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Miguel Coronel Granado: [Technical Difficulty] In general, there have been a series of problems, organic and inorganic growth in different areas. And the most important ones are transactions and then others. And we have seen more than a very stable performance. At the level of EBITDA, there has been a slight reduction in EBITDA with respect to net income. And this is concentrated in some adjustments we have made in the area of Construction in the last quarter of the year. And we will speak about this later on. Now if we speak about the P&L, the result of the parent company went down. We had a contraction of EUR 267 million. And as I was saying, there are several elements. I also mentioned EUR 166 million that have to do with this. Another factor that has contributed has been the exchange rate, which, as you can see, the strength of the euro as a consolidated currency left about EUR 53 billion of a negative impact in terms of financial results. In addition, we had endowed some provisions. They're one-off provisions for water treatment and some of the assets that we have specifically in the U.K., which amounted to EUR 96 million for the whole year. So as compared with the EBITDA we had, this was similar to 2024 considering these three types of effects. And these have resulted in the EUR 164.4 million I mentioned before. Having said all this, if we consider the balance sheet and the joint financial structure, the group evolved in a very positive way. In 2025, we closed with a net financial debt of just EUR 2.3 billion. This was a reduction of 23% of our net financial debt in spite of the fact that, again, a very significant effort was made as we did in 2024 in terms of investments. We made net investments for EUR 1.2 billion. And this is really noteworthy in terms of revenues. If we compare the CapEx revenue ratio, well, it's 12%, which is a substantial figure if you compare it with the levels of amortization, endowment and revenues. So this is a significant figure in. Spite of the effort we made, we showed a significantly robust financial performance. Also at the end of last year, we collected the money corresponding to an additional percentage of minority stake we had in FCC Enviro, which is devoted to environmental activities, where we had a revenue of EUR 1 billion. The net assets grew by over 26%. We now stand above EUR 4.7 billion. And as I was saying, together with investments, another variable which for us is very important to mention is the portfolio for future revenues. At the end of last year. we closed with a portfolio of over EUR 51 billion. If you look at the calculations in the group and the activities of the 4 different areas we have, as I was saying, the growth was over 11%, specifically 11.4%. And the main driver -- although the different activities performed very well, Water and Environment, but the star was Construction, where in the management report we provide details of the most significant contracts that made this growth possible. In the case of Construction, the growth was notable. Right. So so far for the P&L and the balance sheet now and the financial situation. But let's look area by area. Now the first area is Environment, which is the most significant area in terms of its contribution. Our broad activity for waste management is included here. Revenues grew by 9.1% to EUR 4.74 billion. Here, the growth was well balanced. We had a good performance across the urban waste collection and street cleaning activities. I would like to mention the evolution in the organic growth in France and Spain as well as the acquisitions we made in the United States and in the U.K. In the United States, they were more focused on waste processing. Now in terms of geographical areas, the 4 platforms that we operate with our brand, FCC Enviro, revenues amounted to EUR 420 million, a significant growth with respect to the previous period's figures. And here, we had a very good performance. In terms of new contracts where we didn't have the management previously, we have grown by 20%. So we are quite satisfied. Although there is an activity which is minor, but by no means irrelevant, which is the industrial waste activity also performed very satisfactorily. We also moved forward in terms of our investments, particularly in waste processing in our different plants. And we are now enlarging some of our plants, although these enlargements are not yet contributing anything to the EBITDA. Now in terms of the platform that we call the Atlantic platform, France, Spain and Portugal, well, the increase was quite significant, EUR 150 million. Here, as I was saying, we are growing organically in terms of our contracts through our brand in France, ESG. And in Portugal, we also had very solid activity and a very stable one. The second platform of FCC Enviro in the U.K. had an increase in revenues, which was quite significant. We had a slight negative effect from the sterling. But we need to mention the whole year contribution of U.K. Urbaser, which combined this newly acquired platform waste collection activities, and we also made a few acquisitions, which was a company called Cumbria Waste Management in the Northwest of the country. So what we have seen is a lower level of processing activity, particularly in landfills, but this has been compensated for by an effect of higher activity levels in recovery and recycling. In Central Europe, in the European market, increases of 3.9%, EUR 660 million. In general, there are 7 markets here. We have a significant presence in the top 5. What we have observed is a certain weakness in the price of secondary raw materials, which had rallied very significantly in the last few years, but now they have stabilized and they have gone down a little. But the compensation has been very strong because this is a highly granular business. But there have been some adjustments in markets like Slovakia or Austria, but there have been growth in the Czech Republic and Poland. And so the performance overall was satisfactory. The last platform I want to mention in FCC Enviro is the United States. Here, the improvement was of over 22%, EUR 470 million. This is a platform that is already quite significant. It is close to the volumes of Central Europe. Here, there was a good evolution and some new organic contracts in waste collection and street cleaning. And here, in general, we are using a highly competitive technology. And I also want to mention the acquisition we made because we are for the first time entering the recovery activity. We already have experience in the U.K. But in the United States, this is something new for us. We made an acquisition that we formalized in the second quarter in the South of Florida of a waste recovery plant. And thanks to that, we managed to secure an operation and maintenance contract that was new. This is 2 very important plants because they have over 1 million tonnes of capacity for waste processing. So it is really very significant plants. So the combination between organic and inorganic activities resulted in very significant growth, 2 digits, 22%. EBITDA increased quite in a similar way given the improvements in revenues, EUR 789.8 million, in line with our forecast. And the gross margin stayed at a very similar level, 16.7%, without very significant differences with respect to the previous period. Now let's talk about the water cycle, Aqualia. Well, here, the turnover increased by 6.9%, EUR 1.7 billion. To be honest, Water is a highly stable business, 100% predictable and with very satisfactory performance. You know that we have two important areas. And the most important one is the so-called water cycle, it's the integrated cycle for water management, of water consumption; and to a lesser extent, technology and networks, which also gives us some competitive capacity to do with infrastructure. Both of them grew quite well. Technology and networks grew a little bit more because it is linked to projects or developments in different concessions, BOT, or comprehensive concessions or integrated concessions. Technology and networks grew by almost 19%. But having said that, this figure changes every year geography by geography. Spain still contributes over half of the share, and revenues increased by 10.2% in Spain. Here, well, things have normalized, particularly after the drought we had last year. In terms of consumption and in terms of the evolution of tariffs, things are a lot more predictable now. And the work done in technology and networks also experienced a significant growth, and this led us to a double-digit revenue increase. In countries like Georgia and the Czech Republic, these are proprietary assets. Here, there's no concession activity. And we grew by 8% to EUR 169 million. Here, there was a little bit of a foreign currency effect. The strength of the euro played a very important role. But the evolution was highly positive, and we are still making investments in Georgia to improve our efficiency and to improve the way in which we invoice our customers. And all of these things were highly positive. Now the rest of Europe, we have activities in Portugal, in Italy and also in France. And revenues increased by 1.4%, EUR 113 million. But here, we must mention a lower level of activity in technology and networks. And we should also mention that in the Portuguese market, there was an effect of the drought all along 2025, which obviously we are clear that in 2026 this is not going to happen again because I'm sure you're well aware that this year really started with a lot of rain from the month of January. So in the Americas, you know that we are now focused on Texas. And the turnover was also positive, 9.8% up, EUR 215 million revenues. We have kept generating new contracts in our concessions of different districts in the American market, MDS, for example, which is the company that we used to carry out our operations. And this has been accompanied by our activities in Colombia, where the evolution was also very good. The latter is basically focused on the integrated cycle. Now in MENA, Northern Africa, well, in Northern Africa, we managed our BOT contracts without any meaningful events. There have been some changes in the tariff. Those changes affected us negatively, and this is because of the strength of the euro. And also in the Persian Gulf, Saudi Arabia, Oman, Qatar and the Arab Emirates, the activity has been highly stable with our combined contracts for advisory. And we're still very positive in terms of the opportunities that await us in the future for new investments that we could make or requests from public customers. Now with this improvement of revenues of 6.9% for Water, EBITDA also grew EUR 450 million up. And the only small difference in terms of margin and EBITDA is due to the heavier weight of technology and networks, which operates with margins that are lower than those of managing water cycle. That's why the final figure was 25% as compared with 25.4% last year. Now Construction, which is basically developing various projects. Revenues increased by 3.4%, over EUR 3 billion more. It is true that although Spain is not the dominant market, it hasn't been the dominant market in terms of portfolio, since these are short-lived contracts, here, there was quite a significant contribution. We have kept contracting services. And so this allowed us to compensate for a fall, resulting from the way in which our projects are closed abroad and in our industrial division. But on the whole, Spain played a very important role in this advancement. So the Spanish construction market was 15% up in 2025. Now if you look at the different locations we have, the different sites we have in the U.K., in the Netherlands, in Norway, in Romania, our revenues were quite stable, EUR 880 million, very similar to 2024. And we had a very important project in the U.K. for the sister company of FCC Co., which is now fully operational. And this was partially compensated for by projects that we had in the Netherlands and Norway that I mentioned before. So the picture is very stable. Another market that was very important together with Spain was that of the Americas. The turnover was almost EUR 11 million, 4.9% up. And here, you can see the importance of some of the projects that we have in Canada and the United States, particularly in railways on the East Coast of the United States and in the area of Metropolitan Toronto. Lastly, I don't want to forget MENA, which is also an area where we have had quite a significant presence for some time. And here, there's been a fall because of the close of certain projects that we are very satisfied about, such as that in Saudi Arabia. And the closing of these projects resulted in a 41% fall in this area. We closed at EUR 152 million. But as we already said in the events and contract reports, you can see that we do have a significant presence and quite significant visibility in the Middle East for the future. So the EBITDA here went down 49.9%, EUR 85.8 million. Of course, the gross margin was also influenced by this. It was not really within the range that we normally are. We closed at 2.8%. And this was due to the fact that in the last quarter, we had to provide for a series of projects and a series of things such as the end of certain projects because we believe it's good to act preventively. A stitch in time saves 9, as they say. So this resulted in a fall in EBITDA and in the gross margin of our construction activity. Now let's talk about Concessions. Well, Concessions closed at EUR 112 million. This was a significant advancement. Here, you may have observed in previous quarters, especially in the third quarter, the figure was lower. But now we are in a development phase. We are executing different projects. A lot of CapEx, especially in a railway concession in the North of Spain, in the region of Aragon, Itinerary 8. And there were two other effects which are not negligible. One of them was we have taken full management control of the Ibiza-San Antonio highway and also the evolution of traffic. Both road traffic and tramway traffic in our concessions, well, has fluctuated throughout the year, IMD and passengers, between 2.2% and 2.9%. So all of this has been highly positive, and it has resulted in that 45.5% increase. Now market by market for FCC Concessions, well, even if we have huge external growth perspective, the majority of the growth took place in Spain for the reasons I mentioned before. I want to mention that internationally, nowadays, revenues are still supported by our concession in Cotuco on the East Coast of Mexico. And there's also the fact that here, there was a concession in Cemusa Portugal that was closed in 2024, and this led to a small fall. It's not very important, but this explains this international fall that we've had internationally in Concessions. But this is just a one-off effect that will have no impact on the future. EBITDA reached EUR 60.4 million, 10.8% up, more moderate than the increase in revenues. But here, this shows the powerful evolution of the business. But of course, the gross margin of concession projects has a lower contribution. But even so, the activity, the growth is of two digits, which is really very significant. I've reviewed the 4 areas we have in our business which are the ones that contribute to the description of the P&L. I will now review the more financial aspects, the interpretation of all of this in more monetary terms. In terms of cash flow and exploitation, we reached EUR 1.2 billion. Here, I would like to mention the operational current capital, which contributed by over EUR 27 million, which is quite differential because last year in 2024, there was some consumption, which is not really strange. The greatest contributor was the Construction area, and you can see this in the information we have distributed. Other exploitation flows had also a very significant effects. And this was because of the carve-out, which is really an element that distorts any comparisons we would like to make. But this effect will disappear from next year. But 2026, if we compare it with 2025, it is quite noticeable and it should be underscored. The investment cash flow, as I was saying, had a very significant investment activity. We invested a total of EUR 1.23 billion gross. And here, we focus on environmental activities. The Environment captured over EUR 900 million in investments, both the recovery plant in the United States in Florida and the reinforcement of the integration we made of our activities in the U.K. to combine it already with our presence in processing plants. The second investment was made in Water, EUR 205 million last year, but more homogeneously distributed into enlargement, maintenance and renewal of our existing assets. Now divestitures, well, we have made very few divestitures. We sold off assets in one of the businesses we have in Spain for waste recovery and resell of recyclable materials, basically cardboard. This was a EUR 40 million divestiture, which was the most significant one. But net investments exceed EUR 1.2 billion. The financing cash flow. Here, there was a combination both of the money we collected from the additional sale of a minority stake of the environmental parent company, EUR 1 billion, together with some other effects such as payment of interest and minorities. But there was a net revenue of EUR 800 million. Now with respect to movements of financial liabilities. Let me remind you that last year, we refinanced most of our debt of our Water subsidiary. And we already informed you about this and this explains the movements happening here. And in these 3 sections, well, the treasury had a very good performance, an increase of over EUR 800 million. So the final figure was over EUR 2.2 billion. So with this, our financial debt closed at EUR 5.3 billion without significant variations with respect to our positioning. The most important thing is that in net terms, given the cash position with which we closed the year, this was all very solid. Our financial leverage went down by 23%. Our net financial debt was EUR 2.3 billion. And the differential elements, apart from the good performance of the exploitation of the operational cash flow, I would like to mention the evolution of our working capital and the effect of the sale we made of stake in FCC Enviro. So that's about all I had to share with you. I just wanted to review the most important highlights of our 2025 financial year. I would just like to mention three elements, which are extremely important for the medium and long term for the evolution of the group. First of all, our investment efforts, which was really very significant given the size and the activity that the group is having. Number two, we have strengthened the financial position of the group. We closed at EUR 2.3 billion with an EBITDA which evolved to over EUR 1.4 billion. And lastly, our portfolio. It is essential for us. We are a group that we basically work on the basis of projects and contracts. So having a visibility of over 11.4% growth year-on-year is really essential for us. We believe that it gives our company a very significant level of robustness. So that's about all I had to share with you. And now we can open the floor for questions from you. Thank you. Operator: First question, what is the level of one-offs and total provisions in the environmental division? Are these out of the cash operations because can you reach EUR 400 million in 2026? Miguel Coronel Granado: Well, I don't know whether the question is related to the level of provisions that we endowed in the environmental activity or not or to the balance sheet in them. With respect to the balance sheet in the Environment, we have two kinds of provisions: general provisions of the business and specific environmental provisions related to the different assets where we have an environmental import, like discharge centers, et cetera. So as far as those provisions are concerned, we always try and calculate what our future payment obligations are. Although there may be years where there may be jumps, the fact that there's more applications than endowments, well, these applications are normally payments, right? So there's quite a good balance between them. Having said that, I mentioned that in 2025, we had to apply environmental provisions for about EUR 90 million, which have been provided for throughout the year. Probably this year, there will be a higher volume of endowments. But in general, endowments and applications are normally well balanced mutually. Now in terms of the level of EBIT, as I was saying, the endowment we made of provisions that for the P&L can be seen in other operational results between EBITDA and EBIT had impact in 2025. Of course, we expect a significant recovery in 2026. Taking into account the adjustment of that EUR 90 million, I think that it's quite feasible. Operator: Next question. In your Construction activities, what is the level of operational EBITDA adjustment for this quarter? Now sales, can they grow at 2 digits? The 5.7% margin of 2024, is it really sustainable? Is there going to be an improvement in working capital because of advancement of certain projects? Miguel Coronel Granado: Well, the level of operational one-offs of EBITDA for the first quarter, if you looked at the sequence of results in our construction activity until the accumulated third quarter, we have followed a very stable tendency. Of course, it is true that in the fourth quarter, there was some situations in certain international projects and several projects. And so we decided to make a few adjustments. What is the magnitude of those adjustments? Well, we don't normally comment on these things because these are projects that are underway. So it wouldn't benefit us to make comments because these are not claims made by a specific customer or a specific supplier. There's no litigation or anything like that in that respect. It is projects underway. But we want to be prudent, and that is why we made those provisions. Is there going to be any cash outlays as a result of that? Well, as you know, provisions are part of a continuous game. So you make an endowment and then it may be applied or not. They are endowed at the level of EBITDA and they are applied at the level of the cash flow. So we try and use a few of the provisions we make as possible. But for us, and to connect with your question as regards to the 5% margin of 2024, well, in a project-based activity like Construction and like Water or the Environment, it is very difficult to say that we are going to be able to keep those levels stable. Our recurrent stable margin in an average cycle normally stands at 5% above. And yes, we think we can go back to that. But obviously, when you look at this in detail, there are effects that may go in one direction or another. Now with respect to what you're asking about the working capital, in spite of the growth in revenues, part of the contribution of Construction to the working capital have been some prepayments because whenever we can, we work with a positive cash flow in our projects so as not to resort to financing. So this is what happened. Of course, we will be applying that working capital in the future as we develop the different projects. Now is this going to happen again in 2026? Well, we'll have to wait and see. It is very good news for 2025. But when you're growing your business, it is not easy to always have working capital that is positive. That is a very difficult thing. Having said that and to answer the last of your question, can your sales grow by 2 digits, well, if revenues are going to grow by 2 digits, well, the Construction portfolio had a very good performance. But these are phased projects. These are important projects such as the ones we have in the United States and in Canada. And although they have pushed our projects portfolio up to -- I think that in 2025, we started at EUR 6.5 billion, and we finished at EUR 9.5 billion, but the maturation period is longer. So this allows us to distribute the execution risk and do it chapter by chapter or phase by phase. So to answer your question, there will be a growth in Construction sales in 2026, but the growth will be more moderate but we will have a lot more visibility than we had at the end of 2024. So the growth will be more moderate. So the revenues are not going to grow that 50% level as the portfolio grew. Operator: Next question. What projection of dividends can you give as you lower your debt? Miguel Coronel Granado: Well, you know that we don't give any guidance in terms of dividends. We have this flexible dividend. And last financial year, it was EUR 0.5. It is set by the Board of Directors before the General Shareholders' Meeting. It's not that by having lowered the debt, we are going to be able to pay a high dividend because we always want to emphasize growth provided that it is profitable and safe. We believe we do have a potential, but those things are not really directly connected. For example, last year, we ended at EUR 2.3 billion of net financial debt. And just with EBITDA and the elements impacting it, we stand at EUR 1.4 billion. So it's less than 2x debt to EBITDA. And a significant part of our activities are utilities or proxy utilities. So the financial strength of the group, not in 2025, but from much earlier has been absolute. So I would answer that those things are not directly interrelated, but the profitability, dividend ratio, I believe, is highly satisfactory, nonetheless. Operator: Next question. Were additional provisions made in Environment in the fourth quarter? Miguel Coronel Granado: No, not that I can think of. The ones I mentioned that practically -- let me go back to it. I think I said at the beginning, EUR 96 million. There could have been some adjustment. But in the first half, we reported EUR 89.2 million. So there were small variations because of the provisions I mentioned to do with some assets where the value had to be adjusted and some projects related with some risks we had under this discussion. But in the fourth quarter, there were no differential provisions. Operator: Next question. Could you quantify the impact of one-off adjustments in Construction during the fourth quarter of 2024 both in sales and EBITDA? Have these adjustments resulted in outlays? Or will such outlays materialize in the next few quarters? How do you expect the working capital to perform this year? Miguel Coronel Granado: Well, let me go back to the answer I gave to your colleague with respect to the provisions in the Construction area. So part of the impact on the EBIT in the fourth quarter resulted from the adjustment we made in some projects. And in some cases, we just readjusted or recalculated the forecast in terms of the completion of the works. So we'll see how it goes. All of this is very much alive. So none of these things respond to any payments that have to be made to any particular person. So there's no differential cash flow. There's no difference with respect to the performance of any other projects. So it's not due to any litigation or anything. There's nothing special to mention about the outflows. Now in terms of the working capital, I already mentioned that the working capital is a very much alive variable which responds to payments and collections. And until the year doesn't close, it's very difficult to say. We would love to also have a positive workflow evolution in 2026, and we normally work with positive working capital. And this is only logical because we are very strict about the payment and collection conditions. We are normally stricter than our own customers, but we do our best in this respect. So if we still keep increasing our revenues, it is going to be difficult to keep such a positive working capital profile as we have kept. Operator: Now what the net like-for-like result adjusted by the different one-offs of the year? Miguel Coronel Granado: Well, I would say that we don't have a calculation for that because in a group such as ours, you can agree on a series of adjustments that we can make. I think that you have all the documents. You can use the adjustments you prefer. I mentioned the 4 blocks, which we believe are the most significant to understand the full picture. But if I had to make an adjustment, I would look at the evolution in revenues because the evolution of operational margins with the different things I mentioned for the different areas didn't undergo any variations. So that would come very close to the variation of a comparable net profit of the consolidated group. It would come very close to the high figure in terms of the evolution of our P&L. Operator: There's no further questions. Miguel Coronel Granado: Okay. Thank you very much, again, for joining. As you know, I'm sure you will be able to peruse our annual accounts in detail. You know that we are always available on the usual channels. So thank you very much, and have a good day.
Michal Zasepa: Good afternoon or good morning. Welcome to a call conference for KRUK Group. My name is Michal Zasepa. It's my pleasure to host you to this meeting. I'll be using the presentation, which is available on our website since yesterday. Please let me guide you through the Q4 or full year 2025 results. And in the meantime, and after my presentation, please use the Q&A functionality here in Teams to ask your questions. I will answer them after the presentation. So let's start. 2025 is a record year for the business. If you look at operating profit measures such as EBITDA, cash EBITDA, there's healthy growth of 12%. It's also 12% that our assets grew by. The net profit growth is much smaller. And the result for that is taxation. There was a release in tax assets last year. There was more tax that we paid or created additional reserve provision for deferred tax assets this year. But fundamentally, this has been a healthy growth for 2025 despite the fact that during the 2025, Romanian RON depreciated versus euro and polish zloty, which cost us about PLN 41 million. And despite the fact that we have increasingly invested and spend money on digital transformation. The OpEx for the digital transformation, which started at the beginning of 2025 was for the year about PLN 30 million. So you have the PLN 70 million of additional costs that occurred in 2025 and depressed our results. Still the business grew by about 12% on operating level and on to profit before tax level. We ended that year with PLN 11.6 billion of portfolio worth on our balance sheet, again, 11% growth with healthy indebtedness level at 2.6x net debt to cash EBITDA with record high recoveries, investments moderate, somewhat lower than our initial plan. They were PLN 2.2 million. But on the other hand, with decent return, you will see later in this presentation, we assume PLN 2.3 million return on the investments we made back in 2025. So overall, a decent year, although it's fair to say we budgeted for higher growth, we have not realized fully our plans. So let's look at the long-term horizon. You may see here that this was a year where we added PLN 2.2 billion, which is less than in the 2 previous years. But please remember, in that business, there is a strong inertia that allows us to continue to recognize the profit and revenue growth a few years after the purchases. That's why this level of investment, especially if it's a good return should not undermine our ability to grow the business in the future. The business is very strong in terms of cash flow. You can see a healthy growth of cash EBITDA throughout the years and also in 2025. Also, our recoveries level for the total consolidated group level showed very healthy growth. This has been excellent results in Poland, Romania, good results in Italy, relatively weak results in Spain and in France, but the total was quite satisfactory. And we finished that year with 20% return on equity as expected despite the fact that our net profit was somewhat lower than budgeted. If you look at Slide #5, it shows a split of the recoveries. You may see Poland contributed about 40%. The recoveries on total were good. They were also in each of the quarters of 2025 and in Q4 above the accounting, this conservative forecast that we had, this percentage is single digits, and it should remain single digits. In 2025, we invested across all 5 of our markets, Poland, Romania, Spain, Italy and France. The biggest single market for us was Italy. And this year, we faced somewhat higher competition than in previous years, but this is also worth to consider in context of decreasing interest rates. Our expectations for returns did not decrease. The market went down somewhat with IRR expectations because interest rates went down, but also because in some of the markets after 2 years of dominance of KRUK, some of our competitors were more brave and possibly wanted to invest more and we let them do it given that we've realized our goals. The results, we believe they are quite healthy, although not as good as we wished for at the beginning of this year. You once again see here that on all the levels, but the net profit, the growth was double digit. The costs increased -- operating costs increased year-on-year, and this is -- and this increase was driven by salary increases, which grew in line with the market. But also, as I mentioned, there is an additional increase coming from digital transformation, roughly PLN 30 million and some increase in legal costs. Finance costs grew as well because we had more debt. On the other hand, the interest rates decrease set off some of that increase. And also, we had a positive impact of hedging instruments totaling about PLN 60 million. And once again, our revenues in that year were negatively affected by depreciation of RON despite that Romanian results were excellent for the year, which you will see in a minute. The company is very well capitalized. We enjoy good access to debt, both from banks and the bond investors. We are ready to continue to deliver on our strategy, which calls for increasing investments, but also increase in recoveries above what you see in estimated recoveries, this conservative accounting forecast, which calls for the digital transformation realization in the next couple of years, and I will touch on that in a few moments. So this is a look at the segment business lines performance across our markets. In 2025, as I said, you saw very good deployment of -- into portfolio purchases in Italy, where we enjoyed, again, a leading position. It was a good year in Poland, although we did invest less than last year. So there, you could see that our investment discipline limited somewhat our appetite for portfolios. We -- our market share for this year was lower. We had, on the other hand, excellent year in Romania, and we withdrew from some of the tenders, especially for banking portfolios in Spain, waiting for more stability in our collection process and especially more stability in the performance of Spanish cards. So if it wasn't for Spain, we would achieve our planned target of PLN 2.5 billion investment. Still, this PLN 2.2 billion comes at decent IRRs. So we are satisfied with this result. You can also see that we optimize between markets to get the maximum NPV to get the maximum IRR from the deployed capital. That's why we decided to decrease somewhat investments in Poland or not to be more aggressive in lowering our expected return in Poland. But on the other hand, we could achieve the desired return level in other markets, Romania and Italy. And that's why you've seen bigger investments there. You can see that all of our 4 markets are profitable with good EBITDA. We were happy with great results from Poland, great results from Romania despite the fact that there is a decrease versus year-on-year, but that comes from just decreased amortization of our very profitable portfolio. We're also very happy to see record results, almost PLN 300 million of EBITDA from Italy. We are not happy with the results in Spain. We hoped we expected higher results still, the business continues to be profitable in 2025, achieving this PLN 130 million EBITDA for the full year. We made a write-down of our assets in France and some write-down of our assets in Slovakia in process of exit, and I will comment that on the subsequent slides. Overall, this picture shows a strong -- solid, I think, growth, double-digit growth on EBITDA and cash EBITDA year-to-year, as you see here. And now a commentary to the market. In Poland, our assessment of the market size was that it was almost exactly the same as in 2 previous years, about PLN 2.1 billion was deployed in Poland for consumer unsecured portfolios, of which about 25% was bought for us. This likely gives us #1 position, although it's a notably lower market share than a year ago and 2 years ago. You may look at this that 2024 was an exceptionally exceptional year for our market share. Poland continues to be very competitive market. It's still a position in 2025 that gives us #1, which shows we are #1. But it's also an outcome of the fact that after a few years of strong market position, some of our competitors have more appetite to increase their deployment in Poland. And also decrease of interest rates naturally decreases or increases pressure on the IRR. Overall, we made good investments in Poland achieving this level of market share. And the results in Poland in terms of recoveries, performance of the back book were excellent. You can see that in the numbers here. You can see it in the value of positive revaluation that we recognized in Q4 over [ PLN 120 million ], and we expect that this trend continues in the following quarters and likely years for the Polish market. In Romania, the market grew significantly year-on-year. You can see that it's -- our estimate is about PLN 800 million compared to PLN 500 million last year, of which we took great majority of 70% market share. So it's a very satisfying result. And the results in terms of financial performance are also very good. You may see that the revaluation was somewhat lower than in some quarters of last year. And I want to tell you, this is the outcome of the fact that we have raised the recoveries so much that this potential for future positive revaluation is lower now than it was a year or 2 years ago. We still expect to continue to see positive revaluation, but on a level closer to the level you have been observing in Q3 or Q4 2025 in subsequent quarters and few years. Overall, the business is growing very well. And in 2026, we hope to be close to the investment level we've seen in 2025 in Poland. And I should add in Poland, our plan assumes that we will grow investments versus last year. In Italy, the market also grew compared to previous year, PLN 2.3 billion, and we are very satisfied with this market share, although it's lower than in '23, '24, but indeed, it was extremely high in those years. In terms of performance, this performance was good, but not as good to allow us to recognize positive revaluation in the past 2 quarters, you can see that it was more or less 0 for Q3 and Q4. If the recoveries go in line with our operating targets, which means they would exceed the accounting forecast, we should come back to positive revaluation in following quarters. This is uncertain, but this is something we would like to achieve. Overall, the situation in Italy is good, stable. And you may have read that we have already secured a significant portfolio on that market in 2026. And Spain, last but not least, the market significantly decreased year-on-year. We believe this is partly due to the uncertainty in legal system among -- across Spain, the courts were working slower and there was uncertainty how long such a situation will persist. In that market also KRUK stopped buying the big banking portfolios. we resorted to buying smaller consumer finance portfolios, which are not as much affected by the legal process. And that's why we only invested there a fraction of what we invested in the previous 2 years, and we had about 12% market share. The performance on that business in 2024 and Q4 was below our expectations. Still, our recoveries were more or less close to the accounting forecast. And you can see that in that situation, the revaluation was more or less 0 for this last year and also Q4. The business was profitable in each of the quarters and also in Q4 2025, but we have ambitions for the business to generate significantly more money in the future. The situation in the legal system across courts in Spain is that the reorganization is complete in sense of creating these new departments and making the final structure for the courts, but it's the beginning of the process of digging into those delayed thousands or hundreds maybe of thousands of cases that lie in Spanish courts and wait to be processed. This acceleration needs to happen this year, we hope. And we think it's realistic that we will see it happening. Only we don't know exactly what the pace will be and where we'll see that exactly in 2026. So it's a stabilization, but on a relatively low level of court effectiveness and with an expectation from our side that this situation will change positively in 2026. When this happens, will be able to resort to buying more, and we have plans to buy -- to invest in Spain this year significantly more than last year than this PLN 122 million, but less than in 2024. So somewhere in between will be our target investment market. When exactly how big it will be, it will depend on how the situation evolves. In the meantime, we don't wait and see. We don't sit and wait for the results. We're focused on what we can improve internally. We're also testing an alternative legal process, which used to be longer, more expensive, but now may prove to be more successful. And it could be that we'll be building also some upside to the current revenue forecast by exploiting those alternative legal processes plus introducing some improvements in our operating process, which is always possible and hopefully, that will build our -- improve our profitability for the coming years. We stand by Spain. We bet still our money on that market. We believe we will make it work and come back to higher profitability in the future. And finally, other markets, please note that these numbers entail France, but also Czech, Slovakia and Germany, the 3 markets that we're exiting and France, the only market which we are developing among this group. In Germany, we have fully exited in 2025, so we don't have assets anymore. Czech and Slovakia, we are on plan to exit these markets in 2026. We made a few sales of our assets on that market. Some of those sales were at profit and some of the sales that we made for Slovakian assets in Q4 was actually at loss. So part of this EBITDA loss that you hear, a few million of that is coming from the sale of Slovak portfolios. But majority of the loss comes from negative revaluation of our -- some of the French portfolios, not a comment to that. You probably realize entering a new market in NPL is a high-risk operation. That's why -- and also having gone through these processes on some other markets, we limit the high risk by limiting our investment deployment in size. That's why we invest in that market as you see here in 2024, PLN 90 million or PLN 115 million in 2025. But we indeed can expect that the performance of those portfolios can be significantly different than our initial assumptions, especially that we don't have operations there, especially that we rely on the valuation of these portfolios provided by third-party servicers. Now we are in a situation where after 1.5 years being there, we had a very positive and better-than-expected performance on any [indiscernible] process. That built our positive EBITDA for that business in the 2024 and 2025. And sometime in 2025, in the second half of 2025, we noticed that some of the cases from some of the portfolios after we entered the legal process do not deliver as much as expected. That means the courts behave differently than assumed. That also means that there may be a high level of imprecision in the valuation. It's underestimated [indiscernible] part, overestimated the legal part. This is normal. This is a normal phenomenon for newly bought portfolios. We make now a reduction in our expectations for recoveries. We defer some of the expected payments for future. We also manage our servicers. We have retained second servicers sometimes in 2026 when we compare both how they do in the legal process and we go on. This situation is, in our view, not a significant obstacle -- it happens usually on new markets. It happens sometimes on old markets on some portfolios we carry on. We just try to learn from the situation as much as possible to include that learning in future investments and in improving our operations. Unfortunately, at this point, in France, we don't have full control of our operations. We don't have operations. So this -- our ability to improve is also lower than on the markets where we have a servicer. But this -- on the other hand, we don't need to cover all of the overhead cost of having operations there being still a small-scale company on the [indiscernible]. So we will continue to buy at small scale in France in 2026 and try to learn as much and improve as much as we can from this situation we found ourselves in 2025. And a word about our lending business. We