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Kentaro Asakura: Ladies and gentlemen, thank you very much for your patience. Now we would like to start FY 2025 Third Quarter Financial Results Presentation. I am from Corporate Communications. My name is Asakura. I will be facilitating today's session. In this presentation, we are going to use Japanese and English. We have simultaneous interpretation service available. [Operator Instructions] We have uploaded Japanese and English presentation material in IR library on our corporate website. Whenever necessary, please feel free to download the material. Today's presenters are Mr. Ogawa, Senior Executive Officer, CFO; Mr. Abe, Head of R&D Division; and Mr. Ken Keller, Head of Global Oncology Business. Now Ogawa and Abe are going to take you through the financial results for the third quarter FY 2025, and then we are going to open the floor for the Q&A. Today's session will be recorded. I would like to ask for your cooperation. Now Ogawa-san, please. Koji Ogawa: This is Ogawa. Thank you for participating in Daiichi Sankyo's earnings briefing today despite your busy schedule. Now I will explain the consolidated financial results for the third quarter of fiscal year 2025 announced at 15:00 today based on the materials. Please look at Slide 3. The content I will discuss today is as follows. Fiscal year 2025 third quarter consolidated financial results, business update, research and development update. The research and development update will be explained by Abe, Head of R&D Unit. We will take your questions at the end. Please look at Slide 4. These are the highlights of the current earnings. Our flagship products, the anticancer agents, ENHERTU and DATROWAY continued to grow steadily and revenue increased significantly. The cost of sales ratio improved compared to the second quarter and core operating profit increased by 8.8% year-on-year. No additional major temporary expenses were incurred in the third quarter. There are no changes to the fiscal year 2025 consolidated earnings forecast from the October announcement. Please note that as reference information, the latest sales forecast for each product are listed in the supplementary earnings materials. Although there are some movements in individual products, there is no change in total revenue from the October announcement. Please look at Slide 5. This slide shows an overview of the fiscal year 2025 third quarter consolidated financial results. The revenue was JPY 1,533.5 billion, an increase of JPY 165.9 billion or 12.1% year-on-year. Cost of sales increased by JPY 13.8 billion year-on-year. SG&A expenses increased by JPY 93.7 billion, and R&D expenses increased by JPY 38.1 billion. As a result, core operating profit was JPY 249.2 billion, an increase of JPY 20.2 billion or 8.8% year-on-year. Operating profit, including temporary income and expenses, was JPY 233.8 billion, a decrease of JPY 14.5 billion or 5.9% year-on-year and profit attributable to owners of the company was JPY 217.4 billion, an increase of JPY 8.8 billion or 4.2% year-on-year. Regarding actual exchange rates, the dollar was JPY 148.75, yen appreciation of JPY 3.81 compared to the same period last year and the euro was JPY 171.84, yen depreciation of JPY 7.02 compared to the same period last year. Please look at Slide 6. From here, I will explain the factors for increases and decreases compared to the same period last year. Revenue increased by JPY 165.9 billion year-on-year, and I will explain the breakdown by business unit. First, for the Japan business unit and others. Sales of DATROWAY, Belsomra for the treatment of insomnia and Lixiana, direct oral anticoagulant and Tarlige, the pain treatment drug increased. On the other hand, sales of Inavir, influenza treatment drug decreased. And unrealized profit on inventory of Daiichi Sankyo Espha was recorded as realized profit in the previous period, resulting in a revenue increase of JPY 10.7 billion. The actual increase or decrease in the vaccine business, which is affected by seasonal demand after provision for returns was an increase of JPY 300 million. Next, I will explain the overseas business units. Here, the foreign exchange impact is excluded. Oncology business increased by JPY 113.3 billion due to growth in sales of ENHERTU and contribution of at DATROWAY sales. American region decreased by JPY 24.3 billion due to the impact of generic entry for the iron deficiency anemia treatment, Venofer, and the impact of price competition for Injectafer. EU Specialty business increased by JPY 13.6 billion due to growth in sales of Nilemdo/Nustendi for the treatment of hypercholesterolemia. ASCA business, responsible for Asia and Latin America increased by JPY 35 billion as ENHERTU grew mainly in China and Brazil. Contract upfront payments and development sales milestones related to partnerships with AstraZeneca and U.S. Merck in the third quarter resulted in an increase of JPY 20.9 billion. We received development milestone income from AstraZeneca associated with approval for first-line treatment of HER2-positive breast cancer in the U.S. for DESTINY-Breast09 and received a second upfront payment from U.S. Merck for R-DXd, which were recorded as sales revenue. The foreign exchange impact on revenue decrease was JPY 3.3 billion overall. Slide 7 shows the factors for increase and decrease in core operating profit. I will explain the JPY 20.2 billion increase by item. As explained earlier, revenue increased by JPY 165.9 billion, including a foreign exchange impact decrease of JPY 3.3 billion. Next, regarding the cost of sales and expenses. Excluding the foreign exchange impact, Cost of sales increased by JPY 12.4 billion due to increased revenue and the recording of inventory valuation losses for ENHERTU and others in the second quarter. SG&A expenses increased by JPY 100.3 billion, mainly due to an increase in profit sharing with AstraZeneca. R&D expenses increased by JPY 42.6 billion due to increased R&D investment associated with development progress of 5DXd ADCs. The expense decrease due to foreign exchange impact was JPY 9.7 billion in total and the actual increase in core operating profit, excluding the ForEx impact was JPY 13.8 billion. Next, on Slide 8, I will explain the profit attributable to owners of the company. As explained earlier, core operating profit increased by JPY 20.2 billion, including the impact of ForEx. Regarding the temporary revenue and expenses, again, as explained at the second quarter briefing in late October, same period last year included temporary income from the sale of shares in Daiichi Sankyo Espha. However, this year, we don't have such impact. Although there were incomes related to litigation with former shareholders of Ranbaxy, overall income decreased. Furthermore, there was a JPY 34.7 billion negative impact due to CMO compensation fee associated with the change in the launch timing of HER3-DXd as well as write-down of inventories of DATROWAY and HER3-DXd. Financial income and expenses contributed positively to earnings by JPY 9.5 billion, mainly due to improved FX gains and losses. Income taxes and so on decreased by JPY 13.9 billion, reflecting lower pretax income and the lower effective tax rate compared to the same period last year. As a result, profit attributable to owners of the company increased by JPY 8.8 billion year-on-year to JPY 217.4 billion. Next is business update. Please turn to Slide 10. This slide shows the sales performance of ENHERTU. Global product sales for the third quarter of FY 2025 increased by JPY 102.4 billion year-on-year to JPY 506.8 billion. New patient share remains #1 in all major countries and regions for existing indications such as breast cancer, gastric cancer and lung cancer. Regarding the new indications, we've started promotion for first-line treatment of HER2-positive breast cancer in the U.S. last December, driving growth in new patient share. In China, we've initiated promotion for hormone-positive HER2 low or ultra-low chemo-naive breast cancer patients in December, followed by promotion for second-line treatment of HER2-positive gastric cancer in January. The NCCN guideline has seen new additions and updates for multiple cancer types. First, ENHERTU has been newly added as a Category 1 recommendation for adjuvant therapy in HER2-positive breast cancer with high recurrence risk. For HER2-positive metastatic breast cancer, HER2 monotherapy was already recommended as first-line therapy based on data from the DESTINY-Breast03 trial, a second-line trial, which demonstrated extremely high efficacy. Additionally, based on data from the DESTINY-Breast09 trial, combination therapy with pertuzumab has been newly added with a category 2A recommendation. For HER2-positive uterine cancer, in addition to existing recommendations for endometrial cancer, ENHERTU has been newly listed with a Category 2A recommendation for endometrial carcinosarcoma. For HER2-positive esophageal and gastric cancers, the recommendation level has been elevated from Category 2A to category 1. ENHERTU is already listed in the NCCN guidelines for numerous cancer types and is recommended for