call today is Glen Nontell, our Chief Financial Officer. Before we get started, I'd just like to extend our thoughts and prayers to the community of Tumbler Ridge to all the victims and all the families impacted. We issued our 2025 fourth quarter and full year results yesterday. I will provide you with some introductory comments and then ask Glen to take you through our financial results. I will follow Glen's review with our outlook section before we open the call to your questions. Despite more challenging markets and higher softwood lumber duties and tariffs in 2025, we entered 2026 with a significantly improved balance sheet to navigate the expected near-term market uncertainty. We also continue to execute on our strategic priorities to accelerate our transition to higher-value products. Some highlights over the last year include: surpassing our health and safety targets for the company's Medical Incident Rate achieving an MIR of 2.7 in 2025 compared to our target of 2.87 and 3.84 in 2024. We are also proud to report several operations achieved 0 recordable incidents in 2025. In Timberlands, we continue to focus on improving log sorts stratification to drive incremental margin. These efforts alongside a disciplined focus on log inventory management has resulted in 11% improvement in log inventory turnover since 2023. In manufacturing, we have improved our operational uptime to 86% in 2025 and compared to 85% in 2024. Our Duke Point facility achieved a 92% uptime in the fourth quarter. We also continue to focus on log and lumber recovery while improving lumber inventory turnover by 9% year-over-year. In sales and marketing, we continued our customer focus, developing value-added products and programs targeted with the end user in mind. Specialty products comprised 52% of sales in 2025, and we increased kiln dried sales to a record 41% of total sales in 2025 and compared to 37% in 2024. In addition, we achieved improved on-time shipping performance of 88% in 2025 compared to 84% in 2024. We made significant progress advancing our strategic capital investments in kilns to support higher-value products. Our two continuous kilns and one thermal kiln at our value-added division are expected to be commissioned in 2026. These investments will allow for more kiln-dried lumber production, generating higher margins than green lumber. From a labor perspective, we completed a 6-year collective agreement that covers the company's USW hourly employees. The agreement is one of the longest term agreements in the history of the BC Coastal forest sector. And finally, we strengthened our balance sheet and liquidity position through $76 million in non-core asset sales and the extension of our $250 million credit facility to July 2028. Overall, I am proud of the significant contributions across our entire organization, which have provided a strong foundation to build from in 2026. I will now turn it over to Glen to review our key financial results. Glen Nontell: Thanks, Steven. Fourth quarter adjusted EBITDA was negative $6.2 million as compared to $14.4 million in the same period last year. As compared to the prior year, results in the fourth quarter were impacted by a 26% reduction in lumber shipments, a 34% reduction in log shipments given lower harvest volumes and higher softwood lumber duties with a combined duty and tariff rate of 45% compared to 14% in the same period last year. This was partially offset by higher log prices on Cedar and first sawlogs and lower stumpage expense. We closed the fourth quarter with approximately 50 million board feet of lumber inventory and 649,000 cubic meters of log inventory. Turning to CapEx. Our 2026 total CapEx spending is expected to be between $45 million to $50 million, which includes approximately $16 million related to 2 previously announced continuous kilns and one thermal kiln at our value-added division. From a balance sheet perspective, we ended the fourth quarter with liquidity of approximately $212 million and a net debt-to-cap ratio of 7%. Touching on our Columbia Vista sawmill, we have made the difficult decision not to rebuild at the site and listed property for sale in December. We have received significant interest for the property, receiving multiple offers above the asking price of USD 10.6 million to date. We will look to finalize the sale of the property late in the first quarter or early in the second quarter of 2026. In addition, we are working with the insurance adjuster to finalize available property insurance proceeds. We plan to use proceeds from the property sale and insurance to initially repay debt to further deleverage our balance sheet. Turning to first quarter seasonality. In typical first quarters, our timber harvesting activity can be periodically interrupted by winter weather. Harvest volumes are typically skewed to the end of the quarter when the weather and light conditions support greater activity. From a market perspective, sales typically accelerate through the quarter. We plan to continue to manage production to market demand and available log supply. Steven, that concludes my comments. . J. Hofer: Thanks, Glen. Turning to our market outlook. Lumber markets remain challenged heading into 2026. Customer expectations are there will not be a significant improvement in demand during the first half of the year. That said, operating curtailments from lumber producers in 2025 are expected to decrease available supply towards the end of the first quarter, which could lead to upward price pressure as demand improves. We remain cautiously optimistic that the U.S. 30-year mortgage rates now at 3-year lows, may support improved housing affordability and modestly stimulate U.S. housing demand this year. Demand in Western Red Cedar product lines remain slow following the trajectory of other building products. In Japan, the yen has further weakened against the U.S. dollar and housing starts continue to be below $800,000 on an annualized basis. Western continues to be focused on the competitiveness of Hemlock and Douglas fir maintain current market share. But market demand for the first quarter of 2026 is lower compared to the fourth quarter of 2025. Overall, we currently have our first quarter order file of approximately 78 million board feet. Touching on the La-kwa sa muqw Forestry Limited Partnership in TFL 64. During the second quarter of 2025, employees represented by the USW commenced a strike at the limited partnership. In January of this year, USW members voted to reject a new collective bargaining agreement with the limited partnership. If there is no near-term resolution to the strike, additional operating curtailments may be required at our Saltair and Duke Point sawmills near the end of the first quarter due to log supply. The limited partnership continues to work to bring a resolution to the strike, and both parties have agreed to mediation process, which is occurring this week. Turning to our Engineered Wood Products Group. To support a modest expansion of our product and service portfolio, including ready to finish -- sorry, ready to install fabricated glulam beams, we are investing in a new CNC fabrication machine at our existing Fruit Valley manufacturing site in Vancouver, Washington. We are currently in the process of finalizing procurement of the manufacturing equipment with delivery and installation anticipated towards the end of this year. In parallel, we are also evaluating opportunities to modernize and consolidate our existing glulam facilities in the region at our Fruit Valley facility. Project planning will continue through 2026, and additional details will be shared as the strategy progresses. Looking ahead, we will remain focused on executing our strategic priorities and CapEx plans while also ensuring we maintain a strong balance sheet. With that, we can open the call up to questions. Operator: [Operator Instructions] First question is from Ben Isaacson with Scotiabank. . Ben Isaacson: First question is on the Columbia Vista decision not to rebuild it. Is that going to require some CapEx spend to reconfigure mills elsewhere? . J. Hofer: Thanks, Ben. Appreciate the question. No. What we've essentially done is been able to add supply from our Saltair facility in Canada, to maintain our market share in both Douglas Fir and Hem-Fir KD squares to Japan. So it's essentially, we've just reallocated that product line to one of our existing facilities. Ben Isaacson: My next question is, we've seen wood products pricing move higher -- you did talk about demand in Red Cedar, not really keeping up. How close are you to a run rate breakeven EBITDA right now? Glen Nontell: Maybe I'll take that one, Ben. I mean, obviously, you can see in the results in the fourth quarter and the curtailment that we've taken ourselves and others are fairly close to breakeven. I'd say, looking into the first quarter here, we see still some challenging headwinds. We might see some pickup late in the first quarter and early in the second quarter. But if you're talking at this point, we have -- definitely do have Cedar product lines that are profitable and others that are more challenged from a breakeven perspective. . Ben Isaacson: And then just last question. You said Douglas Fir and Hemlock squares are down quarter-over-quarter for Q1. Can you just give some magnitude on how much we should expect them to be done? . Glen Nontell: Yes. I mean the current order file right now is -- I'm going to say it's probably in the 5% to 7% quarter-over-quarter. We're a little optimistic as we go into the middle of the year and into Q3 that things will normalize. The yen is having a big impact on the overall competitiveness of all imports into the Japanese market. So we'll be paying attention to what occurs on the exchange rate as we go forward here. But our focus, both from a log standpoint and from a manufacturing standpoint is to be globally competitive in that marketplace. It's a very important market for our company, for the species that we have access to. And frankly, the Japanese market, they prefer the species that we have and the quality that we deliver to that marketplace. So obviously, some short-term headwinds right now on overall demand in the quarter, but I think we'll see a normalization as we go into the balance of the year. Operator: The next question is from Sean Steuart with TD Cowen. Sean Steuart: A couple of questions. Steven, I want to talk about your operating rate trajectory here. You guys have taken a lot of curtailments that you spoke to. And I gather most of this decision is tied to markets and rising duty deposits and Section 232 tariffs. Can you help put some perspective around how much of the curtailments are related to log supply constraints in the coast? How much of the decision is being driven by the fiber situation. J. Hofer: Thanks, Sean. It probably would take a little bit more time to kind of go through it at an operational by operational basis. Each mill has some different dynamics in play. Some are directly impacted by the change in tariffs from 14% to our rate today of 45%. Other facilities are constrained by certain log profiles that are in, I would say, limited supply and are uneconomic, and that would kind of be the discussion, for example, at Chemainus. But we're really focused on ensuring that when we run that it's -- it has a chance of being profitable for us. So we're not taking any risk on running below our cash shutdown costs and building excess inventory. So we're just being very, very disciplined on our run rates across each of the facilities. I will say though that I'm really pleased on the level of execution within our facilities around reliability and uptime. So despite some curtailments, our team on the manufacturing side has just done an outstanding job in the last couple of years of demonstrating that we can run our facilities at higher levels of reliability and uptime. Sean Steuart: Okay. And I guess the follow-on there is appreciating Chemainus still be down this year. Do you feel like the current capacity footprint is viable for the company? And appreciating there's an anticipation that demand will eventually start to recover here and volumes should improve. I'm just trying to weigh the cost benefit of this extensive rolling downtime versus potential permanent capacity closures. Is this the right capacity footprint for the company going forward? . J. Hofer: Well, those are questions that we have every day, including with our board and with our shareholders around what is the optimal operating configuration for Western relative to the overall log profile and log supply on the BC Coast. And so you can see that we continue to be focused on optimizing our operating platform, and we're having to make some really difficult decisions. And that's evident at a place like Chemainus, where we just, in today's market environment and the log profile at that mill was designed to consume that we don't have a profitable program there for that mill. So it will stay curtailed for the balance of this year. But the question is around what is the optimal manufacturing configuration for our company. We're focused on that every day. Sean Steuart: Okay. Just 1 last one for me. Columbia Vista, the site sale process, can you give us perspective on timing and maybe not willing to divulge, but any thoughts on potential proceeds for that site? . Glen Nontell: Yes, Sean, it's Glen. We listed the property for sale in December at an asking price of USD 10.6 million. To date, we've received multiple offers at or above that asking price. And we are working to finalize that sale late in the first quarter or early in the second quarter. Concurrent with that, we are also looking to finalize the insurance process, which would be incremental potential proceeds to that land sale. Operator: The next question is from Matthew McKellar with RBC. Matthew McKellar: Maybe first, just a question on the thermally modified Hemlock initiatives. Could you maybe talk a bit about how that product will be marketed and what kind of demand indications you have for today? And then help us understand how you potentially approach considering any further investments in capacity there? . J. Hofer: Thanks, Matt. We're really excited about this initiative. It's certainly we see that as a path forward to add incremental value and margin to our Hemlock profile. So the first thermally modified kiln will become operational towards the end of this year. I would say that we are being very disciplined in managing expectations. We're going to start relatively small, and we're going to walk before we run, and we're going to deliver -- exceed expectations from a product quality and from a product usability standpoint. The opportunity for thermal modified hemlock will be primarily around decking -- exterior decking applications, siding applications and Soffit and Fascia applications. But again, this is just 1 kiln, relatively small volumes to start with. But we do see a very unique opportunity to continue to build a viable, profitable program. As far as the go-to-market strategy, this will not be commodity. This will be inside of our specialty product category. And typically, this gets sold through very targeted distribution partners who are aligned around specialty building materials. So we're engaged in that process today. There's a lot of work being done on technical specifications, usability standards, installation requirements, marketing collateral, so forth. So it's not a commodity piece of 2x4. It will be -- definitely be a niche specialty product and a marketing program that aligns with that. Matthew McKellar: Great. I'd also like to ask about the CDKs. And I think you said the kiln dried sales are maybe 41% of total with the capacity you're bringing on, how should we expect that mix to evolve to maybe exit '26? Would you expect to fill up that incremental capacity quite quickly with your kind of current level of activity and mix? Or how should we kind of set our expectations there? . J. Hofer: Yes. I think the easiest way, Matt, is just to think about each continuous dry kiln with the species mix that we have and the product line that we manufacture. You can kind of look at each kiln having an annual capacity of around 80 million board feet. If you just look at -- you can do the math on the back of the envelope there what that will do to our incremental kiln-dried product. So each kiln on an annualized basis will be around 80 million feet of additional kiln dried product. Matthew McKellar: Perfect. Okay. That's straightforward. And if I could just 1 last one in. Just around the glulam markets and maybe your motivation around the expansion of the product portfolio. Maybe what you're seeing around demand or supply-demand balance and the market opportunity there? J. Hofer: Yes. I mean our investment that we're referencing is relatively modest. Our -- previously, we've been a supplier of what we would call glulam billets into the mass timber market. We have a very strong existing glulam product line in curved beams as well as in industrial beams. But this investment in fabrication is really targeted toward the mass timber market. And every opportunity that we have to capture incremental margin in that segment, we want to capture that. And -- so as we move down this product offering, it's just being able to do a certain level of fabrication on those beams that are going into a mass timber project. And there's quite a nice incremental margin there that we're able to capture. So relatively short payback. We've added a couple of very strong technical resources to our team, and we're seeing some really nice uptick in our ability to provide a fabricated beam with all the installation hardware into some very unique projects that are very, very profitable. So again, we're -- it's a phased approach. It's a modest investment and it's all focused on capturing that incremental margin in the supply chain. Operator: This concludes the question-and-answer session. I'd like to turn the conference back over to Mr. Hofer for any closing remarks. . J. Hofer: Well, thanks, everyone, for joining our call today. We appreciate your continued interest in our company, and we look forward to our next call in May. Have a great day. Operator: Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.