presented from now on, we will present it as one group level loan business because Wonga Poland is now a mother company of Novum, the lending company that was focused on crew customers. And also Wonga Poland acquired from KRUK Group, its Romanian entity lending to customers and started to lend money on the open market to new customers. So now Wonga brand is the brand for the lending activity across KRUK Group being present on 2 business lines in Poland, open market and closed customers in Poland and open market and crew customers in Romania. And I'm happy to tell you this was a very good year for the business. We earned PLN 170 million EBITDA in 2025. In terms of funding access, the situation looks good. In 2025, we successfully increased value of our credits and making from the banks. We also saw a very good market for bond issues. That situation persists in 2026. So please expect us to also strengthen our access to debt funding this year, although it's not a year where we would need a lot of money coming from the analysis of our cash flow, not so much of our bonds are coming due in 2025, actually none. However, it could be that we decide to resort to call option for some of the bonds calculating whether it's profitable or not for specific issues. So that moment may come because of the difference in interest rates now and from a few years ago. We are well funded, and we will use most likely banking credits and Polish bond issues to finance our growth this year. On this slide, I draw your attention to these figures, which show the expected money multiple or gross IRR at all the investments we made in a given year. And you can see it's about 21% for 2025 or 3x money, a decent result. It's lower than in 2024 for 2 reasons. First is indeed somewhat higher competition and our returns are subject to pressure from fall in decrease in the interest rates. But second, a higher percentage of our investments is coming from countries where we have a longer curve, namely Italy versus Poland. And also that means that the money multiple and IRR is similar, but the gross IRR is somewhat lower. Overall, on IRR on operating level, we made our budgetary plans. Also, you may have seen that we decided to invest somewhat less, but at a better IRR, which is, I think, a safer scenario. Moving on. I want to also draw attention to this slide. The graphic representations are the slides below, where we had another year of recoveries, which shows the strength of the back book. This 22nd year of our recoveries portfolios or subsequent year gave very satisfactory performance across those old vintages of portfolios, which tell us this curve has been flat and nothing indicates that it's going down soon. So that's a very positive news that those recoveries are remarkably resilient. And on this slide, I want to comment how advanced we are for implementation, realization of our strategy, strategy for the period of 2025 to 2029. Please remember the most important element of this strategy is to deliver on the net profit growth. And here, we don't give you a guidance, but we guide you to what our shareholders approved for the incentive plan for the company and for the Board, which calls for 12% annual profit before tax growth every year in that period. And we would like to achieve that, and we did achieve it in 2025. Now the elements of that plan call for PLN 15 billion of investments. We are on way to realize it. But please understand it is a benchmark. If we can realize our profit goals by investing not PLN 15 billion by PLN 13 billion with decent IRRs, that's even better scenario for us. So the PLN 15 billion is not a goal in itself. Of course, we need to grow investments to continue to grow long term, but it's really a range of possibilities. And at this point, this PLN 15 billion, we believe, is still possible to achieve. More important, I think, is what do we think and what do we see about the possibility of exceeding the accounting remaining -- the estimated remaining recovery. So this accounting forecast for recoveries. And for the first time, in 2025, we showed you a picture where we said, listen, our ERC stands at PLN 21 billion, but the management's plan, this ambitious operating plan stays at PLN 8 billion more, PLN 29 billion. And in this presentation, we give you a situation -- a snapshot of situation as of now a year later. And this situation is that currently, our ERC stands at PLN 26 billion, but our operating plan is again PLN 8 billion above. So despite the fact that we recognized PLN 500 million of positive revaluation raising our accounting curve, despite the fact that we achieved PLN 225 million of recoveries above 2025 accounting forecast. The difference, this PLN 8 billion difference between accounting and operating plan did not decrease as planned. It actually stayed at PLN 8 billion. Why? Because we saw we identified additional potential of recoveries on our back book on portfolios that we have purchased over the past 20 years, not on the ones we bought in 2025. So it's a significant positive situation. And we also tell you most of that additional roughly PLN 1 billion comes from Poland sometimes later in the curve. And why it's coming? Because we see the stability across all the back book portfolios in recoveries even after 10, 12, 13, 15 years. So it's quite positive, and it tells you despite significant revaluations, we did not decrease this potential to go above forecast -- recoveries forecasted in our accounting plan for the next [indiscernible] year. We made the 20% ROE target as expected. We are on the way to build our assets to PLN 20 billion. In that time, the assets grew by 12%. We continue to go through digital transformation from this [ PLN 500 million ] earmarked for this project, we spent already about [ PLN 70 million ], 40%, OpEx, 60% CapEx. Our leverage is contained within the plan. So I think we can say all of the boxes are ticked here in terms of strategy implementation. On this slide, we once again tell you this difference between operating and accounting target, but there's no new information above what I told you a minute ago. So I'll go further. And finally, on this Slide 18, we tell you a bit more detail about what we have achieved technically in terms of building this new digital IT ecosystem. This is a very important year, 2026, where the system, this newly created operating system will already be tested on the first portfolios in Poland. It will be the minimum viable product. So it will not be fully operational, but it will already test sometime in the second half of 2026, whether the system works, what need to be improved. And once again, the full functionality here, we want to achieve by 2029 and the benefits, which we believe will be significant from implementation of this new system in Poland, Romania, Italy, Spain and potentially later in the new markets will come after 2029. So we are well advanced in that process. It's a difficult process. It's an investment in the future. It's an investment with a payoff beyond the strategy level, but we believe it's very important for the success of that business in the long term, and we're really excited about what we are building at the company. And just a reminder, you may have read that in January, we have -- we announced that we will be reorganizing the group to fit it better for a company with very significant element of investments in NPL. KRUK wants to become an alternative investment company, a publicly listed alternative investment company by end of 2027. It's a significant reorganization. We believe it will help us manage risk better. It will make us stronger. It will be a more regulated, more safe business, we believe, better fitted to realize our investment plans. And we started to work on that, and we will need probably 2 shareholders' approvals during that process. First, to break up KRUK into operating company, headquarter and investment company and second, to merge this investment company into a licensed investment fund sometimes in 2027. We're in process of preparing for that. The good information is we have good feedback from the regulator, and we have good feedback from our biggest shareholders to continue to work on that path and I think a good understanding of all the regulator and supervising bodies. I think this is the most important information at this point, and I'll be very happy now to take your questions. I'll now look at the Q&A section. Michal Zasepa: Okay. You are asking how the new structure will affect us in terms of taxation. So my answer to that would be, first of all, this reorganization is done for business reasons so that we are better prepared to be a company that deploys in the next 5 years, this PLN 15 million and does it mitigating the investment risk does it with better regulatory oversight and does it with good investment discipline. If we deliver on this plan changed, the side effect could be that our tax situation remains as it is currently, which means we continue to pay 19% tax from the profits that the company has made, where our securitization funds profits are taxed when they are transferred to the [indiscernible] in the company when we pay out the dividend we pay or we pay back or redeem our bonds. The side effect of the transformation will be that if we get positive opinion from the Polish tax authorities, our securitization companies will not be subject to Pillar Two GloBE taxation. So there will not be an additional tax on the top of this 19% that we're paying. And one more comment regarding GloBE, not relating to the organization is that we have informed you a year ago that we could be subject to global taxation from 2027. Now we know we will not be. We will not be because in 2025, we have not exceeded the threshold of EUR 750 million of revenues, which is this threshold to qualify, which means that we know for sure that neither in 2026 nor in 2027 will be subject to the taxation. You're also asking what was the reason behind changing incentive program underlying benchmark from EPS to profit before tax after 2024. The reasons for that was uncertainty related to global taxation. We didn't know what exactly how this will affect us. And therefore, we agreed with the shareholders that for this particular period of time of this uncertainty, it's more reasonable to have this threshold at the lower below tax, which, of course, matter for 2025. But later on, we should achieve similar levels of growth, both on net profit and profit before tax. You're also asking, is it fair to assume that our reorganization is converging the group to an asset management company seeking a license for that. It is true, although it will be a specialized asset management company, a company specialized in NPL purchases. And we will change the mindset in which we will say this is the investment company. And of course, our most important goal is to maximize NPV on the deployed capital. But we also are an investment company that wholly owns the servicing companies. And their job is to maximize the value on the portfolios that we have given them to service. And now it allows us to be to make a decision about deployment and optimization of the process at different places, and it makes our lives a bit easier not to have the risk of affecting our operating -- operational agenda by our investment decision or vice versa. It also opens the door to thinking that if we are on that market, relying only on our own servicer, is this the ideal situation forever? Or should we champion challenge our own servicer to see whether we could improve it somehow by looking at what other servicers is doing. That will be especially useful in the new markets or in the markets where we don't feel yet we are the best servicer on the market. But overall, you should understand that this reorganization is not a change of strategy. We are and will remain to be an NPL company, but we are indeed a company where most value is done by the decision to deploy billions of zloty and soon billions of euro in some periods of time. So we are actually in this reorganization, achieving a structure that we have in all the other countries, but Poland because when you look at KRUK Group today, in, for example, Spain, there is local Spanish servicer, but there is a securitization fund in Malta making the investments. If you look at Italy, it's similar differentiation. Only in Poland, we have one company, KRUK, who is servicer, headquarter and investment company. We want to separate that, and we believe it will be a good idea long term to -- for our risk management. You're also asking how much money do we want to deploy in 2026. Please understand it's always a certain range of possibilities. I would say, more than in 2025. Why more than in 2025? Because we plan to come back to buying more in Spain. And the results could be somewhere between PLN 2.4 billion, PLN 2.7 billion in 2026. You're also asking specifically about when do you want to return to investing in Spain. The answer is in 2026, I would say, possibly in second half of this year, but it will really be dependent on what we see in recoveries, what we see market opportunities. You're also asking why do we have higher effective tax rates in Q4. Please understand that a big element of our tax is deferred taxation. So we have an accounting rule that says based on the planned cash flows, twice a year where the Management Board approves the budget or the business plan, the budget sometimes in December, the business plan sometimes in June, we look at the next 3 years, and we see how much money do we need to transfer to the Polish matter company and while transferring this money will pay tax. And then we say, okay, so that will be the transfers. That will be the tax. How much is our provision for that. If this is -- if the provision is lower than it should be, we increase, we increased the provision. If it happens that the provision is already bigger than what we planned, we decreased the provision. Hence, the volatility in 2024, in Q4, we released the provision because our business plan changed. In Q4 2025, we increased provision. So please look at the deferred tax assets and take a look also at the cash tax that we are paying and both are available in our financial statements to see that those are really driven by different situations. And please understand that we have this volatility, which is not intentional. It's a product. It's a derivative of the change in our cash flow plan for the next 3 years. And again, in the long term, we will pay 19% or high-teen percent effective tax rates on all of the profits we make. But in the mid- to short term, it will depend on whether we are stable or we are returning the money to the mother company or reinvesting the money in our securitization funds where in which situation we can enjoy a period of time where our effective tax rate is significantly below 19%. Guidance on portfolio purchases in 2026, I answered that already. Let me see if there are any more questions. You're asking, do we want to increase investments in France in 2026 despite lower recoveries. We're thinking about investing a similar amount of money this year roughly as last year. So it means contained investments, not significant growth, partly because of the issues that we have seen. You're asking about incentive program. Does it mean that in the next future incentive programs, you will come back to EPS? Yes. Yes, because it is the best measure given situation in taxation environment is stable. I don't see more questions. I'll wait a second to see. If it happens that I didn't answer your question exactly, please follow up with the IR team. We'll be happy to take it. I don't see more questions now. In which case, thank you very much for your interest and time today. Have a good afternoon, and I hope to see you on the roadshow or company conferences. Thank you very much. Goodbye now.
Operator: Welcome to the Morgan Stanley Direct Lending Funds Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. At this time, I'd like to turn the call over to Sanna Johnson, Head of Investor Relations. Please go ahead. Sanna Johnson: Good morning, and welcome to Morgan Stanley Direct Lending Fund's Fourth Quarter and Full Year 2025 Earnings Call. I am joined this morning by Michael Occi, Chief Executive Officer, Jeff Day; Co-President; David Pessah, Chief Financial Officer; and Rebecca Shaoul, Head of Portfolio Management. Morgan Stanley Direct Lending funds Fourth quarter and full year 2025 financial results were released yesterday after market close and can be accessed on the Investor Relations section of our website at www.mscl.com. We have arranged for a replay of today's event that will be accessible from the Morgan Stanley Direct Lending Fund website. During this call, I want to remind you that we may make forward-looking statements based on current expectations. The statements on this call that are not purely historical are forward-looking statements. These forward-looking statements are not a guarantee of future performance and are subject to uncertainties and other factors that could cause actual results to differ materially from those expressed in the forward-looking statements, including and without limitation, market conditions, uncertainties surrounding interest rates, changing economic conditions and other factors we have identified in our filings with the SEC. Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions can prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions can be incorrect. You should not place undue reliance on these forward-looking statements. The forward-looking statements contained on this call are made as of the date hereof, and we assume no obligation to update the forward-looking statements or subsequent events. To obtain copies of SEC related filings, please visit our website. With that, I will now turn the call over to Michael Occi. Michael Occi: Good morning, everyone. Thank you for joining us today. I'll start with some earnings highlights and our outlook before turning it over to Jeff Day to discuss deployment in the portfolio. David will then walk through our results in more detail before we conclude with Q&A. We generated solid performance in the fourth quarter. In terms of operating results, we earned net investment income of $0.49 per share as compared with $0.50 per share for the prior quarter. Earnings quality remained high, characterized by limited contributions from payment in kind and other income. Our underlying portfolio continues to perform well, and we remain confident that MSDL is well positioned from an execution perspective. As we reflect on 2025, I would be remiss not to acknowledge at the outset that the direct lending industry faced a number of obstacles. Though these factors have affected sentiment for the asset class, we think that some of these pressures may soon ease. Starting with asset yields. We acknowledge the contraction in MSDL's portfolio yield since the late 2023 peak. However, that contraction has decelerated, and there's evidence that it may be winding down, driven by the spread stability that we witnessed throughout 2025, the repricing trade having largely run its course, and the Fed now potentially in the late innings of its easing cycle. Secondly, investors have been rightfully looking for cues of credit stress across the industry given still elevated rates, tariff policy, and other shifts in the economy. Despite these economic dynamics, our borrowers have been resilient, and we believe that our book has held up well. Underperformance in MSDL's portfolio has been isolated and has not generally been driven by systemic factors. As we have all seen in recent weeks, the market's latest concern has been artificial intelligence as a threat to software. While we recognize that AI will be disruptive, we are confident in our underwriting process that has explicitly taken AI risk into account for a number of years. As part of this, we benefit from being part of the broader Morgan Stanley platform, a global financial services leader in software and technology. As Jeff will review in more detail, this provides us with immense resources that augment our underwriting process as well as our portfolio management efforts. Lastly, on the deal environment, which has been another area of focus for the market. M&A was famously slow to recover from the post-COVID trough. But we started to see a rebound in PE sponsor activity take hold in the second half of 2025. We think that this pickup will be a multiyear phenomenon that will continue to be a structural tailwind for lenders like us. Against this evolving backdrop, we remain focused on protecting NAV, preserving balance sheet flexibility and providing shareholders with a consistent distribution. These are priorities for our leadership as we position MSDL for long-term success through economic cycles. Accordingly, the Board declared a distribution of $0.45 per share for the first quarter of 2026, representing a $0.05 reduction from the prior quarter. This adjustment aligns the distribution with the normalization of short-term interest rates and implies a still robust yield on NAV of approximately 9%. We think that this enables MSDL to deliver a distribution that is durable and consistent with our dividend policy framework that remains rooted in our pursuit of generating attractive and transparent risk-adjusted returns to shareholders. We will remain focused on optimizing MSDL's return on NAV without deviating from our thoughtful capital management approach and more defensive investment strategy. During the second half of 2025, we made strides to recalibrate the right-hand side of the balance sheet, including through the refinancing of legacy unsecured debt, the execution of our inaugural CLO and the repricing of our asset-based facility. Aligned with this mission, we also successfully closed the joint venture that will deploy assets consistent with MSDL's selective credit box and that will utilize appropriate leverage. While this only closed 1 week ago, the JV is already close to 50% ramped, and we believe will be accretive to MSDL's net investment income, all else equal. With the broader support of Morgan Stanley, we have remained true to our strategy of providing loans to high-quality sponsor-backed businesses and leveraging the broader integrated firm in those efforts. We also believe that our transparent revenue model, efficient and conservative debt profile, relatively low operating expense base, thoughtful fee structure and repurchase program highlight our strong alignment with shareholders. With that, I will turn the call over to Jeff Day. Jeffrey Day: Thank you, Michael. Turning to the market environment. We continue to see a constructive opportunity set across the direct lending landscape supported by improving sponsor engagement and a steady flow of actionable opportunities across a broad range of sectors. Importantly, our origination activity continues to benefit from our differentiated sourcing model. Given our integration within a full-service investment bank, our private equity clients increasingly view us not just as a capital provider, but as a long-term strategic financing partner. As a result, we are seeing consistent access to high-quality transactions sourced through our dedicated origination team as well as other parts of the Morgan Stanley platform. During the quarter, MSDL committed $146 million to new investments the majority of which were for new LBO transactions, underscoring our continued ability to originate and execute on unique well-structured opportunities. Overall, fundings were largely offset by repayments. That being said, we have seen a slowdown in repricing activity and believe nearly all loans that stood the benefit from a repricing event have already done so over the last 2 years. Looking at the non-refinancing volume in the quarter, nearly 70% was driven by new platforms, and we led or co-led all of these transactions. Rounding things out, the existing portfolio also continued to provide a healthy contribution to overall funding activity. From a borrower segmentation perspective, we continue to believe that MSDL's core middle market focus is positioned in the sweet spot of the market while our origination funnel and capital base affords us the flexibility to take advantage of attractive credit opportunities across the size spectrum. Our median EBITDA for deals closed over the course of the year was approximately $94 million which was in line with the overall median of our entire portfolio of $90 million. The market remains competitive for the highest quality borrowers with durable cash flow profiles. Encouragingly though, spreads have demonstrated stability for the fourth consecutive quarter with weighted average spreads on capital deployed in the mid- to high 400 basis point range, evidence of disciplined market conditions despite increased capital availability. We believe our defensive orientation remains a key differentiator with a conservative weighted average loan to value of just below 40% as of the fourth quarter. In addition, we have continued to see positive trends in key portfolio metrics. Revenue and EBITDA growth rates remained healthy. We saw an increase in the weighted average interest coverage ratio for our borrowers year-over-year while PIK income as a percentage of total income declined quarter-over-quarter. While nonaccruals for the quarter ticked up modestly, we are pleased that the portfolio remains in very good shape and the mark-to-market activity that took place during the fourth quarter was a result of a small number of credits that have been underperformers in prior quarters. Digging a bit deeper into our portfolio construction, we continue to believe that MSDL's portfolio remains relatively insulated from direct tariff exposure and broader cycle volatility with our software investments continuing to demonstrate strong resilience. We remain overweight in professional services businesses and underweight and more trade in consumer-oriented verticals as well as health care borrowers with potential reimbursement risk relative to other BDCs in the market. Looking specifically at our software portfolio, our focus remains squarely on mission-critical system of record platforms, including ERP systems. These businesses sit at the core of their customers' operations often in complex or regulated environments and frequently house proprietary data. As a result, they benefit from long sales cycles, high switching costs, strong renewal dynamics and durable recurring cash flows. In our view, these are typically the last systems a company would consider replacing even in periods of economic stress. The burden of accuracy for these solutions is remarkably high and while AI has already or will inevitably be integrated into each of these investments to increase efficiency or improve the user experience, we believe it will be challenging for AI solutions to completely replace these critical software solutions. AI is a disruptive technology by nature, but it is not new to our evaluations of an investment or assessment of our existing portfolio. When we look at new investments, we take a disciplined and analytical approach, leveraging Morgan Stanley's best-in-class software advisory insights as part of our due diligence process to validate competitive positioning, assess moats, evaluate enterprise value and identify potential risks that threaten terminal value well in advance. Since our inception, our robust underwriting approach has included an assessment of potential risks and opportunities associated with AI adoption, competitive dynamics and long-term enterprise value. We believe this approach enhances our ability to underwrite technology risk thoughtfully rather than react to headlines. In addition, we have been utilizing a proprietary AI scorecard, which we apply to every new investment and is updated on a quarterly basis as part of our ongoing portfolio review process, aiding us in continually monitoring and proactively assessing a potential competitive threats or business model disruption. In summary, we are confident about the quality of our existing book and our unique capabilities as a leader in this marketplace. Our sourcing engine is unearthing attractive opportunities and an improving M&A backdrop, and our underwriting discipline equips us well to continue to navigate an evolving market environment for the benefit of shareholders. I will now hand the call over to David Pessah. David Pessah: Thank you, Jeff. At quarter end, our portfolio totaled $3.8 billion at fair value, maintaining our strong first lien focus comprising of 96% first lien debt, 2% second lien debt and the remainder in equity and other investments. The portfolio remains well diversified with 227 portfolio companies across 35 industries and an average borrower exposure of approximately 40 basis points. Regarding credit metrics at quarter end, the weighted average loan to value of our portfolio companies was approximately 40%, with a median EBITDA finishing the quarter virtually unchanged at $90 million. The weighted average yield on debt and income-producing investments was 9.3% at cost and 9.5% at fair value, marking a decline of roughly 40 basis points quarter-over-quarter, primarily due to the decline in base rates. In terms of credit quality, we removed Atlas purchaser from nonaccrual and placed DCA investment holdings on nonaccrual. Our nonaccrual rate stood at 160 basis points of the total portfolio at cost. Underneath the $146 million of new investment commitments that Jeff highlighted were loans to 17 new portfolio companies and 15 existing ones. Investment fundings including those for existing commitments amounted to about $164 million, offset by $163 million in repayments. Moving on to our financial results for the fourth quarter. Total investment income was $96.6 million, down from $99.7 million in the previous quarter largely attributable to the recent Fed rate cuts. PIK income remained relatively low, which declined by 20 basis points to 3.9% of total income for the quarter. Total expenses decreased to $54.2 million from $56 million in the prior quarter, largely due to a reduction in incentive fees earned from our incentive fee cap. Net investment income for the fourth quarter was $42.4 million or $0.49 per share. The net change in unrealized and realized losses for the fourth quarter was $13.7 million driven by underperformance in a small number of portfolio companies. Net realized losses for the period were primarily due to the restructuring of and sale of Atlas purchaser. As of December 31, our total assets were $3.9 billion and total net assets were $1.75 billion. Our ended NAV per share for the fourth quarter was $20.26 compared to $20.41 in the prior period. The debt-to-equity ratio increased to 1.20x from 1.17x in the previous quarter, with our unsecured debt comprising 54% of total funded debt at the end of the quarter. As Michael noted, a key focus throughout 2025 has been diversifying our funding sources and lowering our overall cost of capital. During the quarter, we repurchased about $9 million worth of our shares at prices below NAV through a 10b5-1 program administered by a third party. We also renewed our repurchase program and maintain the overall size of the program by the $100 million, which is sizable as a percentage of market cap and reflects our commitment to delivering long-term shareholder value. In February, we began investment operations for the joint venture referenced earlier. The vehicle has a total equity commitment of up to $250 million of which $200 million is committed from MSDL. To date, approximately 47% of the total equity commitment has been called and the joint venture has made $372.8 million investment commitments across 51 portfolio companies. Our objective is to scale this vehicle over time to approximately $700 million in assets. Regarding distributions, we paid a $0.50 regular distribution in the fourth quarter. Additionally, our Board of Directors declared a regular distribution of $0.45 per share for the first quarter to shareholders of record on March 31, 2026. As of December 31, 2025, our spillover is approximately $0.85. With that operator, please open the line for questions. Operator: [Operator Instructions] And we'll take our first question from Rick Shane with JPMorgan. Richard Shane: Look, you guys are demonstrating the ability to do more than one thing at a time in terms of deploying capital, repurchasing shares. I am curious when you sort of weigh those investment opportunities and the potential returns, what you think is most compelling. And also when you think about the use of leverage in this environment on your own balance sheet to lean into one or both of those tactics? Michael Occi: Yes, Rick, it's great to have you on the line. Good question. I'll start, and then Dave can give you a little bit more nuance on the buyback program. We've got multiple capital allocations at our disposal and we think they can all at times be value generative. And so it is a balance, as you suggest, leverage is an input into that regular way deal deployment and the economics of that evolve day by day, quarter by quarter, but we continue to find compelling opportunities in the marketplace to go and deploy capital and refinance legacy investments and we think that, that can actually be even more attractive in a volatile environment. And so it's really about optimization of these different tools, but we can give you a little bit more color on the buyback activity. David Pessah: Yes. So our buyback plan, as kind of Michael alluded to, our capital allocation remains prudent. So in the fourth quarter alone, we repurchased $9 million, which is up meaningfully from the third quarter. We're very committed to our buyback program. We understand the accretion benefits associated with that. And most recently with our Board, as of yesterday, just authorized a fresh renewal of the program for up to $100 million in size, which we think is relatively sizable in the context of our current market cap. Operator: We'll go next to Heli Sheth with Raymond James. Heli Sheth: So as you begin launching this new JV, any further insight into the pace or trajectory of ramping the JV. How should we think about capital deployment, earnings contribution over the next few quarters? David Pessah: Yes. No, good question. I'll just give you a quick background on the JV and kind of how we're thinking about the utilization of it. So as mentioned some in the prepared remarks, we put incremental capital to work through that newly formed JV, we committed $200 million in total size. And as mentioned, we nearly called half of that already. Total investments, it's about $373 million across 51 portfolio companies. And there's a credit facility down there of a total debt commitment of about $500 million in size. The idea behind it, I think it just provides capital efficiencies across our portfolio. And then how we're thinking about terms of just overall structural in size, the goal is to get it north of $700 million in funded assets. It can take anywhere from 4 to 6 quarters is our projection in terms of getting there, but we'll be prudent in terms of what we're actually thinking about and scaling that. In terms of the actual investments that are in there, it's honoring our same narrow credit box that's similar to how we been deploying capital up at MSDL. So I'm thinking about our investment strategy as one and the same between the normal way of course, at MSDL as well as within the joint venture itself. Heli Sheth: And a quick follow-up here, switching gears to nonaccrual. This quarter, cost of BDC space, we've seen 3 different nonaccruals in the dental space, including DCA, which is in your portfolio. Are you seeing anything concerning about the dental space specifically? Or is there any -- are there any specific sectors within the broader health care industry that's been concerning? Michael Occi: Yes, Heli, it's a great question. I think as we said at the beginning, the portfolio continues to exhibit very good health. So credit generally across the book has exhibited pretty good trends across a bunch of different dimensions. You look at growth, both topline and EBITDA, as we talked about the stability in leverage and LTV, the kind of grind higher and interest coverage. On the nonaccrual front, we had the one-off, one on. You asked about dental roll-ups. There's probably a pattern there in terms of some weakness we've seen there, as we've talked previously about some weakness in logistics in both of those categories, which is really the extent of kind of industry-related themes that we would highlight as underperforming. We are -- we have limited exposure to both of those and more broadly and away from that, underperformance truly is idiosyncratic. Operator: We'll move next to Kenneth Lee with RBC Capital Markets. Kenneth Lee: Just one follow-up on the new JV there. Just by my math, it sounds as if the overall portfolio allocation could be around 15% or so. Just want to check that. And what do you see in terms of just overall longer-term allocation to this JV? Michael Occi: Yes, Ken, thanks for the question. So the 200 max equity commitment for MSDL equates to a 5% allocation relative to the total portfolio. So when we think about the economic upside potential for MSDL, we would point you to that type of magnitude relative to the whole. And the way to think about it to go back to what Dave alluded to in being kind of having half of the capital already called, roughly 2.5% of that full allocation from the start. Kenneth Lee: Got you. And then in terms of the share repurchase program, the new one, the $100 million, just to clarify, is this a discretionary program? What sorts of restrictions are there around the repurchases there? David Pessah: Yes. No, it's similar to the plan that we had prior. There are parameters in place to submit it's programmatic and administered by a third party that does have some governors in terms of the overall plan in itself. But that -- but then again, it's all being facilitated by the third party. So like for instance, yes, various parameters such as price and other capital structural considerations that go into it. Operator: We'll go next to Ethan Kaye with Lucid Capital Markets. Ethan Kaye: On the JV, so the 47% that currently invested. It sounds like it may have been a kind of onetime asset purchase. I guess firstly, is that the case? Secondly, did that -- were assets sold down from kind of MSDL's balance sheet? And more generally, is that the strategy where MSDL will be selling assets down to the JV? Or are these kind of what will the overlap look like, I guess, is the question? David Pessah: Yes. I'll start and let Michael or Jeff add anything. It wasn't any assets that were dropped down from MSDL into the JV. It was actually an acquired portfolio of directly originated senior secured loans across our book. Michael Occi: Yes. The logic of having warehouse these assets in advance of the formal closing of the joint venture was designed to accelerate the potential impact on MSDL for the benefit of shareholders. So we weren't starting that ramp from zero day 1. As far as overlap is concerned, Ethan, it's a good question. It is the same mandate, and so there will inevitably be overlap as we think about specific allocations at the borrower level industry level. But importantly, we're going to be laser focused as far as our portfolio management activities are concerned to monitor for single borrower exposures, industry exposures on a look-through basis taking into account the JV. Ethan Kaye: Great. I appreciate that. And then 1 or 2 more just on the dividend. So you guys comfortably covered the new dividend by about $0.04 per share this quarter. With that being said, there are still some NII headwinds out there. I guess the question is, how confident are you that you can earn this NII level or this dividend level through the rate cycle? Or is this kind of something you see continuing to have to be reassessed 6, 12 months down the road? Michael Occi: Yes, Ethan, I'll try to break it down maybe starting from the bridge for the $0.49 relative to the $0.50 in the prior quarter. The $0.01 effectively was largely driven by the September cut impact part of the October Fed cut impact as we -- relative to the $0.49 baseline moving forward and focused on the potential impact to SOFR. This quarter, the first quarter of 2026, is really the first quarter where we're going to see the impact of all of the Fed cuts that have happened previously, including the December cut. So probably a couple of pennies directionally impact relative to the $0.49 as we think about all else equal, the impact of the Fed cuts that we've seen. As you alluded to, as we talked about in the earlier remarks, there are a couple of additional cuts expected from the Fed over the course of the year and into '27. That obviously ebbs and flows that can introduce additional drag on NII. But importantly, the joint venture, which was obviously relevant for the prior questions, can provide incremental ROE and NII to MSDL. It's going to ramp gradually, but as we talked about, it's kind of 50% there out of the gate. We wouldn't expect meaningful impact in the first quarter, given the timing of that closing, but we would stand for this to potentially be a contributor beginning with the second quarter and ramping from there. So a lot of these variables we're taking into account as we think about the dividend decision with the Board. There's no way to fully bullet proof any level, including the one that we decided on at the $0.45 is we don't control monetary policy spreads and other variables. But we feel pretty good about the size of the distribution over the medium term based on what we know today. Ethan Kaye: Great. I guess it would be easier if you did control monetary policy, but great. Operator: [Operator Instructions] We will move next to Doug Harter with UBS. Cory Johnson: This is Cory Johnson on for Doug. I had a question. I guess in regards to the dividend, I guess, given where you guys are at in terms of like earnings and also what the spillover that you have. Should we expect, I guess, any supplemental or special dividend going forward? Michael Occi: Yes. Cory, it's a good question. We spent a lot of time thinking about different permutations prior to the IPO. We actually had the supplemental formula that was in a different environment, a rising rate environment. We ultimately concluded to kind of keep it simple and transparent back to kind of some of the principles that we're focused on as it relates to dividend policy. And so as we just talked about, we feel pretty comfortable about the level based on the earnings model and kind of the variables that we can account for today. Should there be excess income at year-end that's something the Board can evaluate in terms of potential for an annual special. Cory Johnson: Got it. And just one other question. Just given all of the noise currently about AI threats and disruption and such. Are there any areas which you maybe went to historically, which you're seeing clear of now or any areas that would give you concern or any areas in particular that you are leaning into or looking to lean into more? Michael Occi: Yes. The short answer is, No. We have had a high bar as it relates to capital deployment from the very beginning. It's part and parcel to our more defensive model. That applies to software. It applies to every industry that we invest in. Within that, we're focused on, of course, the underlying business at the very top of the list, but also structure leverage pricing, et cetera. And so that certainly applies to software, where AI has been part of the equation as it relates to the original underwrite for a while now and certainly on an ongoing basis. And it's not just software as we evaluate the potential impact, positive or negative, from AI to other businesses away from that industry vertical. So in short, the industry allocations are going to ebb and flow. They're going to ebb and flow based on conscious decisions that we are making on a regular basis to deploy capital. And certainly, there's a governor that we have in mind as it relates to making sure at the portfolio level that there's significant diversification throughout. Operator: And at this time, I would like to turn the call back to Michael Occi for closing remarks. Michael Occi: Thank you. On behalf of the management team, I greatly appreciate you joining us today, along with your support from Morgan Stanley Direct Lending Fund. As I've mentioned before, our platform benefits from Morgan Stanley's global resources and our continued focus on MSDL as our most visible pool of capital, the firm has continued to support the build-out of our team as part of the ongoing scaling of MSIM's credit business. I'm very pleased with our continued execution, particularly in the face of the more eventful backdrop. We're seeing potentially constructive market developments and our strategy and structure position us to win in the marketplace. We also remain methodical about optimizing the business with the goal of delivering high-quality returns to investors. We look forward to providing an update on our first quarter 2026 earnings call in May. Operator: Thank you. Ladies and gentlemen, that will conclude today's call. We thank you for your participation. You may disconnect at this time.