use. We'll continue to generate data to pursue further new listings and category updates. Next, I will explain the sales status of DATROWAY. Please refer to Slide 11. Global product sales for the third quarter fiscal 2025 reached JPY 31.6 billion, representing 83.8% of the October forecast. In addition to steady market penetration for the breast cancer indication in Japan and in the U.S., the lung cancer indication rapidly gained market traction in the U.S., significantly increasing the number of new patients. Globally, prescriptions were issued to over 3,000 cumulative patients, approximately 1.5x more than the end of the previous quarter. Sales growth significantly exceeded expectations in both the U.S. and Japan with lung cancer indication, particularly driving sales in the U.S. Given these circumstances, we've updated our full year forecast to JPY 47 billion, up by JPY 9.2 billion from the October forecast. For both breast cancer and lung cancer, prescriptions have expanded beyond the projections. This is primarily due to much higher-than-expected unmet needs, especially in the third line and later, leading to prescriptions for more patients than expected. Additionally, awareness among health care professionals regarding AE management such as stomatitis and dry eye, an area where we have focused on since the launch has increased and experience is being accumulated. Furthermore, DATROWAY has seen new additions and updates in the NCCN guidelines. For triple-negative breast cancer, it's been newly added as a Category 2A recommendation for first-line treatment. For EGFR mutated NSCLC, recommended EGFR mutation coverage has been expanded from the existing category to existing, widening the opportunity for DATROWAY to make further contribution. We'll continue to pursue further market penetration in existing sales regions and expand into new countries and regions while advancing efforts to obtain new indications. We are committed to delivering ENHERTU and DATROWAY to as many patients as possible who need these medications. Slide 12 shows an update on Seagen U.S. patent dispute related to our ADC. Last December, the U.S. Court of Appeals for the Federal Circuit issued a ruling reversing the District Court's decision that ordered us to pay damages and royalties to Seagen, finding that Seagen's U.S. patent was invalid. The court issued a ruling affirming the U.S. Patent and Trademark Office decision that Seagen's U.S. patent is invalid, dismissing Seagen's appeal. We highly value this ruling by the court. Slide 13 is information about the briefing session. On April 8, Japan time, we will hold the sixth 5-year business plan briefing. Once details are finalized, we will inform you. From here, this is the R&D update. I will hand it over to Abe, Head of R&D. Yuki Abe: Thank you. This is Abe. I will talk about the R&D update. First, I will explain about 5DXd ADCs. Next slide, please. In December last year, ENHERTU in combination therapy with pertuzumab obtained approval for the first-line treatment of the patients with HER2-positive unresectable or metastatic breast cancer in the U.S. As you know, this indication based on the DB09 study was approved under breakthrough therapy designation, priority review and real-time oncology review program. Regulatory filings have also been accepted in Japan, China and Europe. And through Project Orbis, multiple regulatory authorities are proceeding with reviews. Next, please. I will talk about the final analysis results of the DESTINY-Breast03 study presented at the San Antonio Breast Cancer Symposium in December last year. This is a Phase III study that compared and verified the efficacy and safety of ENHERTU and T-DM1 for second-line treatment of HER2-positive breast cancer. As you can see in ENHERTU group, the median OS was 56.4 months and estimated 5-year survival rate was 48.1%, showing long-term significant efficacy compared to the T-DM1 group's median OS of 42.7 months and estimated 5-year survival rate of 36.9%. In addition, no new safety findings were observed through long-term follow-up. And the incidence rate of ILD adjudicated to be drug related in the ENHERTU group was 17.5% with no Grade 4 or 5 ILD observed. This indication has already been approved and launched in many countries and regions, including Japan, the U.S. and Europe. But these results reconfirmed ENHERTU's consistent sustained efficacy and long-term safety and substantiated its contribution to improving survival. Next, please. This slide summarizes updates toward expanding indications for ENHERTU. ENHERTU is making steady progress in expanding indications in various countries and regions centered around breast cancer. And in December last year, based on the results of DB05 for post neoadjuvant therapy for HER2-positive breast cancer with high recurrence risk, it received breakthrough therapy designation in the U.S. Also in December, based on the results of DB06, approval was obtained in China for the indication of chemotherapy naive hormone receptor positive and HER2 low or HER2 ultra low breast cancer. And this month, based on the results of DG04, approval was obtained in China for the indication of second and later line treatments for HER2-positive gastric cancer. Previously, in China, third-line treatment for HER2-positive gastric cancer had conditional approval. But with this approval, full approval has been obtained for second and later-line treatment. Next, please. This slide shows the progress of each ENHERTU study. Aiming to contribute to more HER2-expressing cancers, we started DESTINY-Lung06 in October last year, targeting first-line treatment of HER2 overexpressing non-squamous NSCLC. And in December last year, we started the randomized phase of DESTINY-Ovarian01 targeting first-line maintenance therapy for HER2-expressing ovarian cancer and DESTINY-Endometrial-02 evaluating adjuvant therapy for HER2-expressing endometrial cancer. Next slide, please. From here, this is the progress of DATROWAY. Data from the TROPION-Breast02 trial targeting TNBC not eligible for PD-1, PD-L1 inhibitor treatment was presented at ESMO in October last year. Based on this data, filings for approval were submitted in Europe and China and were accepted in December last year. Procedures toward filing are also progressing in other countries and regions. For TNBC, as shown in the table on the left, in addition to the TB02, 3 Phase III studies are ongoing in early stage and recurrent metastatic stage. Next, please. This slide introduces new Phase III trial. The TROPION-Lung17 trial compares DATROWAY monotherapy with docetaxel in patients with non-squamous NSCLC in second line or later setting. Building on insights from prior studies such as TROPION-Lung01, we target at patients with TROP-2 NMR biomarker positive. This trial aims to expand the treatment opportunity for DATROWAY monotherapy in NSCLC. Next slide. This slide introduces the latest status of the ongoing DATROWAY trials. The first is the TROPION-Lung07 trial, which targets first-line treatment for non-squamous NSCLC with PD-L1 expression below 50%. This trial had not previously applied the TROP-2 NMR biomarker, but following a protocol amendment, PFS and OS in the TROP-2 NMR-positive population were newly added as primary endpoint. The second is the TROPION-Lung12 study. This is an adjuvant therapy trial for Stage 1 NSCLC with ctDNA positive or high-risk pathological features evaluating combination therapy with rilvegostomig. Regarding this trial, due to complexity of study operation, we've decided to discontinue patient recruitment. No new safety concerns were identified, and there is no impact on other DATROWAY trials. Next slide, please. From here onward, I would like to talk about the progress of next wave. For EZHARMIA, we are preparing a Phase I trial combining darolutamide with EZHARMIA for metastasic CRPC. Regarding DS-9606, a modified PBD ADC targeting Claudin 6, we've decided to discontinue its in-house development following a strategic portfolio review. Meanwhile, DS-3610, a STING agonist ADC introduced at last year's Science and Technology Day commenced its first in-human trial in November last year. This slide shows that EZHARMIA received Prime Minister's award. EZHARMIA was approved in Japan 2022 for the treatment of relapsed/refractory adult T-cell leukemia lymphoma and in 2024 for relapsed or refractory peripheral T-cell lymphoma. Japan was the first in the world to obtain approval. This time, in combination of health care -- in recognition of health care contribution through establishing a new cancer therapy targeting EZH1/2 epigenetic regulation, we've received the Prime Minister's award at the 8th Japan Medical Research and Development Awards following Enhertu's award at the 6th ceremony. We are extremely pleased that the drug independently developed by Daiichi Sankyo is contributing to patients' treatment and that its achievement has been recognized by the society. Finally, news flow from now onward. Regarding upcoming regulatory decisions, we anticipate review results for DESTINY-Breast11 trial from the U.S. FDA in the first half of next fiscal year. As for the upcoming key data readouts, for