Operator: Good afternoon, ladies and gentlemen, and thank you for joining mBank's conference call covering Q4 and full year 2025 results. Joining us for the presentation are Cezary Kocik, Chief Executive Officer; and Pascal Ruhland, Chief Financial Officer, who will walk you through the group's financial and business performance. Following the presentation, we will move to the Q&A session, which will be joined by Marek Lusztyn, Chief Risk Officer; and Marcin Mazurek, Chief Economist. So now I would like to hand over to Cezary Kocik, CEO of mBank. Cezary Kocik: Good afternoon, ladies and gentlemen. Welcome to our conference call for Q4 financial results. In today's presentation, I would like to walk you through our outstanding results in 2025. While Pascal will discuss the results for the fourth quarter and outlook for 2026. 2025 was a year of a strong performance across all key dimensions. Our 4 major developments that I would like to focus on: First, we achieved faster than the market growth of business volume, which allow us to further strengthen our market position. The expansion of the loan portfolio was driven mainly by a very strong acceleration in loans -- mortgage loan sales, while on the liability side, we recorded a significant increase in deposits, supported by a stable inflow to transactional accounts. As a result, both loans and the deposit base increased at double-digit rate, 10% for loans and 14% for deposits, clearly outpacing the market and translating into market share gain. Second, 2025 was the best financial year in mBank history with a net profit of PLN 3.5 billion. We also delivered profit before the tax, exceeding the level of PLN 5 billion, supported by record total revenue of PLN 12.4 billion. Importantly, the revenue growth by 12% was achieved, thanks to higher net interest income despite interest rate cuts during the year. Net fee income also contributed positively. This was reflected in our material improvement in return on tangible equity, which increased to over 20%. It confirms the high quality and sustainability of our earnings. Third, in 2025, we continue our efforts to strengthen our capital base. mBank's own funds increased by 19% year-on-year, reaching over PLN 20 billion. This growth was driven primarily by a full earnings retention, which allow us to organically build capital to pave the way for continued growth. In 2024, we were the first bank that executed the broadly distributed AT1 capital bonds out of Poland. In 2025, we are again in the forefront of the market, being the first to issue euro-denominated Tier 2 instruments from Poland. Consequently, our capital ratio remains safely above the regulatory requirement, Tier 1 ratio exceeding the minimum by 4.3 percentage points. Finally, we made a very strong progress in reducing legal risk related to Swiss franc portfolio. We continue to keep a very strong pace of settlements with Swiss franc borrowers as this remained our key priority. The number of concluded settlements increased by 31% year-on-year, reaching more than 32,000 cases. At the same time, we observed a consistent downward trend in the new and pending court cases. It led to a lower cost of legal risk related to Swiss franc portfolio of PLN 2 billion, less than half of the amount booked in 2024. We are clearly on the right track to close this topic very soon. I'm also very proud of the progress that we are making in our digital journey. In 2025, we introduced a number of new solutions for clients. I will mention 2 of them, digital mortgage and the smart payments ring. In 2025, we completed 2 phases of the digital mortgage rollout. Initially, we enable our existing clients to refinance their mortgage loans from other banks. In the second phase, the offering was further expanded to include more complex scenarios such as financing purchases on the secondary market. Importantly, the entire process is conducted end-to-end in the mobile app with credit decision available in only 15 minutes. Moreover, mBank was the first bank globally to introduce smart payment. The device was developed in a cooperation with NiceBoy and Mastercard. It combines contactless payment with health and activity tracking, supporting our broader focus on clients' financial and physical well-being. In line with our 2026-2030 strategy, full speed ahead, we aim to achieve market shares exceeding 10% in key products by 2030. In household zones, our market share increased from 7.8% at the end of 2024 to 8% in December 2025. If we focus specifically on the mortgage loan, the increase is even more pronounced. Our share moved from 8.4% to 8.7%, even though our FX mortgage portfolio was shrinking fast. In household deposit, we also improved our position, increasing our market shares to 8.6%. It was driven mainly by strong inflows into current accounts as we are a truly transactional bank. Our market share in loans to enterprises remained stable year-on-year at 8.1% despite higher leverage during the year. The corporate portfolio decreased in December as a result of lower utilization of the current financing by our corporate clients, the trend we observed every year. What is more in Q4, we observed a decent level of new loans that was visible in the total engagement but has not yet converted into balance utilization. The drop was only temporary and the level of corporate portfolio is already rising again in January and February. Market share in deposits from enterprise stabilized at 10.3%, remaining close to our strategic threshold. Now look how the sales of loans performed last year. In mortgage lending, it was another record-breaking year for Era. The sales went up 38% year-on-year to PLN 14.7 billion. The increase was recorded in all our markets, Poland, Czech Republic and Slovakia. Fixed rate mortgages dominated new production, accounting from 70% to more than 80% of the monthly sales. At the year-end, fixed rate loans represented 54% of our outstanding PLN mortgage portfolio. Sales of non-mortgage loans grew by 21% to PLN 13.7 billion, another record high number. Finally, in corporate... [Technical Difficulty] So I would like to apologize for our technical problems, which we solved but it took us some time. So I will continue starting from the Slide #10 because I believe that, that was the moment where we will cut it off. So coming back to our presentation, in the mortgage lending, this was another record-breaking year for mBank. The sales went up 38% year-on-year to PLN 14.7 billion. The increase was recorded in all our markets, Poland, Czech Republic and Slovakia. Fixed rate mortgages dominated in production, accounting from 70% to more than 80% of monthly sales. As of the year-end, fixed rate loans represented 54% of our outstanding PLN mortgage portfolio. Sales of non-mortgage loans grew by 21% to PLN 14.7 billion, another record high number. Finally, in corporate lending, we saw a clear acceleration with new sales up by 23% to PLN 49 billion. Growth was balanced across all client segments, supported by higher demand for working capital and investment financing. The strongest momentum came from structured finance, particularly in the renewable energy project, fully aligned with our strategic priorities. The results of our sales effort are reflected in the growth of loan portfolio by over 9% year-on-year our core retail loans, excluding FX mortgage loans expanded by over 13%, driving the market share increase by 0.5 percentage points to 8.1%. Our market share in mortgage loans in zloty increased even more by 0.7 percentage points to 8.9%. At the same time, loans to corporate clients increased by over 7% year-on-year. Now let's have a look at the development of mBank deposits. Total deposit base reached PLN 229 billion, up 14% year-on-year. The main driver was continued inflows into current account and savings, which grew by around 20% year-on-year. This reflects steady growth in active clients and strong transactional activity, giving us a very stable low-cost funding base. Corporate deposits also grew strongly, rising nearly 10% year-on-year, supported by healthy business activity across SME and large corporate clients. As shown on the right, this performance translated into higher market share in household deposits, while in corporate deposits, our market share declined slightly and pricing optimization, but remain safely above the strategic 10% threshold. Let's move to key P&L items for 2025. Total income reached the highest level in mBank's history of almost PLN 12.5 billion, up by nearly 3% year-on-year. Net interest income rose by 4.5%, supported by higher loan and deposit volumes, a larger loan portfolio and effective interest rate management. Our net interest margin declined to 4.05% by 30 basis points compared to 2024. The decrease reflects lower average yields on the loan portfolio and lower rates on Central Bank's placement, driven by interest rate reduction by 175 basis points during 2025. Net fee and commission income increased by 12% year-on-year driven by higher transaction volumes, a growing client base and stronger product sales as well as 2 minor one-offs. Moving on to the costs. Our operating costs increased by around 13% year-on-year. Personnel costs were 10% higher year-on-year. This was a function of employment, which rose by 230 FTEs as well as salary increases introduced in 2024, 2025. Material costs increased by 11% year-on-year, mainly due to higher IT and security expenses related to the project and price increases. Marketing spending also rose because of the communication activities linked to the implementation of our new strategy. Administration increased by 11% year-on-year, driven by our continuous investment into IT software. Additionally in 2025, contribution to bank guarantee fund almost doubled due to end of relief from payments to the deposit guarantee scheme. Turning to the right of the slide, despite the higher cost, we maintained excellent efficiency level. The cost-to-income ratio reached 31%, well within our strategic threshold of 35%, showing that we continue to operate with a very efficient cost structure. Going to our cost of risk. Our cost of risk remains low, reflecting the high quality of our loan portfolio. Loan loss provision were up by nearly 30% year-on-year, mainly due to the strong growth of the portfolio, because of the individual exposure in the corporate portfolio and a very low base in 2024. Our cost of risk in 2025 rose by 58 basis points but remain well below our strategic target of 80 basis points. Strong repayment discipline of our clients supported by a favorable backdrop in -- macro backdrop and NPL sales contributed to a lower NPL ratio of 3.5%. On the light of all these developments mBank profit in 2025 reached PLN 3.5 billion. This is the best ever bottom line of mBank. Losses in the non-core segments fell sharply from PLN 3.4 billion but remain material at PLN 2 billion in 2025. Consequently return on equity reached 17.9% and return on tangible equity, 20.8% in 2025. At the same time, ROTE of the core business excluding FX mortgage segment amounted to 37.2%. This profitability metrics confirm the strong earnings power of mBank and its ability to generate value for shareholders. Last year, again, we made a significant effort to further improve our capital position as a foundation for future growth. In June, we executed first ever broadly distributed euro-denominated T2 transaction from Poland in the amount of EUR 400 million. In October, we continue -- we concluded our fifth synthetic securitization transaction based on the portfolio of PLN 3.8 billion. We also used the ramp-up options in the previous corporate transaction. Moreover, we included our net profit for the first 3 quarters into our own funds. In 2025, our funds increased by almost 19% to PLN 20.7 billion. At the same time, [ CRR ] rose by PLN 24.5 billion driven both by higher business volumes and regulatory changes, including the CRR [indiscernible] ratio. Consequently, our capital ratio decreased with TCR at 16.3%. Capital buffer remains safely above regulatory requirements with 4.7 percent points for CET1 and 4.3 percentage points for [indiscernible] and TCR. Finally, as we already informed 2025 earnings will be retained to support further loan growth. Let's now turn to the summary of legal risk related to FX mortgage loan portfolio. The slide shows the positive trends are continuing. First, the number of settlements rose sharply to over 32,000 at the end of 2025, an increase of 9,500 year-on-year, reflecting our continued focus on settlement as a top priority. Second, Q4 was the eighth consecutive quarter of declining new court cases. Importantly, we saw declines for both active and repaid loans. And third, the number of pending court cases continue to fall across both active and repaid loans. The figure dropped by 63% to less than 6,000. As you can see on Slide 19, we are very successful in reducing the risk related to FX portfolio, both the value as well as the number of active contracts declined significantly. At the end of 2025, only less than 6,000 contracts remained active. I would like to underline that Q4 was the eighth consecutive quarter of declining legal risk cost. In 2025, we booked in total PLN 2 billion of provisions less than half of the amount from 2024. This brought the cumulative FX-related legal risk cost that we booked since 2018 to a massive amount of PLN 18.6 billion. Thanks to our continuous efforts to actively reduce the risk related to this portfolio, we are optimistic about the level of provision in 2026 as they should no longer be a material burden to our results. Before I finish my presentation, let me briefly summarize the key takeaway. We delivered a very strong business growth in line with our strategic target. Our financial performance was outstanding with record high revenues and profit. Our return on tangible equity of 20.8% clearly shows strong profitability and efficient use of capital. We strengthened our capital position, giving us the capacity to continuing growth and gaining market shares in key products. Finally, we made very good progress in reducing Swiss franc related risk, bringing us closer to the end of this long cycle. Altogether this strong performance shows solid momentum to continue executing our full speed ahead strategy. Now I hand over to Pascal. Pascal Ruhland: Thank you so much, Cezary. And so let's move now to the fourth quarter after so many, I would say, extraordinary records. I will follow up on the Q4 because also we have delivered the highest ever quarterly net profit. And I would like to go briefly through the account lines to provide you some insights and afterwards also an outlook for 2026. Let's start with our revenues, which remain above PLN 3 billion in the quarter. Net interest income is just slightly down, reflecting the rate cuts. Respectively, net interest margin, as you can see, is from 3.97% down to 3.74%. The decline came mainly from interest rate environment and this is first, lower average loan yields and second, lower yields on floating rate securities and also our Central Bank exposures. But very important here, if you relate the drop in NII and the net interest margin to the very steep cut of 175 basis points in 2025, you see that this is kind of modest, which confirms our effective interest rate and balance sheet. Net fee and commission income remains solid in Q4. The slight decline quarter-on-quarter was entirely driven by a Q3 one-off of PLN 42 million of Mastercard. If you clean that, most fee categories improved in Q4. Net trading and other income declined by 60%. This decrease was mainly driven by a sharp drop in trading income, reflecting losses on hedge accounting and a weaker result on our equity instruments. Total costs, excluding comp contribution rose 9% quarter-on-quarter. And here, this is kind of seasonal and the main driver here is, as you know, personnel costs because they increased 11%, driven by year-end provisions for holidays, severances, bonus accruals and also higher headcount. Despite that increase, cost-income ratio shows a healthy 33.1%, so below our strategic threshold. Moving to the LLPs. The increased by 25% quarter-on-quarter. Despite this increase, which was mainly driven by the year-end review of the corporate exposure, our cost of risk clearly show a healthy book. The cost of legal risk related to foreign currency index loans was PLN 379 million, so down from PLN 455 million in Q3. This is the eighth consecutive quarter of declining legal risk provisions and Cezary already went into the details. So I just conclude the positive trend is visible. And as a result, we delivered PLN 1.2 billion profit before tax in Q4, while the net profit exceeded PLN 1 billion. So it's more than 30% up quarter-on-quarter. The low Q4 ETR, so effective tax rate of around 14% reflected an increase in deferred tax assets, driven mainly by the revaluation of DPAs following the corporate income tax rate changes. Consequently, in Q4, we see a very strong profitability with an ROE of 19.5% and