Operator: Greetings, and welcome to Grupo Traxión Fourth Quarter '25 and 2025 Conference Call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the conference over to Aby Lijtszain, Executive President and Co-Founder. Thank you. You may begin. Aby Lijtszain Chernizky: Thank you. Welcome, everyone. There are many positive matters to discuss. Despite the challenging and complex year that ended, perhaps the most important milestone of the year is the acquisition of Solistica. This is a tremendously accretive transaction that has transformed the asset-light profile of the company and is also remarkably strategic as we set even higher the barriers of entry to the logistics and transportation sector in Mexico, and Traxión further emphasizes its leadership in the industry. The integration was fully completed within 2025 and synergies started to become apparent in operations, finance and most importantly, in the commercial front. Moreover, as you know, we took debt to pay for the acquisition, which has proven to be effective as our leverage ratio ended the year exactly at the same level it was just before the transaction took place. This means that we were able to create additional value as we integrated such a successful company into our platform. Just to put some context, this is exactly the level at which we invest for organic growth below 4x EBITDA. In summary, we bought a large successful company, which has proven to be a perfect fit, perhaps the best in our history. Moving on, we achieved our guidance figures and did so taking care of operating cash flows, while maintaining a healthy leverage ratio well within our comfort zone. As usual, we released our guidance for 2026, which considers a growth of approximately 10% in both revenue and EBITDA with a CapEx of around MXN 2.4 billion. This basically means 2 things. First, there is a small margin expansion implicit in those figures, which could lead to lower leverage. And second, while the absolute number of CapEx might seem high, it is not when we look at it as a percentage of revenue. which is a significantly lower figure compared to other years, especially 2023 and 2024. We are starting to see stabilization in our business. and many investment and expansion decisions that were on standby are materializing. We definitely see a better outlook this year compared to 2025. Nonetheless, we will be conservative and proceed with caution this year, reducing CapEx and preserving cash flows. Finally, please be advised that since the asset-light component will become increasingly more relevant in 2026, accounting for a majority portion of revenues, EBITDA margin should be around 16% moving forward. This is the new standard for our margin from now on. Even though this new level is lower compared to past years, there are also significantly lower CapEx requirements to grow with a higher contribution to profitability. With that, I end my remarks today. I will now hand over to the others for a deeper dive in operating and financial matters. Rodolfo Mercado Franco: Thank you, Aby. Good morning, everyone. I will now walk you through the most relevant operating details. The Cargo division continued with disruptions in some circuits. Such phenomenon has been caused mainly by instability in the demand driven by peaks and valleys in both cross-border and regular services. This resulted in a 7.9% decrease in kilometer volume and 7.5% in revenue per kilometer. In the period, however, for 2025, we experienced an overall increase in revenue per kilometer with 8.2% less volume with some efficiency in costs. Moving on to mobility of people, we posted a smaller growth rate that was planned like that. As you know, for 2025, we decided to be more conservative towards expansion in this division. We carried out a plan to increase our clients' profitability. And for the first time, there is a fleet renewal program in place in this segment. This basically means that we are increasing the asset utilization rate to reduce CapEx requirements. All that resulted in a marginal growth in the average fleet, a reduction in kilometer volume and a mid moderate single-digit growth in virtually all relevant metrics despite the challenges and complexities we experienced throughout the year. Moreover, such efforts have started to pay off, and we will see results as soon as the first quarter of this year. We continue to implement and upgrade our proprietary technologies, increased the utilization of artificial intelligence and broadened several best practices, guidelines that have resulted in a stronger commercial and human capital backbone. Finally, in the Logistics and Technology division, we experienced greater-than-usual revenue this quarter. Traxión participated in large vaccine distribution business in November and December, which generated more than MXN 2 billion of revenue in the period. Despite having a lower-than-usual margin, it was a profitable business because of its 0 CapEx nature and is proof of the company's large operating capabilities and highly specialized service. As you can see, even though there were disruptions and challenges this year, Traxión was able to deliver once again. Having said that, I will now hand over to Wolf. Wolf Silverstein: Thank you. On the financial side, there are several financial metrics worth elaborating. First, one of the most relevant figures this period is operating cash flow. It more than doubled during the quarter, mainly because of much better working capital management. For the year, such metric posted a 33.2% growth compared to 2024. Then we posted a 2.2x leverage ratio, which as Aby just mentioned, is especially relevant since it is basically the same ratio we reported just before acquiring Solistica, which translates into a very accretive transaction as we typically deploy organic CapEx at such levels. Since we took debt to pay for a great portion of Solistica, it is important to bear in mind that such amount was fully reflected in the balance and in the cash flow of the company with the caveat that Solistica only reflected 6 months of results in 2025. So cash flow should look better if we look at the pro forma with 12-month basis. Moving on, I want to comment on net income as the annual figure came down more than 24% than in 2024 and was mainly driven by higher interest expense due to investments executed during the year that will reflect the full benefit in 2026, together with the negative effect of foreign exchange and tariff uncertainty, resulting in fluctuation in customer demand and volumes, both in cross-border circuits and regular services, which led to less kilometers driven and lower prices, mainly impacting temporarily our mobility of cargo and logistics businesses. Despite this, both our gross profit and operating income remained virtually unchanged, which is good news. In terms of CapEx, our guidance for this year is MXN 2.4 billion, with approximately 60% allocated to fleet renovations in both cargo and mobility, 25% for organic growth and the rest is for technology and innovation. Please bear in mind that this absolute figure is significantly lower than in other years as a percentage of revenue. Also, we expect EBITDA margin for 2026 to be around 16%, which will be mainly driven by a higher contribution of the asset-light business lines to consolidated revenues. All that is part of our strategy to proceed with caution this year, privilege cash flows and organic growth mainly through our asset-light business and take more care of leverage as we have some initiatives this year to improve company profitability. Thanks for your attention. I will now hand over to Tonio. Antonio Obregón: Thank you, Wolf. I will now walk you through some relevant ESG milestones and other tech-related developments. For the second year in a row, Traxión was included in the Global Sustainability Yearbook of S&P, which is one of the most prestigious and comprehensive rankings in terms of sustainability. This achievement represents the most compelling proof of the company's commitment to best ESG practices and of the transparency of our communications and disclosure. This inclusion gains a special relevance if we consider that there are more than 9,200 companies from 59 industries assessed globally and only 848 were selected as part of this year's addition, which positions Traxión as 1 of only 2 Mexican companies of the transportation and infrastructure sectors to be included. Moving on. During the fourth quarter, Traxión received its corporate sustainability assessment ranking for 2025, which came in 8 points higher compared to 2024 and places Traxión within the top 4 percentile and in the 11th place of best ranked companies in the industry globally and #1 in Mexico in the sector. This assessment allows an accurate comparison of the performance of all companies within a broad range of ESG-related criteria is available to an ever growing universe of investors and represents the most renowned sustainability database within global indices. Finally, another important sustainability milestone is that this period, we incorporated data regarding renewable electricity generation from solar panels installed in our facilities. This is indeed very good news and a tremendous step in terms of emissions reduction and energy efficiency as we continue to expand our logistics footprint and presence. Thanks for your attention. With this, we conclude management remarks and open the floor to Q&A. Operator: [Operator Instructions] Your first question comes from Pablo Monsivais with Barclays. Pablo Monsivais: I have 2 questions. The first one is if you can provide more detail on the increase in revenues in the logistics sector. We saw that you won a project in the pharma sector, but would love to have more visibility on that. And my second question is on your guidance. If we account from the contribution of Solistica for 2026 and we compare your guidance for 2025, it seems that implicitly cargo revenues are still are negative or that cargo will have a tough year in 2026. What's going on in that business? If you could provide more color, it would be very helpful. Antonio Obregón: Pablo, this is Tonio. Can you repeat the first question? It wasn't very clear. We didn't catch it well. Pablo Monsivais: On the increase in revenues in the logistics sector and the project that you have on the pharma side. Antonio Obregón: Pablo, thank you. It was a vaccine distribution operation. We were able to participate mainly because of the large operating infrastructure that we have and the high-quality service in the pharma division. It was a first time for us. It was a particular event, and we believe that we delivered a better-than-expected service, and we feel very confident that there is a high chance of repeating it this year. However, that business, in particular, is not included in the guidance. Wolf Silverstein: Pablo, and regarding your second question, in terms of the guidance, basically, as Tonio just mentioned, we didn't include in the guidance to repeat this particular project, even though we think that, that could be repeated by the end of maybe 2026. So if you consider that, let's say, without putting in the base of 2025, basically, the growth that we are projecting for 2026 in terms of revenue, it will be close to 17%. So that's what basically moved the company back to the margins and back to the regular track that we had in the previous years. Operator: Your next question comes from Martín Lara with Miranda Global Research. Martín Lara: What can we expect in terms of EBITDA margins in mobility of cargo and mobility of personnel this year? And could you please provide the CapEx breakdown between maintenance and growth? And how do you see the fleet performing in cargo and personnel? Wolf Silverstein: Martín, regarding your first question, considering the margins in the cargo and mobility of people divisions, I would say, basically, we are looking for something similar. As you can see, usually in the Mobility of Personnel division, we are something close to the 26% margins. And regarding the Cargo division, it was at the end, something between 18% and 19%. So we are expecting something close to that considering the FX rate as of now. And even though it could be better maybe in the second half of this year in particular. And regarding the details of the CapEx for 2026, it is basically the renewal CapEx will be almost 50% of the CapEx that we are expecting. We are going to be growing a little bit on the mobility of people division basically and renewal CapEx only for the rest of the asset-heavy divisions. Martín Lara: Okay. And what can we expect in terms of free cash flow generation? Wolf Silverstein: Considering, in particular, this guidance, and as you can see also in 2025, we're privileging more the cash flow generation. As you can see, in particular for 2025, the operating cash flow, it will bump up over 30% for the previous year. So this is part of the strategy of the company to privilege the cash flows and even though to get a free cash flow in an organic way for 2026. Operator: Your next question comes from Enrique Cantu with GBM. Enrique Cantu Garza: Congrats on the results. So as part of your evaluation of potential M&A opportunities in the U.S. Could you elaborate on the type of assets you are currently assessing? And additionally, how should we think about the expected timing for a potential transaction? Antonio Obregón: Enrique, thank you for your question. What we're looking at for M&A in the U.S. is we want to participate in the cross-border business, which we believe is a very attractive market currently. And that's where we are focusing our efforts. Enrique Cantu Garza: Okay. Perfect. And then do you have an expected timing for this transaction? Antonio Obregón: No, we don't have anything defined yet. We have some targets. We've been working analyzing, but we don't have anything definite as of today. Operator: [Operator Instructions] Your next question comes from [ Arturo Leal ] with [ Imberco ] Asset Management. Unknown Analyst: My first question relates to shareholder value creation. While we recognize the company has been executing on its growth strategy, remains focused on M&A, the stock price has declined by nearly 70%, which appears to reflect meaningful investor concern. Could you elaborate on what you attribute the decline to? And more importantly, what concrete actions have been taken or planned to enhance shareholder value? At what point do you expect balance acquisition-driven growth with a clear and more measurable return framework for investors? And secondly, regarding foreign exchange dynamics with the peso strengthening relatively to the U.S. dollar, how does that impact the company, positively or negatively? Antonio Obregón: [ Arturo ], this is Tonio. Thanks for your question. I'm going to answer your second question first. The foreign exchange has 2 effects basically in the company. The first one is that a portion of the trucking revenues are denominated in U.S. dollars, basically the portion that we do in cross-border services. That has an impact and has had an impact historically when -- with a stronger peso. What we are looking at this year to offset that negative effect is that we are adjusting the prices to reflect a more accurate exchange rate, which is on the 17.2% range. And the second effect of foreign exchange in the company is that we hold a position in U.S. dollars. And when we do the mark-to-market, we do -- we record either a profit or a loss depending on what's happening on the markets. And regarding your first question, we are very worried about the share price as well as you. And that's a matter that is of utmost important for the company. One of the things that we are doing to reverse that situation first is obviously improve the results of the company for 2026. In 2025, we faced a very challenging year, but we were able to protect the balance to privilege cash flows. If you see, for example, operating cash flow in the quarter, in the quarter, it went up more than 100% and in the year, more than 33%. That's a very, very, very meaningful milestone for the company. 2026, we're going to reduce CapEx. We're going to be more conservative towards investments in growth. And that naturally privileges cash flows and protects the balance. We are expecting a normalization, stabilization and then a recovery this year. And then we are always striving to be close to our investors, to our research analysts to be able to respond quickly to their concerns and so that they have information to make their decisions. So those are the actions that we're taking towards more value creation for our shareholders. Unknown Analyst: Just a follow-up, if I could. Do you guys expect to do any share buybacks at this price considering the price and the value of the company or maybe distributing some dividends to investors? Or the sole focus is to continue growing the company and maybe paying back some debt? Antonio Obregón: Thank you, [ Arturo ]. Yes, we have been doing some buybacks at this level. We think it's a very strong message to the market that they see us participating at this level. We think it's ridiculously cheap, the valuation right now. And in terms of dividends, we are not looking at that right now. The company is in a growth mode, and we are using all the cash that we generate to grow and to be able to maintain the operations of the company. Operator: Your next question comes from Daniel Rojas with Bank of America. Daniel Rojas Vielman: The first one is on your costs. Thank you for breaking down the items in your press release. I was seeing that you had an increase of around 124% to 125% due to facility services and utilities. I was hoping you could give us additional comment on that and drill down on what's happening there and if that will normalize going forward? And on your other cost items, what we should expect going forward? And my second question is regarding the Cargo division. You gave us guidance for that, but I was hoping to get some color on what you expect as we move into the second half of the year and maybe we get a resolution of the USMCA. Are you seeing your clients getting prepared for that? Or is it too early? I'm trying to think of 2027 and it should be a recovery year? Or should the Cargo division numbers be more normalized to what we see in 2026? Wolf Silverstein: Daniel, this is Wolf. So regarding the cost level, basically, it was, let's say, affected by 2 particular things. First one was the particular project that Tonio already mentioned about the pharma vertical. So basically, that's one of them. And the other -- and the rest of that in terms of the facilities, basically, it's the inclusion of Solistica into the numbers of Traxión. And obviously, all of that related cost to the third-party units that we use basically in the brokerage business. So that's basically the 2 main things that kick up the cost. So one as of now was a particular event in the fourth quarter that could be, again, repeated by the end of 2026. It's something that it comes with a seasonality of that business. And the rest is basically the growth considering more in the asset-light business and the expansion of the brokerage business. And regarding the second question, considering on the cargo side, basically, we're looking at better economics for, let's say, for the second half of 2026. We're starting to see some clients that basically in 2025, postponed their investment decisions in several industries considering the tariff environment. And the [ talks ] that we have with them, it's basically that they're taking some of that decisions currently. So we expect a stabilization in that demand. And obviously, with that, we can stabilize also the prices into that particular division. So regarding that question, we're seeing a much better second half of the year in the Cargo division. Operator: Your next question comes from Andres Radin with The Rohatyn Group. Andres Radin Borrajo: Regarding the pharma project, could you repeat if it's a onetime thing? Can we expect it for the next year? And also, if you could repeat if you made any adjustments in the guidance regarding this project? Wolf Silverstein: Andres, this particular project is -- it comes with a seasonality of that particular need. So we operate for the first time of the company in the fourth quarter of 2025, and we are not projecting in our guidance for 2026, even though we think that with the work that we did in that particular project and it was successful, I think maybe we could be doing it again by the end of 2026, even though we didn't consider in this guidance. Operator: Your next question comes from Federico Galassi with The Rohatyn Group. Federico Galassi: Two questions. The first one is a follow-up of Andres' question. If I do the math for this particular project in pharma, the dimension of this business was almost flat, almost zero, it is okay? And if you can give you some more information about that. This is the first question. Wolf Silverstein: Federico, so as Tonio mentioned, in particular, and Rodo, this project, it was the first time that we executed in Traxión. The margin of this business was less than 5% with 0 CapEx. So it was basically all ready for the company, even though we experienced the first time executing this kind of project, basically, based on the infrastructure of the company. So if we are able, obviously, to repeat that by the end of 2026, hopefully, we can get much better economics on that project. Federico Galassi: Okay. Okay. It's a project that can give you more revenues in the future. And the second one, and you're reducing part of the net debt to EBITDA after Solistica, et cetera. But the interest payments continue to be a big portion of the EBIT and you -- how's your view for that for this year, in particular in the leverage side? Wolf Silverstein: So regarding the interest expense for 2026, there's 2 different things that will be important to mention. The first one, it's obviously that the rates come down during the last 12 months. So that will be basically affecting positive, let's say, the expenses in terms of interest. And the second one, as we mentioned also, we are putting less CapEx for this year. So with that, we are deleveraging the company more than it was on average on 2025. So with those 2 things, we're experiencing less, let's say, interest expense for 2026. And that's basically what we are projecting. As also -- maybe you know last week, we issued a new bond also in the market. So we'll continue looking for different strategies to make more efficiencies also in the debt side. Federico Galassi: You continue after Solistica with your net debt target for the year? How is your... Wolf Silverstein: We're looking at -- more close to 2x. Operator: Thank you. This now concludes our question-and-answer session. I would like to turn the floor back over to Aby Lijtszain, Executive President and Co-Founder, for closing comments. Aby Lijtszain Chernizky: We are looking to a double-digit growth in the low teens for this year with much less CapEx while privileging cash flow generation and preserving the balance. The market is starting to stabilize. There are many clients across different sectors that put off their investment or expansion decisions in 2025 that are currently making such decisions, and Mexico is still a very competitive destination for many industries. We are confident that 2026 will be a normalization and recovery year. Thanks for your attention, and have an excellent weekend. Operator: Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. Please disconnect your lines, and have a wonderful day.
Michal Zasepa: Good afternoon or good morning. Welcome to a call conference for KRUK Group. My name is Michal Zasepa. It's my pleasure to host you to this meeting. I'll be using the presentation, which is available on our website since yesterday. Please let me guide you through the Q4 or full year 2025 results. And in the meantime, and after my presentation, please use the Q&A functionality here in Teams to ask your questions. I will answer them after the presentation. So let's start. 2025 is a record year for the business. If you look at operating profit measures such as EBITDA, cash EBITDA, there's healthy growth of 12%. It's also 12% that our assets grew by. The net profit growth is much smaller. And the result for that is taxation. There was a release in tax assets last year. There was more tax that we paid or created additional reserve provision for deferred tax assets this year. But fundamentally, this has been a healthy growth for 2025 despite the fact that during the 2025, Romanian RON depreciated versus euro and polish zloty, which cost us about PLN 41 million. And despite the fact that we have increasingly invested and spend money on digital transformation. The OpEx for the digital transformation, which started at the beginning of 2025 was for the year about PLN 30 million. So you have the PLN 70 million of additional costs that occurred in 2025 and depressed our results. Still the business grew by about 12% on operating level and on to profit before tax level. We ended that year with PLN 11.6 billion of portfolio worth on our balance sheet, again, 11% growth with healthy indebtedness level at 2.6x net debt to cash EBITDA with record high recoveries, investments moderate, somewhat lower than our initial plan. They were PLN 2.2 million. But on the other hand, with decent return, you will see later in this presentation, we assume PLN 2.3 million return on the investments we made back in 2025. So overall, a decent year, although it's fair to say we budgeted for higher growth, we have not realized fully our plans. So let's look at the long-term horizon. You may see here that this was a year where we added PLN 2.2 billion, which is less than in the 2 previous years. But please remember, in that business, there is a strong inertia that allows us to continue to recognize the profit and revenue growth a few years after the purchases. That's why this level of investment, especially if it's a good return should not undermine our ability to grow the business in the future. The business is very strong in terms of cash flow. You can see a healthy growth of cash EBITDA throughout the years and also in 2025. Also, our recoveries level for the total consolidated group level showed very healthy growth. This has been excellent results in Poland, Romania, good results in Italy, relatively weak results in Spain and in France, but the total was quite satisfactory. And we finished that year with 20% return on equity as expected despite the fact that our net profit was somewhat lower than budgeted. If you look at Slide #5, it shows a split of the recoveries. You may see Poland contributed about 40%. The recoveries on total were good. They were also in each of the quarters of 2025 and in Q4 above the accounting, this conservative forecast that we had, this percentage is single digits, and it should remain single digits. In 2025, we invested across all 5 of our markets, Poland, Romania, Spain, Italy and France. The biggest single market for us was Italy. And this year, we faced somewhat higher competition than in previous years, but this is also worth to consider in context of decreasing interest rates. Our expectations for returns did not decrease. The market went down somewhat with IRR expectations because interest rates went down, but also because in some of the markets after 2 years of dominance of KRUK, some of our competitors were more brave and possibly wanted to invest more and we let them do it given that we've realized our goals. The results, we believe they are quite healthy, although not as good as we wished for at the beginning of this year. You once again see here that on all the levels, but the net profit, the growth was double digit. The costs increased -- operating costs increased year-on-year, and this is -- and this increase was driven by salary increases, which grew in line with the market. But also, as I mentioned, there is an additional increase coming from digital transformation, roughly PLN 30 million and some increase in legal costs. Finance costs grew as well because we had more debt. On the other hand, the interest rates decrease set off some of that increase. And also, we had a positive impact of hedging instruments totaling about PLN 60 million. And once again, our revenues in that year were negatively affected by depreciation of RON despite that Romanian results were excellent for the year, which you will see in a minute. The company is very well capitalized. We enjoy good access to debt, both from banks and the bond investors. We are ready to continue to deliver on our strategy, which calls for increasing investments, but also increase in recoveries above what you see in estimated recoveries, this conservative accounting forecast, which calls for the digital transformation realization in the next couple of years, and I will touch on that in a few moments. So this is a look at the segment business lines performance across our markets. In 2025, as I said, you saw very good deployment of -- into portfolio purchases in Italy, where we enjoyed, again, a leading position. It was a good year in Poland, although we did invest less than last year. So there, you could see that our investment discipline limited somewhat our appetite for portfolios. We -- our market share for this year was lower. We had, on the other hand, excellent year in Romania, and we withdrew from some of the tenders, especially for banking portfolios in Spain, waiting for more stability in our collection process and especially more stability in the performance of Spanish cards. So if it wasn't for Spain, we would achieve our planned target of PLN 2.5 billion investment. Still, this PLN 2.2 billion comes at decent IRRs. So we are satisfied with this result. You can also see that we optimize between markets to get the maximum NPV to get the maximum IRR from the deployed capital. That's why we decided to decrease somewhat investments in Poland or not to be more aggressive in lowering our expected return in Poland. But on the other hand, we could achieve the desired return level in other markets, Romania and Italy. And that's why you've seen bigger investments there. You can see that all of our 4 markets are profitable with good EBITDA. We were happy with great results from Poland, great results from Romania despite the fact that there is a decrease versus year-on-year, but that comes from just decreased amortization of our very profitable portfolio. We're also very happy to see record results, almost PLN 300 million of EBITDA from Italy. We are not happy with the results in Spain. We hoped we expected higher results still, the business continues to be profitable in 2025, achieving this PLN 130 million EBITDA for the full year. We made a write-down of our assets in France and some write-down of our assets in Slovakia in process of exit, and I will comment that on the subsequent slides. Overall, this picture shows a strong -- solid, I think, growth, double-digit growth on EBITDA and cash EBITDA year-to-year, as you see here. And now a commentary to the market. In Poland, our assessment of the market size was that it was almost exactly the same as in 2 previous years, about PLN 2.1 billion was deployed in Poland for consumer unsecured portfolios, of which about 25% was bought for us. This likely gives us #1 position, although it's a notably lower market share than a year ago and 2 years ago. You may look at this that 2024 was an exceptionally exceptional year for our market share. Poland continues to be very competitive market. It's still a position in 2025 that gives us #1, which shows we are #1. But it's also an outcome of the fact that after a few years of strong market position, some of our competitors have more appetite to increase their deployment in Poland. And also decrease of interest rates naturally decreases or increases pressure on the IRR. Overall, we made good investments in Poland achieving this level of market share. And the results in Poland in terms of recoveries, performance of the back book were excellent. You can see that in the numbers here. You can see it in the value of positive revaluation that we recognized in Q4 over [ PLN 120 million ], and we expect that this trend continues in the following quarters and likely years for the Polish market. In Romania, the market grew significantly year-on-year. You can see that it's -- our estimate is about PLN 800 million compared to PLN 500 million last year, of which we took great majority of 70% market share. So it's a very satisfying result. And the results in terms of financial performance are also very good. You may see that the revaluation was somewhat lower than in some quarters of last year. And I want to tell you, this is the outcome of the fact that we have raised the recoveries so much that this potential for future positive revaluation is lower now than it was a year or 2 years ago. We still expect to continue to see positive revaluation, but on a level closer to the level you have been observing in Q3 or Q4 2025 in subsequent quarters and few years. Overall, the business is growing very well. And in 2026, we hope to be close to the investment level we've seen in 2025 in Poland. And I should add in Poland, our plan assumes that we will grow investments versus last year. In Italy, the market also grew compared to previous year, PLN 2.3 billion, and we are very satisfied with this market share, although it's lower than in '23, '24, but indeed, it was extremely high in those years. In terms of performance, this performance was good, but not as good to allow us to recognize positive revaluation in the past 2 quarters, you can see that it was more or less 0 for Q3 and Q4. If the recoveries go in line with our operating targets, which means they would exceed the accounting forecast, we should come back to positive revaluation in following quarters. This is uncertain, but this is something we would like to achieve. Overall, the situation in Italy is good, stable. And you may have read that we have already secured a significant portfolio on that market in 2026. And Spain, last but not least, the market significantly decreased year-on-year. We believe this is partly due to the uncertainty in legal system among -- across Spain, the courts were working slower and there was uncertainty how long such a situation will persist. In that market also KRUK stopped buying the big banking portfolios. we resorted to buying smaller consumer finance portfolios, which are not as much affected by the legal process. And that's why we only invested there a fraction of what we invested in the previous 2 years, and we had about 12% market share. The performance on that business in 2024 and Q4 was below our expectations. Still, our recoveries were more or less close to the accounting forecast. And you can see that in that situation, the revaluation was more or less 0 for this last year and also Q4. The business was profitable in each of the quarters and also in Q4 2025, but we have ambitions for the business to generate significantly more money in the future. The situation in the legal system across courts in Spain is that the reorganization is complete in sense of creating these new departments and making the final structure for the courts, but it's the beginning of the process of digging into those delayed thousands or hundreds maybe of thousands of cases that lie in Spanish courts and wait to be processed. This acceleration needs to happen this year, we hope. And we think it's realistic that we will see it happening. Only we don't know exactly what the pace will be and where we'll see that exactly in 2026. So it's a stabilization, but on a relatively low level of court effectiveness and with an expectation from our side that this situation will change positively in 2026. When this happens, will be able to resort to buying more, and we have plans to buy -- to invest in Spain this year significantly more than last year than this PLN 122 million, but less than in 2024. So somewhere in between will be our target investment market. When exactly how big it will be, it will depend on how the situation evolves. In the meantime, we don't wait and see. We don't sit and wait for the results. We're focused on what we can improve internally. We're also testing an alternative legal process, which used to be longer, more expensive, but now may prove to be more successful. And it could be that we'll be building also some upside to the current revenue forecast by exploiting those alternative legal processes plus introducing some improvements in our operating process, which is always possible and hopefully, that will build our -- improve our profitability for the coming years. We stand by Spain. We bet still our money on that market. We believe we will make it work and come back to higher profitability in the future. And finally, other markets, please note that these numbers entail France, but also Czech, Slovakia and Germany, the 3 markets that we're exiting and France, the only market which we are developing among this group. In Germany, we have fully exited in 2025, so we don't have assets anymore. Czech and Slovakia, we are on plan to exit these markets in 2026. We made a few sales of our assets on that market. Some of those sales were at profit and some of the sales that we made for Slovakian assets in Q4 was actually at loss. So part of this EBITDA loss that you hear, a few million of that is coming from the sale of Slovak portfolios. But majority of the loss comes from negative revaluation of our -- some of the French portfolios, not a comment to that. You probably realize entering a new market in NPL is a high-risk operation. That's why -- and also having gone through these processes on some other markets, we limit the high risk by limiting our investment deployment in size. That's why we invest in that market as you see here in 2024, PLN 90 million or PLN 115 million in 2025. But we indeed can expect that the performance of those portfolios can be significantly different than our initial assumptions, especially that we don't have operations there, especially that we rely on the valuation of these portfolios provided by third-party servicers. Now we are in a situation where after 1.5 years being there, we had a very positive and better-than-expected performance on any [indiscernible] process. That built our positive EBITDA for that business in the 2024 and 2025. And sometime in 2025, in the second half of 2025, we noticed that some of the cases from some of the portfolios after we entered the legal process do not deliver as much as expected. That means the courts behave differently than assumed. That also means that there may be a high level of imprecision in the valuation. It's underestimated [indiscernible] part, overestimated the legal part. This is normal. This is a normal phenomenon for newly bought portfolios. We make now a reduction in our expectations for recoveries. We defer some of the expected payments for future. We also manage our servicers. We have retained second servicers sometimes in 2026 when we compare both how they do in the legal process and we go on. This situation is, in our view, not a significant obstacle -- it happens usually on new markets. It happens sometimes on old markets on some portfolios we carry on. We just try to learn from the situation as much as possible to include that learning in future investments and in improving our operations. Unfortunately, at this point, in France, we don't have full control of our operations. We don't have operations. So this -- our ability to improve is also lower than on the markets where we have a servicer. But this -- on the other hand, we don't need to cover all of the overhead cost of having operations there being still a small-scale company on the [indiscernible]. So we will continue to buy at small scale in France in 2026 and try to learn as much and improve as much as we can from this situation we found ourselves in 2025. And a word about our lending business. We presented from now on, we will present it as one group level loan business because Wonga Poland is now a mother company of Novum, the lending company that was focused on crew customers. And also Wonga Poland acquired from KRUK Group, its Romanian entity lending to customers and started to lend money on the open market to new customers. So now Wonga brand is the brand for the lending activity across KRUK Group being present on 2 business lines in Poland, open market and closed customers in Poland and open market and crew customers in Romania. And I'm happy to tell you this was a very good year for the business. We earned PLN 170 million EBITDA in 2025. In terms of funding access, the situation looks good. In 2025, we successfully increased value of our credits and making from the banks. We also saw a very good market for bond issues. That situation persists in 2026. So please expect us to also strengthen our access to debt funding this year, although it's not a year where we would need a lot of money coming from the analysis of our cash flow, not so much of our bonds are coming due in 2025, actually none. However, it could be that we decide to resort to call option for some of the bonds calculating whether it's profitable or not for specific issues. So that moment may come because of the difference in interest rates now and from a few years ago. We are well funded, and we will use most likely banking credits and Polish bond issues to finance our growth this year. On this slide, I draw your attention to these figures, which show the expected money multiple or gross IRR at all the investments we made in a given year. And you can see it's about 21% for 2025 or 3x money, a decent result. It's lower than in 2024 for 2 reasons. First is indeed somewhat higher competition and our returns are subject to pressure from fall in decrease in the interest rates. But second, a higher percentage of our investments is coming from countries where we have a longer curve, namely Italy versus Poland. And also that means that the money multiple and IRR is similar, but the gross IRR is somewhat lower. Overall, on IRR on operating level, we made our budgetary plans. Also, you may have seen that we decided to invest somewhat less, but at a better IRR, which is, I think, a safer scenario. Moving on. I want to also draw attention to this slide. The graphic representations are the slides below, where we had another year of recoveries, which shows the strength of the back book. This 22nd year of our recoveries portfolios or subsequent year gave very satisfactory performance across those old vintages of portfolios, which tell us this curve has been flat and nothing indicates that it's going down soon. So that's a very positive news that those recoveries are remarkably resilient. And on this slide, I want to comment how advanced we are for implementation, realization of our strategy, strategy for the period of 2025 to 2029. Please remember the most important element of this strategy is to deliver on the net profit growth. And here, we don't give you a guidance, but we guide you to what our shareholders approved for the incentive plan for the company and for the Board, which calls for 12% annual profit before tax growth every year in that period. And we would like to achieve that, and we did achieve it in 2025. Now the elements of that plan call for PLN 15 billion of investments. We are on way to realize it. But please understand it is a benchmark. If we can realize our profit goals by investing not PLN 15 billion by PLN 13 billion with decent IRRs, that's even better scenario for us. So the PLN 15 billion is not a goal in itself. Of course, we need to grow investments to continue to grow long term, but it's really a range of possibilities. And at this point, this PLN 15 billion, we believe, is still possible to achieve. More important, I think, is what do we think and what do we see about the possibility of exceeding the accounting remaining -- the estimated remaining recovery. So this accounting forecast for recoveries. And for the first time, in 2025, we showed you a picture where we said, listen, our ERC stands at PLN 21 billion, but the management's plan, this ambitious operating plan stays at PLN 8 billion more, PLN 29 billion. And in this presentation, we give you a situation -- a snapshot of situation as of now a year later. And this situation is that currently, our ERC stands at PLN 26 billion, but our operating plan is again PLN 8 billion above. So despite the fact that we recognized PLN 500 million of positive revaluation raising our accounting curve, despite the fact that we achieved PLN 225 million of recoveries above 2025 accounting forecast. The difference, this PLN 8 billion difference between accounting and operating plan did not decrease as planned. It actually stayed at PLN 8 billion. Why? Because we saw we identified additional potential of recoveries on our back book on portfolios that we have purchased over the past 20 years, not on the ones we bought in 2025. So it's a significant positive situation. And we also tell you most of that additional roughly PLN 1 billion comes from Poland sometimes later in the curve. And why it's coming? Because we see the stability across all the back book portfolios in recoveries even after 10, 12, 13, 15 years. So it's quite positive, and it tells you despite significant revaluations, we did not decrease this potential to go above forecast -- recoveries forecasted in our accounting plan for the next [indiscernible] year. We made the 20% ROE target as expected. We are on the way to build our assets to PLN 20 billion. In that time, the assets grew by 12%. We continue to go through digital transformation from this [ PLN 500 million ] earmarked for this project, we spent already about [ PLN 70 million ], 40%, OpEx, 60% CapEx. Our leverage is contained within the plan. So I think we can say all of the boxes are ticked here in terms of strategy implementation. On this slide, we once again tell you this difference between operating and accounting target, but there's no new information above what I told you a minute ago. So I'll go further. And finally, on this Slide 18, we tell you a bit more detail about what we have achieved technically in terms of building this new digital IT ecosystem. This is a very important year, 2026, where the system, this newly created operating system will already be tested on the first portfolios in Poland. It will be the minimum viable product. So it will not be fully operational, but it will already test sometime in the second half of 2026, whether the system works, what need to be improved. And once again, the full functionality here, we want to achieve by 2029 and the benefits, which we believe will be significant from implementation of this new system in Poland, Romania, Italy, Spain and potentially later in the new markets will come after 2029. So we are well advanced in that process. It's a difficult process. It's an investment in the future. It's an investment with a payoff beyond the strategy level, but we believe it's very important for the success of that business in the long term, and we're really excited about what we are building at the company. And just a reminder, you may have read that in January, we have -- we announced that we will be reorganizing the group to fit it better for a company with very significant element of investments in NPL. KRUK wants to become an alternative investment company, a publicly listed alternative investment company by end of 2027. It's a significant reorganization. We believe it will help us manage risk better. It will make us stronger. It will be a more regulated, more safe business, we believe, better fitted to realize our investment plans. And we started to work on that, and we will need probably 2 shareholders' approvals during that process. First, to break up KRUK into operating company, headquarter and investment company and second, to merge this investment company into a licensed investment fund sometimes in 2027. We're in process of preparing for that. The good information is we have good feedback from the regulator, and we have good feedback from our biggest shareholders to continue to work on that path and I think a good understanding of all the regulator and supervising bodies. I think this is the most important information at this point, and I'll be very happy now to take your questions. I'll now look at the Q&A section. Michal Zasepa: Okay. You are asking how the new structure will affect us in terms of taxation. So my answer to that would be, first of all, this reorganization is done for business reasons so that we are better prepared to be a company that deploys in the next 5 years, this PLN 15 million and does it mitigating the investment risk does it with better regulatory oversight and does it with good investment discipline. If we deliver on this plan changed, the side effect could be that our tax situation remains as it is currently, which means we continue to pay 19% tax from the profits that the company has made, where our securitization funds profits are taxed when they are transferred to the [indiscernible] in the company when we pay out the dividend we pay or we pay back or redeem our bonds. The side effect of the transformation will be that if we get positive opinion from the Polish tax authorities, our securitization companies will not be subject to Pillar Two GloBE taxation. So there will not be an additional tax on the top of this 19% that we're paying. And one more comment regarding GloBE, not relating to the organization is that we have informed you a year ago that we could be subject to global taxation from 2027. Now we know we will not be. We will not be because in 2025, we have not exceeded the threshold of EUR 750 million of revenues, which is this threshold to qualify, which means that we know for sure that neither in 2026 nor in 2027 will be subject to the taxation. You're also asking what was the reason behind changing incentive program underlying benchmark from EPS to profit before tax after 2024. The reasons for that was uncertainty related to global taxation. We didn't know what exactly how this will affect us. And therefore, we agreed with the shareholders that for this particular period of time of this uncertainty, it's more reasonable to have this threshold at the lower below tax, which, of course, matter for 2025. But later on, we should achieve similar levels of growth, both on net profit and profit before tax. You're also asking, is it fair to assume that our reorganization is converging the group to an asset management company seeking a license for that. It is true, although it will be a specialized asset management company, a company specialized in NPL purchases. And we will change the mindset in which we will say this is the investment company. And of course, our most important goal is to maximize NPV on the deployed capital. But we also are an investment company that wholly owns the servicing companies. And their job is to maximize the value on the portfolios that we have given them to service. And now it allows us to be to make a decision about deployment and optimization of the process at different places, and it makes our lives a bit easier not to have the risk of affecting our operating -- operational agenda by our investment decision or vice versa. It also opens the door to thinking that if we are on that market, relying only on our own servicer, is this the ideal situation forever? Or should we champion challenge our own servicer to see whether we could improve it somehow by looking at what other servicers is doing. That will be especially useful in the new markets or in the markets where we don't feel yet we are the best servicer on the market. But overall, you should understand that this reorganization is not a change of strategy. We are and will remain to be an NPL company, but we are indeed a company where most value is done by the decision to deploy billions of zloty and soon billions of euro in some periods of time. So we are actually in this reorganization, achieving a structure that we have in all the other countries, but Poland because when you look at KRUK Group today, in, for example, Spain, there is local Spanish servicer, but there is a securitization fund in Malta making the investments. If you look at Italy, it's similar differentiation. Only in Poland, we have one company, KRUK, who is servicer, headquarter and investment company. We want to separate that, and we believe it will be a good idea long term to -- for our risk management. You're also asking how much money do we want to deploy in 2026. Please understand it's always a certain range of possibilities. I would say, more than in 2025. Why more than in 2025? Because we plan to come back to buying more in Spain. And the results could be somewhere between PLN 2.4 billion, PLN 2.7 billion in 2026. You're also asking specifically about when do you want to return to investing in Spain. The answer is in 2026, I would say, possibly in second half of this year, but it will really be dependent on what we see in recoveries, what we see market opportunities. You're also asking why do we have higher effective tax rates in Q4. Please understand that a big element of our tax is deferred taxation. So we have an accounting rule that says based on the planned cash flows, twice a year where the Management Board approves the budget or the business plan, the budget sometimes in December, the business plan sometimes in June, we look at the next 3 years, and we see how much money do we need to transfer to the Polish matter company and while transferring this money will pay tax. And then we say, okay, so that will be the transfers. That will be the tax. How much is our provision for that. If this is -- if the provision is lower than it should be, we increase, we increased the provision. If it happens that the provision is already bigger than what we planned, we decreased the provision. Hence, the volatility in 2024, in Q4, we released the provision because our business plan changed. In Q4 2025, we increased provision. So please look at the deferred tax assets and take a look also at the cash tax that we are paying and both are available in our financial statements to see that those are really driven by different situations. And please understand that we have this volatility, which is not intentional. It's a product. It's a derivative of the change in our cash flow plan for the next 3 years. And again, in the long term, we will pay 19% or high-teen percent effective tax rates on all of the profits we make. But in the mid- to short term, it will depend on whether we are stable or we are returning the money to the mother company or reinvesting the money in our securitization funds where in which situation we can enjoy a period of time where our effective tax rate is significantly below 19%. Guidance on portfolio purchases in 2026, I answered that already. Let me see if there are any more questions. You're asking, do we want to increase investments in France in 2026 despite lower recoveries. We're thinking about investing a similar amount of money this year roughly as last year. So it means contained investments, not significant growth, partly because of the issues that we have seen. You're asking about incentive program. Does it mean that in the next future incentive programs, you will come back to EPS? Yes. Yes, because it is the best measure given situation in taxation environment is stable. I don't see more questions. I'll wait a second to see. If it happens that I didn't answer your question exactly, please follow up with the IR team. We'll be happy to take it. I don't see more questions now. In which case, thank you very much for your interest and time today. Have a good afternoon, and I hope to see you on the roadshow or company conferences. Thank you very much. Goodbye now.