the DESTINY-Lung04 trial of ENHERTU for the first-line therapy of HER2-mutated NSCLC, data is expected in the first half of next fiscal year. For the TROPION-Lung07 and Lung08 trials of DATROWAY for first line of NSCLC, data is expected in the second half of next fiscal year. Furthermore, AVANZAR trial data is now expected in the second half of calendar year 2026. Additionally, data from TROPION-Lung 15 trial, which targets EGFR mutated NSCLC after osimertinib is still expected in the next fiscal year as previously planned. Slide 29 and onwards are appendix. Please take a look at those slides later. That's all from myself. Operator: [Operator Instructions] The first question is from Yamaguchi-san, Citigroup. The sound is back now to the translation line. Sorry, we missed the question from Yamaguchi-san. Unknown Executive: Well, regarding 9606, we stated that our in-house development will be discontinued. As we proceeded in our development, we had the result. And regarding mPBD itself, its utility was confirmed. Hidemaru Yamaguchi: And then how should we do moving forward? Unknown Executive: We may have an option taking partnership with other companies who may be interested in out-licensing of this asset, but in-house development will be discontinued. Therefore, regarding mPBD technology, its usefulness has been confirmed. Therefore, the subsequent researches are ongoing. Therefore, changing the targets, the clinical programs will continue. That is our policy. Hidemaru Yamaguchi: So I'm sorry. But including the competition, for clothing -- regarding 9606, given the strategic value, you decided not to do it on your own. Is that right? Unknown Executive: In giant cell tumor, we had a positive result. So there is a room of making more development in that area. But given the portfolio perspective, we decided not to continue the in-house development in this field. I see. Hidemaru Yamaguchi: Another question is ENHERTU marketing. First, starting from December, promotion started. And I'm sure if it's already appearing quantitatively in the numbers, but what is your feeling in the market, DB09 marketing promotional activities, how effective the activities are producing the results? Unknown Executive: Thank you for your question. Regarding DB09 current status, Ken Keller is going to give you a comment, please. Joseph Kenneth Keller: Yes. Thank you very much for the question. So DESTINY-Breast09, which is the first-line HER2-positive metastatic breast cancer indication, it's been launched in the U.S. The team is now educating our oncology customers in the U.S. The data, as you know, is really outstanding. It's being received very, very well. I would expect the adoption to be very, very quick. At this point, the oncology community knows ENHERTU very well. They're comfortable with it. And with this data, I think they will embrace it very quickly. Hidemaru Yamaguchi: Do you have some sense of penetration rate as of today or it's too early to say? Joseph Kenneth Keller: It is too early to say what it is. We just launched it really just a little while ago. And so we'll be able to provide you with more information in about a quarter from now. Operator: Next question is from Daiwa Securities, Hashiguchi-san. Kazuaki Hashiguchi: This is Hashiguchi speaking. My first question is related to ENHERTU Japan, your sales situation. So this time, you have made a downward revision of your forecast slightly compared to the original forecast, what's going -- what is going differently? What is the background for you to take your forecast downward? Can you explain about the reason and the background for that? Unknown Executive: Yes, I would like to make one comment first, and then I would like to ask Ken Keller to make some additional comments. In Europe, we are seeing some adjustment. When we look at the quarter-on-quarter situation in Europe, there has been a change to the ERP system. As a result, we had to do some shipment in the second quarter, and that was affecting the quarterly sales. But I would like to ask Ken Keller to comment on the situation in Europe and sales from a full year sales perspective. Joseph Kenneth Keller: Thank you very much. When we look at ENHERTU in Europe, we're in a situation where all of the countries have launched the HER2-positive second-line metastatic breast cancer indication. And the market share, the penetration has already achieved a very, very high level. And so we see continued growth in that setting. But now as we look forward, we're going to see substantial growth in Europe as the different countries obtain access for the HER2-low indication. We've got the HER2-low indication in most countries in Europe, but now we're working through the typical reimbursement approval. As these occur, you'll see an acceleration of growth in Europe. Kazuaki Hashiguchi: For Japan, what's the situation in Japan? Unknown Executive: Yes. Let me respond to that question regarding Japan. Last year, in April, we had seen some impact. NHI drug price revision just before -- just before the start timing in April, we had seen some last minute on demand and that impact still lingered. Overall, ENHERTU future growth trajectory in Japan remains unchanged. Kazuaki Hashiguchi: Next, DATROWAY NSCLC Phase III trial progress, that's what I would like to understand. Avanzar study was changed from the first half to the second half in terms of the timing. And for TL07, your disclosure was always saying that FY 2026, but AstraZeneca is saying first half of the calendar year. And in your fiscal year, latter half, you've made a timing change to the latter half of your fiscal year. And what is the reason behind this timing change? Unknown Executive: Thank you very much, Mr. Hashiguchi. First, regarding AVANZAR, enrollment has been complete. And with the event -- with the incidence of event, we understand that there has been change made, and that's all we know. And for TL07, 08, we've disclosed second half of this fiscal year. So it's still being in line with our initial plan. Kazuaki Hashiguchi: Regarding 07, primary endpoint was added this time. And so when you get the overall primary endpoint data, I guess you are going to make a disclosure. Is that the case? Or if you collect -- can collect the data on already set endpoint, are you going to disclose those endpoints first or like all of them altogether? Unknown Executive: Thank you very much for your question. Regarding 07, NMR biomarker has been added to primary endpoint, as we have explained. And next year, second half, the PFS data is expected to be disclosed. So whenever we have event, we are going to make a disclosure. And as we have experienced at AVANZAR, when event becomes long or takes longer, then the timing of the disclosure may come later. But when that happens, we are going to communicate to you. This time it's protocol amendment, with regard to that, we've had a lot of sufficient discussion. And what's more important here is that is that we are going to get the positive study results. So we do our best, and we continue this study. Operator: Next question is Sakai-san from UBS. Fumiyoshi Sakai: This is Sakai, UBS. My first question is about the follow-up question of TL-07. There are 4 primary endpoints now. Is that right? And then what is the hierarchy of the statistical analysis? And how should we consider the alpha? And TL-08 and 10, don't you have to change their primary endpoints? Unknown Executive: Thank you for your questions. Whether or not in total, there are 4 endpoints in ITT and NMR positive population, PFS and OS will be evaluated as primary endpoints. And as a result, how we will be leading to the filing, we will consider risks and benefits, taking a look at the study results and make a strategy for filing. Therefore, at this point in time, which is going to be included or not, I may have to expect that anything is not yet definite. Therefore, I'd like to reserve my comment this time. But based upon data, we will proceed our filing. Fumiyoshi Sakai: What about 08 and 07. Unknown Executive: regarding TL-08, we are also having discussion. And we are currently considering to include NMR as of today. And if we decide and add to this change, then we will also let you know. Concerning TL10, we don't have any idea at the moment to make such an aggressive change. Fumiyoshi Sakai: Second question is the inventory write-down on the balance sheet. I think it was towards the end of the year, and it increased remarkably. What are the items contributed to that increase? And like the past case, don't we have to worry about any potential write-off of inventories? Unknown Executive: Thank you for your question. At this point in time, there is no potential impairment we anticipate. So that's one point. And for ENHERTU and DATROWAY, overall, they are accelerating the growth globally. And especially the stock takings are accumulating in the U.S. for the purpose of growth, and that is affecting most. Operator: Next question is from BofA Securities, Mamegano-san. Koichi Mamegano: I am Mamegano from BofA Securities. I would like to make one clarification on IDX. Phase III trial received a clinical hold, but I heard that this clinical