a return on tangible equity of 22.6%. To conclude this slide, I would like to flag an accounting change we introduced in Q4. We adjusted the booking of FX swap transactions related to corporate clients in 2 P&L line items. It's NII and net trading income. Negative swap points generated by these transactions, roughly around PLN 190 million were reclassified from NII to net trading income, improving NII, therefore, and reducing the net trading income. This adjustment applies only to 2025 as this product was introduced in that year, and we have obviously restated the previous quarters accordingly. Let's move now with this message to the very important expectations of 2026. First, in '26, we will operate, as everyone knows, in a lower interest rate environment following the 175 basis point cuts in 2025 with expectations of further declines. This naturally pressures our net interest income. However, we expect to offset partly this impact and therefore, anticipate a slight reduction in total revenues. Fee and commission income is expected to remain resilient, supported by ongoing portfolio growth, higher client transaction activity and continued expansion of our transactional banking offering. The pace of growth will normalize compared to the exceptionally strong 2025 base, which also included approximately PLN 85 million of one-off items. Second, we expect our cost-to-income ratio to stay below our strategic threshold of 35%. In '26, cost growth will be mainly driven by higher personnel expenses, increased investments in our strategy and security projects and higher EFG contributions. Additionally, as you know, we invest very much in our capital stack, so CapEx on business and regulatory initiatives will result in higher amortization. Third, we anticipate that FX-related legal risk costs will be less of a topic to talk about in 2026. The Swiss franc portfolio, as we have shown, is shrinking steadily and the number of new court cases continues to fall. Finally, we aim to grow market share with business volumes expected to outperform the competition. Our focus will remain on mortgage lending and on corporate financing in growth stream segments where we see strong potential and our clear competitive advantages. So overall, 2026 should be a year of stable financial performance, disciplined cost and risk management and sustained business growth. And now we're looking forward to your questions. Operator: Thank you very much, Cezary and Pascal. Again, apologies for this short break. And now we can start the Q&A session. We covered some of them already in our speech, but I will read all the questions we received. So the first one is about our tax. What part of the DTA of PLN 118 million created in 2025 falls on corporate income tax? Pascal Ruhland: So I'm taking the question. So with respect to the corporate income tax change, we have a revaluation of the deferred tax assets, which had purely on that matter, PLN 118 million effect. So anything is related to the income tax rate change. But there are 2 other positions also which currently support our Q4 number, just to complete the picture so that you can get the numbers correct. We have recognition of the R&D tax relief also in Q4, which is amounts to PLN 36 million and has also a positive impact on our tax line. And also we have higher DTAs from a larger number of settlements, which are reflected in our model, which also roughly adds up PLN 30 million. And with that, it completes the picture. Operator: What is the level of the free loan sanction provision and provision for unauthorized transactions? Pascal Ruhland: So as we normally also discussed, we're very much following as everyone else, these 2 matters. And for us, obviously, the risk which is related to those topics is very much in our focus. And currently, we feel very well. Operator: Next, we have a series of questions from Jovan. So I will read them one by one. Is the end of extraordinary effects on the regulatory capital ratio? Or should we expect something in 2026? Marek Lusztyn: So basically, this is largely the end of one-offs we have seen in the capital. This was primarily driven by regulatory changes that we have applied at the end of 2025. As far as additional effects affecting capital ratios in 2026, we have to mention that we have received the final decision from the supervisory authorities on model changes related to the implementation of so-called definition of defaults. And the way we calculate days past the [indiscernible] implementation of that is done for the first quarter of 2026. We can't estimate that further impact on risk-weighted assets in the range of up to 5% of the overall risk-weighted assets. And beyond that, at this moment, we see no further regulatory changes to the risk-weighted assets in 2026. Operator: What was the share of refinanced loans in the new housing loan sales in Q4? Cezary Kocik: That was 1-digit number [indiscernible]. Less than 10%. Operator: Reason for minor deceleration in corporate lending in Q4. Already covered by Cezary during the speech or can we add something? Cezary Kocik: We see a very positive trend in new loan agreements. And as I mentioned, it is still not visible in balance sheet at the end of the year, but I believe that we will give you much more detail after the Q1 results because that it should be in majority reflected in our balance sheet at the time. Operator: Okay. Now the question to Marcin. Can you remind us what was the reason for a sharp downward revision of the base rate outlook by 100 bps to the terminal rate of 3% shortly after the CMD. Marcin Mazurek: So thank you. Let me cast some light on this because, well at the time of CMD, we were believing that as economy is reaccelerating, we would see a somewhat higher rate than expected by the consensus. Very shortly, we believe that with economy gaining momentum, we also believe that labor market is going to gain momentum and wages are going to stop falling in a dynamic way. So we thought that the path of inflation in 2026 would be rather upward slow peak. After that, we had a series of downside surprises. We had the new data with respect to labor demand. We had the new data of CPI regarding services and goods inflation. And we saw that the momentum is somewhere else. So basically, we've seen that -- well, the second China shock spinning over to a large extent to the tradables prices. Right now, this pricing goes at around minus 5%, 7% in CPI. And also, we saw that despite upswing in economic activity, we are seeing the collapse or the decrease in labor demand. So there is some kind of automation going on. So it rather speaks in favor of continuation of falling growth dynamics going forward. In this vein, we believe right now that inflation will be very, very low in 2026. Therefore, we expect rates to be at 3% at the end of the year. The consensus started the year at between 3.5%, 3.75%. Right now, the market pricing is at around 3.25%. So it moved to our direction. Operator: And the last question of Jovan, net interest margin NII outlook for 2026, I think also already covered by Pascal during his [indiscernible]. Pascal Ruhland: Maybe on the NII, as we guided lower than 2025 due to the interest rate cuts, but it will be compensated partly by our volume gains, which will then support our NII forward-looking. I just want to reiterate that on the data on NII, which is obviously the main driver for all of us to see how sensitive we are for further rate cuts and relates to what Marcin was saying, are we closer to the 3% or as the market consensus was 3.5% that we have not moved too much by end of the year because currently, we see NII on our side of 100 basis points rate cut on PLN 680 million. And as you know, while we work in various currencies, just a bit more than 50% are related to the real Polish zloty and there we are talking a bit more than PLN 400 million. So that stays on our side, which if you compare it to the overall contribution to the bank via the last 12 months is a very digestible number. And also was shown in the Q4 results, as I was mentioning it, that we are very resilient currently with respect to the cuts. Operator: Thank you. And would you like to add anything on our current guidance for Swiss franc cost in 2026? Pascal Ruhland: No, we have said that the trends are in our favor. Obviously, that is the most important thing because it's based on a model. And therefore, we are very confident that the most is behind us and that we have seen in 2025, the last significant year. Operator: Can you explain the CET1 move quarter-on-quarter? Marek Lusztyn: Yes. So that CET1 quarter-on-quarter is basically increased due to the application of the new approach to the population of risk that includes capital for the -- losses due to the [ Swiss francs ] primarily driven by this operational risk recalculation by [ PLN 5.5 billion ], and that was driving the common equity by PLN 0.6 billion. The increase to the operational risk calculation follow the publication of the final European [indiscernible] regulatory technical standards regarding the operational risk. This impact is expected to decline in the following years. We expect this to decrease by PLN 1.5 billion in 2026 or -- but this is something that we phase out completely on the time. Operator: A question on the tax expense which is already covered. So, another question, can you provide details why NPS increased in Q4 and what drove the increase in Stage 2 loans in Q4? Marek Lusztyn: Yes, thank you for the question. So on the NPS increase there are 2 drivers. The first one is we have had isolated a number of defaults in [ group-wise ] portfolio, few clients from household appliances, real estate and energy industries, which we consider one-off events. And at the same time, further increasing the way we approach the credits, we have implemented a collective staging that covers some aspects of climate risk assessment. And that resulted in a transfer from Stage 1 to Stage 2 of approximately PLN 4 billion of exposure that was primarily seen within the corporation. Operator: And the last question from Kamil Stolarski, would you reiterate revenue and cost growth guidance for 2026, given in the strategy presentation. Pascal Ruhland: So in the revenues we have today more or less we guided because we said 2026 will be slightly below 2025. And on the cost, there is no major reguidance. Here, we expect, as we have seen it in our strategy presentation to continue the investment cycle, which is very important for us because we want to deliver value to our clients with state-of-the-art technology and therefore, also state-of-the-art products, and that is our major aim in spending the cost the right way. Operator: Thank you very much. This was the last question. So thank you for the attention and questions, and see you in -- at the end of April. Pascal Ruhland: Thank you so much. Cezary Kocik: Thank you.
Operator: Thank you for standing by. This is the conference operator. Welcome to the Finning International Inc. Fourth Quarter 2025 Investor Call and Webcast. [Operator Instructions] And the conference is being recorded. [Operator Instructions] I would now like to turn the conference over to David Primrose, Executive Vice President and Chief Financial Officer. Please go ahead. David F. Primrose: Thank you, operator. Good morning, everyone, and welcome to Finning's Fourth Quarter Earnings Call. Joining me on today's call is Kevin Parkes, our President and CEO. Following our remarks, we will open the line to questions. This call is being webcast on the Investor Relations section of finning.com. We have also provided a set of slides on our website that we will reference and an audio file of this call and the accompanying slides will be archived. Before I turn it over to Kevin, I want to remind everyone that some of the statements provided during this call are forward-looking. Please refer to Slides 10 and 11 for important disclosures about forward-looking information as well as currency and specified financial measures, including non-GAAP financial measures. Please note that forward-looking information is subject to risks, uncertainties and other factors as discussed in our annual information form under Key Business Risks and in our MD&A under Risk Factors and Management and forward-looking information disclaimer. Please treat this information with caution as our actual results could differ materially from current expectations. In addition, unless otherwise noted, this presentation reflects the results of continuing operations only. Kevin, over to you. Kevin Parkes: Thank you, Dave, and good morning, everyone. We appreciate you taking the time to join us on the call today. 2025 was another strong year for Finning. I am grateful for our team's hard work and their disciplined execution of our strategy. We are proud of our many accomplishments that we achieved together. We grew our business in all 3 regions. We built our backlog by 20% since the end of 2024 and simplified our operations to further focus on growth in our Caterpillar dealerships. This included restructuring areas of our back office and head office and completing the sale of 4Refuel. We continue to grow our product support revenues in a dynamic business environment, where we strive to control what we can, supporting our customers with their toughest challenges and earning their loyalty from them in the long term. Our earnings are more resilient, and our cost and capital position has significantly improved, fundamentally enhancing the long-term earnings capacity and return profile of our business in all market conditions. We continue to be well positioned to capture opportunities for further product support growth driven by equipment population growth and transformational growth in power, energy, rental and used equipment. As with last quarter, my prepared remarks will concentrate on the long term. I will also provide a brief update on our 2023 Investor Day objectives that we set out to achieve by the end of the year 2025. I'll then turn the call over to Dave, who will provide details on our results in the quarter. Starting on Slide 2. The strong momentum we developed in the first 9 months of the year continued through the balance of the year, with revenues up 7% to $10.6 billion in 2025. We also continued to building our backlog to a record $3.1 billion at the end of the year, while at the same time achieving record new equipment revenue. Our product support revenue continued its steady growth trajectory, up 8% in 2025 to almost $6 billion with strong activity levels in mining in Canada and South America growing at 10% and 5% year-over-year, respectively. Our strategy remains consistent. We are as focused as ever on growing rebuilds, contracted service, and we have recently launched a services commitment in Canada and improving our responsiveness and building loyalty. All of this means building our technician base where we added 225 new technicians across our region and expanded our workshop capacity to enable us to better serve our customers and capture growing product support opportunity. This is all, of course, enabled by enhanced digital and technology capabilities. We are very pleased with the resilience and growth of our earnings year-over-year. Adjusted earnings per share increased 14% in 2025 and our SG&A margin is now 15%. The lower fixed cost base of our business will continue to support a more resilient earnings profile in the future. Our consistent focus on invested capital velocity continued all year, with our invested capital balance ending the year, only slightly higher than the prior year, while growing our revenue by 7%. As we noted on our last call, we expected free cash flow to inflect positive in Q4, and we are pleased to have generated nearly $550 million of free cash flow during the year. From a sustainable growth perspective, we continue to see strong growth in our Power and Energy business as well as some recovery of rental activity in Canada. Our Power and Energy backlog at the end of December remains strong at $1 billion, up 25% from December 2024 and continues to reflect a diverse mix of prime power packages, oil and gas-related equipment orders and data center standby packages to be delivered through 2027. We are pleased to start to see the recovery in construction sector in Canada, with rental revenues up 9%. We believe this market remains attractive, and we are committed to enhancing our rental business in the long term. Turning to Slide 3. We are proud of the results we achieved by executing our strategy outlined at our Investor Day in 2023. As I mentioned earlier, product support revenues are nearing $6 billion from $5.2 billion on a trailing 12-month basis at the end of Q2 2023 just before our Investor Day. We have always remained constructive on our product support growth prospects despite some market dynamics that were out of our control, believe in, we have the opportunity to win share by supporting our customers to achieve their goals. Our consistent focus on providing customers with comprehensive maintenance, repair and rebuild options, coupled with a growing technician base has positioned us well to continue to grow this important segment. The recovery in product support in 2025 supports our conviction to continue to drive product support. From a full cycle resilience perspective, we are extremely pleased to have delivered all of our objectives. We moved our invested capital turns into our target range of 2.3 to 2.5x. We lowered SG&A margin to 15%, well below our target of 17% and successfully executed a number of capital optimization initiatives, which we previously highlighted when we announced the 4Refuel