Miguel Coronel Granado: [Technical Difficulty] In general, there have been a series of problems, organic and inorganic growth in different areas. And the most important ones are transactions and then others. And we have seen more than a very stable performance. At the level of EBITDA, there has been a slight reduction in EBITDA with respect to net income. And this is concentrated in some adjustments we have made in the area of Construction in the last quarter of the year. And we will speak about this later on. Now if we speak about the P&L, the result of the parent company went down. We had a contraction of EUR 267 million. And as I was saying, there are several elements. I also mentioned EUR 166 million that have to do with this. Another factor that has contributed has been the exchange rate, which, as you can see, the strength of the euro as a consolidated currency left about EUR 53 billion of a negative impact in terms of financial results. In addition, we had endowed some provisions. They're one-off provisions for water treatment and some of the assets that we have specifically in the U.K., which amounted to EUR 96 million for the whole year. So as compared with the EBITDA we had, this was similar to 2024 considering these three types of effects. And these have resulted in the EUR 164.4 million I mentioned before. Having said all this, if we consider the balance sheet and the joint financial structure, the group evolved in a very positive way. In 2025, we closed with a net financial debt of just EUR 2.3 billion. This was a reduction of 23% of our net financial debt in spite of the fact that, again, a very significant effort was made as we did in 2024 in terms of investments. We made net investments for EUR 1.2 billion. And this is really noteworthy in terms of revenues. If we compare the CapEx revenue ratio, well, it's 12%, which is a substantial figure if you compare it with the levels of amortization, endowment and revenues. So this is a significant figure in. Spite of the effort we made, we showed a significantly robust financial performance. Also at the end of last year, we collected the money corresponding to an additional percentage of minority stake we had in FCC Enviro, which is devoted to environmental activities, where we had a revenue of EUR 1 billion. The net assets grew by over 26%. We now stand above EUR 4.7 billion. And as I was saying, together with investments, another variable which for us is very important to mention is the portfolio for future revenues. At the end of last year. we closed with a portfolio of over EUR 51 billion. If you look at the calculations in the group and the activities of the 4 different areas we have, as I was saying, the growth was over 11%, specifically 11.4%. And the main driver -- although the different activities performed very well, Water and Environment, but the star was Construction, where in the management report we provide details of the most significant contracts that made this growth possible. In the case of Construction, the growth was notable. Right. So so far for the P&L and the balance sheet now and the financial situation. But let's look area by area. Now the first area is Environment, which is the most significant area in terms of its contribution. Our broad activity for waste management is included here. Revenues grew by 9.1% to EUR 4.74 billion. Here, the growth was well balanced. We had a good performance across the urban waste collection and street cleaning activities. I would like to mention the evolution in the organic growth in France and Spain as well as the acquisitions we made in the United States and in the U.K. In the United States, they were more focused on waste processing. Now in terms of geographical areas, the 4 platforms that we operate with our brand, FCC Enviro, revenues amounted to EUR 420 million, a significant growth with respect to the previous period's figures. And here, we had a very good performance. In terms of new contracts where we didn't have the management previously, we have grown by 20%. So we are quite satisfied. Although there is an activity which is minor, but by no means irrelevant, which is the industrial waste activity also performed very satisfactorily. We also moved forward in terms of our investments, particularly in waste processing in our different plants. And we are now enlarging some of our plants, although these enlargements are not yet contributing anything to the EBITDA. Now in terms of the platform that we call the Atlantic platform, France, Spain and Portugal, well, the increase was quite significant, EUR 150 million. Here, as I was saying, we are growing organically in terms of our contracts through our brand in France, ESG. And in Portugal, we also had very solid activity and a very stable one. The second platform of FCC Enviro in the U.K. had an increase in revenues, which was quite significant. We had a slight negative effect from the sterling. But we need to mention the whole year contribution of U.K. Urbaser, which combined this newly acquired platform waste collection activities, and we also made a few acquisitions, which was a company called Cumbria Waste Management in the Northwest of the country. So what we have seen is a lower level of processing activity, particularly in landfills, but this has been compensated for by an effect of higher activity levels in recovery and recycling. In Central Europe, in the European market, increases of 3.9%, EUR 660 million. In general, there are 7 markets here. We have a significant presence in the top 5. What we have observed is a certain weakness in the price of secondary raw materials, which had rallied very significantly in the last few years, but now they have stabilized and they have gone down a little. But the compensation has been very strong because this is a highly granular business. But there have been some adjustments in markets like Slovakia or Austria, but there have been growth in the Czech Republic and Poland. And so the performance overall was satisfactory. The last platform I want to mention in FCC Enviro is the United States. Here, the improvement was of over 22%, EUR 470 million. This is a platform that is already quite significant. It is close to the volumes of Central Europe. Here, there was a good evolution and some new organic contracts in waste collection and street cleaning. And here, in general, we are using a highly competitive technology. And I also want to mention the acquisition we made because we are for the first time entering the recovery activity. We already have experience in the U.K. But in the United States, this is something new for us. We made an acquisition that we formalized in the second quarter in the South of Florida of a waste recovery plant. And thanks to that, we managed to secure an operation and maintenance contract that was new. This is 2 very important plants because they have over 1 million tonnes of capacity for waste processing. So it is really very significant plants. So the combination between organic and inorganic activities resulted in very significant growth, 2 digits, 22%. EBITDA increased quite in a similar way given the improvements in revenues, EUR 789.8 million, in line with our forecast. And the gross margin stayed at a very similar level, 16.7%, without very significant differences with respect to the previous period. Now let's talk about the water cycle, Aqualia. Well, here, the turnover increased by 6.9%, EUR 1.7 billion. To be honest, Water is a highly stable business, 100% predictable and with very satisfactory performance. You know that we have two important areas. And the most important one is the so-called water cycle, it's the integrated cycle for water management, of water consumption; and to a lesser extent, technology and networks, which also gives us some competitive capacity to do with infrastructure. Both of them grew quite well. Technology and networks grew a little bit more because it is linked to projects or developments in different concessions, BOT, or comprehensive concessions or integrated concessions. Technology and networks grew by almost 19%. But having said that, this figure changes every year geography by geography. Spain still contributes over half of the share, and revenues increased by 10.2% in Spain. Here, well, things have normalized, particularly after the drought we had last year. In terms of consumption and in terms of the evolution of tariffs, things are a lot more predictable now. And the work done in technology and networks also experienced a significant growth, and this led us to a double-digit revenue increase. In countries like Georgia and the Czech Republic, these are proprietary assets. Here, there's no concession activity. And we grew by 8% to EUR 169 million. Here, there was a little bit of a foreign currency effect. The strength of the euro played a very important role. But the evolution was highly positive, and we are still making investments in Georgia to improve our efficiency and to improve the way in which we invoice our customers. And all of these things were highly positive. Now the rest of Europe, we have activities in Portugal, in Italy and also in France. And revenues increased by 1.4%, EUR 113 million. But here, we must mention a lower level of activity in technology and networks. And we should also mention that in the Portuguese market, there was an effect of the drought all along 2025, which obviously we are clear that in 2026 this is not going to happen again because I'm sure you're well aware that this year really started with a lot of rain from the month of January. So in the Americas, you know that we are now focused on Texas. And the turnover was also positive, 9.8% up, EUR 215 million revenues. We have kept generating new contracts in our concessions of different districts in the American market, MDS, for example, which is the company that we used to carry out our operations. And this has been accompanied by our activities in Colombia, where the evolution was also very good. The latter is basically focused on the integrated cycle. Now in MENA, Northern Africa, well, in Northern Africa, we managed our BOT contracts without any meaningful events. There have been some changes in the tariff. Those changes affected us negatively, and this is because of the strength of the euro. And also in the Persian Gulf, Saudi Arabia, Oman, Qatar and the Arab Emirates, the activity has been highly stable with our combined contracts for advisory. And we're still very positive in terms of the opportunities that await us in the future for new investments that we could make or requests from public customers. Now with this improvement of revenues of 6.9% for Water, EBITDA also grew EUR 450 million up. And the only small difference in terms of margin and EBITDA is due to the heavier weight of technology and networks, which operates with margins that are lower than those of managing water cycle. That's why the final figure was 25% as compared with 25.4% last year. Now Construction, which is basically developing various projects. Revenues increased by 3.4%, over EUR 3 billion more. It is true that although Spain is not the dominant market, it hasn't been the dominant market in terms of portfolio, since these are short-lived contracts, here, there was quite a significant contribution. We have kept contracting services. And so this allowed us to compensate for a fall, resulting from the way in which our projects are closed abroad and in our industrial division. But on the whole, Spain played a very important role in this advancement. So the Spanish construction market was 15% up in 2025. Now if you look at the different locations we have, the different sites we have in the U.K., in the Netherlands, in Norway, in Romania, our revenues were quite stable, EUR 880 million, very similar to 2024. And we had a very important project in the U.K. for the sister company of FCC Co., which is now fully operational. And this was partially compensated for by projects that we had in the Netherlands and Norway that I mentioned before. So the picture is very stable. Another market that was very important together with Spain was that of the Americas. The turnover was almost EUR 11 million, 4.9% up. And here, you can see the importance of some of the projects that we have in Canada and the United States, particularly in railways on the East Coast of the United States and in the area of Metropolitan Toronto. Lastly, I don't want to forget MENA, which is also an area where we have had quite a significant presence for some time. And here, there's been a fall because of the close of certain projects that we are very satisfied about, such as that in Saudi Arabia. And the closing of these projects resulted in a 41% fall in this area. We closed at EUR 152 million. But as we already said in the events and contract reports, you can see that we do have a significant presence and quite significant visibility in the Middle East for the future. So the EBITDA here went down 49.9%, EUR 85.8 million. Of course, the gross margin was also influenced by this. It was not really within the range that we normally are. We closed at 2.8%. And this was due to the fact that in the last quarter, we had to provide for a series of projects and a series of things such as the end of certain projects because we believe it's good to act preventively. A stitch in time saves 9, as they say. So this resulted in a fall in EBITDA and in the gross margin of our construction activity. Now let's talk about Concessions. Well, Concessions closed at EUR 112 million. This was a significant advancement. Here, you may have observed in previous quarters, especially in the third quarter, the figure was lower. But now we are in a development phase. We are executing different projects. A lot of CapEx, especially in a railway concession in the North of Spain, in the region of Aragon, Itinerary 8. And there were two other effects which are not negligible. One of them was we have taken full management control of the Ibiza-San Antonio highway and also the evolution of traffic. Both road traffic and tramway traffic in our concessions, well, has fluctuated throughout the year, IMD and passengers, between 2.2% and 2.9%. So all of this has been highly positive, and it has resulted in that 45.5% increase. Now market by market for FCC Concessions, well, even if we have huge external growth perspective, the majority of the growth took place in Spain for the reasons I mentioned before. I want to mention that internationally, nowadays, revenues are still supported by our concession in Cotuco on the East Coast of Mexico. And there's also the fact that here, there was a concession in Cemusa Portugal that was closed in 2024, and this led to a small fall. It's not very important, but this explains this international fall that we've had internationally in Concessions. But this is just a one-off effect that will have no impact on the future. EBITDA reached EUR 60.4 million, 10.8% up, more moderate than the increase in revenues. But here, this shows the powerful evolution of the business. But of course, the gross margin of concession projects has a lower contribution. But even so, the activity, the growth is of two digits, which is really very significant. I've reviewed the 4 areas we have in our business which are the ones that contribute to the description of the P&L. I will now review the more financial aspects, the interpretation of all of this in more monetary terms. In terms of cash flow and exploitation, we reached EUR 1.2 billion. Here, I would like to mention the operational current capital, which contributed by over EUR 27 million, which is quite differential because last year in 2024, there was some consumption, which is not really strange. The greatest contributor was the Construction area, and you can see this in the information we have distributed. Other exploitation flows had also a very significant effects. And this was because of the carve-out, which is really an element that distorts any comparisons we would like to make. But this effect will disappear from next year. But 2026, if we compare it with 2025, it is quite noticeable and it should be underscored. The investment cash flow, as I was saying, had a very significant investment activity. We invested a total of EUR 1.23 billion gross. And here, we focus on environmental activities. The Environment captured over EUR 900 million in investments, both the recovery plant in the United States in Florida and the reinforcement of the integration we made of our activities in the U.K. to combine it already with our presence in processing plants. The second investment was made in Water, EUR 205 million last year, but more homogeneously distributed into enlargement, maintenance and renewal of our existing assets. Now divestitures, well, we have made very few divestitures. We sold off assets in one of the businesses we have in Spain for waste recovery and resell of recyclable materials, basically cardboard. This was a EUR 40 million divestiture, which was the most significant one. But net investments exceed EUR 1.2 billion. The financing cash flow. Here, there was a combination both of the money we collected from the additional sale of a minority stake of the environmental parent company, EUR 1 billion, together with some other effects such as payment of interest and minorities. But there was a net revenue of EUR 800 million. Now with respect to movements of financial liabilities. Let me remind you that last year, we refinanced most of our debt of our Water subsidiary. And we already informed you about this and this explains the movements happening here. And in these 3 sections, well, the treasury had a very good performance, an increase of over EUR 800 million. So the final figure was over EUR 2.2 billion. So with this, our financial debt closed at EUR 5.3 billion without significant variations with respect to our positioning. The most important thing is that in net terms, given the cash position with which we closed the year, this was all very solid. Our financial leverage went down by 23%. Our net financial debt was EUR 2.3 billion. And the differential elements, apart from the good performance of the exploitation of the operational cash flow, I would like to mention the evolution of our working capital and the effect of the sale we made of stake in FCC Enviro. So that's about all I had to share with you. I just wanted to review the most important highlights of our 2025 financial year. I would just like to mention three elements, which are extremely important for the medium and long term for the evolution of the group. First of all, our investment efforts, which was really very significant given the size and the activity that the group is having. Number two, we have strengthened the financial position of the group. We closed at EUR 2.3 billion with an EBITDA which evolved to over EUR 1.4 billion. And lastly, our portfolio. It is essential for us. We are a group that we basically work on the basis of projects and contracts. So having a visibility of over 11.4% growth year-on-year is really essential for us. We believe that it gives our company a very significant level of robustness. So that's about all I had to share with you. And now we can open the floor for questions from you. Thank you. Operator: First question, what is the level of one-offs and total provisions in the environmental division? Are these out of the cash operations because can you reach EUR 400 million in 2026? Miguel Coronel Granado: Well, I don't know whether the question is related to the level of provisions that we endowed in the environmental activity or not or to the balance sheet in them. With respect to the balance sheet in the Environment, we have two kinds of provisions: general provisions of the business and specific environmental provisions related to the different assets where we have an environmental import, like discharge centers, et cetera. So as far as those provisions are concerned, we always try and calculate what our future payment obligations are. Although there may be years where there may be jumps, the fact that there's more applications than endowments, well, these applications are normally payments, right? So there's quite a good balance between them. Having said that, I mentioned that in 2025, we had to apply environmental provisions for about EUR 90 million, which have been provided for throughout the year. Probably this year, there will be a higher volume of endowments. But in general, endowments and applications are normally well balanced mutually. Now in terms of the level of EBIT, as I was saying, the endowment we made of provisions that for the P&L can be seen in other operational results between EBITDA and EBIT had impact in 2025. Of course, we expect a significant recovery in 2026. Taking into account the adjustment of that EUR 90 million, I think that it's quite feasible. Operator: Next question. In your Construction activities, what is the level of operational EBITDA adjustment for this quarter? Now sales, can they grow at 2 digits? The 5.7% margin of 2024, is it really sustainable? Is there going to be an improvement in working capital because of advancement of certain projects? Miguel Coronel Granado: Well, the level of operational one-offs of EBITDA for the first quarter, if you looked at the sequence of results in our construction activity until the accumulated third quarter, we have followed a very stable tendency. Of course, it is true that in the fourth quarter, there was some situations in certain international projects and several projects. And so we decided to make a few adjustments. What is the magnitude of those adjustments? Well, we don't normally comment on these things because these are projects that are underway. So it wouldn't benefit us to make comments because these are not claims made by a specific customer or a specific supplier. There's no litigation or anything like that in that respect. It is projects underway. But we want to be prudent, and that is why we made those provisions. Is there going to be any cash outlays as a result of that? Well, as you know, provisions are part of a continuous game. So you make an endowment and then it may be applied or not. They are endowed at the level of EBITDA and they are applied at the level of the cash flow. So we try and use a few of the provisions we make as possible. But for us, and to connect with your question as regards to the 5% margin of 2024, well, in a project-based activity like Construction and like Water or the Environment, it is very difficult to say that we are going to be able to keep those levels stable. Our recurrent stable margin in an average cycle normally stands at 5% above. And yes, we think we can go back to that. But obviously, when you look at this in detail, there are effects that may go in one direction or another. Now with respect to what you're asking about the working capital, in spite of the growth in revenues, part of the contribution of Construction to the working capital have been some prepayments because whenever we can, we work with a positive cash flow in our projects so as not to resort to financing. So this is what happened. Of course, we will be applying that working capital in the future as we develop the different projects. Now is this going to happen again in 2026? Well, we'll have to wait and see. It is very good news for 2025. But when you're growing your business, it is not easy to always have working capital that is positive. That is a very difficult thing. Having said that and to answer the last of your question, can your sales grow by 2 digits, well, if revenues are going to grow by 2 digits, well, the Construction portfolio had a very good performance. But these are phased projects. These are important projects such as the ones we have in the United States and in Canada. And although they have pushed our projects portfolio up to -- I think that in 2025, we started at EUR 6.5 billion, and we finished at EUR 9.5 billion, but the maturation period is longer. So this allows us to distribute the execution risk and do it chapter by chapter or phase by phase. So to answer your question, there will be a growth in Construction sales in 2026, but the growth will be more moderate but we will have a lot more visibility than we had at the end of 2024. So the growth will be more moderate. So the revenues are not going to grow that 50% level as the portfolio grew. Operator: Next question. What projection of dividends can you give as you lower your debt? Miguel Coronel Granado: Well, you know that we don't give any guidance in terms of dividends. We have this flexible dividend. And last financial year, it was EUR 0.5. It is set by the Board of Directors before the General Shareholders' Meeting. It's not that by having lowered the debt, we are going to be able to pay a high dividend because we always want to emphasize growth provided that it is profitable and safe. We believe we do have a potential, but those things are not really directly connected. For example, last year, we ended at EUR 2.3 billion of net financial debt. And just with EBITDA and the elements impacting it, we stand at EUR 1.4 billion. So it's less than 2x debt to EBITDA. And a significant part of our activities are utilities or proxy utilities. So the financial strength of the group, not in 2025, but from much earlier has been absolute. So I would answer that those things are not directly interrelated, but the profitability, dividend ratio, I believe, is highly satisfactory, nonetheless. Operator: Next question. Were additional provisions made in Environment in the fourth quarter? Miguel Coronel Granado: No, not that I can think of. The ones I mentioned that practically -- let me go back to it. I think I said at the beginning, EUR 96 million. There could have been some adjustment. But in the first half, we reported EUR 89.2 million. So there were small variations because of the provisions I mentioned to do with some assets where the value had to be adjusted and some projects related with some risks we had under this discussion. But in the fourth quarter, there were no differential provisions. Operator: Next question. Could you quantify the impact of one-off adjustments in Construction during the fourth quarter of 2024 both in sales and EBITDA? Have these adjustments resulted in outlays? Or will such outlays materialize in the next few quarters? How do you expect the working capital to perform this year? Miguel Coronel Granado: Well, let me go back to the answer I gave to your colleague with respect to the provisions in the Construction area. So part of the impact on the EBIT in the fourth quarter resulted from the adjustment we made in some projects. And in some cases, we just readjusted or recalculated the forecast in terms of the completion of the works. So we'll see how it goes. All of this is very much alive. So none of these things respond to any payments that have to be made to any particular person. So there's no differential cash flow. There's no difference with respect to the performance of any other projects. So it's not due to any litigation or anything. There's nothing special to mention about the outflows. Now in terms of the working capital, I already mentioned that the working capital is a very much alive variable which responds to payments and collections. And until the year doesn't close, it's very difficult to say. We would love to also have a positive workflow evolution in 2026, and we normally work with positive working capital. And this is only logical because we are very strict about the payment and collection conditions. We are normally stricter than our own customers, but we do our best in this respect. So if we still keep increasing our revenues, it is going to be difficult to keep such a positive working capital profile as we have kept. Operator: Now what the net like-for-like result adjusted by the different one-offs of the year? Miguel Coronel Granado: Well, I would say that we don't have a calculation for that because in a group such as ours, you can agree on a series of adjustments that we can make. I think that you have all the documents. You can use the adjustments you prefer. I mentioned the 4 blocks, which we believe are the most significant to understand the full picture. But if I had to make an adjustment, I would look at the evolution in revenues because the evolution of operational margins with the different things I mentioned for the different areas didn't undergo any variations. So that would come very close to the variation of a comparable net profit of the consolidated group. It would come very close to the high figure in terms of the evolution of our P&L. Operator: There's no further questions. Miguel Coronel Granado: Okay. Thank you very much, again, for joining. As you know, I'm sure you will be able to peruse our annual accounts in detail. You know that we are always available on the usual channels. So thank you very much, and have a good day.