study was reconvened -- recommenced. Is that the case? And for this, I think it was a trial to support the filing. And can you tell me like whether you've made -- you've submitted the filing already or not? Unknown Executive: Yes. Thank you very much for your question. And sorry that we've concerned you I-DXd, we've received a partial clinical hold, and it's been lifted already. However, I would like to explain the current situation. ED8-Lung-02 study shows ILD series serious, may have ILD serious cases and our R&D team came to realize that and we stopped the patient recruitment, and we made a report to the FDA. And then FDA has issued partial clinical hold and that's been already disclosed -- sorry, that's been already lifted. But in a meantime, ourselves and Merck decided to have a more strict risk management for ILD. So ILD high-risk patients are now excluded from the trial, and we have more strict inclusion criteria. Independent data monitoring data is looking at the safety and efficacy data more frequently. And on top of that, participating investigators and clinical site staff are receiving additional education and updated training amendment of protocol, ILD symptoms and ILD management are now more thoroughly implemented with those partial clinical hold has been lifted. Koichi Mamegano: And for ED801 study submission. What is the impact on the filing? Unknown Executive: There is no impact on such filing. So we are having a discussion with the regulatory authorities in different countries and regions. And we stick to the original time line. That's all. Koichi Mamegano: One more question. You're going to announce MTP, midterm business plan in April. And that's -- with regard to DATROWAY, I'm sure this is a growth driver for you. But now you have a AVANZA trial. And in the second half, you're going to have top line result. And in midterm business plan, DATROWAY's assumption. How should we expect DATROWAY's assumption to be laid out in the MTP? Unknown Executive: Thank you very much for your question. Well, we would like to make a detailed presentation on MTP when we make announcement. So I can't make a detailed comment at this point of time. But DATROWAY study result such as AVANZA study result and the others will make a big difference in coming 5 years business. So when we make announcement of MTP, we will explain about the assumptions and the scenario on which MTPs being formulated. We would like to offer you as much explanation as possible. Operator: Next question is from Ueda-San, Goldman Sachs Securities. Akinori Ueda: This is Ueda, Goldman Sachs. I have a question about clinical trials of DATROWAY. This time, TROPION-Lung07, which biomarkers were used. As a result, enrollment increased in terms of number of patients and the data affect to the data announcement timing? Or do you think that you still need to review all those? And also for 08 study, biomarker usage is now under review. And if you decide to use it, then should we anticipate that the timing of announcement will be changing. Unknown Executive: Thank you for your question. Regarding the timing, this time, the enrolled patients numbers have been increased and already we completed enrollment. Therefore, there is no delay anticipated. It's already complete. But as we experienced with AVANZAR, if any events happen and causing any delay, we will let you know. So for the enrollment of the patients compared to the original plan, we added on NMR, and we have already completed the enrollment. Did I answer to your question? Akinori Ueda: Yes. And it's the same situation for 08? Unknown Executive: Regarding 08, as of today, I'm sorry, I cannot comment in details, but a similar strategy is taken to move forward. Akinori Ueda: I understood. My second question is about ENHERTU indication expansion impact. First, in the first-line treatment, as you expand the indication more, I think the sales will be accelerated. And already in the U.S. DB09 positive results has been disclosed. And as a result, do you see already some positive impact in the clinical practice? Or can we expect more acceleration of the sales expansion? And DB05 and 11, those approvals are also expected. And number of patients seems to be big. But given the number of cycles of treatment, I may consider 09 contribution may be big or if actual the target population expands and if the clinical practices are conducted more efficiently, then there will be also a major contribution expected from 11's result. Which way do you consider? Unknown Executive: For this question, Ken Keller will answer to your question. Joseph Kenneth Keller: So if I heard the question correctly -- we're already seeing some spontaneous use in DESTINY-Breast09, from almost the moment when that data became public. So we are seeing people adopting it and using it already, even though commercially, we've launched this just a little while ago. As we project out to the early-stage breast cancer settings of DESTINY-Breast11 and 05, in these early settings, the goal is cure. And both of these studies provide standard of care changing new data. And I expect them and everything we're hearing from the community is that they will -- it will be embraced very, very quickly. Did that answer your question? Operator: Next question is from JPMorgan Securities, Mr. Wakao, please. Seiji Wakao: This is Wakao from JPMorgan. My first question is as follows. This time, you didn't have a temporary expense. But wasn't there any special factor? And then for the CMO compensation fee, I thought that there is something which is still under negotiation. What's the status right now? Unknown Executive: Temporary expense that we disclosed. And on top of that, is there anything else? The answer is no. And going forward, with regard to the CMO compensation fee, we did -- if we scrutinize the situation and when something comes up, we are going to disclose. But at this point of time, we don't -- we haven't identified any outstanding remaining compensation fee that we need to pay to CMO. Seiji Wakao: When are we going to see the conclusion of this? Unknown Executive: We are having an ongoing discussion with CMO and we cannot determine when is the expected timing of the conclusion of this negotiation. Seiji Wakao: TL-07 and 08, you are now adding NMR marker -- biomarker. And can you explain about the background why you've decided to do so? I understand that you are trying to improve the probability of success. But if you are confident in the result of Dato, I don't think it was necessary, but what's the reason behind? Unknown Executive: Thank you very much for your question. We've had a lot of internal discussion on that. And at one point of time, we thought that this biomarker is not necessary. But pembrolizumab and Dato-DXd, as we have experienced in breast cancer, these 2 are good match. And for lung cancer -- in lung cancer, patients are hetero as based on our experience. So NMR biomarker in lung cancer is very critical. That's one of the reasons. And although you haven't asked this, but TL-17 NMR biomarker study is going to take place. So in the area of lung cancer, with the existence of biomarker, we can offer better benefit to the patients. And in 07, 08, by using biomarker, we can enhance the probability of success. That's why we've decided to add biomarker in the protocol. Seiji Wakao: So I understand that you've discussed with FDA on this. And for NMR-positive population, if you meet endpoint, I would understand that you can successfully make submission and of course, depending on the data, but I think you can get the approval from FDA. Unknown Executive: Yes, we've consulted with FDA before we amended protocol. And it all depends on how good our clinical trial result is. MTP is to be announced in April. The other day, in the JPMorgan Healthcare Conference, CEO mentioned regarding the profit outlook into 5 years. So in 5 years from now, you have a sales milestone for ENHERTU, and you have cliff with Lixiana. So the profit somewhat may decline. However, if things go well, you can make some growth. Seiji Wakao: And I think that's the outline of the message of you. But can you explain about that once again? Unknown Executive: Well, with regard to the next MTP to be announced in April, I am very sorry, but we cannot offer you any detailed comment because we are having an ongoing discussion to formulate MTP. Lixiana, LOE, Injectafers being impacted by generic, you understand those things quite well. Those would be the downside factor, negative factors. So with 5 ADC growth, we are hoping to catch up or compensate those decline as much as possible. And that's all I can tell you for now, but we are still committed to improve profitability and that's the baseline for the next MTP. Operator: Next question is Muraoka-san, Morgan Stanley MUFG Securities. Shinichiro Muraoka: I'm Muraoka from Morgan Stanley. I have a follow-up question about Wakao-san's conference-related item. I'd like to understand the wording exactly. Did you say decline or a slight decline? And I think it depends on how much inclusion you assumed. And if you included Dato conservatively, is it a decline or slight decline? Could you share