sale. In terms of sustainable growth, we have also made solid progress. We are participating more in the used equipment market with used equipment revenues up 31% since Investor Day. And our Power and Energy business continues to perform strongly with revenues up 41% since Q2 2023, and our backlog is up over 70%. The rental market opportunity remains large, and we will continue to invest carefully into this market as the outlook improves. All of our initiatives and results have driven returns to a higher and more sustainable level within our 18% to 25% adjusted return on invested capital target range in all quarters but one since the Investor Day. In 2026, we will continue to execute on our strategy that we outlined in our 2023 Investor Day, as there remains meaningful opportunity in each of our 3 strategic priorities. With that, I'll hand the call back to Dave, who will provide more detail on our results in the quarter and our outlook. David F. Primrose: Thank you, Kevin. I'll now turn to Slide 4. Our Q4 revenue of $2.7 billion was up 6% compared to Q4 2024, higher across all regions, driven by strong performance in product support and new equipment. We are pleased with another quarter of consistent strategy execution alongside the positive business momentum with steady mining, improving construction and encouraging power and energy activities. Our fourth quarter earnings were adjusted for a $22 million write-off related to the decommissioning of certain technology assets as we evaluate the business needs of our operations and align with Caterpillar's digital and technology strategy and solutions. Excluding the write-off, adjusted EBIT was down 2% from Q4 '24. LTIP expense was $21 million this quarter or $0.12 per share of earnings, driven by the continued strong share price appreciation whereas in Q4 '24, LTIP was a recovery of $3 million or $0.02 of earnings per share benefit. Adjusted EPS of $1 was up 3% from Q4 '24 EPS, primarily reflecting higher earnings in Canada and the benefit of share repurchases throughout 2025. Meanwhile, our balance sheet remained healthy, and we continued to strengthen our financial position. We generated strong free cash flow of $642 million this quarter, and our net debt to adjusted EBITDA ratio was reduced to 1.2x compared to 1.7x at the end of 2024. Our working capital velocity also continued to improve. We thought our invested capital turns reached 2.34x, with an improvement in working capital balances. Our consolidated adjusted return on invested capital this quarter was 19.2%, up 130 basis points from Q4 last year, reflecting increased capital velocity and improved earnings. On Slide 5, we show changes in our revenue by line of business compared to Q4 '24 and the composition of our equipment backlog by market sector. New equipment sales were up 9%, driven by higher deliveries in construction and power and energy across all regions. Used equipment sales were down 23%. Q4 '24 had large conversions of mining rental equipment with purchase options in Canada that did not repeat this quarter. Product support revenue was up 8%, primarily driven by strong mining activity in Canada. Our equipment backlog reached a new record of $3.1 billion at the end of December, up 20% from last December and up 9% from September 2025, reflecting order intake outpacing delivery across all market sectors. Order intake continued to be strong in Canada this quarter, up nearly 50% from Q4 '24, driven by all market segments, particularly in mining. In Canada, we secured multiple large orders from key mining customers, and we currently have over 50 ultra-class trucks in addition to over 20 other large mining trucks in our backlog in Canada. In the Power and Energy sector, our backlog was supported by a large data center order from a customer in the U.K. and Ireland as well as multiple orders for gas compression equipment in Canada. Overall, our current backlog continues to provide confidence for our business in terms of activity levels and future product support opportunities. Turning to EBIT performance on Slide 6. Gross profit margin was down 70 basis points, primarily driven by lower product support margins. SG&A margin was down 10 basis points to 15.4% in the quarter, reflecting operating leverage offset by higher LTIP expense, which had approximately an 80 basis point impact on the Q4 2025 SG&A margin. Looking ahead, we will continue to seek opportunities to reduce overheads, improve efficiency and operating leverage and build more resilience to drive higher earnings capacity. Q4 adjusted EBIT margin was 10.4% in South America, 8.1% in Canada and 4.6% in the U.K. and Ireland. Moving to our South American results and outlook, which are summarized on Slide 7. In functional currency, new equipment sales were up 4% from Q4 last year driven by strong growth in the construction and power and energy sectors, partially offset by lower sales in the mining sector. Product support revenue was up 5%, driven by higher activities in the construction sector in Chile. Adjusted EBIT margin of 10.4% was down 50 basis points from Q4 '24, reflecting lower product support margins, partially offset by lower SG&A margin. Adjusted return on invested capital was 24.5%, down 140 basis points due to slightly lower trailing 12-month profitability. In Chile, our outlook for the longer term remains positive, underpinned by growing global demand for copper, strong copper prices and customer confidence to invest in brownfield and greenfield projects. We are seeing a broad-based level of quoting, tender and award activity for mining equipment, product support and technology solutions. However, in the near term, we expect some moderation in activity levels as customers adjust their mine plans and existing equipment fleets. We also continue to expect some challenges in the labor market as demand for skilled labor remains high. In the Chilean construction sector, we continue to see a healthy demand from large contractors supporting mining operations and we expect infrastructure construction activity to remain steady. In the power and energy sector, activity remains strong in the industrial and data center markets. In Argentina, we continue to closely monitor the government's rules and policies, and we are carefully positioning our business to capture growth opportunities, particularly in the oil and gas and mining sectors. We have recently seen an increase in quoting activity for equipment, and we expect activity levels to improve in the coming years, subject to an improving investment environment. Now turning to Canada on Slide 8. New equipment sales were up 2% from Q4 '24, primarily driven by stronger sales in the construction sector. Used equipment sales were down 42% due to large mining conversions of rental with purchase options in Q4 '24. Rental revenue was up 10% on improved market conditions. Product support revenue was up 12%, driven by strong demand from mining customers. Adjusted EBIT margin of 8.1% was up 60 basis points from Q4 '24, driven primarily by lower SG&A margin and a higher proportion of product support in the revenue mix. Adjusted return on invested capital from continuing operations of 18.2% improved 280 basis points, driven by both improved profitability and higher invested capital turns as we focused on working capital velocity through operational improvements. Our outlook for Western Canada is improving. We are encouraged by recent announcements regarding the potential to accelerate resource development and infrastructure project activity but we remain cautious with respect to the exact timing and magnitude. Construction sector activity in general is moderate, but is showing signs of improvement. We expect steady activity levels in our mining business as customers renew, maintain and rebuild aging equipment fleets. In the power and energy sector, activity remained steady in the oil and gas market, with longer-term potential in the data center market. And finally, we remain focused on managing costs and invested capital levels while driving productivity improvements. Please turn to Slide 9 for our results on the U.K. and Ireland. In functional currency, new equipment sales were up 21% from Q4 '24, primarily driven by strong power and energy project deliveries. Product support revenue was flat as lower machine utilization in the construction sector was offset by strong activity in power and energy. Adjusted EBIT margin of 4.6% was down 120 basis points from Q4 '24, primarily driven by the higher proportion of new equipment. Adjusted return on invested capital of 20.1% was up 510 basis points year-over-year, primarily reflecting the optimization of pension assets. In terms of outlook, we expect demand for new construction equipment in the U.K. and Ireland to remain soft, in line with the low projected GDP growth. We continue to expect a growing contribution from Power and Energy, driven by our strategic execution and healthy demand for both primary and backup power generation, particularly in the data center market. Our product support business is expected to remain stable. Before I turn it back to Kevin, I would like to provide a quick update on our 2026 capital expenditure plans. Following a slower-than-expected construction market in Canada in 2024 and '25, we expect to build our rental fleet to capture opportunities as the market improves and continue to thoughtfully execute our strategic pillar of sustainable growth. We also expect to make selected investments in our capacity and capabilities to drive operational improvement and efficiency including improving our warehouse operations in Edmonton, implementing case and workforce management in Canada, and focused investments in South America and the U.K. to better serve our customers. We expect our 2026 net capital and net rental fleet expenditures to be greater than $350 million. I will now turn it back to Kevin for some closing remarks. Kevin Parkes: Thank you, Dave. We are really pleased with the continued execution by our teams in all regions, and we continue to build a more resilient and sustainably growing business that can produce strong returns in all market conditions. We're constructive on the long-term outlook in all of our markets. We're particularly pleased with the business in Canada, the core business strength led by mining, encouraging outlook for CI and exciting opportunities for core population growth in Power Systems. Our backlog has grown more than 2x since this time last year in all 3 segments. We delivered 95 new trucks over the last 2 years, and we have more than 50 in backlog. Chile is a more dynamic environment with lots going on. And given the growth we've seen over the past 2 years where we delivered 132 new trucks and we have 16 more in backlog, we do see a period of moderation as fleets get reorganized ahead of what we hope to be an encouraging second half of the decade as evidenced by the strong quoting outlook we have today. We're committed to our strategy, focused on growth, earnings expansion and a strong return on invested capital. This is evidenced by our performance in 2025 with 7% revenue growth, 8% product support growth, 14% EPS growth, all of that from our core dealership operations. With that, I'll hand you back to the operator for questions. Operator: [Operator Instructions] The first question today comes from Krista Friesen with CIBC. Krista Friesen: Maybe just to follow up on your last comment there about some of the softness in South America. Can you speak to how you're thinking about near term? Is that next couple of quarters? Or are you thinking over the next year or 2? And then additionally, how you think this impacts product support in the region? Kevin Parkes: Yes. I mean I don't think we call it softness, Krista. There's still a lot of activity, but Chile copper mining production is growing. What we've seen is a period of real success in our business there and some substantial significant truck population deliveries. As I mentioned, 132 new trucks over the last 2 years. That's more than one a week. And we've seen those trucks be added to the fleet. And I think miners now, as they continue to strive for lowering the cost of production and productivity, they're putting those fleets to good use now, and there is some retirement of some of the older fleets now. Some of those are retired and stay in region. Some of those are retired and leave the region. And so that's the dynamism that we're referring to. We don't see any inherent, so there may be some changes to product support over the near-term as trucks get retired and the fleets get realigned. But the production outlook for Chile is still strong. And we do have 16 trucks in backlog that are going to be added to the fleet, added to the population this year. As I said previously, we have multiples of that backlog in the pipeline for good quality in activity, including in Argentina, which could be an offset to some of the Chilean dynamism as well. So I think that it's not softness in the market. It's just a reorganization of the fleets there. And we remain very confident that we've got a good population of trucks there. We also remain very focused as we did in the oil sands for the last couple of years on supporting our customers with their productivity and utilization efforts and ultimately lowering their cost to serve, which ultimately grows market share in the long term. David F. Primrose: I would just add that Kevin said -- I mean, with the medium term, we're very bullish on South American copper, very positive outlook. Quoting activity remains very active in both Chile and now Argentina, but those cycle times can be longer for awards. And in the near term, like Kevin said, there's just some mine plan adjustments, fleet adjustments, but we're still going to deliver a number of new ultra-class trucks into Chile this year as well as very active tenders for future, including Argentina. Krista Friesen: Appreciate the color there. Just a second one from me. Can you share if any conversations that you might be having at this point on being a prime power source provider for data centers in Alberta or Canada in general? Kevin Parkes: Yes. I mean, we can't provide any specifics, Krista. But I can tell you, I actually had a meeting on Friday about this. And Alberta, I think they've had more than 20 gigawatts of power requests going into the power providers. And I think just over 1 gigawatts is being allocated so far. So the most encouraging part of that, as you mentioned, Krista, is the prime power opportunity. So it's kind of come to Alberta, build a data center, but bring your own power. And that being prime power is a fantastic opportunity for us. And if you look at some of the recent releases from Caterpillar, you've seen more evidence of natural gas prime power for data centers. Given Alberta has a plentiful supply of natural gas and a good pipeline network, we're really excited. I'm not saying we're encouraged. We're excited about that opportunity, particularly, as you mentioned, given its prime power. We're working on one specific opportunity at the moment, but it's too early to give any more details on that. But hopefully, you can tell in my voice that there's a level of excitement around that opportunity, particularly for our business in Alberta. Operator: The next question comes from Cherilyn Radbourne with TD Securities. Cherilyn Radbourne: It sounds like there's a lot of upside optionality in Argentina if things play out in a positive way. Can you talk about how you're positioning the company for those potential mining opportunities and when you think more of those might materialize as bookings and backlog? Kevin Parkes: Yes, sure. Thanks, Cherilyn, it's a great question. And it's going to be a big effort from the team to get organized for what we do believe will be a substantial opportunity in Argentina. And we know that Argentina hasn't been the easiest country to operate in over the years. And so we remain really thoughtful about how we organize. So it's a real -- we're really optimistic about the opportunities. And some of those opportunities are really coming to life now. And -- but we remain thoughtful about investing behind the capabilities and capacities because we need to -- when you're running large fleets of mining trucks, you need capacity capabilities, you need inventory, you need technicians, trained technicians and management and supervision. But we don't want to get ahead of ourselves. So it is a tricky planning process, which I think is what you're referring to. But the team are all over it. I would say it's one of Juan Pablo, who runs our South American business. It's one of his top 3 priorities for this year, organizing an enablement in Argentina. And to the last part of your question, I'm really confident that you'll start to see some of that activity show up in our backlog and order intake through the course of this year. Cherilyn Radbourne: Great. My second question is you've had 2 strong quarters of JV earnings from Pipeline International, which I assume is outside of Canada. So maybe you can give us some color on that? Based on what is developing in Canada, what do you think is the likelihood of a pipeline in Western Canada going forward or an incremental pipeline in Western Canada going forward? Kevin Parkes: Yes. So I mean pipeline machinery is a fantastic JV that we're involved in. And the beauty of that business is that we are exposed to opportunities outside of our territory. And they extend to South America and the Middle East in some cases. And I would say, since I've been in Canada, I always look at the ratio of the revenues in that business and how they swing between