Operator: Good morning, and welcome to NIQ's Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] With that, I'd like to turn the call over to Will Lyons, Head of Investor Relations. Please go ahead. William Lyons: Good morning, everyone, and welcome to NIQ's fourth quarter and full year 2025 earnings call. Joining me today are CEO, Jim Peck; CFO, Mike Burwell; and Chief Product Officer, Troy Treangen. Following Jim and Mike's prepared remarks, Jim, Mike and Troy will take your Q&A. As a reminder, our remarks today will include forward-looking statements. Actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause these results to differ materially are set forth in today's earnings press release. Any forward-looking statements that we make on this call are based on our assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. Also, during this call, we will present both GAAP and certain non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release which is available on our IR website, investors.nielseniq.com. A replay of this call will also be available on our IR site. And unless otherwise noted, growth rates mentioned on this call are versus the comparable prior year period. And with that, I'll now hand the call over to Jim. James Peck: Thank you, Will. Good morning, everyone, and thank you for joining us. 2025 was a defining year for NIQ. We entered the public markets and executed consistently against our profitable growth strategy and exceeded all key financial targets set at our IPO. 5.7% organic constant currency revenue growth, expanding adjusted EBITDA margins 320 basis points to nearly 22% generating $350 million of free cash flow in the back half and achieving free cash flow positive ahead of schedule. And we deleveraged to 3.25x EBITDA. These results demonstrate our strengthening business model and disciplined execution. For the balance of my remarks, I will address how NIQ is positioned to win in an AI world. I'll reinforce how AI strengthens NIQ in 3 ways: First, how our governed data mode and domain expertise make AI work for clients. AI models require precise governed data to power high stakes decisions across the enterprise. From pricing and assortment to innovation, trade allocation and advertising. This is exactly where NIQ operates. Second, how we're using AI to drive revenue growth and product innovation more deeply embedding at the application layer to serve clients. And third, our AI delivers structural operating efficiency across our business. First, the scale, breadth and depth of our data mode advantages us. We now cover $7.4 trillion in consumer spending worldwide. We aggregate consumer shopping data across offline and online sources, point-of-sale data from thousands of retailers and millions of stores across developed and emerging markets. Proprietary traditional trade data through our NIQ field network, digital commerce assets and the largest global e-receipt panel. Our Connect engine ingests codified, categorizes and enriches approximately 4 trillion data records per week, up from 3.1 trillion just a year ago. We generate substantial proprietary metadata across more than 240 million items and tens of millions of product attributes. This context layer is critical to client decision-making. It is continually refreshed, standardized and enriched to provide a current comparable view of consumer behavior. Beyond that, the proprietary and permission data we ingest and the intelligence we create are governed by long-standing agreements with retailers and manufacturers. These are not merely contractual arrangements. They reflect decades of trusted relationships and rigorous data stewardship. This governance framework defines how our most AI forward clients embed NIQ's decision grade intelligence directly into their pricing, innovation and operating management systems. It also reinforces NIQ as central to responsible enterprise-ready AI deployment. We enter client data and NIQ intelligence remain protected, permissioned and used only with explicit authorization. And as leading AI companies have acknowledged this week, domain embedded governed systems are essential for AI to work effectively. Strict governance principles also underpin our strategic partnerships with the likes of Microsoft, Google and Snowflake integrating NIQ intelligence into enterprise AI environment. As AI moves from insight generation to operational deployment, NIQ's trusted, governed data and domain expertise provide clients a decisive advantage securely turning intelligence into mission-critical action. This has been NIQ's strength for decades. We see measurable adoption across our largest clients. Client data consumption grew more than 30% year-over-year, a leading indicator of deeper workflow embedment. More than 60% of our top 50 clients adopted at least one AI native NIQ product, increasing platform penetration across our largest accounts. And adopters of NIQ AI products are growing their investment in NIQ 30% faster than nonadopters, demonstrating clear monetization leverage from AI integration. Put simply, increased AI adoption strengthens NIQ's role inside enterprise decision systems. Second, AI is driving meaningful revenue today and accelerating innovation across our platform. Total intelligence revenue grew 7.1% in organic constant currency in 2025, led by continued strength in EMEA and Americas. Retention and expansion remained strong with net dollar retention of 105%, gross retention of 98% and annualized subscription revenue growth of 6.6%, our seventh consecutive quarter above 6%. Several of our new capabilities are now growing at double-digit rates, reflecting strong client adoption. E-commerce is a clear example of this momentum. Revenue growth accelerated to 32% in 2025, and cross-sell penetration increased to 29% of intelligence clients, up from 19% last year. AI enabled us to expand our full view measurement capabilities including broader Amazon coverage and a new read into a large U.S. club retailer. We ended the year with more than 190 full view measurement clients and expect continued growth in 2026. In consumer panel, we delivered strong renewals and accelerated competitive share gains in Western Europe and Latin America. In the U.S., we expanded our omni shopper panel to an industry-leading 250,000 panelists with a clear path to scale further using AI. Panel revenue grew low double digits in 2025, and we are increasing investment in 2026 to expand coverage and capture additional market share. When paired with our measurement data, our panel assets power our differentiated full view value proposition. This was central to 8-figure renewals with several multinational consumer product companies, Full View anchors their pricing, promotion, assortment and category growth strategies across highly competitive markets. Also, our AI-powered analytics and forward-looking capabilities position us not just as a measurement provider, but as a transformation partner as clients move toward predictive and automated decision-making. We also saw a strong performance in adjacent and high-growth markets. In new verticals, AI enabled expansion in packaging and rapid scaling of our media offerings. Along with government and financial services, these verticals delivered mid-teens growth in 2025. Finally, SMB grew at high teen rates, supported by strong retention across geographies. We continue to scale AI-driven go-to-market capabilities, including expanding an AI agent pilot to 66 markets improving targeting and future growth potential. In activation, we're seeing the continued strong client adoption of our new Gen AI native offerings. BASES AI screener expanded to 209 categories and we more than doubled the client base to 36 in Q4. Client engagement increased as well with more than 1,000 innovations tested last year. BASES product developer adoption increased as well in Q4, and we cross sold 35 of our largest clients in 2025. This early success underscores the central role our AI platform plays in helping clients innovate and grow. While these AI solutions grow from a small base, our activation revenue was flat in 2025. This reflects varied project timing as some clients navigate an uneven landscape. However, retention is high and pipeline demand remains solid, reflecting growth potential, not displacement. In 2025, 78% of activation revenue came from clients that buy intelligence and 40% of our intelligence clients by activation, implying large cross-sell upside. In 2026, we've taken decisive action to capture this opportunity, strengthening activation leadership, sharpening go-to-market focus and embedding AI tools to improve pipeline management and conversion. Our data moat positions us at the forefront of AI innovation. For example, in 2026, we were evolving Discover into an AI-powered intelligence hub that recommends NIQ products, data and analysis tailored to specific client needs. In January, we beta launched our Agentic AI analyst feature in Discover, enabling natural language interaction across our data sets for more than 40 client personas, including pricing, distribution, account performance and shopper analysis. As engagement and cross-selling accelerate, we are evaluating new pricing models in 2026, These include usage-based approaches and an AI innovation index that better align pricing with the value we create. So our proprietary permission data is becoming more essential. Our applications are becoming smarter, our workflow is more automated. As AI embed into enterprise decision systems where clients have billions of dollars at stake, NIQ becomes even more mission-critical. The third benefit to NIQ is also taking shape, measurable cost efficiency. As previewed in November, we accelerated the use of advanced technologies, including AI to drive operational excellence. For example, AI-assisted automation and data operations reduces manual effort and improves quality. In Germany, Agentic AI now codes tens of thousands of products in hours instead of days cutting data costs by nearly 70% and accelerated our product insights launch to 4 new European markets. AI tools and engineering delivers roughly a 10% productivity uplift and 25% faster time to market in pilot programs allowing us to scale output across more than 2,200 engineers without adding headcount and directly supporting margin expansion. In sales, AI enables sellers with 40% faster access to sales materials, reduced time to proposals, better pipeline management, and less administrative workload. This is increasing time spent selling and we see ample opportunity to further optimize our sales motions in 2026. In customer support, we upgraded AI search across 3,000-plus documents and expanded AI-assisted ticket resolution cutting manual workload by 17% and improving response times and quality. While driving 81% self-serve via NIQ service suite, and we are also continuing to deploy AI tools across finance, legal and HR to automate repeatable work. AI is driving structural cost efficiencies, underpinning our confidence in continued margin and free cash flow expansion in 2026 and beyond, which brings me to our new 2026 cost optimization program announced today, these actions signal a prominent next phase for NIQ, reflecting our commitment to leveraging AI, automation, advanced digital tools and data-driven processes to streamline operations, enhance agility and reinforce competitive advantages. While this program increases onetime investments in 2026, the result is a structurally stronger margin profile and a greater free cash flow over time. As free cash flow ramps in 2026, our capital allocation philosophy remains consistent. Prioritizing deleveraging while investing for durable growth. We will also continue to pursue targeted accretive tuck-in acquisitions that advance our strategic growth priorities, complement our product road map and expand our geographic footprint. We will maintain our disciplined growth-oriented CapEx at 6.5% to 7% of revenue focused on panel expansion, platform enhancements and AI capabilities. Looking ahead, our 2026 strategic priorities are clear. Execute our revenue growth algorithm, advance areas of strength, invest prudently and drive the next phase of AI benefits. Mike will discuss our 2026 outlook in more detail, but highlights include a 5-plus percent organic revenue growth, meaningful adjusted EBITDA margin expansion to more than 23.5%, $235 million to $250 million of levered free cash flow. And continued deleverage towards sub-3x by the end of 2026. Intelligence growth remains durable, activation returns to growth. AI becomes increasingly embedded both in our revenue engine and our cost structure. In closing, 2025 was an inflection point. We strengthened our growth, expanded margins, generated positive free cash flow and strengthened our balance sheet and advance our AI leadership. Before I turn the call over to Mike, I want to acknowledge Tracey Massey's decision to step down as COO for personal reasons. Over the past several years, Tracey strengthened our client-focused commercial organization and will continue to act as a trusted adviser to me and the rest of the management team. I want to thank Tracey for her contributions. I'm taking this opportunity to step further into the business, and I remain fully committed to driving its continued success. We're streamlining our operating motion as we enter 2026 with a strong unified leadership team and clear momentum. I want to thank NIQ associates worldwide for their expertise and dedication in 2025. I look forward to what we're going to achieve together in 2026. With that, I'll turn it over to Mike. Michael Burwell: Thanks, Jim, and good morning, everyone. 2025 was a strong year with 5.7% growth, margins expanding to nearly 22% and $315 million of back half free cash flow, achieving free cash flow positively ahead of schedule. We exceeded the guidance we provided at our IPO and in November. We also strengthened our balance sheet through debt repayment and reduced leverage. Our 2026 guidance builds on this momentum, reflecting accelerated technology, adoption and continued progress on growth, margins, free cash flow and deleveraging. As we dig into our Q4 results, our Q4 organic constant currency revenue grew 5.7% to $1.1 billion. Adjusted EBITDA growth accelerated to 30% to $289.2 million, and we expanded adjusted EBITDA margin by 410 basis points to 25.4%, driven by profitable revenue growth, GfK’ integration and early AI-driven efficiencies. From a segment perspective, EMEA was our strongest performing region with intelligence driving renewals, value-based pricing, cross-sell, upsell and continued expansion into new verticals. EMEA grew 7.5% on an organic constant currency basis. Americas grew 5.7% supported by broad-based intelligence momentum. APAC grew modestly at 1.2%, and we're optimistic about the 2026 as our investments in retailer relationships and data coverage take hold. From a product perspective, total intelligence revenue grew 7.7% in organic constant currency. Annualized intelligence subscription revenue increased 6.6% marking our seventh consecutive quarter of 6%-plus growth. Our net dollar retention and gross dollar retention at 105% and 98%, respectively, underscore the durability of our revenue algorithm and the mission criticality of our solutions. Our highly recurring activation revenue remains sticky with strong retention. While project timing remains varied, our new AI products are growing. As Jim noted earlier, we've also taken decisive actions to further improve growth in 2026. Now I'll walk you through the details of our P&L. On expenses, our Q4 total expenses were roughly flat, driven by continued cost discipline, operational efficiencies and lower restructuring costs. OpEx grew only 1% for the full year and were flat excluding the onetime stock-based comp charge in Q3 related to our initial public offering. Total onetime and restructuring costs were $53 million in Q4. Full year onetime costs were $136 million, in line with our IPO guidance. Depreciation and amortization was $163 million for the quarter and $632 million for the year, approximately 14% of our revenue. The increase is primarily driven by changes in foreign currency, and to a lesser extent, higher amortization from our 2025 M&A. As I look below the operating line, Q4 GAAP interest expense was $60.7 million, driven by lower debt balances from our IPO and our 3 successful debt refinancings in the past 18 months. Our Q4 changes in foreign currency resulted in a $7.7 million gain in the period versus a $31.3 million loss last year, driven primarily by remeasurement of our debt obligations held in foreign currencies. Our Q4 income tax expense was $54.2 million or approximately 15% of adjusted EBITDA in 2025, in line with our IPO expectations. Full year 2025 net loss and adjusted net loss improved by $445 million and $211 million on a year-over-year basis, respectively, reaching positive adjusted net income of $61.9 million. As I turn to liquidity, we finished 2025 with cash and cash equivalents of $518.8 million as well as $750 million of revolver capacity for $1.3 billion of total liquidity. And I'll remind everyone that Q1 is seasonally lowest point for us from a cash flow standpoint, primarily due to the timing of certain tech vendor payments as well as variable compensation payments. Our term loans totaled USD 3.6 billion at the end of Q4. We have hedged roughly 80% and have an all-in weighted average rate of approximately 5.4% as spreads decreased during the period. Turning to free cash flow. Q4 cash provided by operating activities was $188.7 million, up more than $120 million versus 2024 from higher profitability and lower interest expense. CapEx was $262.9 million or 6.3% of revenue, down from 7.5% last year. Approximately 70% remains focused on long-term growth including consumer panels, platform and AI. We delivered $90.9 million of levered free cash flow in Q4 and $315 million in the back half, exceeding the top end of our guidance by $40 million, driven by strong EBITDA flow-through and improved working capital. We ended the year at 3.25 net leverage ahead of our 3.5 target. In 2026, our capital allocation philosophy remains disciplined and balanced. We continue to prioritize deleveraging, while selectively reinvesting in high-return growth areas. Now turning to our guidance. For the first quarter, we expect reported revenue growth of approximately 8.6% to 8.9%. We expect organic constant currency revenue growth of approximately 4.5% to 4.8% consistent with the durable growth algorithm outlined at our IPO. Adjusted EBITDA growth of approximately 16% to 18% and applied adjusted EBITDA margin of 20.9% to 21.1% approximately 150 basis points on a year-over-year basis. Adjusted earnings per share of $0.08 to $0.10, improving from a $0.05 loss in Q1 of 2025. Turning to the full year. We expect reported revenue growth of approximately 5.7% to 6%. We expect organic constant currency revenue growth of approximately 5% to 5.3%. Adjusted EBITDA growth of 14% to 16%, driven by operating leverage. Adjusted EBITDA margin of 23.5% to 23.8%, approximately 200 basis points of year-over-year expansion at the midpoint, ahead of our IPO guidance. Adjusted earnings per share of $0.95 to $0.99, up from $0.23 in 2025. Levered free cash flow of approximately $235 million to $250 million, also ahead of our IPO target and net leverage tracking to below 3x by the year-end. To further support modeling assumptions, we expect depreciation and amortization of $614 million to $619 million or approximately 14% of revenue. GAAP net interest expense of $230 million to $235 million, down from $317.6 million in 2025. As a reminder, GAAP net interest expense includes interest on our term loans and other obligations as well as amortization of debt issuance costs and the discount on our debt. Income tax expense of $165 million to $170 million or roughly 16% of adjusted EBITDA, diluted share count of approximately 300 million, consistent with our IPO assumptions. CapEx of approximately 6.5% to 7% of revenue. Lastly, some comments on the 2026 cost optimization program. We exceeded expectations at the IPO and are launching this program from a position of strength. It is incremental to the restructuring actions outlined at the IPO, accelerates progress towards our midterm targets and increases free cash flow capacity beginning in 2027. We've already begun executing organizational changes to reduce complexity and improve agility and efficiency. We expect $55 million to $65 million of annual run rate cost savings versus our 2025 expense base, with the majority realized within 1 year. The program is self-funded with total cost of $50 million to $60 million, largely cash. Actions are front-half-weighted in 2026 with margin and free cash flow benefits building through the back half and into 2027. For transparency, costs were reported in a separate 2026 program expense line with certain costs excluded from adjusted results consistent with prior restructuring actions. Based on this program, we continue to see additional efficiency opportunities. The capacity created enables selective reinvestment and strategic priorities while continuing to expand adjusted EBITDA margins and free cash flow. In conclusion, we are pleased with our performance and confident in our 2026 outlook. With that, operator, ready to open the call for Q&A. Operator: [Operator Instructions] And your first question comes from Manav Patnaik with Barclays. Manav Patnaik: Jim, I just wanted to touch on like the data problems question basically. I think you used the word government data, Thomson Reuters CEO earlier this week used the word fiduciary data. So I just wondered if you can double click on the importance of that. And also, you talked about the relationship with the retailers and manufacturers. Just how I guess the question we get is, could those clients give their data to new competitors basically. James Peck: Yes. So okay. Manav, with regards to the words governed or fiduciary or stewardship, I think the world kind of underestimates just how important that is. And we have relationships with literally tens of thousands of providers, let's say, retailers and others, some big, some small, that have evolved over time. And the way -- the reason they're trusted is they aren't really interested in just giving their data to anybody because they don't want to be exposed. And so we have very sophisticated methods of understanding where they feel like they have entitlement issues or their own governance, and we're able to put those in place across all the jurisdictions that we serve. And so having that trusted or governed intelligence layer is something that has taken time to build not only from, let's say, a technical standpoint but also from a relationship standpoint. And I think it's fair to say not ever easily replicable in any short period of time. And I think that was even acknowledged this week. As you know, a lot of the AI companies are speaking about this. And what struck me is they acknowledge that domain enabled, which means you actually understand what you're trying to do with the client, governed systems are essential to AI working effectively. And that's exactly what we do. We understand both our customers and the people who provide, let's say, we understand what their concerns are relative to access to information and governing information. We understand how it fits in our clients' workflows. So we make sure they're able to use it appropriately and correctly. And then we deliver those insights to them right into their workflow. So we're really deeply embedded into those workflows. We could jump in deeper here. I'll maybe let you guide me. We have our Chief Product Officer on the phone. If you would like to get us to talk a little more about how we -- what we do with the information and how we deliver to clients, we can do that or I can let you -- I'll pause for another question. Manav Patnaik: Yes. I mean I think that's fine. Maybe I'll save that for someone to follow up. But the other question I had was you obviously gave a bunch of examples on how AI is helping your -- I guess, your revenue pipeline. I was just hoping what are the puts and takes to that? A lot of the questions you get is this could be at least deflationary pressure from all the AI technology out there. So maybe just remind us of what you think pricing is today and how that plays a role going forward as well? James Peck: Sure. So given some of the data on our net dollar retention and even just our growth, you can tell we're not experiencing any pricing pressure, certainly not any related to AI. And I think you're asking me about what -- how does that AI drive our revenue maybe. But it does underpin most all of our revenue given that we've been using AI or various analytics delivery sites to our clients for many, many years now. So it's embedded in our offering that supports our retention, it sports cross-sell, upsell. But in the very, very short run, what we're doing now is -- which shows financial impact, it's actually helping with our margin expansion. And we're stepping into having it be more discrete revenue line items. So we're certainly not seeing any revenue compression associated with it. Michael Burwell: And Manav, I would just add to Jim's comments. When you look back at our net dollar retention at 105 and our gross dollar retention at 98%, and our subscription growth continues, it's been about 6% for the last 7 quarters. I guess to me, Manav, I guess I just point to that fact in terms of what that means from a from pricing standpoint. Operator: Your next question comes from the line of Alexander Hess with JPMorgan. Alexander EM Hess: Jim, Mike, I want to start with the 30% call out in the prepared remarks on data consumption increases. Maybe you could walk us through how you define that, what's included in that and what that says about the state of your business today just as a starting point? James Peck: Yes. So I think you're asking for a particular formula on how we're... Alexander EM Hess: I think I'm just asking like what's the -- what is that -- what should that signal to the market about the state of your business and the level of demand you're seeing amidst all of the current discussions around AI, around newly public so people are still learning you guys? Like what does that 30% number really tell? James Peck: Yes. So what it's telling us is that as the world continues to move forward at the rate it's moving forward, the demand for our data is just increasing. There's not some kind of -- and it's not just our data. It's our insights and it's how we're delivering it to our clients and how we're embedding ourselves in their workflows. So there's not some kind of demand problem. And I'm anxious to get Troy a little bit involved in this conversation. Troy, why don't you share your view? Troy, we can't hear you. Troy Treangen: [Technical Difficulty] James Peck: I think we're having some technical issues there with Troy. Alexander EM Hess: That's all right. But maybe you can also -- as we look at the -- into '26, you could touch on. It sounds like you've spoken to taking this restructuring action from a position of strength. But sort of what signals are you seeing in the market that are telling you that here and now is the time to be undertaking an incremental restructuring program. And I know you guys have said what this will mean for you fundamentally on the financials coming out of this, but operationally, and this is sort of done what should investors sort of be watching for the signs that this is a high ROI project? James Peck: Yes. So regarding the restructuring, I don't know if it's an external market signal. It's something that we've been pursuing internally, and we'll always continue to pursue internally is getting more and more efficient. I think we had a fundamental step change in using AI internally that we probably didn't realize at the very beginning of the year last year, right? We didn't realize how fast we were going to be able to get there. And so we're -- the money we're using for the restructuring is really about severance and taking the people out of our cost structure associated with being much more efficient. And it pays off all in the year so it's an easy ROI decision to make, right? And I make it every time. And I'd make it again because we're returning -- we're really getting the return this year. Alexander EM Hess: So it sounds like net-net, you're seeing AI benefits both on the top line and through demand and on the expense line through incremental efficiency opportunities I think it's quite -- that seems pretty straightforward to me. Just maybe if you'll permit a quick follow-up for those 2 questions. Is there anything you think that the market right now doesn't understand. Obviously, there is this narrative of data companies AI losers. Manav asked about this. Just anything else you want the market to sort of understand about your positioning entering '26. James Peck: I think -- well, I think I said it all in my notes, but I'll just reaffirm that we feel like we're very much on our front foot with regards to the question you just asked and the question du jour the question of the day on AI. And I think -- I'm going to say it again, I think I don't want to put it in my own words. I'll put it in the words of the people who are the LLM companies. They acknowledge that domain enabled governed systems are essential to AI working effectively. So domain enabled so we understand how our customers work. We're deeply embedded in our customers' workflows. They're not just plucking our data from nowhere. It's embedded in what they do. The data -- they can be assured that they're using data that is allowed to be used for the uses that it's been used for that it's correct. And that is all essential for any analytics to work effectively and, of course, AI. So I think we're just kind of right in the very good sweet spot of having the data that fuels this stuff, having the capabilities to apply to the data and then ensuring that the data is protected and governed appropriately. So they're effectively not doing anything wrong that they shouldn't be with it. Operator: Your next question comes from the line of Kevin McVeigh with UBS. Kevin McVeigh: Congratulations on the results. You had a comment on kind of clients shifting from insight to operational deployment. Is that shifting the workflow or consumption in terms of how they're using the NIQ data. It's just pretty interesting because obviously, you're seeing accelerated adoption. But just anything from a behavioral perspective is you're shifting from insight to deployment. James Peck: Yes. So the way I look at it, we're working with our biggest clients. We actually call them builders of AI, right, because they're not just users, they're going to build things internally. And we are working with them to even more deeply penetrate our data into their workflows and helping them understand how our data can even unlock more value. And I should really say our data and analytics, unlocking more value across their whole set of operations so connecting their innovation to their supply chains, to their pricing. It's just embedding us more deeply into their workflows. And that's what we're seeing. Kevin McVeigh: That's super helpful. And then just 1 quick for Mike. Obviously, the restructuring -- the cash flow component. So I mean the free cash flow guidance would have been even that much stronger, if not for the $55 million to $65 million, right? So if you adjust for that, it would have been kind of $290 million to $310 million, something like that. Michael Burwell: Yes. That's right, Kevin. I mean, we -- that's inclusive of it. But as Jim said, we look at that 1-year return to it. So you're going to see that additional cash flow inflection continue into 2027 and beyond, yes. Operator: Your next question comes from the line of Curtis Nagle with Bank of America. Curtis Nagle: Great. So just thinking about the org rev guide, maybe any commentary you can give in terms of how to think about performance by region, generally in line with '25, should we think maybe North America catches up a little bit relative to EMEA, even just on comps. But yes, any way you can kind of disaggregate that and give any thoughts would be helpful. James Peck: Sure. So Curt, look, we don't give guidance specifically related to it. I know you're trying to get some indication of it. I think the trends that you're seeing I think makes sense as it relates to North America and EMEA. We're continuing to make investments as Jim and I both mentioned as it relates to APAC in terms of our coverage that we would look to continue to see progress moving in that direction. But I think if you kind of look at those trend lines that you've seen in each of those regions, I think those are pretty good views as we're really guiding overall in terms of thinking about it. Curtis Nagle: Okay. And then maybe just a very quick follow-up on the restructuring. Just in terms of, I guess, the flow through, right, from your restructuring actions, what should we expect in terms of realization, right, in '26? I know you'll be at a $60 million run rate by the end of the year. But yes, anything more you could talk to the actual flow through kind of as the year progresses? James Peck: Sure. When we looked at the restructuring itself, if you look at it in our guidance, we said roughly 200 basis points improvement in our margins is the guidance that we had from '25 to '26. And just a reminder, back, that's about $80 million above our IPO model and $50 million above the latest consensus. When we look at that, that's roughly about 140 basis points is coming from the restructuring action and the rest from our continued operating performance. So look, the revenue beat a big piece of that has been driven from a reported standpoint as it relates to FX, and it doesn't necessarily flow through on a one-on-one basis. So just kind of repeating back, we're -- that's what we're looking at. We also try to be -- put numbers out there that we make sure we believe that we hit in terms of our overall guidance. And as you can see from our history here, we're trying to make sure we put in a beat-and-raise cadence in terms of thinking about how we give guidance. Hopefully, Curt, that's helpful. Operator: Your next question comes from the line of Ashish Sabadra with RBC Capital Markets. Ashish Sabadra: I just wanted to focus on the full view measurement. You talked about some really good significant progress there with 190 clients. Can you talk about the pipeline, also initial feedback from the clients that have already adopted but also a pipeline for that product going forward? James Peck: Yes. So the full view measure is our way of describing a view of the customer shopping behavior across all channels. And a significant part of that is our Amazon read, which we have at a very detailed level that no one else have and certain, let's say, club purchasing that goes on combined with our omni shopper panel combined, which is demographic data, combined with other panel data that we have on e-commerce. And so what we're able to provide our clients is the full view of consumer shopping behavior, which is exactly what they want because they want to understand what's happening at a very detailed level across the market and then they want to understand what's happening specifically in what store and what city and then how they can link that to demographic information so they can understand, for example, not only how -- I don't know, let's say there's spaghetti sauce is selling, but they're also trying to understand why is it selling that way and to who is it selling that way. And so we're able to get down into that level of detail and then even compare it to what else is going on in the market so they can understand they have new competition, if they have pricing issues, if they have promotion issues. So that's why it's really taken off, not only for manufacturers, but also for retailers who are also trying to understand the same thing. And so we of course are getting incremental revenue from that and it's also just reaffirming the massive need our clients have for as much detailed level data as they can. I know I went on a little there. I think Troy is back. Troy, would you want to add anything to that? Troy Treangen: Yes. I want to add just one thing on full view measurement. So it's not just a U.S.-only thing. It is a global product strategy that we have. And what we do is we combine retail measurement data with consumer behavior data from our panels, including E-receipt data and other alternative methods to ultimately figure out who buys, where they shop and what behavior shifts happen. So to Jim's comments that he just mentioned is we want -- we deliver signals to clients at very granular levels to be able to activate against those consumer shifts. And that's ultimately the objective. We have many clients today like I think it was mentioned, 190 clients today, and the pipeline is very strong. And like I said, it's not only U.S., it's many, many markets across the world that we're combining all those assets to give that full view. Ashish Sabadra: That's great color. And maybe just as a follow-up on the activation side. You talked about some impact from the project timing and the pipeline obviously continues to remain really strong. Can you talk about how we should think about the activation trends in '26. James Peck: Sure. Yes. So we -- what we alluded to in activation was our -- I think you could say last year, our clients were kind of trying to figure out where to spend their money. And as you know, we have a broad offering across a broad portfolio of activation solutions. And as they were doing that, we're -- we can control what we can control. So we could control our ability to execute, we can control how we go to market, but we can't necessarily control our clients' ability to execute and sometimes we're dependent on them for data or dependent on them for expected outcomes. And there -- I think it's fair to say there's a little confusion on where they wanted to spend the money. But right now, the pipeline is strong. We have very clear visibility into that. We know the demand is there. We have taken some steps heading into '26, strengthening the leadership, strengthening in our go-to-market. I'm not just saying this because it's got the word AI in it, actually using AI to help us streamline our processes and be able to execute more quickly, which all is under our control and which affects our revenue. So I think the base of your question though is probably about demand and our pipeline is strong. And we're feeling good about the business going forward. Operator: Your next question comes from the line of Kyle Peterson with Needham & Company. Kyle Peterson: Great. I wanted to start out on panels business. It seems like that remains a real bright spot for you guys. So just any more color there on what has driven kind of that sustained outperformance? And do you think there's still a good amount of runway there where it can be growing faster than the rest of the business? Just any more context there would be really helpful. James Peck: Yes. So our panel business is global. And so it's global and local at the same time, right? So we're addressing many different countries, but it is a country-by-country build of our consumer panel. What we have that no one else really has is the market data or the RMS data integrated with the panel data. And as Troy just described, we can tell what's going on broadly in the market, and then we can deep dive down into specifically what's causing that to happen by understanding the actual people who are doing the buying, right, because that's our consumer panel. So last year, we've integrated those things into our Discover platform. And that's what's driving the demand. So it's exactly what our customers have said they've always wanted, and we put it in place and now we're just reaping the benefits of that. Kyle Peterson: Great. That's really helpful. And then I guess just a follow-up here. I wanted to ask on the APAC region. I know the growth there has been a little more lackluster. So I guess just is -- how should we think about a return back to growth that's more in line with Americas and EMEA there? Or in what initiatives either need to happen or macro impacts, just how should we think about the path back to maybe mid-single-digit growth in that geo? James Peck: Yes. So first of all, in our guidance, we haven't assumed some type of huge comeback, okay? We're reflecting a more steady come back. So we don't have that risk in our plan. So I just -- I think that's important to note. And APAC, of course, is not just one thing. It's a diverse set of many countries and cultures that we're serving. And certainly, India and China still are big, big opportunities for us. And we're just -- what we're -- the plan is, it's just to steadily address our coverage in each of those markets. And get ourselves engaged in the quick -- what's it called, Troy. Troy Treangen: Quick commerce. James Peck: Quick commerce. I keep calling quick marketing. But quick commerce that's happening, especially in India, but also in China. And so we've had to just make some more, I think, we changed the leadership. I mean just like we do anywhere else, we had to steadily go and create relationships with the right companies and show them we're adding value and increasing our coverage. And so I think just by doing that, you're going to see a nice click up. And we're not doing this in a vacuum. We're doing this with our clients big and small in the region, we're saying this is what we need to do better business ourselves in China or to do better business ourselves in India or Korea or Vietnam. And I think I would say that we were just a little behind where we were in some of the other countries, getting our coverage and even our analytics capabilities on top of that where they need to be. But we have a very clear plan right now, we're executing it. Operator: Your next question comes from the line of Andrew Nicholas with William Blair. Andrew Nicholas: I wanted to hone in on guidance a little bit further. I think OCC growth expectations, 5%, 5.3% obviously encouraging and a good number. But looking at intelligence, it looks like the annualized intelligence subscription revenue has been growing 6% to 7%. And so I'm just wondering if I hear you on the activation front and the project timing and the pipeline. But is it fair for us to think about activations acceleration or recovery being incremental to the current outlook? Or just kind of how we should think about conservatism from that light because intelligence has been really, really strong over the past couple of quarters. James Peck: Yes. So I -- we'll just speak generally about our guidance approach, and I think those of you who know me, we guide to what we feel very certain of. Some might call it conservative, but we're -- that's the pattern that you've seen from me and you've seen from the company already. And so you can -- that's the same philosophy that we head into this year with. And I think I had to say that any one specific thing is incremental to our guidance. I don't -- I think I would just say the overall approach we have, I'll come back to what I just add is to do what we say we're going to do. We certainly are incented on higher numbers. We're certainly incented on higher activation numbers than you might see reflected in our guidance. But what we're guiding to is what we're comfortable with. Andrew Nicholas: Makes sense. And then for my second question, just hoping you could kind of help us frame the growth of GfK in 2025. It's been a part of your business since acquiring it in '23 that has consistently accelerated year-to-year. Can you talk about how '25 kind of wrapped up and holistically, how you're thinking about that over the next couple of years? James Peck: Sure. So GfK, as you know, way back when, this is a long time ago. We had quite a bit of a period where we were under examination from the European Union. And so they came out of the gates pretty weak in '23, '24. We got them back to good growth in '25. And we're planning on seeing the same kind of performance in '26. So good contribution, good customer demand, same kind of customer demand that you have in tech and durables that you have in the CPG client base. There is an interesting demand there for some of our activation tools, which these clients have never had access to. And so we're kind of working on that and ramping that up as well. Operator: Your next question comes from the line of Jason Haas with Wells Fargo. Jason Haas: I'm curious if you're seeing a trend of clients maybe still buying your data but consuming it more through their own tools or third-party tools. And then I'm curious your philosophy on where you're putting your incremental investment dollars. Are you still planning to invest heavily on the activation side to improve those analytical tools? Or does it make sense to really focus more on the data side and building out those proprietary data sets. James Peck: Yes. So I started to think about your second part of your question before I lost the first part. Can you repeat the first part again? Jason Haas: Yes, they are somewhat tied together, but I'm curious if you're seeing a trend of clients consuming the data more through... James Peck: Like I said, we have a set of clients. I like the persona we give them as they're the builders. They're going to have the money, the capital to try and figure out how to stitch together all the different parts of their operations. And we're right there with them as they work with different providers who help them with their back-end data integration matters. And what we're seeing is they're asking us to help them understand how they can integrate, help them understand how they can leverage our data even more as they link together. Let's say, hey, they come up with a really interesting innovation, but they didn't do the work to understand their supply chain could actually build the product. And so we're -- that's just one example of how we're getting more involved in their workflows, trying to stitch those 2 things together to say and get to market much faster. So I'd say we're learning with them as they go. And we are creating relationships with the companies you'd expect us to who they're going to use, whether it's for their data integration needs or their AI needs. And so we're just right in the middle of their ecosystem and we're learning with them, which is of course, helping us not only apply that to them, but then we can understand how the midsized players who can't really afford to do that kind of stuff, how we can help them use products like our Discover platform even more effectively. Of course, we're integrating our AI capabilities into Discover as we speak. And then the second question was... Jason Haas: I think you answered it pretty well. Is there -- I guess, one part on the first one, is there a trend where you're seeing your clients increasingly use some of these third-party tools to analyze the data. Has that been a shift that's taking place? James Peck: No, no. No -- if anything, they do like working with 1 provider who they know knows them. And when they do use alternative providers, it's usually not -- it's something we don't do, right? But they do need us to help them very often with doing -- the data is quite complex and understanding the context for it is really important. And I'll get back to this AI comment. That's exactly what the LLM guys were saying if we don't understand the data and we don't understand the context, our AIs doesn't work and if we don't have the data. So we need these players like Nielsen IQ and others to make AI work effectively. And so we're not really seeing a shift away from us. We're just -- actually, we're seeing more of, hey, can you help us? Jason Haas: Okay. That's great to hear. And if I could add a follow-up question. I'm just curious on how you think about the pace of organic growth through the year because the guidance seems to imply a softer start and then an acceleration through the year. So can you just talk about what drives that acceleration? James Peck: Yes. Mike, do you want to take that one? Michael Burwell: Sure. So Jason, we said from a guidance standpoint, as Jim said, we want to make sure we know exactly what's happening, what we see is we get a lot of our renewals that are done in the first quarter. And then we have greater visibility to those through the rest of the year. So that's what you see is a little bit lower number in our guide in Q1 and then really you're seeing accelerate over the second half of the year. Operator: That's all the time we have for questions today. I will now turn it back over to Jim for closing comments. James Peck: Yes. Okay. So thanks, everybody, for joining us today. We're excited about our progress and looking forward to another good run in 2026. And I'd just like to thank our clients, everyone who works with us and our investors, and we look forward to seeing you again in May. Bye-bye. Operator: Ladies and gentlemen, that does conclude today's conference call. Thank you for your participation, and you may now disconnect.