that part once again with us? Unknown Executive: In terms of wording, the word we used is slight decline. And overcoming the factors against the profit, we will be putting ourselves back on track for growth. And in that context, this wording was used. But how much -- I'm sorry, we cannot talk about it specifically. But at any rate, there would be some directions, negative direction putting us downside, but we would like to recover from that as much as possible and all those measures will be incorporated in our 5-year business plan. So if it is a slight decline, then I think naturally thinking you should be able to achieve a V-shaped recovery after that. Shinichiro Muraoka: Another question is smuggling point, are you going to make acquisition by the time of next 5-year business plan? And how many deals at what the scale? Unknown Executive: Well, excuse me, what you're asking about is to acquire external assets? Shinichiro Muraoka: Yes, yes. Unknown Executive: At this point in time, we don't have anything that we can talk about. But again, in our 5-year business plan, we look at our pipeline, especially in early-stage pipelines, if there are anything which we can expect working as a complementary, we would like to pursue toward the growth during the 5-year business plan and beyond, we'd like to explore externally any good candidates of assets. So that strategy is unchanged. And before the announcement of April, the announcement of the 5-year business plan, nothing is now moving at the moment in this regard. Shinichiro Muraoka: And just one more point. Well, actually, your stock price went down much, but it came back quite quickly. Did you conduct a buyback, share buyback? It is a sharp decline and recovery. So I think probably in the next week, you will disclose whether you conducted the share buyback or not. But could you comment regarding share buyback, as we have been talking about it. Unknown Executive: We will take into the stock price and others, and we make a comprehensive review and make a decision. And so far, on a monthly basis, we have the timely disclosure in the first operating day. And on that timing, we will continue disclosing the information. Operator: Next question is from Bernstein, Sogi-san. Miki Sogi: Regarding TL-07 and TL-08, I have question. NMR biomarker is now added in the primary endpoint. And I think this is a good news. Regarding this, I have 2 questions. Regarding 07, 08, it was a combination with KEYTRUDA and you use NMR and then this will increase the probability of success. And I think it will have a big commercial impact because you can combine with standard of care KEYTRUDA. 07, 08, for those 2 studies, I think you are done with the patient recruitment. And within 12 months, the result will be presented. So you have come to this end. Now you're making amendment. But you've got the kind of like consensus from the FDA. Does that mean that FDA understands the significance of NMR as a biomarker? Unknown Executive: Thank you very much. In terms of the marketability, I would like to ask Ken Keller to make some comment. And I would like to respond to your second part of your question, whether -- how FDA sees the significance of NMR. Well, this relates to the discussion of contents of FDA, so I can't make any comment. But by including biomarker, our intention is to improve the probability of success of this trial. That was the main intention, and please allow me to repeat that point once again. And depending on the result, study result, we will consult with FDA and figure out how we want to do with the filing. Joseph Kenneth Keller: And the question in terms of adding in and working with the standard of care, you are absolutely correct. KEYTRUDA is clearly the market leader, and we've got a number of first-line non-small cell lung cancer studies with KEYTRUDA. And also, to remind you, we've got the AVANZAR study with Imfinzi which is AstraZeneca's I/O drug. So we feel that whatever the preference is of that specific oncologist, we're adding DATROWAY in a way that is very convenient, and it should lead to very quick confidence in our drug adding to whatever they prefer. Miki Sogi: Next, regarding MTP, regarding health care conference hosted by JPMorgan. I know you're announcing MTP in April, so you can't talk much about it now, but slight decline, as you say, with regard to profit, It's not margin. Are you talking about absolute amount? Is that correct, not margin? And also when the profit declines, the driver behind is, I guess, the aggressive R&D cost assumption. So in your case, 5 ADC has many trials and you have partners. So with regard to the R&D cost, I would assume that with AstraZeneca, Merck, you've already, I guess, made alignment on the cost. And I don't think you alone cannot make adjustment or changes by yourself, correct? Unknown Executive: With regard to the future R&D spending, splitting R&D cost between us and the partner has been determined. So we stick to that. Which study is to be dealt by who. This is different in different trial. And when we've made agreement and then we just stick to the cost split structure we've predetermined with the partner. During the MTP period, how are we going to control R&D cost? I think that's what you wanted to understand. So to that end, we have trials where we work with partners, and we have development that we take care of all by ourselves. So in coming 5 years, what are going to be -- which projects are we going to prioritize. That project prioritization and the resource allocation needs to be well managed. Miki Sogi: Okay. I have a follow-up question. In next 3 years -- well, in next 3 years, not 5 years, am I correct to understand that you've already had a lot of discussion with your partners as to what kind of trials are going to take place for what product. Unknown Executive: Yes, depending on the product, we are in a different stage. And for each product, we have formulated joint team. So rest assured, we have sufficient discussion going on between us and our partner through the joint team. And we stick to the priority that we decide on. Operator: The last question is from Tony Ren from Macquarie. Tony Ren: So I want to go back to your Claudin 6 ADC, the decision to discontinue DS-9606. My question is about the construct of the modified PBD construct. You mentioned its clinical utility has by now been established. Can I confirm that the decision -- because I also noticed your peer company, Chugai also discontinued a Claudin 6 T cell engager in October. Can I confirm that it might be an issue with the target of Claudin 6. Can you also give us any sense about the toxicity of the modified PBD construct? So that's my first question. Unknown Executive: Thank you for your question. Regarding mPBD. In terms of technology, yes, we confirmed that technology utility, as I mentioned earlier. And the reason we selected Claudin 6, there are several reasons. Therefore, we expected in this asset, but there are things that turned out as it's expected or unexpected. And in terms of science contents, we'll be discussing it in some medical conferences. So allow me not to touch upon those. But in terms of utility in the giant cell tumors, if we can confirm the efficacy, then technology-wise, it should be very good. And for that point, we could confirm. And also side effect was manageable as well. Therefore, amongst the difficult challenging technology with PBD, we believe that our technology utility level is high. And talking about the Claudin 6 in, giant cell tumors, can't it be developed for this particular type of tumor. Well, I think it is possible. Therefore, any companies interested in this may consider development, including in-licensing. But what about the business viabilities or in terms of portfolio. Well, given our business portfolio overall, we decided to discontinue. That is the background reason. Did I answer to your question? Tony Ren: Yes. Yes, answered very well. I was mostly concerned about the toxicity. My second and the last question is about your CapEx plan. So Nikkei Asia reported that you guys were considering spending JPY 300, that is close to USD 2 billion on CapEx, right, in 4 different countries, Germany, Japan, U.S. and China. This obviously feels pretty big in relation to the JPY 800 billion in CapEx you guys already disclosed in the last 5-year plan. Can I confirm that this JPY 300 billion is in addition to above and beyond the JPY 800 billion already committed? Unknown Executive: Thank you for your question about our CapEx. Well, it is not a new additional investment. So what we announced is as we have been explaining so far within the range that we have been already talking about, this spending will be incurred. Therefore, there is nothing new, nothing additional to the CapEx that we have already announced. Tony Ren: Okay. So it is part of the JPY 800 billion already announced? Unknown Executive: Yes. Sorry. I'm not familiar with the articles detailed content. But yes, your understanding is correct. Operator: Thank you very much. So with that, we would like to conclude today's earnings call. Thank you for your participation today.