the different geographic jurisdictions. And I would say that there's a renewed optimism in the U.S., as you would expect, from the new administration's focus on natural resources and oil and gas production. So that's why that business is seeing the permitting and licensing of those pipelines is way more proactive than it has been in the past. Some challenges still remain there, but that business is really optimistic. But I would say the opportunities in Canada are very healthy. So we see it through PLM, our pipeline business, but we also see it through our core business. And I would say we've had a really encouraging start here in Canada in our core business that -- fundamentally, a lot of that business is around energy infrastructure and pipelines. And so I think we'd be encouraged in both the U.S. and in Canada around pipelines. And as it relates to the big question around an incremental pipeline in Canada, it's not something that's in our immediate plans right now. And I think it takes a while to work through the system. I think we have -- my view is there's a lot of opportunity to grow. I don't think that the lack of that pipeline inhibits oil production growth in Canada and Alberta in the near term, but it certainly helps realize the full potential of the region for both the region and for Canada. And so we'd be a big supporter of that work. But like I say, I don't think that it will happen in the near term, and I don't think we need it in our near-term plans to grow. But accessing -- it feels like Canada is doing a great job to look to diversify its revenue streams from oil and gas. But we need infrastructure to be able to access those markets, which is the big question right now. And I guess the big debate between Alberta and Ottawa. Operator: The next question comes from Sabahat Khan with RBC Capital Markets. Sabahat Khan: Just, I guess, on the product support side, just a 2-part question there. There's a lot of installed fleet that went out into the market in the last 3, 4 years post the pandemic. Just want to understand where those machines are on the product support life cycle are you starting to see some initial work? And then there's also a push a few years ago to get a bit more into construction product support. Just want to get an update on where those efforts are. Kevin Parkes: Yes. So I would say that the installed base, as I mentioned previously, nearly a truck a week in Canada for the last 2 years and more than a truck a week in South America over the last 2 years, but some of those were delivered last year. So in terms of -- we typically see a substantial parts of service increase as they hit their first components, which will be after 2 years. So I would say that we're probably running into some of those right now, but obviously, they're distributed over deliveries over the last 2 years. So I mean it's hard to pinpoint when you see that inflection point. And I wouldn't focus too much on that per se, more so that those trucks have been added to the population and they'll be there for a decade or more, right? And so that's the opportunity. And I would say in Canada, we are seeing that the trucks that are added in Canada, the majority of those are incremental trucks as haul distances increase, and we're still rebuilding the oldest truck. We will add our 500 truck to population at some point in this year, which we're really excited about. In South America, I think those trucks are a little -- they're on the same timeline, but remember, they're electric drive trucks, so less components. But again, there's 132 trucks in population, which we articulated at our Investor Day. And I would encourage you to think about not specifically what point in time they start producing product support. There's a certainty that they will produce product support, and we'll be right there to support our customers and capture it. In terms of CI, I think the effort has been there for 2, 3 years on CI, on construction, sorry, product support growth. The challenge we've had then more so is just the softness in the market. So I think we've been well organized and ready, and then we've built capabilities in that regard. We're adding a lot of technicians right now. The Canadian business is super focused on growing the labor force. And I mentioned the service commitment in my remarks. That's our commitment to grow labor. And so I would say we saw that kind of inflect in the post-summer last year. The comments will be a little easier for a while here, but I think we've got some real encouragement in construction product support. In Chile, it's been strong. We've grown double-digit for, I think, 6 years on the balance consecutively. So that strength has always been there in Chile, but it's a smaller part of the business, so you don't see it so much. And then similarly to Canada and the U.K., the softer market hasn't helped, but we see some encouragement there. We're probably slightly behind Canada in that inflection point. Sabahat Khan: Great. And then just one follow-up on Argentina. It sounds like in the commentary, that is an emerging opportunity, obviously, a market that's evolving. Sort of how are you balancing positioning yourself and the CAP products to take advantage of the growing mining opportunity, but sort of keeping in mind just a volatile backdrop that's been in the market and just being careful of how that could evolve? Just additional color on that market, please. Kevin Parkes: Is that for Argentina? Is that for that question? Sabahat Khan: Yes, on Argentina, yes. Sorry, I missed. Kevin Parkes: Yes. Like I said to, Cherilyn, similarly, I think we are acutely aware of some of the challenges in the past and the volatility. We are supporting major customers in the area, major international customers. We're obviously closer to the government and closer to the conversations. We're encouraged about the general Argentina outlook. And we can clearly see the investment through the RIGI process, people investing behind that. Our focus is to invest behind those and work hand-in-hand with those blue-chip international companies to make sure that we can demonstrate to them that when we're ready to go, we're ready, we're a good partner. We can provide the services that they require to be successful. And as I said to Cherilyn, we're -- that is gathering momentum right now. And I'd like to think that we'd have some encouraging updates through the course of this year. David F. Primrose: I'll just add to that. We have existing facilities in the region. So most of the requirement for us will be investing in people and tooling on-site and things like that. And the other thing is we're working with large, global, sophisticated customers. So we're structuring those discussions that work well for both of us and reduce risk for both of us. Operator: The next question comes from Devin Dodge with BMO Capital Markets. Devin Dodge: So I want to start with a question on Chile. Look, the elections last year, I think they seem to go pretty much as expected. But just wondering if you see many puts and takes for your business, either from a commercial perspective or customers may be more or less willing to invest? And then on the labor side and if you expect changes in immigration policy to exacerbate some of the already job tightness down there? Kevin Parkes: They are good questions, Devin, I would say. So let me try and answer each one of those. So in terms of the elections, they did go I guess, as expected as well as you can predict elections these days. But I'd say, they did go as expected. And generally, we would be encouraged by the direction of travel with the government and for business in general. And for mining production, you have to believe that it's a more constructive administration for resource development. So I think that's a big plus in terms of permitting and support for the mining industry. In terms of the puts and takes, it's too early to say. They're not even in the office yet. But you would say that coming to your third point around labor relations, you would expect that notwithstanding their commitments to strong immigration policies and lowering crime. They still need to support the -- one of the biggest drivers of their economy, which is copper mining. I would say there are 2 opportunities there. One is in the permitting and the support for expediting permitting processes. The second is having skilled labor and enough labor to execute on the programs. And the third is given companies like ours, good confidence and line of sight so we can invest behind that and make sure we're ready to go when the new mines or the brownfield expansions are permitted. So it's too early to say in terms of detailed puts and takes, but I would say it's an encouraging direction of trouble for the administration in Chile. There's encouraging sentiment from customers and from major producers, Codelco, for example, in terms of their outlook. And so we would hope that things will get a little easier in the country in terms of executing on these activities and major projects. And so I would hope that they will help with the challenges of labor in terms of both investing in growing labor but also helping with labor relations. David F. Primrose: I think it's fair to say for both us and our customers in the region, Bolivia, Argentina, and Chile, it's all net positive is the sentiment, I would say. Devin Dodge: Okay. Good color. Okay. Second question, just wondering if you can give an update on the rental business, specifically how utilization has trended across the various fleets? And are there -- there were some comments about rental CapEx stepping up in 2026. Just wondering if you could provide some color on which fleets are likely to see the most investments this year? Kevin Parkes: Yes. Sure, Devin. And so just to start at the top of the that discussion. On rental, as you know, is a secular trend. You're seeing it all over the world, but specifically in North America. And we are committed to growing and investing behind that secular trend. And we've said that since the Investor Day, it was part of our sustainable growth strategy. The reason why we haven't necessarily invested behind it as much as we could have is because of the construction outlook. It just wasn't the market there to get excited about investing behind. We're seeing that pivot a little bit or inflect and we have a more encouraging outlook for this year in Canada. And so that's why you see a stronger investment profile, particularly in rental services, which is the smaller side of our business, the smaller machine side of the business. So particularly in that area, and there might be even a little bit of catch-up in there as the market inflects. Equally, we're excited about the opportunities within power rental in Canada and in the U.K. And so you'll see some more investment going into those areas. The most important thing to mention is that it will still remain to be a very thoughtful approach. We have a super robust review and approval process. So we'll invest with the market and beyond the market to a certain degree where we're confident our capabilities can win market share. But we've got a very thoughtful process, and we'll walk through that as we walk through the year and make sure that we're not getting ahead of ourselves, but we are ambitious in terms of growing market share. And rental revenues were up 9% in Canada last year. Utilization is healthy and we're more optimistic about that this year and even last year. Operator: [Operator Instructions] The next question comes from Maxim Sytchev with National Bank Financial. Maxim Sytchev: I was wondering if it's possible to get a bit more color on product support. And I guess if you can segregate the velocity between kind of parts, labor rates and rebuild penetration? What's kind of happening in these different buckets? Kevin Parkes: Yes, sure. So it's a good question. So product support growth in Canada, specifically, is being driven by the mining sector, more than construction. Power is healthy, but there was a softness towards the end of the year with some of the lower gas oil and gas pricing. But we've seen that start in a pretty encouraging way this year. As I mentioned previously, I mean, to Saba, the construction market has inflected in the fall last year. And so we'd be more encouraged about the construction outlook there. I just go around the regions first, and then I'll talk about the segments. And then in South America, product support is robust. It's not -- wouldn't be growing as fast as it is in Canada right now, but it's the biggest part of our business. But the construction product support has been growing for 6 years consecutively, as I mentioned previously. And the power installed base is very small down there, but it's -- the product support growth rates for power are encouraging, and they're almost like a bonus for that part of the region. And then in the U.K., most of the growth last year was driven by power population that we've built over a number of years, encouraging product support growth in the oil and gas sector actually in the U.K. And then construction, as we mentioned, that's been softer with the softer market. We've got -- we're hopeful that, that will return to growth and be more positive this year. In terms of the key aspects of product support growth, population is the biggest driver, and we continue to see that and the 3.5 -- sorry, the $3.1 billion backlog is evidence that's one of the best leading indicators to future population growth. So I would say that's the key driver. So we got population and then we go utilization, and we're seeing utilization of equipment, particularly in mining, improve, but also in construction. Utilization is different in power because it can be prime power and it's very highly utilized. And then -- but obviously, in data -- in backup power, less so. And then penetration, we continue to focus on penetration, rebuilds being the biggest driver. And I would say our rebuild performance is sustained, and it's demonstrably better than it was pre-pandemic. Our CVA population or contracted service business continues to grow. And particularly in Canada, we have a big opportunity to increase the labor proportion of the service contracted business. So that's exciting. And I think the final one, Max, is just the number of technicians. So we added over 200 technicians last year across the 3 different regions. And we have plans to continue to do that to continue that. We're adding a technician a week in Canada right now, which is, a, encouraging. It's a good indication of the market segment, but it's also a positive statement of intent from the Canadian business in terms of their participation in the labor market. But I would say that -- I would say parts has increased faster than labor, but we're committed to that labor proportion as well. We think it's one of our key differentiators in the market. And attracting technicians in Canada right now, I'm super encouraged about our ability to attract technicians in this marketplace. David F. Primrose: What I would add, Max, is your rebuilds -- Kevin said rebuilds remain very stable. But in mining, in particular, we're seeing very strong product support growth over and above the stable level of rebuilds that we're doing. Maxim Sytchev: Okay. No, that's great to hear. And sorry, just maybe, David, one quick question for you. Given the fact that obviously, top line is growing nicely, et cetera, how should we be thinking about the working capital consumption in 2026? David F. Primrose: Yes. I think you saw that last year, we're willing and wanting to invest in that growth, and we'll continue to do that. There's always some seasonality through the year on construction season and then also -- mining can be very lumpy. But we do feel confident about further growth, and we will make sure we're invested and ready for that. Kevin Parkes: Well, ultimately, Max, that we're committed to our ROIC range that we put out in the Investor Day. And we need to invest behind the growth. And so, as you can invested capital went up slightly, but turns are now into that Investor Day target range of more than 2.3. And that then obviously supports the return on invested capital, and that's the backstop that we talk about all the time at Finning. When we look through the growth opportunities and the opportunity to invest behind the growth, we are always committed to that return on invested capital range. And we examine all opportunities thoroughly when they come across the table. Operator: The next question comes from Carol Adu-Bobie with Scotiabank. Carol Adu-Bobie: This is Carol on for Jonathan Goldman at Scotiabank. And on construction in Canada, you've mentioned several times that you've reached an inflection point. Can you talk about the signs that you're seeing that could potentially drive this higher activity? Kevin Parkes: Yes. I think -- I mean, the primary one, Carol, is order intake. And so when we see customers placing orders, I mean, it's not like mining where they've got long-term plans. They're really investing behind, particularly in Canada, seasonal construction outlook. So when we see your order intake improve through Q4, and then actually, I'm pretty encouraged about the order intake that's, as we've carried into the new year. That's the primary driver of construction activity that we see. And then as I mentioned to Max previously, I mean, the more population we have in the field with service contracts, that gives us line of sight to the population we need to drive product support. So I would say that the best indicator we have for construction activity right now is order intake. I would say, and it would be remiss of me not to say this and to congratulate the team in construction that we are really pleased with what we believe is a very healthy market share gains within 2025. And as I said previously, so it's not just the market as well. It's a very determined approach to market share growth, and I think we've seen that carry on into this year. Carol Adu-Bobie: And could you also provide some color on order intake trend in the Power Systems segment? Kevin Parkes: Yes, sure. So we've seen -- we're really encouraged about -- like we're more than encouraged to talk about excitement in the Power Systems sector. So in terms of in power and energy, the order intake in Q4 last year was nearly double in Canada, and it was double in the U.K. And Chile is a much smaller part of the business, but we're -- I say it's lumpier in Chile, but we've had a really good run in Chile and it's additive to the business in Chile. But yes, order intake in Q4 in Canada and in the U.K., which is our primary power businesses, was more than double it was in the same quarter in 2024. Carol Adu-Bobie: I appreciate the color. And if I could just squeeze in one more. We saw a very strong working capital performance this quarter. Could you remind us of your capital allocation priorities given leverage is at all-time lows? David F. Primrose: Sure. I'll touch on that. I mean returning capital to shareholders is important, and we've been consistently doing that for many, many years now, buybacks and dividends. We have the NCIB in place. We've been buying back shares. We think there's volume being consistent in our approach. But the process of capital allocation, it's always dynamic. We look at that all the time. And key factors being near-term free cash flow expectations, capital spending and inventory purchases is given the significant growth opportunities that we've got ahead of us. And potential M&A and customer activity levels. So I mean, it can be quite -- invested capital demand is going to be quite seasonal through the year. But overall, if I come back to it, again, we strongly believe in returning that capital to shareholders and being consistent in our approach. Operator: This concludes the question-and-answer session. I would like to turn the conference back over to Mr. Primrose for any closing remarks. David F. Primrose: Thank you, operator, and that concludes our call today. I want to thank all of you for your participation, and have a fantastic day. Thank you. Operator: This brings an end to today's conference call. You may now disconnect your lines. Thank you for participating, and have a pleasant day.