Operator: Greetings, and welcome to Grupo Traxión Fourth Quarter '25 and 2025 Conference Call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the conference over to Aby Lijtszain, Executive President and Co-Founder. Thank you. You may begin. Aby Lijtszain Chernizky: Thank you. Welcome, everyone. There are many positive matters to discuss. Despite the challenging and complex year that ended, perhaps the most important milestone of the year is the acquisition of Solistica. This is a tremendously accretive transaction that has transformed the asset-light profile of the company and is also remarkably strategic as we set even higher the barriers of entry to the logistics and transportation sector in Mexico, and Traxión further emphasizes its leadership in the industry. The integration was fully completed within 2025 and synergies started to become apparent in operations, finance and most importantly, in the commercial front. Moreover, as you know, we took debt to pay for the acquisition, which has proven to be effective as our leverage ratio ended the year exactly at the same level it was just before the transaction took place. This means that we were able to create additional value as we integrated such a successful company into our platform. Just to put some context, this is exactly the level at which we invest for organic growth below 4x EBITDA. In summary, we bought a large successful company, which has proven to be a perfect fit, perhaps the best in our history. Moving on, we achieved our guidance figures and did so taking care of operating cash flows, while maintaining a healthy leverage ratio well within our comfort zone. As usual, we released our guidance for 2026, which considers a growth of approximately 10% in both revenue and EBITDA with a CapEx of around MXN 2.4 billion. This basically means 2 things. First, there is a small margin expansion implicit in those figures, which could lead to lower leverage. And second, while the absolute number of CapEx might seem high, it is not when we look at it as a percentage of revenue. which is a significantly lower figure compared to other years, especially 2023 and 2024. We are starting to see stabilization in our business. and many investment and expansion decisions that were on standby are materializing. We definitely see a better outlook this year compared to 2025. Nonetheless, we will be conservative and proceed with caution this year, reducing CapEx and preserving cash flows. Finally, please be advised that since the asset-light component will become increasingly more relevant in 2026, accounting for a majority portion of revenues, EBITDA margin should be around 16% moving forward. This is the new standard for our margin from now on. Even though this new level is lower compared to past years, there are also significantly lower CapEx requirements to grow with a higher contribution to profitability. With that, I end my remarks today. I will now hand over to the others for a deeper dive in operating and financial matters. Rodolfo Mercado Franco: Thank you, Aby. Good morning, everyone. I will now walk you through the most relevant operating details. The Cargo division continued with disruptions in some circuits. Such phenomenon has been caused mainly by instability in the demand driven by peaks and valleys in both cross-border and regular services. This resulted in a 7.9% decrease in kilometer volume and 7.5% in revenue per kilometer. In the period, however, for 2025, we experienced an overall increase in revenue per kilometer with 8.2% less volume with some efficiency in costs. Moving on to mobility of people, we posted a smaller growth rate that was planned like that. As you know, for 2025, we decided to be more conservative towards expansion in this division. We carried out a plan to increase our clients' profitability. And for the first time, there is a fleet renewal program in place in this segment. This basically means that we are increasing the asset utilization rate to reduce CapEx requirements. All that resulted in a marginal growth in the average fleet, a reduction in kilometer volume and a mid moderate single-digit growth in virtually all relevant metrics despite the challenges and complexities we experienced throughout the year. Moreover, such efforts have started to pay off, and we will see results as soon as the first quarter of this year. We continue to implement and upgrade our proprietary technologies, increased the utilization of artificial intelligence and broadened several best practices, guidelines that have resulted in a stronger commercial and human capital backbone. Finally, in the Logistics and Technology division, we experienced greater-than-usual revenue this quarter. Traxión participated in large vaccine distribution business in November and December, which generated more than MXN 2 billion of revenue in the period. Despite having a lower-than-usual margin, it was a profitable business because of its 0 CapEx nature and is proof of the company's large operating capabilities and highly specialized service. As you can see, even though there were disruptions and challenges this year, Traxión was able to deliver once again. Having said that, I will now hand over to Wolf. Wolf Silverstein: Thank you. On the financial side, there are several financial metrics worth elaborating. First, one of the most relevant figures this period is operating cash flow. It more than doubled during the quarter, mainly because of much better working capital management. For the year, such metric posted a 33.2% growth compared to 2024. Then we posted a 2.2x leverage ratio, which as Aby just mentioned, is especially relevant since it is basically the same ratio we reported just before acquiring Solistica, which translates into a very accretive transaction as we typically deploy organic CapEx at such levels. Since we took debt to pay for a great portion of Solistica, it is important to bear in mind that such amount was fully reflected in the balance and in the cash flow of the company with the caveat that Solistica only reflected 6 months of results in 2025. So cash flow should look better if we look at the pro forma with 12-month basis. Moving on, I want to comment on net income as the annual figure came down more than 24% than in 2024 and was mainly driven by higher interest expense due to investments executed during the year that will reflect the full benefit in 2026, together with the negative effect of foreign exchange and tariff uncertainty, resulting in fluctuation in customer demand and volumes, both in cross-border circuits and regular services, which led to less kilometers driven and lower prices, mainly impacting temporarily our mobility of cargo and logistics businesses. Despite this, both our gross profit and operating income remained virtually unchanged, which is good news. In terms of CapEx, our guidance for this year is MXN 2.4 billion, with approximately 60% allocated to fleet renovations in both cargo and mobility, 25% for organic growth and the rest is for technology and innovation. Please bear in mind that this absolute figure is significantly lower than in other years as a percentage of revenue. Also, we expect EBITDA margin for 2026 to be around 16%, which will be mainly driven by a higher contribution of the asset-light business lines to consolidated revenues. All that is part of our strategy to proceed with caution this year, privilege cash flows and organic growth mainly through our asset-light business and take more care of leverage as we have some initiatives this year to improve company profitability. Thanks for your attention. I will now hand over to Tonio. Antonio Obregón: Thank you, Wolf. I will now walk you through some relevant ESG milestones and other tech-related developments. For the second year in a row, Traxión was included in the Global Sustainability Yearbook of S&P, which is one of the most prestigious and comprehensive rankings in terms of sustainability. This achievement represents the most compelling proof of the company's commitment to best ESG practices and of the transparency of our communications and disclosure. This inclusion gains a special relevance if we consider that there are more than 9,200 companies from 59 industries assessed globally and only 848 were selected as part of this year's addition, which positions Traxión as 1 of only 2 Mexican companies of the transportation and infrastructure sectors to be included. Moving on. During the fourth quarter, Traxión received its corporate sustainability assessment ranking for 2025, which came in 8 points higher compared to 2024 and places Traxión within the top 4 percentile and in the 11th place of best ranked companies in the industry globally and #1 in Mexico in the sector. This assessment allows an accurate comparison of the performance of all companies within a broad range of ESG-related criteria is available to an ever growing universe of investors and represents the most renowned sustainability database within global indices. Finally, another important sustainability milestone is that this period, we incorporated data regarding renewable electricity generation from solar panels installed in our facilities. This is indeed very good news and a tremendous step in terms of emissions reduction and energy efficiency as we continue to expand our logistics footprint and presence. Thanks for your attention. With this, we conclude management remarks and open the floor to Q&A. Operator: [Operator Instructions] Your first question comes from Pablo Monsivais with Barclays. Pablo Monsivais: I have 2 questions. The first one is if you can provide more detail on the increase in revenues in the logistics sector. We saw that you won a project in the pharma sector, but would love to have more visibility on that. And my second question is on your guidance. If we account from the contribution of Solistica for 2026 and we compare your guidance for 2025, it seems that implicitly cargo revenues are still are negative or that cargo will have a tough year in 2026. What's going on in that business? If you could provide more color, it would be very helpful. Antonio Obregón: Pablo, this is Tonio. Can you repeat the first question? It wasn't very clear. We didn't catch it well. Pablo Monsivais: On the increase in revenues in the logistics sector and the project that you have on the pharma side. Antonio Obregón: Pablo, thank you. It was a vaccine distribution operation. We were able to participate mainly because of the large operating infrastructure that we have and the high-quality service in the pharma division. It was a first time for us. It was a particular event, and we believe that we delivered a better-than-expected service, and we feel very confident that there is a high chance of repeating it this year. However, that business, in particular, is not included in the guidance. Wolf Silverstein: Pablo, and regarding your second question, in terms of the guidance, basically, as Tonio just mentioned, we didn't include in the guidance to repeat this particular project, even though we think that, that could be repeated by the end of maybe 2026. So if you consider that, let's say, without putting in the base of 2025, basically, the growth that we are projecting for 2026 in terms of revenue, it will be close to 17%. So that's what basically moved the company back to the margins and back to the regular track that we had in the previous years. Operator: Your next question comes from Martín Lara with Miranda Global Research. Martín Lara: What can we expect in terms of EBITDA margins in mobility of cargo and mobility of personnel this year? And could you please provide the CapEx breakdown between maintenance and growth? And how do you see the fleet performing in cargo and personnel? Wolf Silverstein: Martín, regarding your first question, considering the margins in the cargo and mobility of people divisions, I would say, basically, we are looking for something similar. As you can see, usually in the Mobility of Personnel division, we are something close to the 26% margins. And regarding the Cargo division, it was at the end, something between 18% and 19%. So we are expecting something close to that considering the FX rate as of now. And even though it could be better maybe in the second half of this year in particular. And regarding the details of the CapEx for 2026, it is basically the renewal CapEx will be almost 50% of the CapEx that we are expecting. We are going to be growing a little bit on the mobility of people division basically and renewal CapEx only for the rest of the asset-heavy divisions. Martín Lara: Okay. And what can we expect in terms of free cash flow generation? Wolf Silverstein: Considering, in particular, this guidance, and as you can see also in 2025, we're privileging more the cash flow generation. As you can see, in particular for 2025, the operating cash flow, it will bump up over 30% for the previous year. So this is part of the strategy of the company to privilege the cash flows and even though to get a free cash flow in an organic way for 2026. Operator: Your next question comes from Enrique Cantu with GBM. Enrique Cantu Garza: Congrats on the results. So as part of your evaluation of potential M&A opportunities in the U.S. Could you elaborate on the type of assets you are currently assessing? And additionally, how should we think about the expected timing for a potential transaction? Antonio Obregón: Enrique, thank you for your question. What we're looking at for M&A in the U.S. is we want to participate in the cross-border business, which we believe is a very attractive market currently. And that's where we are focusing our efforts. Enrique Cantu Garza: Okay. Perfect. And then do you have an expected timing for this transaction? Antonio Obregón: No, we don't have anything defined yet. We have some targets. We've been working analyzing, but we don't have anything definite as of today. Operator: [Operator Instructions] Your next question comes from [ Arturo Leal ] with [ Imberco ] Asset Management. Unknown Analyst: My first question relates to shareholder value creation. While we recognize the company has been executing on its growth strategy, remains focused on M&A, the stock price has declined by nearly 70%, which appears to reflect meaningful investor concern. Could you elaborate on what you attribute the decline to? And more importantly, what concrete actions have been taken or planned to enhance shareholder value? At what point do you expect balance acquisition-driven growth with a clear and more measurable return framework for investors? And secondly, regarding foreign exchange dynamics with the peso strengthening relatively to the U.S. dollar, how does that impact the company, positively or negatively? Antonio Obregón: [ Arturo ], this is Tonio. Thanks for your question. I'm going to answer your second question first. The foreign exchange has 2 effects basically in the company. The first one is that a portion of the trucking revenues are denominated in U.S. dollars, basically the portion that we do in cross-border services. That has an impact and has had an impact historically when -- with a stronger peso. What we are looking at this year to offset that negative effect is that we are adjusting the prices to reflect a more accurate exchange rate, which is on the 17.2% range. And the second effect of foreign exchange in the company is that we hold a position in U.S. dollars. And when we do the mark-to-market, we do -- we record either a profit or a loss depending on what's happening on the markets. And regarding your first question, we are very worried about the share price as well as you. And that's a matter that is of utmost important for the company. One of the things that we are doing to reverse that situation first is obviously improve the results of the company for 2026. In 2025, we faced a very challenging year, but we were able to protect the balance to privilege cash flows. If you see, for example, operating cash flow in the quarter, in the quarter, it went up more than 100% and in the year, more than 33%. That's a very, very, very meaningful milestone for the company. 2026, we're going to reduce CapEx. We're going to be more conservative towards investments in growth. And that naturally privileges cash flows and protects the balance. We are expecting a normalization, stabilization and then a recovery this year. And then we are always striving to be close to our investors, to our research analysts to be able to respond quickly to their concerns and so that they have information to make their decisions. So those are the actions that we're taking towards more value creation for our shareholders. Unknown Analyst: Just a follow-up, if I could. Do you guys expect to do any share buybacks at this price considering the price and the value of the company or maybe distributing some dividends to investors? Or the sole focus is to continue growing the company and maybe paying back some debt? Antonio Obregón: Thank you, [ Arturo ]. Yes, we have been doing some buybacks at this level. We think it's a very strong message to the market that they see us participating at this level. We think it's ridiculously cheap, the valuation right now. And in terms of dividends, we are not looking at that right now. The company is in a growth mode, and we are using all the cash that we generate to grow and to be able to maintain the operations of the company. Operator: Your next question comes from Daniel Rojas with Bank of America. Daniel Rojas Vielman: The first one is on your costs. Thank you for breaking down the items in your press release. I was seeing that you had an increase of around 124% to 125% due to facility services and utilities. I was hoping you could give us additional comment on that and drill down on what's happening there and if that will normalize going forward? And on your other cost items, what we should expect going forward? And my second question is regarding the Cargo division. You gave us guidance for that, but I was hoping to get some color on what you expect as we move into the second half of the year and maybe we get a resolution of the USMCA. Are you seeing your clients getting prepared for that? Or is it too early? I'm trying to think of 2027 and it should be a recovery year? Or should the Cargo division numbers be more normalized to what we see in 2026? Wolf Silverstein: Daniel, this is Wolf. So regarding the cost level, basically, it was, let's say, affected by 2 particular things. First one was the particular project that Tonio already mentioned about the pharma vertical. So basically, that's one of them. And the other -- and the rest of that in terms of the facilities, basically, it's the inclusion of Solistica into the numbers of Traxión. And obviously, all of that related cost to the third-party units that we use basically in the brokerage business. So that's basically the 2 main things that kick up the cost. So one as of now was a particular event in the fourth quarter that could be, again, repeated by the end of 2026. It's something that it comes with a seasonality of that business. And the rest is basically the growth considering more in the asset-light business and the expansion of the brokerage business. And regarding the second question, considering on the cargo side, basically, we're looking at better economics for, let's say, for the second half of 2026. We're starting to see some clients that basically in 2025, postponed their investment decisions in several industries considering the tariff environment. And the [ talks ] that we have with them, it's basically that they're taking some of that decisions currently. So we expect a stabilization in that demand. And obviously, with that, we can stabilize also the prices into that particular division. So regarding that question, we're seeing a much better second half of the year in the Cargo division. Operator: Your next question comes from Andres Radin with The Rohatyn Group. Andres Radin Borrajo: Regarding the pharma project, could you repeat if it's a onetime thing? Can we expect it for the next year? And also, if you could repeat if you made any adjustments in the guidance regarding this project? Wolf Silverstein: Andres, this particular project is -- it comes with a seasonality of that particular need. So we operate for the first time of the company in the fourth quarter of 2025, and we are not projecting in our guidance for 2026, even though we think that with the work that we did in that particular project and it was successful, I think maybe we could be doing it again by the end of 2026, even though we didn't consider in this guidance. Operator: Your next question comes from Federico Galassi with The Rohatyn Group. Federico Galassi: Two questions. The first one is a follow-up of Andres' question. If I do the math for this particular project in pharma, the dimension of this business was almost flat, almost zero, it is okay? And if you can give you some more information about that. This is the first question. Wolf Silverstein: Federico, so as Tonio mentioned, in particular, and Rodo, this project, it was the first time that we executed in Traxión. The margin of this business was less than 5% with 0 CapEx. So it was basically all ready for the company, even though we experienced the first time executing this kind of project, basically, based on the infrastructure of the company. So if we are able, obviously, to repeat that by the end of 2026, hopefully, we can get much better economics on that project. Federico Galassi: Okay. Okay. It's a project that can give you more revenues in the future. And the second one, and you're reducing part of the net debt to EBITDA after Solistica, et cetera. But the interest payments continue to be a big portion of the EBIT and you -- how's your view for that for this year, in particular in the leverage side? Wolf Silverstein: So regarding the interest expense for 2026, there's 2 different things that will be important to mention. The first one, it's obviously that the rates come down during the last 12 months. So that will be basically affecting positive, let's say, the expenses in terms of interest. And the second one, as we mentioned also, we are putting less CapEx for this year. So with that, we are deleveraging the company more than it was on average on 2025. So with those 2 things, we're experiencing less, let's say, interest expense for 2026. And that's basically what we are projecting. As also -- maybe you know last week, we issued a new bond also in the market. So we'll continue looking for different strategies to make more efficiencies also in the debt side. Federico Galassi: You continue after Solistica with your net debt target for the year? How is your... Wolf Silverstein: We're looking at -- more close to 2x. Operator: Thank you. This now concludes our question-and-answer session. I would like to turn the floor back over to Aby Lijtszain, Executive President and Co-Founder, for closing comments. Aby Lijtszain Chernizky: We are looking to a double-digit growth in the low teens for this year with much less CapEx while privileging cash flow generation and preserving the balance. The market is starting to stabilize. There are many clients across different sectors that put off their investment or expansion decisions in 2025 that are currently making such decisions, and Mexico is still a very competitive destination for many industries. We are confident that 2026 will be a normalization and recovery year. Thanks for your attention, and have an excellent weekend. Operator: Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. Please disconnect your lines, and have a wonderful day.
Operator: Welcome to the Atrium Mortgage Investment Corporation's Fourth Quarter Results Conference Call. [Operator Instructions] A reminder that this conference is being recorded, Friday, February 27, 2026. Certain statements will be made during this phone call that may be forward-looking statements. Although Atrium believes that such statements are based upon reasonable assumptions, actual results may differ materially. Forward-looking statements are based upon beliefs, estimates and opinions of Atrium's the date the statements are made. Atrium undertakes no obligations to update these forward-looking statements in the event that management's beliefs, estimates, opinions or other factors change. I would now like to turn the conference over to your host, Robert Goodall, CEO of Atrium. Mr. Goodall, please go ahead. Robert G. Goodall: Thank you all for calling in this morning. Our CFO, Chris Anastasopoulos, is joining me today. Chris will begin with an overview of our financial results, and then I'll speak about our performance from an operational and portfolio perspective. Chris? Chris Anastasopoulos: Thank you, Rob. In the fourth quarter and for the year ended December 31, 2025, Atrium continued to generate strong results for shareholders amid a challenging economic environment. Atrium generated net income of $12.2 million in the fourth quarter, and our basic earnings per share was $0.25 per share, which decreased from $0.27 per share in the fourth quarter of 2024. For the year ended December 31, 2025, Atrium earned net income of $49.1 million, a 2.5% increase over the prior year, resulting in basic earnings per share of $1.03 per share. This was ahead of our fixed dividend rate for the year of $0.93 per share. And after considering the $0.10 per share special dividend announced yesterday, our total dividends for the year were $1.03 per share, which is in line with our earnings per share for 2025. We are proud of this performance, particularly given the weak market conditions in 2025. As expected, the average interest rate on the mortgage portfolio decreased to 8.98% at December 31, 2025, down from 9.98% at December 31, 2024. The decrease was largely driven by repayments of loans with higher yields compared to new loan originations and the impact of 25 basis point rate reductions by the Bank of Canada during the year impacting floating interest rates. As at December 31, 2025, 80.8% of the mortgage portfolio was priced based on floating rates with the majority having rate floors in place. The mortgage portfolio ended the year at $917.1 million, an increase of 3.4% from $886.7 million at December 31, 2024. Despite the difficult market and due to the strength of our underwriting team, we were able to grow the portfolio this year. During the year ended December 31, 2025, mortgage advances exceeded interest and principal repayments with $358.6 million of mortgage principal advanced and $316.6 million repaid and transferred net of write-offs of $4.3 million. At December 31, 2025, 95.2% of our mortgages were first mortgages, and we maintained a conservative average loan-to-value ratio of 61.4% for the portfolio, which decreased from 61.9% at December 31, 2024. Our mortgages classified as Stage 1 were $782.4 million at December 31, 2025, down 3.1% from $807.7 million at December 31, 2024. We had $48.7 million in mortgages classified as Stage 2 at year-end, a decrease of 2.6% from $49.9 million at December 31, 2024. Stage 3 loans increased to $86 million at December 31, 2025, compared to $29 million as at December 31, 2024, and $56.3 million at the end of the third quarter. 3 commercial loans totaling approximately $53 million were migrated to Stage 3 in the fourth quarter as they became impaired, which were offset by repayments of commercial loans of approximately $23 million during the quarter. The allowance for credit losses was $30.5 million at December 31, 2025, a 3.1% increase over December 31, 2024. As a percentage of the mortgage portfolio, this represents a healthy 332 basis points, consistent with the prior year rate of 333 basis points. The total allowance for credit losses related to Stage 1 loans was $6.1 million at December 31, 2025, down from $8.1 million at December 31, 2024. Our allowance for credit losses on Stage 2 mortgages was $2.9 million at year-end, a decrease from $8.1 million at December 31, 2024. Our Stage 3 allowance for credit losses was $21.5 million, up from $13.3 million at December 31, 2024, primarily due to the migration of new loans from Stage 2 during the fourth quarter, offset by loan repayments. We continue to maintain a strong liquid and well-capitalized balance sheet. As at December 31, 2025, balance sheet debt remained low at 40% with $283 million drawn on our $380 million credit facility, leaving a healthy available capacity. The weighted average cost of borrowing on the credit facility was 5.08% this year, down from 7.03% in the prior year. During the year, we also repaid our 5.6% convertible debenture with a principal amount of $28.7 million on March 31 and our 5.5% convertible debenture with a principal amount of $34.4 million on December 31. Our healthy debt capacity provides us with the opportunity to make use of convertible debt in the market in 2026, providing market conditions are favorable. In 2025, we continued our trend of strong financial performance for our shareholders even under difficult market conditions. We remain committed to our disciplined risk management approach as we pursue new opportunities, strengthening our team to ensure timely transaction analysis, managing our operating expenses prudently and maintaining a strong balance sheet to confidently navigate the current economic cycle. I will now pass you back to Rob for the business and portfolio updates. Robert G. Goodall: Thank you. As Chris said, Atrium MIC had a very good quarter with basic earnings per share of $0.25, identical to the previous quarter. I'm very proud of our annual results of $1.03 per share, which marks the fourth consecutive year in which our earnings exceeded $1 a share. We were able to deliver one of our best years despite a very weak economy and the severe downturn in residential real estate markets across Canada for which our team deserves a lot of credit. This strong performance has allowed us to reward our shareholders with a $0.10 special dividend. Overall, the portfolio increased to $917 million, up from $887 million at the end of calendar 2024. I think a big reason for the increase in the portfolio is the growth in our underwriting team, which has more than doubled in size since the beginning of 2020. Loan advances in 2025 were $359 million, which was slightly higher than in calendar 2024. Repayments in calendar 2025 were $317 million, which represents a portfolio turnover of approximately 39%, which is in line with our normal level and is a sign of a healthy portfolio. We made good progress implementing CMCC's strategy to increase our exposure to commercial and single-family mortgages in 2025. The commercial category represented 28.7% of the total portfolio at the end of the year and has seen an increase of $72 million over the past year, representing a 38% increase year-over-year. And the single-family and apartment category has risen to 19.2% of the total portfolio, up 14% on a year-over-year basis. Together, these lower-risk sectors now represent approximately 48% of our portfolio. In Q4, Atrium's average mortgage rate dropped from 9.2% last quarter to 8.98% this quarter, which reflects the 25 basis point drop in the prime rate of interest during the fourth quarter. Total of high ratio loans, that is loans over 75% loan-to-value was $85 million, equal to 9.3% of the portfolio. For the single-family mortgage portfolio, loans over 75% loan-to-value totaled just over $30 million. And there were 5 high ratio commercial loans totaling $54.7 million. One of these loans totaling $14.25 million was repaid in full in January, while another totaling $12.6 million is expected to be substantially paid down by the end of March. In Q4, the average loan-to-value of the portfolio increased slightly from 60.8% last quarter to 61.4% at year-end and continues to be well within our desired range of 65%. Atrium's percentage of first mortgages remained very high at 95.2% and construction loans rose slightly in Q4 but still represent less than 5% of the portfolio. We funded a $12.5 million construction loan with a well-known Toronto developer on a purpose-built rental in Q4. Turning to portfolio quality. The mix of Stage 1, 2 and 3 loans changed in Q4. The good news is that the aggregate of Stage 2 and 3 loans dropped by 13.6% to 14.7% of the portfolio. Stage 2 loans dropped sharply from $96.8 million to $48.7 million. Although Stage 3 loans did increase from $56 million to $86 million, it was due to the addition of a $31 million loan, and that property has been conditionally sold, and we expect it to be repaid in early Q2 2026. In terms of the loan loss reserve, we expensed a loan loss provision of $1 million in Q4 after having a $1.3 million loan loss provision in Q3 and a total provision expense for the year of $4.5 million. On a net basis, Atrium's total loan loss reserve increased marginally from $29.5 million last quarter to $30.5 million at year-end, equal to 332 basis points on the overall mortgage portfolio. With regard to our line of credit, we added 3 new lenders to our lender syndicate in 2025 and increased our committed line of credit from $340 million to $380 million. We used the line of credit to repay 2 convertible debentures, which matured in 2025. We expect to access the convertible debenture market in 2026, provided market conditions remain favorable. My economic commentary is as follows: the Bank of Canada's latest forecast of GDP growth is for a flat Q4. Bank of Canada has also forecasted slow growth of 1.1% in 2026 and 1.5% in 2027 as Canada adjusts to a new trading relationship with the United States. CPI dropped to 2.3% in January, and the Bank of Canada expects inflation to slow further in the coming months. Both Canada and the United States held their rates steady in December, and it's unclear when or if more interest rate cuts will occur in either country. Turning to commercial real estate. The commercial real estate market stabilized in 2025 as investor confidence gradually improved. Performance across most commercial real estate sectors has been resilient, particularly the retail and seniors residence sectors. The multi-residential and industrial sectors are still healthy, although rents have dropped from their peak levels and vacancy rates have risen. We view commercial real estate as one of the best areas to focus our lending activities, and CMCC has worked hard in the last 2 years to increase Atrium's exposure to these markets. The office sector, where we have limited exposure, has recently shown signs of recovery in the GTA as a result of return to office requirements by many large employers with mandates of 4 to 5 days per week in office. However, it is still a difficult sector for all but the AAA class buildings. Looking at the residential and multi-residential real estate markets. In contrast to the commercial real estate, unfortunately, the misery continues in residential housing markets. Starting with resales. In the GTA, resales declined by 11% in 2025 on a year-over-year basis, with sales at their lowest level in at least 12 years. Similarly, resale activity in the Greater Vancouver area decreased by 10% year-over-year in December, capping a year with the lowest annual sales in 2 decades. Over the past year, benchmark resale prices declined by 6.3% in the GTA and 4.5% in the Greater Vancouver area. Turning to new home sales. The soft resale market conditions have directly contributed to a lack of activity in the new home market as construction costs and affordability constraints continue to weigh heavily on demand. The new home market remains slow across most urban centers in Canada, with the GTA and the GVA leading the way with new home sales 81% and 70% lower, respectively, than the average sales for the 10-year period between 2016 and 2025. But other markets are also slow. For example, in 2025, even Calgary and Montreal, 2 of the stronger market had new home sales that were 42% and 70%, respectively, below their 10-year average from 2016 to 2025. The condo sector is the weakest sector within the residential markets. But fortunately, the new -- the supply of new condos should reduce dramatically over the next 2 years. For example, in the GTA, the number of condominium units under construction dropped sharply to 50,000 units by the end of the year, and that number could drop as low as 30,000 units by the end of 2026, which should form the base for a recovery. The housing market clearly needs more government support in the form of an HST rebate for all buyers, not just first-time buyers and ideally a major reduction or elimination of development charges. And it's worth noting that Mississauga and Burlington have implemented on their own a reduction or elimination of development charges. And the housing market, of course, also needs more economic certainty to improve consumer confidence. We believe that the housing market in the GTA particularly, should stabilize and gradually start to recover in 2027 when the number of project completions starts to drop sharply. To conclude, I'm proud of Atrium's results in 2025 and pleased that we're able to reward our eligible shareholders with a $0.10 special dividend. The results didn't come easily. The new management -- senior management -- or the senior management team have all been working very hard to navigate the toughest real estate market that I've seen since the early '90s. We have dealt effectively and decisively where we've had problem loans rather than kicking the can down the road. This is important because the residential resale and new home markets are generally expected to perform poorly in 2026. So a delayed response will likely be costly. The other challenge in 2026 will be continuing to source new loan business due to the lack of overall activity in the market. The banks have at times been very aggressive. CMCC recently added 2 underwriters in the Toronto office in attempt to free up time to source more new business. Our growth in 2026 will also hopefully come from Western Canada. The BC office has lots of room for growth, and we are looking at the possibility of recruiting a new Managing Director in Alberta. Notwithstanding the challenges, Atrium has a more resilient portfolio than many of our competitors. And as a publicly traded MIC, one of the few publicly traded MICs, I might add, we have more stable funding sources, including permanent shareholders' equity, better access to syndicate lenders for our line of credit. For instance, in 2025, we added 3 new lenders to our lender syndicate and access to the convertible debenture market. While conditions remain very difficult, Atrium's results have been consistently strong through economic downturns, and our track record confirms that we know how to construct and manage a resilient loan portfolio in all stages of the market cycle. That's all for the presentation, but we'd be pleased to take any questions from the listeners. Operator: [Operator Instructions] Our first question is from Graham Ryding of TD Securities. Graham Ryding: Maybe, Rob, just to elaborate on sort of your messaging at the end of the call there or your prepared remarks, just big picture, obviously, a tough market, particularly in the GTA condo space. What's your strategy broadly for managing your portfolio and deploying capital in what seems to be a tough macro backdrop? Robert G. Goodall: So the strategy, and it really started almost 3 years ago has been to do more single-family mortgages because we still view that as one of the most liquid types of real estate. And by the way, condominium had an enormous supply of completions, as you probably know, over the last 2 years, 60,000 units. So that swamped the market. That will be changing in 2026 and even more particularly in 2027. So it's not like we're focused on the condominium market, but we think that it will gradually improve. And condominiums do have the advantage of being the most affordable type of single-family residents. So we're not totally against condominiums. We're obviously wary given the supply. But -- so we look at single-family mortgages as a good area, and we look at commercial real estate as a good area. We've done a lot of multi-res, and we've done a lot of industrial, occasionally retail. We've looked at senior residents. We haven't won any business there yet, but that's a really strong sector right now, as you probably know. So we're avoiding development except for the very strongest developers who are being opportunistic. Those people we would back. But those, as you know, are a few and far between those type of opportunities. So generally, we're looking at income-producing and single-family mortgages as sort of the 2 areas we're most focused on. Graham Ryding: Okay. Helpful. And then just with your ACLs on the balance sheet, just given the, I guess, the sort of difficult market conditions, you had about, I think, $4.9 million in PCLs in 2025. How are you thinking about your level of provisioning. And should we expect a similar level in 2026 or could we move down to see in 2023, 2024 levels perhaps? Robert G. Goodall: Yes, I don't think it will be back to '23. And I think we had well over $10 million in provisions in '23. I don't think it will be that -- it would surprise me if we had that big a provision. So we're thinking it will probably be similar, but it's really, really hard to tell right now because we're so early in the year. But we do risk rate every single loan every single quarter. So we know the portfolio inside and out, and we know where the vulnerabilities are, and we're watching those closely. So one thing I'm confident is we're very adequately provisioned on what we put in Stage 3 or put in Stage 2. Graham Ryding: Okay. Great. And one more, if I could. Just the -- it sounds like you're expecting to get repaid for that $31 million loan in Stage 3 repaid in Q2. Is that a full repayment with no loss. Is that what you're expecting there? Robert G. Goodall: That's right. Yes. Because it's under contract, I don't want to say more about it. But yes, it's a full recovery. Operator: [Operator Instructions] It appears there are no other questions at this time. I will now give the call back to Robert Goodall for closing statements. Robert G. Goodall: Okay. Thank you all for getting up early and attending our conference call. We're pleased with the results, particularly the $0.10 special dividend, and I hope our shareholders are as well. For existing shareholders, thank you so much for your continued support, and have a great day. Operator: Thank you all for participating. This conference call has now concluded. Please hang up.