Terje Pilskog: Good morning, everyone, and welcome to our fourth quarter presentation. Our growth continues, and we deliver on our strategy with a high level of activity across all of our segments and all of our portfolio. We are growing our pipeline. At the same time, we continue to also strengthen our financial position. And we are operating in markets with strong underlying demand, and we're focusing on markets with strong underlying demand for clean, affordable and flexible power. Renewable energy is the most competitive source of power generation in our markets, and we continue to see strong and attractive long-term demand for renewable energy in our markets. And this is reflected in the additional projects that we are able to secure in our markets, and it's also reflected in the growing pipeline that we are presenting today. And today, I will start with a summary of our 2025 achievements, and then I will take you through the highlights of the quarter. Hans Jakob will go through the financials. And then at the end, we will also provide comments on our outlook for 2026. And then to summarize our full year 2025, we are scaling the platform while maintaining -- continuing to maintain financial discipline, and we have also strengthened our balance sheet. We see strong near-term growth, and we have 11 gigawatts of generation capacity across our projects in operation, in construction and in our backlog. And this is our largest near-term growth that we have ever had. We have also significantly strengthened our position in storage and hybrid solutions, reflecting the increasing demand for flexible and hybrid systems. Our growth portfolio now includes more than 6.5 gigawatts of battery storage systems. And this development is supported by battery prices falling over the past 2 years, and we aim to continue to increase our pipeline in this space. During the year, we have also reduced our gross debt -- corporate debt by 25% and our corporate debt now stands at NOK 6.7 billion. And this is something that we have done while we continue to invest in new projects and new capacity. So overall, I'm very happy with the performance that we have achieved last year, and we are proving that we can execute on growth while we continue to deleverage, building a resilient and a very scalable platform. So let me then take you through the highlights of the last quarter. We delivered strong group revenues of NOK 3.4 billion. This is an increase of 25% relative to the same quarter last year, and this is mainly driven by high activity in our Development & Construction segment. We have very good progress on our projects under construction. And in the quarter, we recognized NOK 2.3 billion in revenues and also a gross margin of 14%. And the key drivers here were Obelisk in Egypt and also the Mogobe BESS project in South Africa. And it's important to emphasize that the attractive gross margin that we are recognizing, it is based on a very strong underlying economics of the projects that we currently have in our construction portfolio. We also continue to mature our pipeline and secure new projects for future growth, with the backlog now reaching an all-time high of 5.3 gigawatts of generation capacity and 4.7 gigawatt hours of battery storage capacity. This is driven by new PPAs that we've been signing over the quarter in Egypt, in Tunisia and also in the Philippines. And one of these projects, which is Energy Valley, is really a landmark project in Egypt, and we will come back and talk a bit more about that later. In parallel, we have also improved our corporate debt maturity profile. We have issued a new bond in November during the quarter. We also paid down the term loan. And at the end of the quarter -- at the end of the year, we have a very strong liquidity position of NOK 5.6 billion. So with that, let me also then take you through the key elements of the Power Production segment. Last quarter, we generated 1 terawatt hours, and this is in line with last year when we adjust for the divested assets. New projects contributed with 73 gigawatt hours. This is from Grootfontein in South Africa and it's also from the Mmadinare project in Botswana. While when it comes to the Philippines, we generated slightly lower megawatt hours, and this is due to hydrology. Revenues from power production amounted to around NOK 1.1 billion, and this is broadly also in line with last year when we are adjusting for the divestments that we've done. And overall, this demonstrates the resilience and the predictability of our contracted generation portfolio even as we continue to actively optimize our portfolio. Now a few words on Ukraine. And here, the ongoing war obviously represents challenging environment, a challenging environment for operations. We own and operate 5 projects in Ukraine in the central and the southern parts of Ukraine, with a total capacity of about 336 megawatts. And during the fourth quarter, the substations and transformers related to one of our projects were targeted and damaged by Russian drone attack. Our first priority in this situation is our employees in the country, and it's very good to know that those are unharmed at least physically after this drone attack. But the power plant is disconnected due to the damage and is currently not delivering energy onto the grid. Ukrenergo, the state-owned utility and our team is working very hard to repair the damages, and we are currently targeting to get the plant reconnected to the grid and start delivering energy again in the beginning of the second half of this year. This is obviously impacting the power generation from Ukraine during the year, and Hans Jakob will come back and comment on this also in the outlook for the year. So let me now talk about the Philippines. Here, we delivered yet another solid quarter, and the Philippines continues to be a major financial contributor to the company. We generated 249 gigawatt hours in the quarter. And despite the slightly lower generation compared to last year, the financials from Philippines were better than last year. Overall, we reached net revenues of NOK 403 million. This is up from NOK 390 million same quarter last year. And here, we are now seeing the benefits of having a flexible asset portfolio and active trading operations in the country. This is now demonstrated based on the several -- as we have several revenue streams and that we're able to capture attractive trading opportunities. And through this, we are able to deliver good and strong financial results despite the fact that the hydrology is slightly lower in the quarter. And we also continue to allocate a significant part of our capacity to the ancillary services market in the country, again, based on the fact that we are seeing attractive revenue opportunities, earnings opportunities in that segment and based on our ability with the flexible asset portfolio that we have. Prices in the quarter were also up. And additionally, we've been able to capture higher-than-average prices on our contracts, and this is also contributing to the financials. So in terms of EBITDA, that increased by NOK 31 million in the quarter to NOK 363 million. Then in terms of construction, we currently have 1.5 gigawatts of solar and 700 megawatt hours of battery storage projects under construction in 5 different countries. Andreas is fixing that. In addition to this, we are also progressing well in our release platform, and we are also having a few projects in that platform being installed as we speak. Since last reporting, we've had a very good construction progress across the portfolio, and we have recorded NOK 2.3 billion in revenues and a gross margin of 14%, as I've already said. And the EBITDA for the D&C segment was NOK 251 million, which is a very high level. Grootfontein in South Africa and also the second phase of Mmadinare project in Botswana reached COD during the quarter and is now in operation. In Tunisia, we target COD for the Tozeur project and the Sidi Bouzid project by the end of the quarter. And for the solar project in Brazil and also for our battery projects in the Philippines, we are expected to reach COD by the end of the first half of the year. When it comes to Mogobe in South Africa, our first battery project in South Africa -- so when it comes to the solar project in Brazil and also the battery projects in the Philippines, we are expecting to have COD by the end of the first half. And then when it comes to Mogobe, our first stand-alone project -- stand-alone BESS project in South Africa, we are for this project expecting to reach financial close in the second half of this year. In general, I'm very pleased with the progress that we're seeing on the construction activities across our portfolio, and I'm very proud of the teams that are doing a very good job on this. At the end of the quarter, we have NOK 1.8 billion in remaining contract revenues related to the projects that we currently have in construction, and we continue to expect to have a gross margin of 10% to 12% related to these projects. Beyond this, obviously, we continue to mature the projects that we have in backlog, and we foresee that we're going to continue to have a high activity level