Operator: Thank you for standing by. My name is Carly, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quantum Minerals Q4 2025 Results Conference Call. [Operator Instructions] I will now turn the call over to Ms. Bonita To, Director, Investor Relations and Capital Markets. Please go ahead. Bonita To: Thank you, operator, and thank you, everyone, for joining us today to discuss our fourth quarter results. During the call, we will be making forward-looking statements. As such, I encourage you to read the cautionary notes that accompany this presentation, our MD&A and the related news release. As a reminder, the presentation is available on our website and that all dollar references are in U.S. dollars unless otherwise noted. On today's call are Tristan Pascall, our Chief Executive Officer; Ryan MacWilliam, our Chief Financial Officer; and Rudi Badenhorst, our Chief Operating Officer. And with that, I will hand the call over to Tristan for opening remarks. Thank you. Tristan Pascall: Thank you, Bonita, and thank you, everybody, for joining us today to discuss our fourth quarter and year-end results. We entered 2025 with 4 clear priorities and our steady delivery on these throughout the year has now positioned us well for a strong 2026. Firstly, we set out to strengthen our balance sheet and enhance our financial flexibility, and this was achieved through the support of our investors in a series of bond transactions that extended the company's debt maturities and reduced our cost of capital. Additionally, we completed a $1 billion streaming transaction with Royal Gold that also represents the largest U.S. corporate investment in Zambia to date. Our hedging program, which we put in place in 2024, fulfilled its intended role as risk mitigation during the construction of the Kansanshi S3 expansion, and we expect to regain full exposure to spot copper prices by the second half of the year, on which Ryan will speak in his financial review. Our next priority, safe and productive operational performance remains a continued focus, and the company achieved its 2025 production targets, which Rudi will cover in his operational review. Also a priority in 2025 was the execution and delivery of the S3 expansion project at Kansanshi. I'm very pleased with our progress at S3, which achieved a major milestone with the declaration of commercial production last December, and I will speak in more detail on this towards the end of my prepared remarks. Our fourth priority continues to be achieving a long-term resolution for Cobre Panama. Whilst we await the start of formal discussions with the government of Panama on this matter, we have made meaningful progress on the preservation and safe management plan to ensure the assets remain in good condition and the site is safely and well environmentally managed. During the fourth quarter, Unit 2 at the power plant was successfully commissioned and synchronized to the grid. The unit achieved its full design capacity of 150 megawatts output in December, reflecting the effectiveness of the maintenance program undertaken at site over the past 2 years. The plant is currently operating steadily at an average output of around 120 megawatts, consistent with the site's power requirements and broader national grid demand. The remaining unit, Unit 1, moved into commissioning in early February and is performing according to expectations. Subsequent to quarter end, in January, the President of Panama announced that the government would approve the removal, processing and export of stockpiled ore at Cobre Panama. It is important to emphasize that processing of the ore stockpiles does not constitute a restart of mining operations and processing of this material is intended to address environmental and operational risks linked to the long-term stockpile storage, such as acid rock drainage while also supplying necessary material for reinforcement of our tailings management facility. We continue to await formal approvals. However, on a preliminary basis, we expect that processing of the stockpiles could begin roughly 3 months after receiving formal regulatory notice and would take approximately 1 year to complete. From the stockpile, we estimate production of approximately 70,000 tonnes of copper, and this activity would support the cost of ongoing asset and environmental management at the mine. We are pleased with the government's decision to authorize the processing of the stockpiles. Alongside allowing proper environmental stewardship, this will generate significant income for the country and create jobs for over 1,000 additional Panamanians, along with broader indirect employment across local procurement such as equipment supply, transportation, logistics, camp and food services. We continue to await the formal approvals for removal and processing of the stockpiles, which will be carried out in close coordination with the government of Panama and in full compliance with our preservation and safe management plan. It is important to reiterate that the processing of the stockpiles is not a reopening mine, and we echo the President's call for transparency and engagement. The resources at Cobre Panama belong to the people of Panama. We remain committed to dialogue to achieve and remain -- achieve an amicable and durable resolution of the mine. for the country and the Panamanian people. In parallel, the integral audit conducted by SGS commenced in the fourth quarter. Our team in Panama continues to cooperate fully with the audit, providing all requested documentation and cooperating in the field visit inspections. We welcome the audit, and we are confident that it will confirm that Cobre Panama has always operated at the highest environmental standards. The integral audit is expected to be concluded in April 2026. Separate to the integral audit and as part of our ESI obligations, the authorities continued with the statutory biannual audits of Cobre Panama's compliance. We are pleased to share that the most recently published audit achieved 100% compliance. The latest external audit field phase was completed in November, and we expect a final report during the first quarter. I will now pass the call to Rudi for his operational review. Rudi Badenhorst: Thank you, Tristan. We are happy to have closed out 2025, achieving our revised guidance ranges. For the year, we achieved copper production of 396,000 tonnes within the revised copper guidance range, while annual gold production of 152,000 ounces and annual nickel production of 23,000 tonnes were above the top end of the respective revised guidance ranges. Looking to 2026, we remain focused on cost management and safe operational execution across all our sites. During the fourth quarter, total copper production was approximately 100,000 tonnes, a 4% decrease from the previous quarter as Sentinel continued to be impacted by both fatigue maintenance and rainy season power interruptions. Copper sales were strong at 108,000 tonnes, exceeding production by approximately 8,000 tonnes. At Kansanshi, we delivered a solid quarter with 48,000 tonnes of copper, up 774 tonnes from the previous quarter. This improvement was driven by a successful ramp-up of S3 expansion, which contributed to higher overall mill throughput. Notably, the site achieved a record monthly mill tonnes in October. Following successful commissioning and strong performance across all key production indicators, S3 declared commercial production as of December 1. The crushing and milling circuit performed well with significant improvements in stability and uptime as enhancements to the conveyor routes took effect. Work on tailings storage facility 2 is progressing well and remains on track for completion in the second quarter of this year. In 2026, Kansanshi is expected to produce 175,000 tonnes to 205,000 tonnes of copper and 110,000 ounces to 120,000 ounces of gold. Of this, S3 is expected to contribute over 84,000 tonnes of copper, sourced evenly from low-grade stockpiles and fresh ore from the Southeast zone. At Sentinel, copper production totaled 48,000 tonnes in Q4, a reduction of 3,000 tonnes from the previous quarter. This decrease was due to lower throughput and lower grades. Throughput was impacted by ongoing maintenance related to B fatigue on Ball mill 2, while grades were affected by a higher proportion of material from Stage 3. Looking ahead of 2026, production at Sentinel is expected to be between 190,000 and 220,000 tonnes of copper. The operational focus will continue to be on increasing throughput and improving consistency through optimization of blast fragmentation, maintaining stable crush ore stockpile volumes, improving milling rates and the flotation recovery. Grades are expected to strengthen modestly as we access previously sterilized Stage 1 and Stage 2 ore following the crusher relocations. Stage 4 ore is expected to come online in the second half of this year. Regarding Ball mill 2, in collaboration with the original equipment manufacturer and specialist consultants, we have established a long-term fatigue management strategy. We will continue managing the fatigue through this year with full remedial work planned for the first half of 2027 when new parts become available. This approach ensures ongoing performance while enabling a permanent solution through next year's planned upgrade. Enterprise delivered excellent performance, achieving record quarterly production of 9,000 tonnes of nickel, a 52% increase from quarter 3. This improvement was driven by improved recoveries and mining of fresh, higher-grade sulfide zones at lower elevations in the bottom of the pit. For 2026, Enterprise is expected to produce 30,000 to 40,000 tonnes of contained nickel. Our focus at Enterprise remains on maximizing ore supply, improving comminution efficiency and maintaining an optimum run-of-mine stockpile to support blending and stable throughput. Grade control drilling will continue to help reduce dilution and improve recoveries. At Cobre Panama, we continued detailed inspections and preservation activities during the quarter. Working closely with original equipment manufacturer teams, we completed reviews of the ultra-class haul trucks, production drills and road shops. The findings are being integrated into our ongoing preservation strategies to ensure to ensure equipment integrity and future reliability. Thank you. And with that, I'll hand the call over to Ryan for his financial review. Ryan MacWilliam: Thank you, Rudi. Starting with commodity markets, which ended the year on a buoyant note, a sentiment which has continued into 2026. During Q4, the copper price averaged $5.03 per pound, peaking at $5.71, a strong performance driven by both supply and demand. On the supply side, 4 of the world's top 20 largest copper mines are currently running at reduced production. And on the demand side, copper stockpiles continue to grow in the U.S. due to the threat of potential tariffs on future imports. We would note that it is important in times like these where prices start to rise that we remain laser-focused on costs. This helps avoid the margin compression that can occur as the benefit of stronger commodity prices on the revenue line are offset by a rising cost base. In this respect, it is helpful that despite generally strong commodity markets, oil prices remain fairly subdued with resilient U.S. and OPEC production keeping the market well supplied. Turning to our fourth quarter results. Revenue was up 10% quarter-over-quarter, underpinned by higher metal prices. This drove a 7% increase in EBITDA and a $73 million improvement in net earnings. Copper C1 costs rose by 13% to $2.21 per pound, reflecting the lower production that Rudi spoke to, along with higher power, labor and maintenance costs. Oil price tailwinds resulted in elevated byproduct credits, providing a $0.14 offset. The enterprise quarterly nickel all-in sustaining costs came in at $3.96 per pound against nickel prices, which averaged $7. These strong margins are a reminder of the high-grade nature of the enterprise nickel sulfide ore body. Nickel prices were depressed for much of last year with the market being in surplus, but have recently rallied following production cuts announced in Indonesia. At Cobre Panama, the P&SM program continues to incur between $15 million and $17 million per month to support the environmental stewardship of the mine and local procurement. $45 million was incurred in Q4 and $400 million has been spent since the mine was placed on PSM. Operating costs to process the stockpiled ore will cost between $12 and $12.50 per tonne mill. Upfront cash investment will be required with cash outflows peaking at around $250 million. On the basis that formal approval is received shortly for the stockpiles, we would expect to be broadly cash flow neutral by year-end at Cobre Panama, inclusive of P&SM costs. Further, on care and maintenance, the sale of Las Cruces both simplifies our portfolio and delivers approximately $30 million in annual cost savings while paving the way for development of the project under a new owner. On the balance sheet, it is pleasing to announce our new syndicated term loan and revolving credit facility. This frees up about $360 million of liquidity in this year, while also securing a larger RCF and extending both maturities to 2029. The refinancing process has underscored the strong backing we continue to receive from our banks with the participation of several new lenders in a highly oversubscribed transaction. The availability of the facilities is subject to customary closing conditions. Furthermore, we've also announced a new $1.35 billion 10-year unsecured bond offering this morning. And lastly, I'm pleased to highlight that this week, the rating agency, S&P, has moved our B rating to a positive outlook, recognizing our progress in strengthening the balance sheet and their positive expectations on the return of Cobre Panama later this year. Moving on to guidance. Across the 3-year guidance period, we've lifted our copper C1 and all-in cost guidance ranges to reflect the updated production guidance, higher costs and the incorporation of inflationary pressures, which are somewhat offset by stronger gold prices. These higher costs are driven by the appreciation of the Kwacha, the Zambian collective bargaining agreements and increased maintenance across Sentinel and Kansanshi. Both copper C1 and all-in costs trend downwards across the 3-year guidance period as production improves with higher grades expected to be fed into the Kansanshi S3 circuit from the new Southeast Dome pit. While cash cost guidance in 2026 and 2027 benefited from higher assumed gold prices, Guelb Moghrein gold sales will no longer be treated as byproduct credits as gold production is expected to pause from Q2 2026. On CapEx guidance, we spent about $240 million less in 2025 than initially guided on, with some of that moving into 2026, such as planned replacements at Kansanshi. 