Operator: Ladies and gentlemen, thank you for standing by. I am Yoda, your Chorus Call operator. Welcome, and thank you for joining the Alpha Bank conference call to present and discuss the full year 2025 financial results. [Operator Instructions] And the conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Alpha Bank management. Gentlemen, you may now proceed. Iason Kepaptsoglou: Hello, everyone. This is Iason Kepaptsoglou, Alpha Bank's Head of IR. Welcome to the presentation of our full year results. Vassilios Psaltis, our CEO, will lead the call as ever with a short summary, and then it's over to Vassilios Kosmas, our CFO, for the numbers. Q&A will come at the end of the call, and we should wrap up within the hour. Vassili, over to you. Vasilis Psaltis: Good morning, everyone, and thank you for joining our call. Let's start with an overview of 2025 on Slide 4, please. For 2025, we recorded EUR 943 million profit. This is up 44% versus last year. On a normalized basis, profit stood at EUR 907 million, up 5% year-on-year. Post AT1 coupon payments, earnings came at EUR 0.36 per share, and this is up 3%. We're proud of the growth we have been able to deliver. On the one hand, we have defended against the fall of interest rates due to our prudent positioning of the balance sheet. On top, we have leveled up our fee generation capacity enhancing our product factories. But at the same time, we have kept costs well contained as we continue to optimize the way we work and we have managed to instigate a lower recurring cost of risk through management actions and the overlays taken at the end of the second quarter. Growth has come with solid commercial trends. As you can see, net credit expansion reached EUR 3.5 billion for the year, and this is driven by corporates. Deposits were up EUR 4 billion for the year, and we have generated EUR 1.3 billion in net sales of assets under management. Thus by asset quality was stable. Return on tangible equity stood at 11.9% on a reported basis and 13.8% based on a normalized profits, while organic capital generation reached 206 basis points. We continue to position the business to maximize the recurring value we can create for our stakeholders in a sustainable way. And that value is increasingly distributed back to shareholders, as you can see on Slide 5. Here, you can depict that we intend to pay 55% of 2025 reported profits as an ordinary distribution, always subject to AGM and regulatory approval. That equates to EUR 519 million in distributions, which is a 6.1% yield on our current market cap. Since the reinitiation of dividends out of 2023 profits, we have been able to increase the payout ratio from 20% to 43% and now 55% with ordinary distributions up fourfold in euro million terms. We intend to split the 2025 ordinary payout equally between a cash dividend and a buyback. At EUR 259 million, this means that total cash distributions for 2025 profits will be more than 3x those of last year. Given the EUR 111 million interim dividend paid in December, the final dividend should be EUR 148 million or approximately EUR 0.065 per share. At EUR 259 million, the size of the proposed buyback is proportional to the one conducted out of 2024 earnings. It is also in line with feedback we have received from a wide range of shareholders. In 2025, we have also built a demonstrable track record of disciplined capital deployment in inorganic transactions, as you can see on Slide 6. AstroBank added scale to our separate presence, instantly positioning us as a top 3 bank in the country with a circa 10% market share and doubling local profitability while remaining in being neutral and CET1 right. Flexfin enhanced our data-driven factoring platform, unlocking access to small businesses and lower tier SMEs with a strong risk-adjusted returns and EPS accretion from year 1. AXIA forms the backbone of our new regional investment banking and capital markets platform, bringing market-leading advisory capabilities and immediate scale in Greece and Cyprus. All of the above transactions have now been closed, and we are progressing swiftly with full integration. We finished the year announcing 1 more deal which we can look at in more detail on Slide 7. Alpha Bank has reached an agreement on the key commercial and legal terms for a transformational combination of insurance activities in Cyprus, bringing together Universal Life and Altius Insurance. The agreement comprises of 2 parallel steps. The acquisition of 100% of our Altius Insurance and the merger of Universal Life and Altius into a single combined entity in which Alpha Bank Group will acquire a majority stake. To support execution and ensure continuity, we are forming a long-term strategic partnership with the Photos Photiades Group, Universal's Cornerstone shareholder. The Altius management team, which has delivered an impressive turnaround in the recent years, remains fully committed, and this is materially reducing any integration risk. Completion is expected towards the end of 2026, subject to regulatory approvals. We will keep investors updated as the process progresses in line with all legal requirements. This transaction will create one of the top insurance group in the country with a leadership position in accident and health and a clear path to long-term growth. The combination creates a platform with over 400 agents and more than 100,000 clients more than doubling our cross-selling potential for banking products and boosting our asset management revenues. It also allows us to actively shape the separate insurance market, building a powerful diversified insurance platform with strong positions across life, non-life and health. Universal brings an impeccable brand and deep expertise in life and health, whilst Altius contributes strong non-life capabilities, Bancassurance expertise and a high-performing sales force. The combined strength of the 2 franchises unlock a clear winning proposition, a broader, more competitive product suite, a more extensive distribution network, a stronger ability to serve households and businesses and an enhance customer experience and digital capabilities. These partnerships offers a rare opportunity to build the best quality insurance group in Cyprus, supported by exceptional talent from both Universal and Altius. It positions us as a major player in financial services with a scalable insurance platform, complementing our lending and wealth positions. It reinforces Alpha Bank's enduring commitment to Cyprus, a market where we already hold a strong banking presence and see attractive macro prospects. From a financial perspective, the transaction is fully aligned with our disciplined capital allocation framework and exceeds all group level M&A criteria. It delivers an EPS accretion of circa 2%, reflecting a strong profit uplift from Cyprus, a return on tangible equity accretion above 30 basis points and a minimal cost for equity Tier 1 impact of just 23 basis points consistent with our commitments. This is exactly the type of capital-light fee-based growth we aim to prioritize, scalable, accretive, resilient and consistent with our long-term strategy. Let's now turn to Slide 8, please. For yet another year, we have delivered on our promises. Results for 2025 have surpassed our original expectations. Revenues have come in line with guidance, and we have been able to counteract exogenous headwinds to our net interest income through a significant outperformance in fees. Costs have also come in line with guidance, showing our disciplined approach to cost management and cost of risk has been better than expected, as during the second quarter, we were able to reduce management overlays on provisions, releasing future cost of risk. The bottom line is that on EPS, on returns, on tangible book value and capital generation, we have been able to surpass expectations. At the same time, capital has been invested through value-accretive M&A to boost future revenues. Let's now turn to Slide 9, please. As you can understand, we're going to be a bit frugal with guidance this time around as our Investor Day is just around the corner. Vassilios, our CFO, will give you more details on the numbers in a minute, but I would like to highlight 1 or 2 things. First, 2025 was a fantastic year for us. We have been fortunate to produce more than EUR 940 million profits for our shareholders. But admittedly, our recurring profitability stood closer to EUR 907 million. Secondly, we have -- we need to be cognizant of the fact that 2026 is a transitional year for us. We are razor focused on integrating the acquired entities, but quite reasonably, we will not see the full benefit of the effect of synergies from year 1. The bottom line is that we expect to deliver 11% growth on normalized earnings. Credible recurring earnings growth is the natural outcome of our strategy and what we believe will continue to differentiate us going forward. The rest I'm afraid we'll have to wait until our Investor Day. And with that, Vassili, over to you. Vassilios Kosmas: Thank you, Vassili, and hello from my side. I'll start from where you left and talk about the guidance for 2026, and then we can move to results. Starting with the bottom line, we expect EPS to reach circa EUR 0.40 in 2026. Remember that this is on a normalized basis post 81 coupons. To make things easier, this translates into profit of circa EUR 950 million or circa EUR 0.39 of reported EPS, in line with current consensus expectations. Before we look at the recurring side, let's keep in mind of some one-offs to take into account. We have a voluntary separation scheme that we expect will cost us about EUR 30 million and we also need to take into account a EUR 20 million restructuring charge for AstroBank. So underlying profits are close to the EUR 1 billion mark. Just to be clear, it is before the full phasing of synergies from our positions. In terms of individual components, NII is expected to surpass EUR 1.7 billion. We're cautiously assuming a 3-month Euribor of 1.9. Clearly, volumes will be a tailwind. We expect mid- to high single-digit growth in loans with circa 90% of credit expansion coming from corporates. We expect this growth to be funded by deposits with no real change in the mix between time and core. We also aim to grow the securities book closer to the 25% mark of the asset base. The other, with EUR 1.5 billion of yield accretive reinvestments we have, the securities book will provide an additional tailwind. The stock of time deposits will also continue to reprice towards front book levels with a benefit of circa EUR 20 million from Q4. All in, the cumulative benefit of the above equates to circa EUR 120 million versus Q4 annualized NII levels after we adjust for AstroBank. There are, however, 2 clear headwinds. The first is the cost of increased wholesale funding issuance as we grow the balance sheet. The second and equally important is that we expect loan spreads to drift lower for the stock by another 10 basis points on account of competitive tension. Fees should land close to EUR 600 million mark versus EUR 510 million we reported for 2025. There are a couple of important things to note here. In organic growth, mainly coming from AstroBank and AXIA should bring in about EUR 30 million more year-on-year. So the pro forma starting base closer to EUR 540 million, we expect to grow that at a double-digit rate. Growth in real estate income previously in other income should bring in more -- should bring in more than EUR 10 million year-on-year on account of recent investments. The remaining EUR 50 million is split between lending and transaction banking, circa EUR 20 million on account of increased penetration and corporate-related fees as we continue to leverage our relationship with UniCredit. Growth in asset management with EUR 1 billion of expected net sales and higher year-end balances, bringing together an additional EUR 20 million; and finally, international business and expansion capabilities as well account for the rest. Based on the above, fees should reach to above 25% of revenues. While revenues should land above EUR 2.4 billion, growing by just under 10%. First, we expect to extract some synergies from the AstroBank acquisition. Those are more likely going to materialize in 2027. As anticipated last year, we don't expect a repeat of admittedly stellar performance for 2025. So underlying cost growth should revert to 3% or 4%, with a cost-to-income ratio edging towards 40%. No news on cost of risk. We still expect 45 basis points going forward. Income from associates would increase to EUR 50 million and that brings the pretax of slightly above EUR 1.3 billion. Last, in terms of tax rate, we expect 26% going forward. Moving to results on Slide 11. Nothing notable to report in terms of one-off items other than some tails, et cetera NPE transactions. Reported normalized profits at EUR 237 million and EUR 225 million, respectively, inching towards the EUR 250 million mark. In terms of full year numbers, as Vassilios mentioned, we have EUR 943 million of reported profits and EUR 907 million on a reported basis. This gives us a normalized EPS of EUR 0.36. With that, let's move to next slide and talk about the underlying results and the main P&L items. Operating income was up 12% quarter-on-quarter, largely driven by more normal quarter for trading as well as the addition of AstroBank for 2 months. If you exclude the effect of these 2 items, growth was still respectable 5% in the quarter on the back of solid performance for fees and I will get into that a bit. Overall revenues in line with our above EUR 2.2 billion guidance. At EUR 233 million costs saw a significant uptick versus third quarter due to the anticipated seasonal effects as well as the inclusion of AstroBank. Overall, we still landed well within our EUR 870 million guidance for the year. Not sure one can find many banks in Europe who have achieved a decrease in absolute OpEx during 2025. Impairments came in at EUR 62 million for the quarter, bringing the cost of risk to 58 basis points for the quarter and 48 basis points for the year versus our 45 bp guidance. I've already talked about profit. So let's move to the next slide on the balance sheet. On Slide 13, strong finish for the year for performing loans, up 5% Q-on-Q, including AstroBank or 3% if we exclude it. Year-on-year, that same figure came in at 8.3%, better than the original guidance. Customer funds were also up 4% in the quarter or 1.4%, excluding the AstroBank with a year-on-year increase at 8.4%. Tangible book value down in the quarter, but if we had the interim dividend in the amount spend of buyback, it's actually up 2.1% and then on capital, we stand at 15% in terms of fully loaded CET1 down versus Q3 on account of the completed acquisitions. On Slide 15, we show the 2 main components of revenues. NII was up for another quarter, continuing the upward trajectory. Most of the increase is attributable to consolidation of AstroBank. On the remainder, we continue to have good tailwinds from volumes on the loan side, while loan spreads continued to be a headwind. Most of the increase in contribution of the securities book came from AstroBank this quarter. Deposits continue to be a tailwind on account of repricing. And then in funding, we have average balances for debt outstanding, where this is counterbalanced by lower cost. On the fee and commission side, I should first highlight that we have introduced a new accounting policy that looks at income from real estate separately, given it has now gained more significance in our footprint. On quarterly basis, and again, excluding AstroBank, fees were up 19%. In Euro million terms, the biggest delta was business credit-related fees, but we've also seen a very strong result in both asset management as well as real estate income. Moving on to Slide 15 and take a look at loans and customer funds. Performing loan balances reached EUR 37.5 billion. This is up 5% on a headline basis or 3% including AstroBank with EUR 1.25 billion net credit expansion in the quarter. Another strong quarter with EUR 4.2 billion of disbursements and similar partners before with corporates, including SME, driving growth evenly spread out across sectors. Year-to-date, net credit expansion has reached EUR 3.5 billion, clearly outperforming our guidance. Spreads continue to be under pressure, but we remain disciplined in our underwriting criteria. As such, we will avoid deals or refinancings that do not meet our own credit criteria and are not accretive to our shareholders. Turning to customer funds, another quarter of solid growth, bringing the total for the year to EUR 4 billion, half of that attributable to AstroBank. Note that most of the outlook for corporates relates to bond placements we led at the end of the previous quarter, something that we have flagged at the time. On AUMs, we continue to see good underlying net sales, EUR 300 million this quarter, brings the total for the year to EUR 1.3 billion and AUM growth to 21% once we include valuation effects. On asset quality, Slide 16. With the NPE ratio flat of 3.6%. Coverage ratio has edged higher to 58%. The underlying picture remains solid, and we have no particular delinquency with flows as should be evident by the underlying cost of risk that stood at 40 basis points this quarter. We don't expect any meaningful surprises in the coming quarters. And at 48 basis points for the year, we feel comfortable with a guidance of 45 going forward. Then on Slide 17 on capital to finish it up. This quarter, we had 52 basis points for capital generation organically, and this includes everything, P&L, DPAs, the usual BDC amortization and RWA growth. This brings the total for the year to 206 basis points. As I mentioned, we have increased the payout to 55%. So the impact this quarter also takes into account the increase for the preceding 9 months, with a total for the year amounting to 213 basis points, including BBC acceleration. All in, CET1 ratio stands at 15% on a fully loaded basis or 15.4% on transitional. We're also showing here on the right-hand side, the main components that bridge the 130 basis point gap to our original guidance of 16.3%, 70 basis points attributable to acquisitions, 50 coming from management actions we took in Q2 on provisions, taking advantage of the positive one-offs we had and 20 basis points as a result of a higher payout. FYI, we have also provided you with a separate slide covering the main impact on the P&L and balance sheet from the 2 bigger acquisitions. With now, let's now open the floor for questions. Operator: [Operator Instructions] The first question comes from the line of Kevin Roberts with Goldman Sachs. Unknown Analyst: Just 2 questions from me, please. First, on fees. And then secondly, on costs. So on the fees, clearly, a strong print in Q4. Could you elaborate a bit, please, on the key drivers that you see looking ahead through into 2026 and where you're particularly focused as a management team? And then secondly, on costs, could you just discuss how you anticipate that mix of costs evolving over 2026, in particular, where you're directing that investment, whether it's in tech, personnel, other strategic builds? Vassilios Kosmas: Thank you. Let me start with fees first. I think fees -- on the fee side, there's, I would say, 3 engines that have driven growth in 2025, and we expect this to continue in 2026. This have to do with assets under management. The very fact that we continue exploiting the relationship with UniCredit along with the franchise means that more and more people trust us with their investments. We expect this trend to continue in 2026. Secondly, on transaction banking, we had a mix effect in 2025, a stress, if you like, a headwind on retail transaction fees from the government managers, which we do not expect in 2026, as this has been already absorbed and a headwind on corporate transaction fee, the very fact that we are able to offer solutions to our clients, which are unique, accessing all the 13 plus 1 UniCredit markets, which we expect to grow -- to continue growing in 2026. Last but not least, real estate. This is something that we have invested heavily during 2025. As I mentioned, there's another EUR 10 million coming out from this line even on the investments that we have already been completed in the 2026 numbers. Going to the cost side, I think we mentioned quite a few times in the past that Greek banks do face service inflation, both in staff costs and G&A that have to do with main suppliers. The -- this inflation is somewhere in the tune of 6% to 7%. I think this is very similar to what our peers have been showing. In our case, we have been managing to drive this down to 0 this year or, let's call it, 3% to 4%, our guidance for next year. The way we do that is we actively manage the refreshing of personnel through voluntary exit schemes, a reminder we're already underway for 1 month ago. And secondly, on the technology side, we're investing in new applications. But at the same time, we're very active in discontinuing the legacy applications, hence, not carry the burden of maintaining the old applications. These are the drivers who we feel will keep containing this line to 3% to 4% over the planning horizon. Operator: [Operator Instructions] Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to management for any closing comments. Thank you. Vasilis Psaltis: Great. Thank you. Short and sweet, as I would prefer it on a Friday. Everybody enjoy the weekends. I know it's been a long reporting season for everyone, and we're going to come back to you soon with the dates on the Investor Day. Thank you very much. Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect the telephone. Thank you for calling, and have a pleasant evening.
Operator: Good day, and welcome to the Escalade Inc. Fourth Quarter 2025 Results Conference Call. [Operator Instructions] Please note, today's event is being recorded. I would now like to turn the conference over to Wes Smith, Vice President of Financial Reporting and Investor Relations. Please go ahead, sir. Wes Smith: Thank you, operator. On behalf of the entire team at Escalade, I'd like to welcome you to our fourth quarter 2025 results conference call. Leading the call with me today is Interim President and CEO, Patrick Griffin; and Stephen Wawrin, our Chief Financial Officer. Today's discussion contains forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the SEC. Except as required by law, we undertake no obligation to update our forward-looking statements. At the conclusion of our prepared remarks, we will open the line for questions. With that, I would like to turn the call over to Patrick. Patrick J. Griffin: Thank you, Wes, and welcome to everyone joining us on today's call. We ended 2025 on solid footing. While the consumer environment remains mixed, our focus on operational excellence and on reshaping our cost structure is paying off. Over the past years, we have built a durable foundation for the business. This foundation gives us healthier margin profile, the ability to maintain operating leverage in a dynamic environment and a strong platform from which we can pivot towards profitable growth. Consistent with broader consumer spending for discretionary leisure products and as expected, net sales declined 2.2% in the quarter, driven by softer consumer demand in categories such as basketball and outdoor games in our e-commerce sales channel. At the same time, we partially offset these declines through healthy growth in archery and billiards driven by a recent acquisition and new product introductions. These trends reaffirm that we are positioned in the right niche categories where consumers remain engaged and where our brands have equity. The impact of our operational improvements was also reflected in our fourth quarter results. Gross margin improved 280 basis points year-over-year to 27.7% of net sales despite a 2.2% decline in net sales. This improvement reflects the structural cost actions we've executed and the discipline embedded across our operations. We also made meaningful inventory efficiency improvement in the quarter. Total inventory declined 10% year-over-year, reflecting our ongoing effort to sharpen working capital management to support improved free cash flow. We expect to further reduce inventory levels in 2026 as we work towards our longer-term target of 3x inventory turns. This objective is a key element of our broader balance sheet management strategy. Looking ahead to 2026, we expect consumer conditions to remain mixed, shaped by the contrast between moderating interest rates and persistent inflation. Less affluent consumers will likely continue to be more price sensitive, while more affluent consumers will likely continue to be less price sensitive. Against this backdrop, our focus is shifting from cost optimization to profitable growth while continuing to leverage our leaner balance sheet and the operational discipline we established in 2025. We are closely monitoring emerging tariff policy changes and are prepared to adjust as market conditions clarify. We do not see any immediate impact from the recent changes. Our established playbook enables us to remain agile and proactive in navigating through this dynamic environment. A central component of our growth agenda is to strategically invest in our businesses. Our strength in free cash flow allows us to invest in growth opportunities and pursue accretive M&A opportunities. Following our recent Gold Tip archery purchase, we completed another acquisition during the fourth quarter to further support growth. The acquisition of AllCornhole brings a leading brand and competitive cornhole bags to our growing outdoor recreation portfolio. During the fourth quarter, we fully integrated Gold Tip archery, which was acquired in the third quarter. This business was accretive in the fourth quarter. Looking forward, M&A remains a capital allocation priority as we concentrate our profitable growth. Our approach will remain consistent, focus on strategic acquisitions that are accretive and complement existing product categories as well as strengthen our market position where we have competitive advantages. In addition to M&A, we expect to increase growth investments in 2026 through targeted capital expenditures that expand capacity, improve efficiency and support long-term growth. As a result, we expect capital expenditures to increase next year. We also plan to selectively invest in and optimize our manufacturing and distribution footprint. In the fourth quarter, we purchased a 110,000 square foot facility to support continued growth in our safety and fitness categories. We had several significant new product launches during the fourth quarter to support our growth agenda. In our Bear Archery business, we launched the new Alaskan Pro Bow, which has been awarded Best Value compound bow in many publications and online review platforms. We also launched an entire new line of Trophy ridge accessories, featuring new designs and a fresh new look. Additionally, during the quarter, our US Weight business expanded our safety offering with several new umbrella bases to fully address market opportunities. Strengthening our balance sheet continues to be a priority. During the fourth quarter, we repaid nearly $2 million of long-term debt while also increasing our cash levels. Given the current interest rate environment and our low-cost fixed rate bank debt, we are taking advantage of attractive cash arbitrage. Our strong free cash flow generation gives us confidence in our ability to meet our financial commitments while continuing to invest in future growth. In summary, we have made significant progress in repositioning the company as we move from cost optimization toward profitable market share-driven growth. As we move further into 2026, we believe we are operating from a position of strength, supported by a leaner cost structure, stable free cash flow profile and a disciplined capital allocation strategy aimed at expanding our leadership in key categories. These actions will allow us to deliver durable value for shareholders as we move through the cycle. With that, I will turn the call over to Stephen for a review of our fourth quarter financial results. Stephen Wawrin: Thank you, Patrick. For the 3 months ended December 31, 2025, Escalade reported net income of $3.7 million or $0.27 per diluted share on net sales of $62.6 million. For the fourth quarter, the company reported gross margins of 27.7% compared to 24.9% in the prior year period. The 280 basis point increase in gross margin was primarily the result of lower operational costs driven by our facility consolidation and cost rationalization program, a reduction in storage and handling costs and the benefit of the Gold Tip acquisition, which was completed in the third quarter of 2025 and accretive to our fourth quarter results. Selling, general and administrative expenses during the fourth quarter increased by 6.8% or $0.7 million compared to the prior year period to $11.6 million. The increase in SG&A primarily reflects $0.5 million of nonrecurring executive transition expenses incurred during the fourth quarter of 2025. Earnings before interest, taxes, depreciation and amortization increased by $0.6 million to $6.5 million in the fourth quarter of 2025 versus $5.9 million in the prior year period. This increase primarily reflects the improvement in our gross profit, partly offset by the nonrecurring executive expenses I just mentioned. Total cash flow from operations for the fourth quarter of 2025 was $14.9 million compared to $12.3 million in the prior year period. The year-over-year increase in operating cash flow primarily reflects a 10% or $7.6 million decrease in our inventory, coupled with improved profitability. As of December 31, 2025, the company had total cash and equivalents of $11.9 million. At the end of the fourth quarter of 2025, net leverage was 0.3x. As of December 31, 2025, we had $18.5 million of total debt outstanding. With that, operator, we will open the call for questions. Operator: [Operator Instructions] And today's first question comes from Rommel Dionisio with Aegis Capital. Rommel Dionisio: I wonder if we could just ask a couple of questions on the acquisition of the new facility, the 110,000 square foot facility. Is that production or distribution or both? Is it domestic? And if so, would that alleviate some of the tariff pressure? Patrick J. Griffin: Rommel, Patrick here. That's a good question. The facility is located in only Illinois, where we already have 2 facilities there. And initially, it's going to be used primarily for warehousing for our fitness and safety businesses, but we're looking at other uses for that facility, so we may consolidate some additional categories into that facility or acquisitions further down the road could go into that. But it really was meant to support future growth in those categories for our U.S. weight business, but then also maybe some future growth plans as well. Rommel Dionisio: Okay. And as a follow-up question, I wonder if we could just delve into the product mix a little bit in the quarter. I know there's a lot of moving parts there between product categories and price points. But you highlighted demand across your -- I'm just reading through your press release, demand across your higher value premium brands remains resilient. So would that have been sort of a positive mix driver during the quarter? And I know that's offset with consumer shifting down to some lower price points as well. I just want to think about how do we think about product mix shift overall in the quarter? Patrick J. Griffin: Great question. I mean on the higher price points, we're generally seeing favorable sales trends there. And on our opening price point product, we're not seeing as favorable trends. So with our leading brands that you kind of referred to with Bear Archery, that's accretive to the overall margin profile. And I would say that's true for a lot of the Brunswick portfolio as well. Rommel Dionisio: Okay. And maybe just one last one. I know you took some price increases last summer to help offset some of the tariff impact. How do you kind of think about that situation? Obviously, it's a very fluid environment with regards to even the last few days with regards to tariffs. But how do you guys think about the proclivity for additional price increases as we look out to 2026? Patrick J. Griffin: Yes. No, we feel good. We were early on our price increases, Rommel, as we -- as you mentioned there. And to the extent that, that environment changes, we'll see where that ends up. But we don't have any near-term changes right now. We're not planning on passing on any significant additional price increases at this point. If tariff -- if that environment changes a lot, there could be some changes down the road, but we don't see any near-term impact. As you know, the environment is very dynamic at this point in time. Operator: And our next question today comes from David Cohen at Minerva. David Cohen: So just a quick follow-up with regard to tariffs. Should the Supreme Court's decision occasion the refund of tariffs paid up until this point, is that a meaningful number for Escalade? Patrick J. Griffin: Yes. Great question, David. Thank you. Yes, it is a meaningful number for us, and we're waiting to see what happens with the actual implementation of those refunds. Some of the tariffs we paid are not tied to the IEEPA tariffs. So it's not our total amount, but the amount that would be refunded is meaningful. David Cohen: Do you want to put any numbers around that, a range perhaps? Patrick J. Griffin: Yes. No, it's in the, I'd say, $4 million to $5 million range. Operator: And ladies and gentlemen, that concludes our question-and-answer session. I'd like to turn the conference back over to Wes Smith for any closing remarks. Wes Smith: Thank you, operator. Once again, thank you for your interest in Escalade and joining our call. Should you have any questions, please feel free to reach out to us at ir@escaladeinc.com, and a member of our team will follow up with you. This concludes our call today. You may now disconnect. Operator: Thank you. That concludes today's conference call. We thank you all for attending. You may now disconnect your lines, and have a wonderful day.
Operator: Good day, and welcome to the AtkinsRealis Fourth Quarter 2025 Conference Call [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the call over to Denis Jasmin, Vice President, Investor Relations. Please go ahead. Denis Jasmin: Thank you, Michele. Good morning, everyone, and thank you for joining us today. For those dialing in, we invite you to view the slide presentation that we have posted in the Investors section of our website, which we will refer to during this call. Today's call is also webcast. With me today are Ian Edwards, Chief Executive Officer; and Jeff Bell, Chief Financial Officer. Before we begin, I would like to ask everyone to limit themselves to 1 or 2 questions to ensure that all analysts have an opportunity to participate. You are welcome to return to the queue for any followup questions. I would like to draw your attention to Slide 2. Comments made on today's call may contain forward-looking information. This information, by its nature, is subject to assumptions, risks and uncertainties, and as such, actual results may differ materially from the views expressed today. For further information on these assumptions, risks and uncertainties, please consult the company's relevant filings on SEDAR+. These documents are also available on our website. Also during the call, we may refer to certain non-IFRS financial measures. Reconciliation of these amounts to the corresponding IFRS financial measures are reflected in our earnings release and MD&A, which can be found on SEDAR+ and our website. And now I'll pass the call over to Ian Edwards. Ian? Ian Edwards: Thank you, Denis. Good morning, everyone, and thanks for joining us today. I'm going to begin today's call by providing an overview of our performance for the fourth quarter and the full year before I pass it to Jeff to provide more detail on our financial results and our 2026 outlook. We will then open it up for questions. But before getting started, I wanted to highlight just how far we have come over the last several years. We set out in 2019 to transform AtkinsRealis into a world-class engineering services and nuclear-focused company. We have now achieved that. We did this because we fundamentally believe that our capabilities and competitive advantage in these 2 areas will create the most value for shareholders. And just as importantly, we've built a world-class culture and have attracted and retained exceptional talent that is vital for the long-term growth of the company. 2025 was a pivotal year for AtkinsRealis, and I'm proud of what we've accomplished and excited to share those highlights with you today. So let's get started on Slide 3. We concluded the first year of our delivering excellence and driving growth strategy with strong results. We remain focused on delivering for our clients and expanding our foothold in key growth markets, both organically and through strategic acquisitions. This resulted in strong revenue growth, continued progress on our margin enhancement program and a record-breaking backlog. Our diversified portfolio enables us consistent performance across our primary business segments and regions through the economic cycle. This year, for AtkinsRealis Services, we generated a record high revenue of $11 billion, representing 16% organic growth and close to 10% segment adjusted EBIT to segment revenue ratio. Our record-breaking backlog for AtkinsRealis Services now sits at $21 billion as at the end of 2025, which represents growth of 23% versus the end of 2024. It was an excellent first year of our 3-year strategy and the progress we made in '25 is setting us up for continued growth across our regions and end markets for the foreseeable future. On Slide 4, we outlined our success against our 2025 financial outlook and related strategic accomplishments. We completed the sale of our remaining interest in Highway 407 for $2.6 billion, which enabled debt repayment and ultimately led to achieving an investment-grade credit rating. We generated $461 million in net cash from operating activities, well above our target, highlighting the cash-generating nature of AtkinsRealis. We deployed our advantaged financial position to return significant capital to shareholders via accretive share repurchases and accelerated our strategy with 3 acquisitions. We won several major nuclear contracts, including the Pickering refurbishment and the Darlington SMR execution phase, leading to an end-of-year record-breaking backlog for our nuclear business. And we continue to focus on building our culture. We achieved a top quartile benchmark employee engagement score of 86%, while increasing our headcount by 1,800 employees. 2025 also marks the completion of the transformation of our business, focused on being a world-class engineering services and nuclear business, and our financial reporting will be adjusted to reflect this. Our fourth quarter performance on Slide 5 highlights our ability to both grow and operate more efficiently across the business. We delivered another strong quarter of AtkinsRealis Services revenue growth, up 17% year-over-year or 11% on an organic basis. Engineering Services regions revenue reached a quarterly record high of approximately $2 billion, while Nuclear revenue organically grew 28% to a quarterly record high of $600 million. We also improved our Engineering Services regions EBITDA margin, highlighting the work we have done across the business, including leveraging technology and innovative delivery models such as artificial intelligence to improve productivity, safety, quality and predictability. These new productivity enhancement technologies enabled us to find more innovative solutions and deliver more work for our clients. Our total backlog reached a new record high this quarter as our expertise across engineering services and nuclear continues to be in demand. We announced the acquisition of C2AE, which advances our land and expand strategy in the U.S. and is in line with our stated capital allocation priorities. Our pipeline of potential bolt-on acquisitions remains robust, and we would expect to announce further acquisitions in the coming quarters. We did all this while maintaining a robust balance sheet, underpinned by strong and growing free cash flow. We are extremely proud of our accomplishments this quarter, generating record revenues and backlog while improving margins and utilizing our strong operating cash flow for buybacks and to invest in M&A opportunities. Our Delivering Excellence driving growth strategy is creating value for our shareholders. Turning to Slide 6. Fourth quarter revenue in our Engineering Services regions business increased 16% year-over-year. On an organic revenue basis, Engineering Services regions grew 9% year-over-year. Segment adjusted EBITDA over net revenue margin was strong at 17.3% for the fourth quarter, up 100 basis points versus the prior year period. The operating margin improvement initiatives continue to bear fruit through continued cost optimization improved backlog gross margin and delivering projects more efficiently. Notably, backlogs in all regions have increased for a total increase of 12% to $13.2 billion versus our backlog as at December 31, 2024. Beginning on Slide 7, we provide an overview of each of our 4 regions and their performance this quarter. In Canada, revenue in the fourth quarter increased organically 14% year-over-year, while segment adjusted EBITDA grew $35 million with a 17.6% margin, a 410 basis points increase, highlighting our continued efforts on our margin improvement plan. Backlog grew 9% year-over-year and now stands at $7.9 billion. Last quarter, we emphasized an increased focus on growing our presence in the buildings and places, transportation, industrials, power and renewables and defense end markets as we believe these areas offer compelling near-term opportunities for our unique capabilities. Fourth quarter performance proves the merits of that strategy as our revenue growth was fueled by key wins in transportation and power and renewables market. Key wins this quarter include the selection of Hydro One Networks for a multiyear owner's engineer mandate for the expansion of their Bowmanville switching station. Our power and renewables experts will provide engineering and project program management services for the expansion of the substation, which is situated across from the Darlington Nuclear Generating Station. This win comes on the back of additional contracts we've secured in several major power and renewable initiatives that are important to the future of Canada. In the U.K. and Ireland, fourth quarter revenue grew 15% and organically grew 12% year-over-year, driven primarily by continued strong demand in aviation, water and defense projects in the U.K. Segment adjusted EBITDA grew to $103 million in the quarter, representing an 18.4% EBITDA margin. Our concentration in the region enables us the flexibility to position our people in areas with the highest demand, which augments operating margin leverage. Backlog grew 16% year-on-year to $2 billion, driven mainly by wins in transportation, rail, water and aviation markets. Our successful history working to improve Heathrow Airport resulted in contracts for expansion work and technology services, while we continue to obtain key wins on the network rail infrastructure project. As an example, we secured the Havant resignalling contract, a major program management commission on the TransPennine route within the Network Rail infrastructure project. And as mentioned on prior calls, there have been several commitments by the U.K. government to increase funding for defense and infrastructure spending over the next decade. Demand in Power and Renewables is rising with early-stage activity in grid investments, while the established long-term U.K. industrial investment strategy will yield enhanced opportunities in the industrials end market. Fourth quarter USLA revenue increased 23%. However, excluding recent acquisitions and a favorable FX impact, organic revenue growth was flat year-over-year as softness within our global minerals and metals sector continued to weigh on the results of our fourth quarter. If we exclude Minerals and Metals business, the underlying engineering services business in the U.S. grew organically in the low single-digit percentages. Segment adjusted EBITDA was $55 million, which translates to a 13.8% operating margin, an improvement of 120 basis points from the previous year. Margin improvement was driven by sustained project execution and overhead control. The region's backlog rose 15% year-over-year to $1.8 billion, reflecting our continued focus on client engagement and the strength of our integrated end-to-end capabilities. As we are deepening our relationship with David Evans and C2AE, we are seeing opportunities to strengthen our capabilities in transportation projects across the country, including highway and aviation work. Looking out, we anticipate continued growth across various end markets in the U.S. where we're expanding our presence. The federal government is funding transportation growth by increasing investment budgets of the Department of Transportation. Additionally, various water infrastructure programs are being allocated billions of dollars annually to sustain multiyear project pipelines. Our success in water infrastructure projects in other markets positions us well to capture our fair share of these projects. While in the U.S. -- while the U.S. continues to evolve, we remain focused on execution. We are strengthening our pipeline, aligning our talent and capabilities and deliberately landing and expanding into unpenetrated high-growth regions across the country. In EMEA, revenue organically by 9%, while segment adjusted EBITDA rose to $40 million, representing a 21% adjusted EBITDA margin over net revenue. In the fourth quarter, we acquired ADG Capital, expanding our scale in Australia by adding approximately 250 professionals to the team. This also strengthens our ability to capture major infrastructure investment opportunities and grow in end markets such as defense and power and renewables. Total backlog in EMEA was approximately $1.5 billion, up 18% versus December 31, 2024, mainly driven by new bookings in the Buildings and places and industrial end markets. And as highlighted last quarter, while Buildings and places opportunity in the Middle East continues at pace, we're seeing increased demand for our services in large-scale