in the Construction segment going forward. Now let me also take some time to appreciate our largest project to date, the Obelisk project. Total CapEx of this project is close to NOK 6 billion. And then it's finished, it will generate in the range of 3 terawatt hours on an annual basis, and it will provide 1.3 million tonnes of CO2 emission reductions. It's a massive project, and it's being constructed at record pace. We have already completed phase 1, which is including 50% of the solar capacity, 100% of the battery capacity and obviously also a very large substation. And this is only about 15 months since we signed the PPA. We are having about 5,000 people on site, and this team is installing in the range of 200,000 modules on a monthly basis. So we're working very hard to secure commercial operation for phase 1 ahead of schedule by the end of this quarter and also accelerating the completion of phase 2, and we're targeting to reach COD for phase 2 already this summer. And obviously, building this project, constructing this project gives us a lot of very valuable experiences and learnings. And we will use these learnings when we're now moving forward also and preparing to start construction for the other projects in Egypt, like, for instance, Egypt Aluminium and also the Energy Valley project. I will now zoom out a bit and talk about our growth portfolio. We have an all-time high backlog of 5.3 gigawatts of generation capacity, and this is including projects in Egypt, in South Africa, in Tunisia, in Romania and in Colombia. And then the construction of these projects, including the ones in backlog, have been completed over the next few years, we will reach a total generating capacity of 11 gigawatts. This is up 2.5x relative to where we are today. In addition, behind this, we have a pipeline of 7.4 gigawatts that obviously we will continue to mature and convert into backlog also over time. Our growth portfolio also includes battery storage, either in hybrid systems or as stand-alone storage systems. Here, we have a backlog of 4.7 gigawatt hours in South Africa, Egypt and the Philippines. And we have now chosen to show this portfolio separately so that you can see also how this is growing over time, and we believe that there's going to also be significant growth opportunities in this space going forward. And let me now also turn at the end to a landmark agreement signed in Egypt, which is a 25-year PPA for 1.95 gigawatts of solar and 3.9 gigawatt hours of battery capacity. So the Energy Valley project, as you will see on this page, includes 2 stand-alone BESS installations and 1 solar and battery hybrid facility. And part of the production from this hybrid facility will be used to provide 24/7 green baseload power. And this is a first of its kind. The project will generate about 6 terawatt hours when it is in operation, it will provide about 2.4 million tonnes of CO2 reductions, and it will save Egypt $150 million on an annual basis in saved fuel costs related to the alternative, which is running their thermal power plants, $150 million on an annual basis. And with the signing of this agreement, we are cementing our position in Egypt as one of the leading players in renewable energy in the country, and we have a very strong team on the ground, which is driving this. And in total, we now have 5 large growth projects in Egypt across different technologies, solar, wind, batteries and green hydrogen. These projects, they will generate substantial D&C revenues over the next few years as we move them through construction. And on a longer-term basis, obviously, they will also generate predictable revenues in the Power Production segment related to the 25-year PPAs that we have for these projects. And finally, also this portfolio will contribute to reduction of 5 million tonnes of CO2 emissions. And just for reference, this is more than 10% of Norway's CO2 emissions on an annual basis, more than 10%. So we now focus on finalizing construction of Obelisk and securing partners and financing for this portfolio with the aim to move this portfolio into construction by the end of this year. So with that, Hans Jakob, I will hand it over to you to take us through the financials. Hans Jakob Hegge: Thank you, Terje. Is the Microphone okay? Yes. So it's been said before, but we are pleased to present strong results across the group, high D&C activity and a good quarter in the Philippines. I'll walk you through the group financials and the performance of our operating segments. And I will also comment on capital structure and further improvements. Starting at group level performance. The last 3 years has been a transition period with increased capital recycling and accelerated growth. The full year consolidated revenues was NOK 5.2 billion and EBITDA NOK 4 billion. Our proportionate revenues was NOK 11 billion and EBITDA NOK 4.6 billion, both positively impacted by the D&C segment. Looking at the quarter on group level, the all-time high D&C activities driving proportionate revenue growth, positively impacting our group financials. Consolidated revenues was NOK 1 billion compared to NOK 1.1 billion in the same quarter last year. EBITDA reached NOK 697 million compared to NOK 816 million year-on-year. The reduction is mainly driven by divestments, which has been instrumental to our long-term strategy of funding growth and reducing debt. This will result in additional revenues from new projects and lower interest expenses and reduced debt. Our proportionate revenues was NOK 3.4 billion compared to NOK 2.7 billion in the same quarter last year. And the proportionate EBITDA was NOK 1 billion compared to NOK 1.4 billion year-on-year. Now let me take you through the segments. Starting with Power Production, which delivered revenues close to NOK 1.1 billion compared to NOK 1.6 billion in the same quarter last year. The reduction is mainly explained by the divestment gains of NOK 380 million booked in the fourth quarter last year. EBITDA was NOK 842 million. And on a 12-month rolling basis, you can see stable development adjusting for sales gains as we are managing to offset the EBITDA from divested assets with new projects. The last 12 months, we have delivered NOK 5.2 billion in revenues and NOK 4.3 billion in EBITDA. Overall, we are very pleased with the value generated from our operating assets. In our Development & Construction segment, activity levels continue to increase. Proportionate revenues more than doubled to NOK 2.3 billion and EBITDA was NOK 251 million, significantly up from the NOK 51 million in the same quarter last year. The trend from the last 12 months confirms the long-term strength and scalability of our D&C business, underlying strong growth. D&C revenues in the last 12 months have reached NOK 5.8 billion with a steady increase over the last quarter, 5 quarters in a row. The rolling EBITDA ended at NOK 462 million, with contribution from high-margin projects and disciplined cost control. The increasing trend reflects higher activity levels across several geographies with Obelisk in Egypt and Mogobe in South Africa being in the forefront in this quarter. With a strong backlog, including 8 projects in 5 countries expected to start construction in the first half of this year, we expect D&C to remain a key engine on our continued profitable growth. At the end of the quarter, we had available liquidity of NOK 5.6 billion. Let me explain some of the main movements. We received NOK 631 million in distributions from power plants, had positive working capital movements of NOK 596 million, mainly related to milestone payments for Obelisk. We invested net NOK 220 million in growth projects and paid NOK 130 million of interest and reduced our corporate debt by NOK 73 million. The EBITDA from the D&C covered investments in the quarter, which is a confirmation of our robust business model and the RCF is currently undrawn. We continue to strengthen our capital structure. Net corporate debt was reduced to NOK 3.4 billion, down from NOK 5.6 billion in the second and NOK 4.3 billion in the third quarter. The reduction was mainly driven by the change in cash of NOK 900 million. We also repaid the outstanding term loan with the proceeds from the NOK 1 billion bond. On project level, net debt increased by NOK 800 million to NOK 16.7 billion, and the project debt in operation increased by NOK 2.3 billion as Grootfontein in South Africa and Mmadinare project in Botswana, debt moved to operation after COD and the net debt for projects under construction was reduced by NOK 1.4 billion. And now the outlook for the year. So commenting on the 2026 outlook, I will start with the full year estimate of Power Production between 5.2 and 5.6 terawatt hours. Our estimated full year EBITDA is in the range of NOK 3.8 billion to NOK 4.1 billion. And let me explain some of the main items affecting the guidance compared to the NOK 4.3 billion we delivered in the full year last year. Last year, we reported NOK 500 million in divestment gains and operational EBITDA related to Uganda, Vietnam, which we sold during the year, we had NOK 200 million of retroactive payments for tariff adjustments in the