2026 guidance also includes added work on Sentinel's Ball mill 2, input crusher for relocation and the third tailings pipeline. CapEx reduces over the course of the 3-year guidance period, driven by the wind down of Southeast Dome pre-stripping at Kansanshi and the completion of Zambian tailings facility works as well as the crusher installation at Kansanshi and the crusher relocation at Sentinel. On to hedging. The collars that rolled off in Q4 yielded copper and gold hedge losses of $42 million in aggregate. Our 2026 planned copper and gold production both remain roughly 20% hedged for the full year and 50% hedged for the first half of the year. At current spot prices, we anticipate losses of around $220 million and $23 million, respectively, on our copper and gold hedge positions. Hedging has been an important tool in providing us with stability and downside protection during the S3 construction and ramp-up. However, at this stage, our existing hedges expire by midyear, and we do not anticipate adding more hedges given our strong margins at these copper prices. During the quarter, net debt increased by $441 million to $5.2 billion. This was driven by 2 key factors. Firstly, an increase in working capital as accounts receivable increased due to late shipments in December. And secondly, the sharp rise in copper prices at the year-end necessitated higher margin deposits associated with our short-term customer QP hedges. Both of these are expected to unwind through the current quarter at stable copper prices. Liquidity remains very strong at $1.9 billion, comprising of $644 million in cash and a fully undrawn credit revolver of $1.3 billion at quarter end. In short, we closed the year with supportive copper and gold markets, a disciplined cost management approach, a strengthened balance sheet and solid liquidity, positioning us very well for 2026. I will now hand the call back to Tristan. Tristan Pascall: Thank you, Ryan. Over the last 2 years, it has been a highlight of my prepared remarks to speak on the progress at S3. However, with the announcement of commercial production, this will be part of Rudi's operational review going forward. I am extremely proud of our delivery of the Kansanshi S3 expansion project. This has been a product of huge collaborative effort across our projects and operations teams and a supportive investment climate delivered by the government of Zambia. As Rudi noted, the S3 expansion delivered strong performance across all key production indicators, which supported the declaration of commercial production. Broadly speaking, while several metrics were considered, commercial production was declared once S3 demonstrated consistent performance at 90% of its design capacity. This was accomplished within 5 months of initial production. This is a significant achievement for a project of this size. At a throughput capacity of 25 million tonnes per annum, S3 is one of the largest global brownfield copper projects delivered in recent years, and I would like to congratulate and express my gratitude to the entire team that delivered this successful outcome. In terms of new project opportunities at First Quantum, I'm pleased to announce that we will be shortly releasing an updated 43-101 technical report for the Taca Taca project later this month. Taca Taca is one of the world's largest undeveloped copper assets, and Argentina is emerging as an increasingly competitive mining jurisdiction, supported by recent economic reforms aimed at attracting greater foreign direct investments. Globally, there are several growth projects being advanced to address the anticipated supply deficit in the copper market. However, I firmly believe that First Quantum is uniquely positioned to deliver on this growth. We expect Taca Taca to follow First Quantum's tested and proven design and construction approach of large-scale SAG mill processing trains with expansion optionality. Taca Taca will involve, for example, installation of First Quantum's seventh and eighth SAG mill at a 40-foot size and will leverage from the company's extensive experience in development and operations at Sentinel, Cobre Panama and most recently, the S3 expansion at Kansanshi. We look forward to sharing the updated technical report, which represents an important step in derisking the project as we continue to advance the ESIA, prepare our RIGI application and evaluate the optimal financing strategy for the project. Whilst Taca Taca is important to First Quantum's long-term growth options and similarly, this year, we will also advance the La Granja and Haquira projects on their own merits. I want to clearly state that our priorities for this year 2026 remain: firstly, progressing towards resolution at Cobre Panama; secondly, to ensure continued safe and productive performance at our operations, including ramp-up of the Kansanshi S3 expansion project; and thirdly, to strengthen the balance sheet to ensure that the company is well positioned to support future growth. We had meaningful achievements in our priorities for 2025, and I'm extremely proud and grateful for the dedication of the entire team at First Quantum. Our position today is a direct result of their hard work. We have collectively accomplished a lot over the last couple of years, and I am confident in the outlook for First Quantum because of the deep talent pool within the company, our meaningful participation and long-term relationships in our host countries and the growing strategic importance of copper. Thank you, operator. I'm happy to open the lines for questions. Operator: [Operator Instructions] Your first question comes from Ralph Profiti with Stifel. Ralph Profiti: Tristan and Rudi, when it comes to the potential for the same remedial work and permanent solutions that you're seeking in Ball mill #2 at Sentinel, transferring that over into ball mill #1, are you going to wait for the review to make that conclusion? And when will that review be concluded? Tristan Pascall: Yes. Thanks very much for the question, Ralph. Rudi, do you want to take that one? Rudi Badenhorst: Yes. No problem. final repairs to ball mill 2 as established with the OEM and ourselves will take place in the first half of 2027. Now we have ordered an additional end can and discharge -- upgraded discharge end period to make -- take advantage of the foundry slot that we've had. And we effectively run with one strategic spare. Ball mill 1 is getting a review principally because it's from the same vendor and no other reason. It is currently performing well, and we do not have any issues with it. Ralph Profiti: And it looks as though that there's going to be some degree of throttle back on the throughput. But also, Rudi, some of your comments in your pre-prepared comments talked about increasing total throughput as well. Just wondering how you're balancing the 2 between risk mitigation and desire to increase throughput. Tristan Pascall: Rudi? Rudi Badenhorst: Yes. Thanks, Tristan. We indicated that we will be doing a couple of projects at Sentinel this year, primarily to debottleneck the back end of the circuit and those relate to the installation of upgraded feed wells to our tailings thickeners, but also the installation of a new tailings line and the reline of an existing one. Effectively, what that does, it helps us to increase throughput through the back end, which is currently the bottleneck. So the first one of those have already been replaced in January. The second one will replaced this quarter and the third one during the end of the second quarter, followed by the tail of Q3. So debottlenecking the circuit allows for the opportunity to increase throughput, albeit maintenance stoppages on Ball mill 2. Operator: Your next question is from Orest Wowkodaw with Scotiabank. Orest Wowkodaw: A couple of questions on Cobre Panama, please. You mentioned, Tristan, that the company is yet to start formal discussions on a new agreement in Panama. Can you give us an idea of what the hurdles are? Is it -- are you just basically waiting for the completion of the environmental audit? Is that expected to kick the process off? Tristan Pascall: Orest, thanks. I think in Panama over the last -- since the middle of last year, you've seen concrete milestones passing and that revolves around approval of the preservation and safe management plan, export of the concentrate, the restart of the power plant and the commencement of the environmental audit. And then most recently, the announcement by the President that the government will approve the removal of the stockpiles and processing associated with that. Looking forward, the President has made announcements around dealing with the matters at Cobre Panama. And I think as you point out, the environmental audit is one of the key elements in that timetable. So we do expect the audit will be completed in April. We'll have to assess the next steps and timing from there. But certainly, that does seem to be one of the key elements in terms of the pathway from here. Orest Wowkodaw: Okay. And as a follow-up, thank you for the disclosure around some of the partial restart costs here to turn on one mill train to process these ore stockpiles, the $230 million to $280 million range. I'm just curious, is that a good rule of thumb in terms of incremental costs to eventually restart all the mill trains? Tristan Pascall: Yes, Orest. It's a little bit of a moving target at the moment because you can paint different scenarios to restart around the timing and ramp-up of that in terms of stage of approvals. But if we follow a pathway -- well, if we just look at the stockpiles and the restart of the plant is important to that stockpile reprocessing that allows us to remove that material, which is -- does cause some acid rock drainage and will greatly improve our water quality control at sediment Pond 2 and the discharge in the Pika side and also in terms of feed to the tailings dam and being able to cope with high rainfall and erosion and so on that we do get on the tailings dam. If we just look at that, it's probably 3 months to get that moving, and it would be on the basis of the cost that we outlined there around $12 to $12.50 per pound per tonne milled and hence, those capital costs that you referred to there. If something else comes through in terms of timetable, and we don't have that clear as yet, that would shift around disclosure from the government of Panama around that. Operator: Your next question comes from Chris LaFemina with Jefferies. Christopher LaFemina: So I just wanted to ask about the overall unit cost guidance. You guys have a lot of operational improvements that you're going to be delivering across the portfolio over the next couple of years. If I look at Sentinel, for example, where you're commissioning the railroad conveyor system, you're expanding the trolley assist network, you're expecting slightly higher grades. Volumes across the business are going to be rising, which should lead to some fixed cost dilution. Yet your unit cost guidance is effectively at the middle of the guidance range, you're basically guiding to cost being flat over the next few years. And I'm wondering, is there a potential for cost to be significantly lower than what you're guiding to? Is your guidance conservative? And if not, I'm wondering what are the offsetting inflationary factors? And you mentioned some of the cost inflation that you're seeing in the business now, but I'm wondering what the inflationary factors are that you're kind of baking into your assumptions here where those inflationary factors are offsetting the benefits of some of these operational improvements that you guys are expected to deliver. Tristan Pascall: Thanks, Chris. And I'm sure Ryan will add a comment. But just -- I mean, big picture, the trade-off at Sentinel is between volume and you're seeing the throughput, you're seeing the effort that's been put in there and to deliver throughput and you're seeing that in terms of the front end of the plant and the dry plant pushing there. And as Rudi mentioned, debottlenecking in the back end to continue that trend. We have had -- that is offset by grade and our management of that as we get into fresh material beneath Stage 3 and also open up Stage 4 over the next year, couple of years, we'll be able to offset that grade, and we'll see good material come through. On the cost side, it's really a story around commodity inflation, as Ryan pointed out, and labor. But Ryan, do you have anything else to add there? Ryan MacWilliam: Sure. Thanks for the question, Chris. So we do see cost guidance fall, albeit fairly slightly through the 3-year period from $1.95 to $2.20 for 2026, down to $1.85 to $2.10 in 2028. And in terms of the swings and roundabouts there, as Tristan notes, we will -- in 2028, we actually see slightly weaker production from Sentinel due to lower grades that year, which somewhat offsets the fact by that at that stage, we expect to be fully feeding S3 from Southeast Dome higher-grade material. So some positives and negatives on the production side there and similar on the cost side, where we're seeing strong gold byproduct credits, albeit our gold price guidance is potentially conservative. It's quite a lot below current spot prices. The flip side is we're seeing a strong quatcha in Zambia as they make continued progress with reforming their economy. The Catcher now sub $20 quatcha to the dollar that has impacts on our labor costs and slightly higher contract and maintenance costs through the period. We've also been cautious and fairly conservative in our electricity cost guidance, where we assume through most of the guidance period that we'll continue to buy power from external sources. And if we see stronger rainfalls in Zambia and we move more back to the ZESCO contracts as a portion, that will be another cost tailwind through the period relative to what we have in our guidance. Operator: Your next question comes from Cody Hayden with Deutsche Bank. Cody Hayden: Great. And apologies for that. Two questions for me, if I may. First, considering greenfield projects and specifically Taca Taca, you kind of alluded to it earlier, but does Cobre Panama need to be up and running before you consider any major new investments here or set any other greenfield projects? And then second, given the ongoing activity in the sector, are you seeing any interest in your assets at the project partnership level, say, beyond the JV with Rio? Tristan Pascall: Cody, thanks for those questions. Yes, look, so our progress on Taca Taca this year will be on its own -- on the project's own merits. And what I mean by that is we will pursue the RIGI application. Well, first, as I referenced, we'll be releasing the Taca Taca, the 43-101 technical report very shortly this month, we expect. And then that builds a pathway towards RIGI application. And in the meantime and around that timetable, we'd like to see the ESIA and the water permitting come through. And really, that builds an underlying pathway for a financing to explore financing options. I think Cobre Panama is important to that, but we do need to make progress on those on their own standing. The balance sheet and our financial capacity is also important to that. But again, the more that we're able to progress the project on the own merits, the market does appear strong in terms of supporting that, and we'd like to progress it and see where that gets to. RIGI is a timetable, and we -- we're anticipating that timetable as well. But balancing all of that through, we have a clear plan, and it revolves around our execution capability in terms of developing a strong plan and something that meets the expectations of Argentina and again, also reflecting the stronger investment climate in Argentina. In terms of interest around the project around that project, look, we wouldn't speculate on that too much other than to say, I think that buy versus build is a strong challenge and pipeline where you have options to be able to develop copper projects in the very near future and the capacity to do that with the execution capability that is, for example, available at First Quantum is hard to find. We're taking a team that built Sentinel, that built Cobre Panama that has just completed S3. They're currently looking at the maintenance and the preservation of Cobre Panama and all of that lends itself to a capacity to look at something like Taca Taca or indeed La Granja in the long term, and that's just not readily available out there in terms of that execution capability. Operator: Your next question comes from Myles Allsop with UBS. Myles Allsop: Just a few quick questions. Maybe just a bit of clarity on that last Taca Taca question. What was the best case case for FID if we kind of put Cobre Panama aside, but in terms of getting RIGI through and then the environmental and water permits, is best case kind of early 2027? Or is it going to take longer? That's the first question. Tristan Pascall: Thanks, Myles. Look, our main focus is derisking. But Ryan, do you want to comment further on that? Ryan MacWilliam: I mean, to be clear, before Cobre Panama was placed on PNSM, our priority focus as a company on was on debt reduction. Nothing has changed in that regard. So we continue to be focused on debt reduction. It's pleasing that despite Cobre Panama being on P&SM over the last 2 years, we've actually made progress on debt reduction, but that continues to be the focus. As Tristan said, pleasing to have a variety of growth options within the portfolio, but those need to come in due course as we focus on deleveraging the balance sheet. Clearly, strong commodity prices help in that respect. Clearly, if Cobre Panama comes back online, that would help. But we're not yet at the point where we're