transportation projects. For example, we were recently contracted to support the development of the Metro Blue Line in Dubai. In Asia, we're seeing growing opportunities for our services in the infrastructure market. In Australia, we are focusing on capturing revenue synergies following our acquisition of ADG, while also continuing to pursue opportunities that arise in the defense sector and ahead of the 2032 Summer Olympics in Brisbane. I'd like to now move to Slide 11 and discuss our fourth quarter results for our Nuclear business. The business continues to demonstrate exceptional growth, achieving an organic revenue increase of 28% compared to the fourth quarter of 2024. This creating a new baseline for future growth. Our nuclear backlog totaled $5 billion, 56% higher than our backlog as at December 31, 2024. Segment adjusted EBIT grew 17% to $66 million and segment adjusted EBIT margin was 11%. Segment adjusted EBITDA grew 16% year-over-year with a 24% margin. On Slide 12, we highlight some achievements across our nuclear CANDU and services portfolios. In our CANDU business, our work on the final reactor at Darlington's refurbishment has been completed, and the reactor was handed back to OPG to reconnect to the grid ahead of schedule and under budget. We also have several projects ramping up in Canada and abroad, while we continue excellent progress on life extension programs that give us excitement about our near-term revenues. In Canada, Prime Minister Carney announced a major federal investment to accelerate Canada's clean energy future with the Darlington new SMR nuclear project as a cornerstone initiatives where we are part of the core delivery team. This project will expand electricity generation, strengthen national energy security and position Canada as a global leader in nuclear innovation. The Ontario government has approved Ontario Power Generation's plan to refurbish 4 CANDU nuclear reactors at Pickering, clearing the way for a start to the execution phase of the project and where our scope of work continues to expand. For services, we secured a 15-year framework at Sellafield for nuclear decommissioning and waste management. Additionally, we signed a multiyear contract with Rolls-Royce to deliver nuclear propulsion and engineering capabilities to support the U.K.'s growing submarines program under the U.K. Defense Nuclear Expertise Enterprise. Turning to Slide 13. You can see our pictorial reminder of these near-term CANDU revenue opportunities within our nuclear business. We've been working hard to bolster our backlog with high-quality wins, which reinforces the bright future we have ahead. As you can see on the slide, we're seeing increased opportunities to sign CANDU MONARK or EC6 newbuilds across Canada and abroad and have commenced the licensing process for CANDU in the U.S. During my time at Davos, I had highly productive conversations amid a surge of global headlines, highlighting the renewed interest in nuclear power development. These discussions reinforce the strong momentum behind nuclear as a vital clean energy solution and underscored the significant growth opportunities ahead for our business. Now moving to Slide 14 and our Linxon, LSTK projects and capital businesses. Moving forward in '26, we are combining these segments into one reporting segment referred to as all other segments. This is a strategic streamlining financial disclosure that will allow our financial reporting to focus on the robust engineering services and nuclear capabilities of the business, the key drivers of long-term growth for AtkinsRealis. In our Linxon segment, revenue in the quarter grew 2% and realized 60 basis points of EBIT margin expansion year-over-year. We generated a record adjusted EBIT and backlog grew 33% to $2.8 billion, reflecting Linxon's continued growth and strong market position. On LSTK projects, we've now substantially completed 2 of the 3 remaining light rail transit systems. The Eglinton project was substantially completed in the fourth quarter and then opened for operation by the client in February this year. Our fourth quarter results include additional costs to close out these projects. So before turning the call over to Jeff, I'd like to touch on AI and how we think about it at AtkinsRealis. We see AI as a strong enabler in our business. We do not see it as a disruptor. The demand for engineering in infrastructure and nuclear is at an all-time high, and this will continue. Engineering is a judgment-based profession that uses data and design to apply it to the built environment and in our case, on nuclear power plants and complex structures. It is a highly regulated industry where engineers are liable and held accountable for the safety, quality, sustainability and performance of assets like roads, bridges, buildings and nuclear power plants. Engineering is the creative application of math, science and empirical evidence to design, build and maintain infrastructure and nuclear power assets. We have a strong commitment to make our business more efficient, and we think of AI as essential to meet growth demands ahead in nuclear and engineering services. For design work done at the conceptual level, we see several areas of application of AI that deliver real improvement, and we are already deploying a suite of tools to aid design, modeling, surveying and even safety. In bidding and work winning, we have new tools to look for data, people, track record in order to win. Like most companies, we've also introduced AI in functional support test and data collection to make processes cheaper, quicker, better. We also implemented specific tools to certain tasks like HR, safety, inspections, taxes, finance and many others. Cost savings will be made, and this will and should lead to margin expansion. We do not see AI affecting our medium- and long-term growth as demand on our engineering services and nuclear capabilities continues to grow. So with that, I'll now turn over to Jeff to discuss the financial highlights and the 2026 outlook. Jeffrey Bell: Thank you, Ian, and good morning, everyone. Turning to Slide 16. Total revenues in the quarter increased 13% year-over-year to $2.9 billion, which included revenue increases of 16% in PS&PM, comprised of increases of 16% in Engineering Services, 29% in Nuclear and 2% in Linxon. These higher revenues were the primary driver in a total segment adjusted EBIT increase of 10% to $238 million. Total corporate SG&A expenses totaled $35 million in the quarter, a decrease of 38%. Acquisitions-related and integration costs were $24 million in the quarter, mainly due to the acquisitions completed in the year and to a change in the fair value of the contingent consideration payable related to the Linxon acquisition in 2018. Net financial expenses for the quarter were lower at $11 million compared to $41 million in Q4 2024, mainly due to the repayment of all outstanding borrowings under the La Caisse loan and the company's term loan in the second quarter and higher financial income due to higher cash balances. The IFRS diluted EPS this quarter increased by 90% to $0.57 compared to $0.30 in Q4 2024, while the adjusted EPS from PS&PM increased 273% to $0.97 per diluted share compared to $0.26 in the fourth quarter last year. On Slide 17, you can see the selected financial metrics for the full year. Total revenues for the year increased by 14% to $11 billion compared to 2024, while total segment adjusted EBIT increased by 15% to $973 million, which was comprised of $1 billion for AtkinsRealis Services, $46 million for capital and negative $112 million for LSTK projects. Total corporate SG&A expenses decreased to $145 million, in line with our expectations. We anticipate that these expenses will decrease again in 2026 to between $125 million and $135 million. Restructuring and transformation costs totaled $112 million, higher than last year, mainly due to efforts relating to operating margin improvement initiatives, including the rollout of the company's global ERP system and workforce optimization as part of ongoing operational improvement initiatives. Net financial expenses for the year were $110 million compared to $163 million in 2024, mainly due to a lower level of recourse debt and lower interest rates. The income tax expense amount was higher than 2024, mainly due to the tax on the gain of the sale of our interest in Highway 407. The effective tax rate was approximately 13% in 2025, lower than the company's Canadian statutory income tax rate, mainly due to revised estimates on certain tax liabilities, the recognition of previously unrecognized deferred income tax assets on loss carryforwards and geographic mix. For 2026, we would expect the company's effective tax rate to be closer to our statutory tax rate and to be between 25% and 30%. Net income totaled $2.6 billion or $15.41 per diluted share, which included the gain on disposal of the company's interest in the Highway 407. But on an adjusted EPS from PS&PM, a better reflection of the company's underlying performance, EPS increased 88% to $3.36 per diluted share compared to $1.79 last year. And as Ian mentioned earlier, backlog ended the year at a record high of $21.2 billion, 21% higher than at the end of 2024 with strong book-to-bill ratios in all businesses, Engineering Services regions, Nuclear and Linxon. Let's now move on to Slide 18 and free cash flow. Net cash generated from operating activities was very strong in the fourth quarter, resulting in $461 million of operating cash for the year, driven by stronger AtkinsRealis Services EBITDA delivery and tight working capital management. LSTK Projects net cash was positive $81 million in the fourth quarter, mainly due to the collection of money owed for a completed project, resulting in a negative net cash of $25 million for the full year. We expect LSTK projects cash flows to be approximately negative $100 million to $150 million in 2026 as we complete the last light rail transit system legacy construction contract, settle out final accounts and pursue claims outstanding. After CapEx of $177 million, which included approximately $64 million for the development of MONARK and the payment of lease liabilities of $86 million, our free cash flow stood at positive $199 million for the year. We expect the CapEx to be in the range of $175 million to $200 million for the full year of 2026. In 2026, we expect to generate approximately $500 million of net cash from operating activities. I'd like to now turn to Slide 19 and our 2026 outlook. Given our increased backlog and strong pipeline of opportunities, we are expecting an organic revenue growth rate of between 5% and 7% compared to 2025 for the Engineering Services regions with an anticipated segment adjusted EBITDA to net revenue margin of between 16.5% and 17.5%. As for the Nuclear segment, despite very strong growth in 2025, we expect revenues to continue to grow and reach approximately $2.5 billion for the full year 2026. Adjusted EBIT to gross revenue margin is expected to be similar to 2025 and be in the range of 11% to 12%, which we expect will equate to a segment adjusted EBITDA to net revenue margin in the mid-20%. As we've seen in previous years, our Engineering Services regions business profitability is affected by some seasonality, and we would expect the company's adjusted EBITDA to be more weighted to the second half of 2026, as shown on the right -- on the bottom right-hand side of the slide. Turning to Slide 20. Following a lower-than-expected organic revenue growth in the Engineering Services regions business in 2025, but considering the continued backlog increase and strong global demand for the company's capabilities, we are adjusting the Engineering Services region's organic revenue growth CAGR for 2025 to 2027 to between 5% and 7%. On the other hand, as a result of the strong financial and operating performance of the Nuclear segment during 2025, the significant increase in the nuclear backlog and the company's positive outlook regarding the global demand for our services, we are raising the nuclear annual revenue target to between $2.6 billion and $3 billion by 2027. The company is also adjusting its Nuclear segment adjusted EBIT to segment revenue ratio to between 11% and 13% from the previous range of between 12% and 14%, reflective of the expected business mix over the next 2 years. We continue to believe that the long-term profitability of the nuclear business will be between 12% and 14%. I'd like to now turn to my final slide, Slide 21. As Ian mentioned, we have accomplished a lot over the last several years to transform the business. And therefore, in 2026, we will be streamlining our financial disclosure. The company has, effective January 1, 2026, combined its Linxon, LSTK projects and Capital operating segments into a single reportable segment referred to as -- all Other segments, as Ian mentioned earlier. The reportable segments of the company that are part of the Engineering Services regions, Canada, the U.K. and Ireland, U.S. and Latin America and Asia, the Middle East and Australia and the Nuclear segment will remain unchanged. At the same time, taking into account the fact that the Capital segment will no longer be presented on a stand-alone basis, the company will cease to report financial information separately from capital and from PS&PM activities. Slide 21 has been prepared to give a view on what the 2025 quarterly comparable numbers will look like. And with that, I'll now hand the presentation back to Ian. Ian Edwards: Okay. Thank you, Jeff. Our fourth quarter performance concluded a great year as sustained demand for our Engineering Services and Nuclear capabilities drove strong revenue growth for the company. 2025 was a pivotal year as it marked the completion of the transformation of our business. We are now very much focused on being a world-class engineering services and nuclear company, and we fundamentally believe that our capabilities and competitive advantages, focus in these areas will create the most value for shareholders. Global energy transition and infrastructure redevelopment are fueling our growth markets. We are focusing where AtkinsRealis has clear competitive advantages and strengthening by building on our strong foundation or landing and expanding. We are optimizing our business, accelerating value creation where demand is strongest and exploring untapped potential through technology and innovative delivery models. In 2026, we will continue to lean into artificial intelligence as an enabler of productivity, safety, quality and predictability. Our innovative tools have given us the upper hand in attracting and retaining high-quality clients and talent. While this has been successful, we can continue to develop and utilize advanced technologies to deliver products and projects and operate more efficiently to lower total costs. Our advantaged balance sheet puts us in a distinctive position to capitalize on inorganic and organic opportunities in a continuously evolving macroeconomic landscape. Finally, I want to thank our 40,000 colleagues for their hard work and dedication as we continue positioning the company to capture real revenue across our engineering services and nuclear businesses in 2026 and beyond. So with that, let's open it up for your questions. Operator: [Operator Instructions] Our first question comes from Sabahat Khan with RBC Capital Markets. Sabahat Khan: Ian, maybe just on some of the commentary you shared around your conversations on nuclear. I was wondering if you can maybe give us an update on where the 2 large potential newbuilds in Ontario maybe stand? And then maybe some of the specific opportunities outside of Canada that you think could start to materialize over the next 3- to 5-year period. Ian Edwards: Yes, for sure. I mean no definitive news in Ontario. But we are working very, very hard with the 2 generating organizations of Bruce and OPG to ensure that CANDU and our CANDU MONARK is the chosen technology for those 2 sites. As AtkinsRealis and as CANDU, we know that the right answer for Canada, for Canadian supply chain and for the efficiency of the product that our CANDU MONARK is the answer. When you think about jobs and economic development in Canada, over 90% of all of the CANDU MONARK that would be deployed there is Canadian content, which is Canadian jobs, Canadian companies. We are convinced that our product is the most efficient with world-class productivity and performance ratings of the EC6 that's been built around the world. And as a reminder, it uses natural uranium, which we have an abundance of in Canada. And I think the last thing that I would say, all the operating nuclear power plants in Canada are CANDU. So it makes an awful lot of sense to continue to deploy CANDU across Canada and obviously, being the indigenous technology. So we are hoping for a read on the technology selection this year. I don't think it will be before H2, but we're optimistic and we're optimistic it's CANDU. I mean across the rest of the world, it's been interesting. I mean, I've spent an awful lot of time in 2025 and even the start of this year, marketing to energy ministers across the world and to try and understand where the opportunities are for CANDU. And I would say having done that, and it's not exclusive, but having done that, I think our nearest term and most firm opportunities would be in Eastern Europe. And having a foothold there in Romania with an EC6 reactor, which has EU approval and has a track record of a relationship with Romania over 50 years. When we're dealing with Eastern European countries and clients, we point to that. And specifically in Poland, you may have seen our -- the Minister Hodgson's visit to Poland to support our efforts in Poland. They're advancing, I would say, quite well. I mean there's nothing to announce today, but we're into a process there where we're going through a technology evaluation. And then in Q2, we're into a commercial evaluation. And I would hope that we'll get a read on that towards the end of this year as well. We have great support from the Canadian government. I think we have a lot to offer is Canada. Eastern Europe would be top of the pile, but then Asia, there's numerous opportunities in Asia. And not to mention, obviously, the very significant potential opportunity in the U.S., which we're in early days for. So a really good outlook, I think, for the long term of CANDU. Sabahat Khan: Okay. Great. And then just the follow-up question, I guess, on the engineering side, obviously, M&A is an increasing focus. You shared a little bit of color earlier on it. But maybe if you can talk about, as you look into the U.S., are you looking at maybe getting into some medium and a bit larger transactions as sort of '26 and '27 come through? And also, if you can just update us on -- as this is sort of a scale you're revisiting, where the integration team, some of the integration capabilities stand today in terms of just aligning with the M&A getting larger. Ian Edwards: Yes. I mean I think that's a good question. We've always said that we're going to take a disciplined approach to M&A. We actually started 18 months ago, but you only saw some acquisitions coming through last year. We are really committed to landing and expanding in the U.S., and there are numerous targets. And we're really prioritizing quality targets that got a cultural fit that we can really use as platforms for revenue synergies to build out the business in the U.S. such that we can be in the top 5 ultimately. That's the goal and to have scale. I think for the majority of this year, we're going to stay within our lane of about 1,000 people, acquisitions like David Evans. That integration is going well. We're building out a very strong team on M&A and a very strong team of integration under Louis Veronneau that joined us last year. I'm really pleased with the strength of that team and the strength both in the U.S. and here in Montreal. But as we get towards the end of the year and moving into next year, we will be looking at deals potentially with 2,000 or 3,000 people, not transformational, but certainly at a bigger scale to get us this capacity and scale that we want in the U.S. So that's kind of the journey, disciplined, methodical, but ambitious. Is that okay? Operator: Our next question comes from Chris Murray with ATB Cormark Capital Markets. Chris Murray: So maybe turning to just the outlook for Engineering Services and the revenue growth. You're talking about organic growth between 5% and 7%, which seems reasonable. But just wondering about how you think that, that is going to evolve over the coming year. I know you had some puts and takes this year, so that number was well below plan. But how do we see that evolving? Is it just a function of what you've got in backlog? Or there are some other things that will convert? So any color on the pace of revenue growth organically would be appreciated. Ian Edwards: Yes. Yes, for sure. I mean -- and clearly, we've done a lot of analysis on this and a lot of analysis of things that happened last year. I mean, just to reflect on last year, I think there were 2 specific areas that had an effect on our business, reprioritization in Saudi and some headwinds seen at the early part of the year in the U.S., mainly because of not a lack of funding, probably a lack of confidence, I'd say, by the states. And if you remember, we also had some year-over-year issues because of 3 specific projects. So when we take all that into consideration, we've obviously had a good Q4. Things have turned back to very strong growth. which is one of the indicators. But also, we ended the year on a very strong backlog in every region actually, which has given us confidence that what we have in backlog and what we see in pipeline across the 4 regions will enable us to deliver the 5% to 7% in every region actually. So we've got a high degree of confidence that this is the right kind of range for 2026. Chris Murray: Okay. That's great. And then maybe turning to how you're going to I guess, realign the other segments of the business. So I guess a couple of questions of this. One, maybe any commentary or color around LSTK. You did note that this was a bit of a closeout quarter, but how do we think about what's left to go to wind that up? And I guess the other piece of this is, should we be thinking of this almost as a, call it, a divestiture segment or a runoff segment now, and that's part of the rationale for separating it out? Or is there any sort of other interpretation we should have on how you've set this up for next year? Ian Edwards: Yes. Sure. Jeff, do you want to take that? Jeffrey Bell: Yes. I mean let me start with the last question there, Chris. I think what you've seen in us moving to this reportable segment structure is actually this continued simplification, making it easier and easier for investors in the capital markets to see the results and the performance of our Engineering Services regions and nuclear. And I think that's really the driver for this. The reality is the elements of -- that are in the all other segments. LSTK is obviously almost completely wrapped up. Capital is significantly smaller without the 407. And as we've talked about previously, ultimately, we'll see where we get to with our links on investment. And together, there are no more currently than 10% of our revenue, but on a kind of EBITDA basis, virtually all of the business is in Engineering Services and nuclear. And we think this kind of reporting segment disclosure really helps investors from that perspective. Chris Murray: Okay. And just any color on the LSTK? Jeffrey Bell: Oh yes, sorry. Yes. So as Ian said earlier, really pleased now that we've got the second of the 3 light rail transit systems here in Canada into operation. That's great to see, frankly, for the people in the city of Toronto. We've got 2 of the 3 legs of REM in operation. I think that's kind of 50 of the 67 or 69 kilometers, so well over half with the case saying that they would expect to have the third one in towards the spring, middle of the year. So I think we're very much in a position where in 2026, we should see all 3 in operation and operating well. Operator: Our next question comes from Krista Friesen with CIBC. Krista Friesen: Maybe just a follow-up on the M&A conversation. You've talked previously about getting to the bottom end of your 1 to 2x range by the end of this year. Do you still feel confident in that trajectory based on what you're seeing in the pipeline for M&A? Ian Edwards: Yes. And maybe Jeff can talk to the sort of balance sheet aspect of that. But we -- our strategy is U.S. land and expand, as I mentioned in the other question. But in addition to that, we are very keen to continue to inorganically and organically grow Australia. We really see Australia as a market where we've historically had virtually no business. But the expertise that's really needed there now is energy, power and renewables and defense. And we're very strong in both of those markets. So we need people on the ground, and we need capacity on the ground. Obviously, ADG was a great acquisition, but that's not the end of it. And we're clearly engaged with numerous targets. In addition to that, across all engineering services regions, we're looking for capability build-out where we see strong end markets. So I'll give you an example. For example, transmission. Obviously, we are a very strong electrical transmission distribution engineering organization built from the work that we've done in Canada. But if we can find more resources and more capability through acquisitions globally, we would do that. Another example would be water, very strong water business in the U.K., very strong markets around the world for water. We need more capability. So there's kind of 3 things here: U.S., Australia and end market. With all those things together and our ambition later in the year to do some larger acquisitions, not transformational, but larger, I think that's probably realistic. But Jeff, do you want to just add? Jeffrey Bell: Yes. I mean I think from a capital allocation perspective, as you've heard us say before, Krista, we have a framework that would look now that the balance sheet is in a really good position and in fact, looking ultimately to get back to that lower end of our 1 to 2x range over the next 12 months or so, we would look to be deploying capital into M&A but also into returns to shareholders. And you saw us do that in 2025. And we would expect to continue to do that in 2026. Our demeanor is weighted towards M&A at this point. We think there's a lot of opportunity, as Ian has talked about, about creating long-term value and accelerating our strategy. But we also see good opportunity because of that to return funds to shareholders, likely using the -- or continuing to use the share buyback process to do that. Krista Friesen: That's helpful. And then just my last one on defense, obviously, very topical. Can you speak to what you're seeing here in Canada in terms of opportunities there and what you think the time line is before we start to see that sort of meaningfully show up in spending for you? Ian Edwards: Yes, for sure. I mean, obviously, Prime Minister Carney's announcement last week, I think it was, is very, very good news. It's good news for the defense market and good news for AtkinsRealis. Where we play is obviously in the supporting infrastructure and that supporting infrastructure both needs to be built to develop assets, whether they're air assets or sea assets, submarines, ships, aircraft and land assets such as barracks and the like. So we design and we deploy and we maintain those assets. And in actual fact, the capital cost of these assets and the OpEx that goes with them for the life of, say, a submarine is actually more than the purchase price of the submarine. I mean, because obviously, they're multiyear programs and contracts. So this is where we're very strong in the U.K. This is what we've been doing for a very long time in the U.K. There's 2 routes to market. One is directly to the government. And the second is to the OEMs, such as Rolls-Royce, BAE in the U.K. And obviously, when assets are chosen, we would have a route to market directly to the OEM of that asset. So actually, some work has already been flowing through. We're seeing definitely some advanced feasibility work. We're seeing some delivery partner work. I would expect that by the end of this year, we could see quite a few revenues. Obviously, we're looking and following the OEM technology selection or asset selection very closely. But we're excited about the market. And I think we have a lot to offer. Operator: Our next question comes from Michael Tupholme with TD Cowen. Michael Tupholme: Just on nuclear, you're obviously looking for continued revenue growth momentum in that segment over the next few years, given the new 2027 guidance or revenue guidance you provided. As we look at and think about that guidance, can you provide a bit of a refresher on what you have and haven't baked into that 2027 nuclear revenue guidance? And as part of that, just trying to understand if everything that you have in there is based on work that's already under contract or in hand? And if not, what sort of prospective work has been built into that 2027 number? Ian Edwards: Yes. No, for sure. And I think Slide 13 is a good place to kind of use for me to explain this. The 2027 outlook is really based on everything we already have secured. So for example, the refurbishment at Bruce, the refurbishment at Pickering, Cernavoda 1, the refurbishment in Qinshan and then Cernavoda 3 and 4 newbuild. And the revenues providing those Phase 2 elements that you see on the slide are awarded are secure. And clearly, there's a high likelihood that those Phase 2 elements will be awarded because the commitment is already made in Phase 1. So the way I think about it, there's a high degree of certainty around the outlook we've put there. What's not included in that outlook is anything additive to that, which would be new builds. And when you think about the new build kind of sequence of events, let's say that we were selected for the 2 sites in Ontario and let's say, we were selected for Poland. There would be a 2- to 3-year period of engineering. And that's revenue, and that is additive. But then once you follow through and get towards the end of the engineering, you're into real procurement and real execution where the revenues would significantly increase. So what I see ahead of us is absolutely delivering against the '27. Potentially, if we do secure new builds, we would add to that. But as we work towards the end of the decade, we could see further revenue coming through at scale. Michael Tupholme: That's all very helpful, and I appreciate all the detail. Just one sort of clarification as it relates to the new build piece in Romania, the 2 reactors. To what extent is that contributing in 2027? I know you mentioned it, but just is it meaningful? Ian Edwards: Yes, it is. Yes, it is. So what we're into now is what they call a limited notice to proceed, which is basically the feed, the feasibility, making sure that all the product the project is defined and the budget is finalized and the regulatory environment is underway. What we would expect towards the end of this year, early next year is the full contract. And that will just continue through to '27 and beyond towards the end of the decade. And some of the revenue that we're seeing in '27 will come from that second Phase II contract. The bulk of it, though, will be beyond '27 actually. Operator: Our next question comes from Maxim Sytchev with NBCM. Maxim Sytchev: Maybe the first question on EMEA. Nice to see, obviously that you turned the corner in the Middle East. I was just wondering in terms of what potential commercial changes you had to adopt in order to make the pivot. Can you maybe talk a little bit about that sort of handoff from Saudi to other markets, et cetera? Ian Edwards: Yes, yes. So the EMEA region has been interesting over the last year or so. And obviously, we've developed a strategy for growth. I mean we intend and formed the EMEA region so that it would grow at or better than the rest of the regions because we see opportunity there. The reprioritization in Saudi did affect us. I mean, projects like NEOM, some other large projects, the funding has been withdrawn. However, Riyadh-based projects and projects that are going to support the Expo and the World Cup are still ongoing, and it's still a very good market. It's just not as good as we would have expected it to be in 2025. But coincident with that, the UAE is really stepping up. And the UAE is providing us good buildings and property opportunities. We won the Sphere. So they're building a Sophia exactly like the Vegas Sphere, we won that. But they're also investing in transport. And there's numerous transport lines that are out for bid right now that we're looking to bid. And historically, in the region, we've been really successful in transport. We've designed out a lot of the Riyadh network, designed out a lot of the Dubai network. So I think we're pretty well positioned for that. But in addition to that, Australia in the sort of medium term to longer term is our growth engine of EMEA as well. And that's why it's important for us to build out Australia and get ready for this new wave of power, renewables, energy work and defense work. So when we think about our strategy now and put all of those things together -- sorry, plus Hong Kong, which has obviously been through a fairly tough time over the last decade, but now it's coming back with the development of the Northern Metropolis, which is road, rail and city. We think that we're feeling pretty optimistic about EMEA. But we've had to pivot a bit, and we've had to kind of adjust our strategy a bit to develop that. Maxim Sytchev: Yes. No, absolutely and good to see. And then maybe just one quick one for Jeff, if I may. Jeff, when we think about sort of the FCF or EBITDA to FCF conversion, can you maybe point to some of the levers that could potentially help that metric, especially as we lap LSTK, et cetera, even though LSTK was less of a drag in 2025 on kind of an absolute basis. But maybe can you talk about sort of strategies there overall, that would be super helpful. Jeffrey Bell: Yes. No, good question, Max. And we're seeing further good progress here in 2026. And I think what I would say is ex the kind of LSTK cash drag that I talked about here in 2026, which we would largely see complete by the end of the year from that perspective, I think that moves us into a position in 2027 where the free cash flow to net income conversion that we've laid out in our Investor Day, we think we're very much in line with that conversion of 80% to 90%. So I think that's the major lever that we would see or the major change that we would see as we get to the end of this year and into next year. But we'll see good cash flow growth here in 2026 as well over '25. Operator: Our next question comes from Benoit Poirier with Desjardins. Benoit Poirier: Could you maybe provide an update on the development of the MONARK reactor and also maybe an update on the potential to sell the CANDU technology in the U.S. where you are right now given the discussion that you've hosted in the past? Ian Edwards: Yes, for sure, for sure. So MONARK development is going well, very well. And we've got a great deal of help, frankly, from the utilities. We have been very careful in the MONARK development to upgrade existing technologies such that it's not first of a kind, first of a kind brings inherent risks around the feasibility of regulatory approval, and it brings risk around the cost and development. We have not done that. We've taken an existing Darlington reactor, and we are upgrading that with the latest safety cases, obviously, digitization and latest control systems to make it state-of-the-art and approvable from the regulatory environment. Now clearly, going through that regulatory process takes time, but we have a high degree of confidence. This is a good product based on really successfully operating units. So it's going well. The commitment from ourselves in terms of our investment is pretty much on track. So we're very, very pleased with progress. Now in the U.S., it's early days. It's obviously a market that we can't ignore. I mean there's a strong commitment to nuclear power in the U.S. And that commitment is both from government and utilities, but it's also from the hyperscalers to feed their AI demand -- data center demand from AI. We are in what we would call the pre-licensing discussion phase and in Q2, we go to the formal submission stage of licensing, and we would expect to get a readout from that next year. So these things take a bit of time. But that does not stop us marketing both the EC6, which is tried and tested technology built 35 times around the world or the MONARK. So like I say, it's early days, but it's a market that we don't want to miss, and it's a market that I think CANDU has the opportunity to prevail in a very strong demand market with few choices on technology that exists today. Benoit Poirier: That's great, Ian. And maybe the follow-up question related to the LSTK. Jeff, you mentioned that it will provide a drag of about $100 million to $150 million in 2026. Could you maybe mention whether if it's all related to the REM project? And what about the risk of seeing greater losses from LSTK in 2026 and potentially to flow in 2027? Jeffrey Bell: Yes. No, the cash flow is not solely related to REM. It has to do with settling out final accounts on things like Eglinton. It has to do with a bit of kind of final cleanup, for instance, on Trillium. So it's a combination of a number of the different projects. Also doesn't include any settlements of sort of claims or anything else. So as ever, and we saw some benefit of that in 2025. If we're able to settle out some of the claims, then that would be upside to that. As a result, we would expect to resolve all -- virtually all of that on those 3 projects over the course of 2026. It's possible a little into 2027. But at this point, we see very little of that. I think in terms of where we would expect to be for this year, there will clearly be some costs related to continuing to just kind of finalize out the projects, some costs related to risk management on that, some costs related to pursuing our claims. But going back to the conversation around that all other segment, that will continue to reduce on LSTK in 2026 versus 2025. And when you look at that segment overall with capital, with Linxon, we would expect, as you can kind of see on that slide outside of Q4 that the net of all of those together on a quarterly basis is going to be kind of a handful of millions of dollars. So not material. Operator: Our next question comes from Jonathan Goldman with Scotiabank. Jonathan Goldman: Maybe just looking at the '25 to '27 revised targets, specifically in Engineering Services, you're calling for organic growth CAGR over the period of 5% to 7%. But if we take '25 results in the midpoint of the '26 guide, that implies a pretty significant reacceleration in '27, probably in the double-digit percentage range. So I know '27 is a long way off, but what visibility do you have in getting to that level of growth in the other years? Jeffrey Bell: Yes. I mean, obviously, with the range, we'll see where we kind of land in '26. We do see an opportunity, and we do see continued growth off the back of record backlog. We see markets [indiscernible] in terms of, as Ian talked about, the shift, for instance, in the Middle East, growth in Australia as well as underlying growth in the U.K., the U.S. and Canada. So I think at this point, we're comfortable with that range with what we see not only in '26, but also what we see heading into '27. Jonathan Goldman: Okay. And maybe circling back to capital allocation. Ian, you did talk about kind of the M&A strategy here. But if we kind of tie it together with defense, is there any opportunity to grow that sort of vertical strategically as opposed to organically mainly? Ian Edwards: Defense? Jonathan Goldman: Yes. Ian Edwards: Yes, for sure. Yes, absolutely. And we have got some defense capability targets in view. Now obviously, we need to go through the process. We need to make sure that they've got the right capabilities, got the right culture, got the right kind of positioning. But yes, I mean, that would be definitely part of particularly the capture of defense work in Canada and Australia, where we see us being able to get to the same sort of level that we're at in the U.K. Yes, I would not rule that out at all. Operator: Our next question comes from Ian Gillies with Stifel. Ian Gillies: With respect to the nuclear EBIT margins and then moving down a little bit, I'm wondering if you could provide a bit of an update on the dynamic that's happening there. And perhaps if we look out later into the decade and if there is a heavy procurement phase, should we be thinking about the lower end of the range while that's going on, that would be helpful. Jeffrey Bell: Yes, Jeff, why don't I take that? As I said in my comments, with a kind of normalized business mix, which is what we would expect over the course of the life of refurbishments and indeed new builds, we very much see a 12% to 14% operating margin. I think what we're seeing as we saw in '25, and we expect to see in '26 and into '27 is that while that heavier mix of procurement, we expect to moderate somewhat. I don't think it gets us all the way back to 12% to 14%, but we definitely think we would be in the 11% to 13% range because of that, which implies some growth in that margin over the next couple of years. I think as we move out from there, as I think we've said before, there's always -- depending on that mix, there could be particular years where it moves around. And frankly, it could be higher than that range as well as we've seen now at the lower end of that range. But as we move out beyond '27, we very much see in the medium to long term, a lot of confidence in that 12% to 14% range. Ian Gillies: Understood. And then there's been a lot of focus on the CANDU side and rightfully so. But -- could you maybe provide a bit of an update on what's happening on the growth side as it pertains to the services side of the nuclear business, whether it's dramatically different than the CANDU side at this period of time? Ian Edwards: It is, it is. And in some ways, it isn't because of the just the nuclear renaissance and the amount of activity across the planet in the demand for nuclear for electrical energy. I mean our services business is also a global business. And it's probably 2 things, I would say. One is the waste remediation business where we just won a very significant set of mandates at Sellafield in the U.K. And there are opportunities globally. I mean, we have a very strong business in the U.S. working for the DOE in that waste remediation also. So I see that as a growth market. There is -- from historical weapons programs that there is a lot of work to do to remediate that. But very excitingly is the assistance that we give other OEMs. And if you take the French technology, EDF, where clearly, in some countries we compete, in some countries, we are their key engineering supplier at Hinkley and Sizewell in the U.K. We would have potentially about 1,000 engineers assisting EDF in the nonnuclear deployment of integration of engineering with the conventional side of a power plant, not the reactor side of a power plant. And that will grow as Sizewell starts to really becoming developed. We also actually assist them in France, and we have an office in France that helps them with the development of their business going forward in France. We support SMR technologies. As I said in my script, we're the first real SMR development in North America is in Ontario at the Darlington plant, and we're the proud architect engineer on there of a very significant role to help deliver that. But we also are supporting SMR technologies in the U.K., Rolls-Royce and X-energy and others in the U.S. So that's a growth market because, obviously, the demand on those technologies are significant. And we deliberately did not develop an SMR technology. We decided to stay with large nuclear, and we're agnostic to helping on SMR technologies across the world. So you're right. I mean it's something we don't talk about as much as can do, but it is a growth market, and it is a significant part of our capability. And sorry, I missed one thing out, which is Fusion. We're very much involved with Fusion so that the long-term positioning of AtkinsRealis as a nuclear world leader is not made irrelevant by the potential of Fusion Power. My own view is that's going to be the late 30s into the 40s. But at least we're very relevant in that space also. Operator: And we have time for one last question, and that question comes from Frederic Bastien with Raymond James. Frederic Bastien: Ian, you've got it pretty easy today. No one is asking about the elephant in the room. So I'm going to ask one. In your opinion, does AI accelerate consolidation in the engineering sector? Ian Edwards: Consolidation in the engineering sector. That's a good question. And obviously, we see AI as a real advantage to enable our business to grow and to enable our business to have a lower cost base. We're a clear advocate of that, and we're deploying at scale tools that will enable those 2 things. And our approach right now is we want it to win us more work, and we want it to lower our cost base. And I won't -- there's many questions about is it a disruptor? I won't go into a lot of detail, but our position and my position as an engineer is no, it's not a disruptor. Will it help consolidation in the industry? Yes, because I believe that as smaller companies try to invest in AI, they will find that increasingly difficult. And companies that have scale and balance sheet like ourselves who are able to deploy AI at scale will clearly have an ultimate advantage from a cost base perspective. I don't see this in the next 1 to 2 years, maybe having a significant effect. But the way this would play out would be, yes. I mean, it will give an advantage to companies like ourselves, and we intend to use it to do that. So I think the short answer is yes. Operator: That concludes the question-and-answer session. I'd like to turn the call back over to Denis Jasmin for closing remarks. Denis Jasmin: Thank you very much, everyone, for joining us today. If you have any further questions, please don't hesitate to contact me directly. Thank you. Have a good day, and have a good weekend. Bye-bye. Operator: Thank you for your participation. You may now disconnect.