talking to specific timing milestones for approving Taca Taca because we first need to work through that deleveraging pathway that's ahead of us. Myles Allsop: Okay. And second question, maybe just related to that as well, in terms of the balance sheet, I mean, where do you want to get to? Is it investment-grade kind of metrics? Is there a net debt target? Do you kind of think job done, let's kind of pivot the focus? Ryan MacWilliam: I don't think Myles we're ever going to be complacent on the balance sheet, and I don't think they'll ever be job done. What we've talked to is being responsible and prudent in managing the balance sheet. A big part of that is looking to work with others on our projects. A good example of that was the partnership at La Granja, which was referenced in the previous question. So when we do get to these future project builds, we don't put all of that on our balance sheet. We finished last year at 3.3x net debt to EBITDA. And we've generally talked about you want to be around or below the 1x net debt to EBITDA before you start a next greenfield project build. That being said, at Taca Taca at the moment, the work is really focused around derisking the project. We're focused around bolstering the balance sheet, and we'll make decisions in due course when that moment comes. But we're not there yet, and we don't expect to be there in the near term. Operator: Your next question comes from Marcio Farid with Goldman Sachs. Marcio Farid Filho: A couple of follow-ups on my side. Maybe first on Panama. You obviously provided some details around cost and CapEx to start the drilling process, which is great. Just wondering if you have early estimates in terms of total CapEx for a full restart as well, including on the mining side? And if you can comment on how the momentum has been for the use to restart the power plant. Obviously, not as relevant, but just to try and understand the state of the preservation of equipment. And then maybe secondly, Las Cruces just got sold a few months back. Just wondering if you want to -- there's consideration to sell other minor operations as well and to focus on the core operations, Zambia and, Panama and eventually Argentina and Peru as well. Tristan Pascall: Thank you for that question, and we'll try and cover all of that. So firstly, on cost to restart for the full possibility of restart in Panama. Look, I think it's -- again, we're following a process in Panama that will be governed by the President and by the government of Panama. It requires transparency and engagement, and that is our focus. The stockpile restart, as we spoke about there, I think there's a good amount of disclosure there to paint that picture. But in terms of restart beyond that, it's really around working capital deployment and it will depend on the condition in the plant. We've been doing a lot of work in that preservation safe management to make sure that areas are in good condition. But we haven't been -- so we certainly looked after the big major assets really well, the mills, the major elements, rope shovels and so on. But there will be work to do on small ball piping on reticulation pumping, these kind of elements. And so getting to grips with that is the major area in the plant and then working capital of getting suppliers in Panama reestablished credit terms around their employees, local Panamanians coming to work and so on is where the major cost and that's potentially sort of $300 million to $500 million in that range. How much of that is borne out in the stockpiles versus a restart down the track will have to come to bear. In terms of the power plant and its restart, it's really been pretty neutral because of the selling power into the grid, but the fuel cost at the moment is at a higher level. And so generally, it comes out roughly neutral. We haven't seen any large major CapEx in that area. Our main focus was on the boiler and making sure that, that was in good condition. It was nitrogen filled. And there were some areas where we did some work on the soot blowers, erosion on the soot blowers that was present, but that wasn't major in terms of capital work, but that's the kind of level of work that went into it. I think by and large, the team has done a fantastic job of looking after that asset. And you see that in terms of the ramp-up that we see on Unit 2, and we're now switching over to Unit 1. It's already in hot commissioning as we stated, and we're working through that unit. On Las Cruces and that sale, maybe, Ryan, if you take over from there on that question around asset sales and other operations. Ryan MacWilliam: Yes, we're pleased to conclude the Las Cruces sale in Q4. Obviously, that had been in the mix for a long time. So to have that completed is pleasing. one, because it further simplifies our portfolio. Two, it removes the $30 million of care and maintenance cost per year that we were bearing. And three, it allows that project to be developed under a new owner for the benefit of the team there, for the benefit of Andalusia and Spain more broadly. Beyond that, we're not proactively looking to sell any of our other assets. But of course, when it comes to some of our smaller assets, we'll always assess what makes sense for shareholders. We're pleased that at Guelb, we see strong EBITDA driven by the gold price and maybe referencing a question that Chris asked earlier, why we see our cost guidance increase through the next couple of years. Part of that is just because Guelb is becoming purely a gold mine. We therefore don't get the byproduct credits as a byproduct, we just get them in as additional revenue. So we don't see it in our C1 numbers, but we certainly see the benefit of Guelb in our cash flows. And then lastly, on [ Shaeli ], that's been one of the real success stories in First Quantum over the last 12 months in terms of the extension to the mine life. So we're pleased that both those assets part of the portfolio. But as people externally express interest, we'll always make an assessment as to what serves our shareholders best. Operator: Your next question comes from Lawson Winder with Bank of America. Lawson Winder: On Taca Taca, you noted that there will be a feasibility study update in Q1 of this year. So first of all, do we expect that will be filed in Q1 2026? And then are there any changes to the scope of any aspects at all of the project that will be part of that updated TR? Tristan Pascall: Lawson, thanks for the question. Yes, we -- look, Taca Taca remains a strong project on its own merits, and we're seeing that the investment climate in Argentina is really developing. The reason for the technical report now, and it will be -- we expect it later this month inside Q1 is part of the application for RIGI. And as you point out, they're painting a clear picture of the engineering study for what the project can look like. Beyond that, in terms of scope and otherwise, I wouldn't want to steal from that report and the impact of that, but there isn't any major sort of change in scope or otherwise. It remains a robust project that extends on beyond 40 years and with inferred resources towards 70 years. It continues to be a project that will, in the first 10 years, deliver very strong copper production. And then after 10 years, there's a reason -- a good reason for expansion at that point in time. So that is consistent with the previous technical report that put out. This is really an update that gives clarity around capital, around the development pathway and paints pretty clearly what is an asset that is one of the strongest potential projects for copper in the world in a region now that's attracting a high level of interest in terms of investment. Lawson Winder: Fantastic. If I could ask one more question, it would just be on the Kansanshi stream that you guys signed in August. I mean that's worked really well. It's done a lot to shore up the balance sheet. Now that your debt metrics have improved and are continuing to improve, -- how do you think about prioritizing the buyback of the 30% interest in that, particularly in light of the higher gold price? Tristan Pascall: Thanks, Lawson. That's a great question. Ryan, do you want to take that one? Ryan MacWilliam: Sure. We liked the stream from a financial perspective when we entered into it, but we also like it from a structural perspective, the fact that it was equity rather than debt, the fact that the copper price we get paid will increase over time and most importantly, that there was a buyback option we were able to embed into it. So Lawson, we still have to make more progress on deleveraging. There are leverage thresholds that we have to meet in order to exercise that buyback option. We don't expect to meet those in 2026. But certainly, as we come into 2027, we hope to be in a position to exercise initially the 20% buyback and ultimately, the second buyback, which is for an incremental 10%. Operator: Your next question comes from Anita Soni with CIBC. Anita Soni: I just want to get a little bit more color on the question Marcio asked because I was going to ask that as well. It's -- so the restart cost for the entire project, I know you don't want to get ahead of yourself, but it sounded like you were saying around $300 million to $500 million total. And would that include the $230 million to $280 million that you just announced? Or would that be additional? Tristan Pascall: Yes, Anita, we don't want to get ahead of ourselves. It's important to follow the pathway outlined by government. And there is a headline on that in terms of the President announcing that beyond the environmental audit coming back in April, but we'll have to assess those next steps and the timing from there. And it will require engagement. It requires transparency. And with a broader population in Panama, that's our prime focus. But in terms of that capital and those indications, yes, the stockpile processing would net off against that. So the $300 million to $500 million would include the $250 million to $280 million, yes. Anita Soni: Okay. And then just a question on the $12 to $12.50 per tonne in processing costs. Could you help frame that in dollars per pound? Does that include your G&A and TCR seeds? And I understand there will be some noncash component because this ore has already been mined. But I'm just looking for sort of the cash component of what it would be in dollars per pound. Tristan Pascall: Ryan, do you have that to hand? I don't have that to hand. Ryan MacWilliam: Sure. We expect it to be around $2.90 per pound from a cost -- unit cost perspective. And what we would expect is at the moment, we're incurring around $15 million to $17 million in PS&M cost at Cobre Panama once we receive formal approval for the stockpiles, we would expect to produce around 70,000 tonnes of copper and the sales from that will contribute towards the PSM and other environmental-related activities that are ongoing at site, and we would end the year broadly cash neutral at Cobre Panama. Operator: Your next question comes from Ian Rossouw with Barclays. Ian Rossouw: Just a follow-up on Cobre Panama and around the operational readiness and some of the comments you already made at the site visit last year. If you do get approvals to start treating the stockpiles, does that change the operational readiness for the eventual restart? Obviously, I understand these are 2 separate processes, but can you actually test switch between the processing trains and ultimately be able to restart the entire plant once that decision comes much quicker than previously expected? Tristan Pascall: Yes. Thanks, Ian. So our focus on the stockpile restart will be environmental, and that is removing that material that does have some acid rock drainage elements and pushing that through one circuit of the process plant at Cobre Panama. So our focus is around that. We do have the opportunity to cycle through the trains. And I think that's useful in terms of ensuring good preservation and safe management practices. The common areas, obviously, are needed for 1 or for 3 trains. So that's the cleaner circuit, the columns, the concentrate areas and so on are needed for and most importantly, the cyclone plant for the tailings facility. Again, the focus will be environmental and the cyclone plant gives us the opportunity to produce the sands that are needed at the tailings dam in order to ensure that we can deal with erosion and so on that's built up over the last 2 years. So that's the focus. But having the plant in a condition that's able to run on one train solidly and cycle through the trains, I think, is overall good in terms of ensuring the ability of the plant to start up well in the event that we get to that. Ian Rossouw: Okay. Great. And then just a follow-up on Taca Taca. I guess Ryan's comments around the balance sheet and I guess, the priority to gear the balance sheet and your comments around buy versus build is ultimately the sort of options around funding when you get to that decision. Will you look at the balance sheet and decide whether I guess, you funded a loan or you consider a stake sale. Obviously, value will be one option to consider. But do you actually think of sort of Panama -- sorry, Argentina as a sort of -- from a risk mitigation perspective, it would make sense to sell? Or just trying to think how you would think about the funding options at that stage once you get to that? Tristan Pascall: Thanks, Ian. Look, again, the reason to be progressing the technical report is it's part of the RIGI process, and that's important. There's some deadlines around that, and we're conscious of those. It also underlines the opportunities when we come to looking at funding options. But again, our priority is on Cobre Panama. We spelled that out very clearly in terms of what our focus is this year and on debt reduction before we would be ready getting the balance sheet into the right position. In terms of progressing the project on its own merits, so if I put those 2 elements aside and just look at the project and to progress it on its own merits is appropriate. That is push forward lodge the RIGI application, get the 43-101 out, which is the pathway for RIGI application, look at options around financing, what could be done. The market is looking at Argentina more, and there's opportunity in that in terms of making progress on that. But again, we have a clear milestones there around the balance sheet and around Cobre Panama that lend into that. In terms of broader opportunities in the business to make Argentina happen, we'll look through options with partnership. We think we said that publicly before, but there's a number of tools in the toolkit in terms of looking at -- and we've used those, for example, at Kansanshi on the gold stream. We've been deploying those tools. But really, this is about making sure that Taca Taca on its own merits begins to stand as a project, which we believe it is, which is really worth looking at and stands up very well compared to any of the other projects out there for copper development in the near future. Operator: Your final question comes from Dalton Baretto with Canaccord Genuity. Dalton Baretto: A couple of quick ones, if I may. Just first on Cobre Panama. Tristan, your disclosure referenced support at 75% to 80% in the communities around the mine. Can you perhaps speak to sort of the broader country, particularly in Panama City, just what the -- what your metrics are showing you and maybe where some of the historical opposition is soon trucks, the NGOs, those sorts of things? Tristan Pascall: Thanks, Dalton. Yes, so that's very much a focus of our activities in Panama and broader support for the mine is around 50%, 55%. That's been steady at that level for some time now. And we see that a key element is really around transparency and engagement as to what the process from here looks like and walking through cleared pathways. What we are seeing is a huge amount of curiosity. So last year, there were some 241,000 engagements one-to-one between people at Panama, our employees, our advocates, our people that are speaking directly to the community. And in those, what we hear is a lot of curiosity about the mine, its place. We note, for example, discussion at Panama on the interconnector between Panama and Colombia, and that's a big power line and connection between really to connect all the way in the group from North America through Mexico and into Costa Rica and Panama for the first time to connect to across Latin America to South America. That's a huge interconnector for the continent and underlines the impact that electricity can provide in terms of uplifting communities and uplifting the standards of living and provide the opportunity for things like data centers modern technology and opportunity and employment to come through. But of course, interconnectors and electricities require copper. And it's that debate with society around responsibly and environmental and with a strong biodiversity program and community programs that's important now in terms of Panama. Again, we're probably 50%, 55% in the broader community. We'd like to see that lift up. And what we're seeing is a level of curiosity to understand the mine and understands how Panama can play into what is a global theme. Operator: There are no further questions at this time. I'll now turn the call back to Mr. Tristan Pascall for any closing remarks. Tristan Pascall: Thanks, Carly, and thank you, everybody, for joining the call. We're looking forward to a strong 2026. I hope you have a great day. Thank you. Operator: This concludes today's conference call. Thank you all for participating. You may now disconnect.