Philippines and Pakistan. In this year, we expect reduced EBITDA from Ukraine due to the repair of one of our plants and lower payment levels for the remainder of the portfolio in the country. Lower EBITDA from the Philippines and Laos due to the normal hydrology expected compared to the high levels we saw in 2025. These effects will be partly offset by contributions from new projects that are starting operations during the year and other operational improvements. For the first quarter, we expect that total Power Production between 950 and 1,050 gigawatt hours. EBITDA in the Philippines of NOK 180 million to NOK 240 million based on the normal hydrology and strong contributions from ancillary services. In our D&C segment, we have NOK 1.8 billion remaining contract value and a gross margin estimate of 10% to 12% on average across the portfolio of projects under construction. For corporate, we expect a full year EBITDA of NOK 125 million to NOK 135 million negative. And these estimates reflects a strong base of operating assets, high construction activity and healthy cost control. And by that, I invite you back, Terje, to take us through the summary. Terje Pilskog: Thank you, Hans Jakob. So to sum up, 2025 was a very good year for Scatec. We've had good financial performance, high construction activity during the year. We have significantly increased our pipeline and backlog during the year, and we have also strengthened the balance sheet. I'd like to think that 2025 was a transformative year for Scatec. We also launched our new targets and our strategic priorities during our Q3 presentation. And in 2026, in line with this, we will focus on strong operational performance, execution of our significant growth portfolio, divestment of noncore assets and also take further steps in terms of deleveraging our corporate balance sheet. I think it's going to be a very exciting and a very active and hectic year. Thank you very much. And now we will move to questions. Andreas Austrell: Thank you, Terje and Hans Jakob. Over to the Q&A. We will as usual, start with the audience in the room, and then we will take some online questions. So if you want to ask a question, just raise your hand. Unknown Analyst: [ Andreas Obst ], SEB. In your guidance for 2026 on Power Production, you provided some soft comments about the changes in Ukraine, but could you be more explicit on how much the contribution in Ukraine is expected to be compared with 2025 levels, some rough indication? Hans Jakob Hegge: Yes. I think in one of Terje's graphs, he showed the impact in the fourth quarter last year of NOK 67 million. I think it's also in the fact sheet. Looking at the outlook as Terje said, the team is working incredibly hard to reinstall the capacity and is anticipated to take until summer. And we haven't provided a figure, but ballpark around NOK 100 million. Unknown Analyst: Okay. So -- but you also made a comment about which I've interpreted as somewhat lower payments from you... Hans Jakob Hegge: Lower payment levels, that Terje is very much aware of. And as the rest of us, we have basically had very higher-than-expected payment levels last year. So starting the year with a more cautious approach to more normal as expected payment levels is a fair assumption. Unknown Analyst: So if I just to summarize, the base line should be somewhat lower and roughly NOK 100 million below the baseline for the first half. Hans Jakob Hegge: Yes. Unknown Analyst: Okay. I have another question as well, if I may. In the Development & Construction segment, I appreciate that you're progressing projects and are trying to sustain activity also in the first half, but there are some financial closures, which needs to be in place for that to happen. How should we think about the first half in D&C upon completion of the projects currently under construction, the NOK 1.8 billion? Terje Pilskog: Your question is what is going to come potentially in addition to... Unknown Analyst: Yes, or how quickly, is that a second half event? Or are you still comfortable with the commencement of construction, as you indicated in the past, during the first half of... Terje Pilskog: Yes. I mean we're typically not commenting on specific dates or exactly sort of when the projects in our backlog are going to come into financial close and start of construction. But we see that sort of across the backlog that we currently have. There are also some projects that we anticipate will come into construction -- reach financial close and coming into construction in the first half of the year. Andreas Nygard: Andreas Nygard, Nordea. You have huge projects now going on in Egypt. Should we assume that you can continue to originate to 2 to 3 gigawatts of projects annually in Egypt? Terje Pilskog: I think now -- I mean, as we went through here, we now have 5 significant projects in Egypt that we're going to focus on securing financing, bringing in investors, bringing to financial close and start construction during this year. And I think that's going to be a main priority for the year. There's still significant more opportunities in Egypt related to renewable energy. Renewable energy makes sense in Egypt. It's basically saving costs related to the alternative sources of power generation. So -- and Egypt is trying to accelerate their program for reaching their targets when it comes to renewable energy in the power mix. They had certain targets. I think it's 42% by 2035. They took it back to 2030, and now they're trying to reach it even earlier. So in that context and based on our position in Egypt, we see more opportunities in Egypt. Andreas Nygard: Okay. That's very clear and very nice to hear. But this scale of projects, could you find it outside of Egypt? Or is Egypt quite special right now in terms of the scale of the projects? Could you see 2 gigawatt projects in South Africa, for instance? Terje Pilskog: Yes. I do think you could also see projects at that scale also in South Africa. But obviously, it also depends a bit on how the regulations are developing. But I think as the power sector also in South Africa will continue to be deregulated, we will also see more opportunities to do corporate PPAs and to build out large portfolio of projects that can basically sell energy to more corporate offtakers. So I think that's a development that we will see. And then we will obviously look for developing large clusters of projects also in South Africa. So there is also potential for larger projects in South Africa. Andreas Nygard: So in summary, the activity level you're expecting in '26 and '27, that run rate could likely just continue in '28, '29 and for eternity? Terje Pilskog: Let me answer your question like this. I continue -- or we continue to see that renewable energy becomes more and more competitive in the markets where we operate. With batteries, it becomes more flexible. It can provide baseload green power. And in many of the markets where we operate, we are -- the countries are, in principle, saving money, reducing alternative cost of power generation from implementing renewables. So I don't see a reason why the current pace in the industry is not going to continue. And I think based on everything that we are currently doing and the track record, capabilities of the organization that we have, I think that we are in a good position to capture part of that growth. Andreas Austrell: We have a couple of questions from our online listeners as well. We can start with Jørgen Lande from Danske Bank. In terms of recent movements in input costs like silver and copper, can you comment on how this potentially has impacted the progress of reaching FID? Terje Pilskog: I think there's a couple of things happening in the industry. Some component prices are going up. The VAT rebate in China has been removed or is being removed over time related to panels and batteries. On the other side, we also see that other components that we are using, we are able to achieve savings. And the things that are happening in this industry is obviously not -- it doesn't come as a surprise to us. So we don't see that any of these things that are happening in the industry will have any significant impact on where we will be able to reach FID and take financial close and start construction of the projects that we currently have in the backlog. We will obviously continue to be very disciplined in terms of our hurdle rates, in terms of making sure that all the projects that we are doing are value creating for us and our shareholders. But based on what we are currently seeing, we see that sort of the changes in the industry is manageable and not also surprising. Andreas Austrell: Thank you. One question from Helene Brondbo from DNB Carnegie. Can you shed some more light on the status of your ongoing asset rotation program? Hans Jakob Hegge: Yes. That's the one we are not sharing a lot of detail on announcing transactions. What we have said is, of course, that we have clear ambitious targets, another NOK 3.4 billion proceeds to 2030. This is within a time frame, which should be manageable and its main focus on the noncore. It's also reaching certain ownership stakes deliberately on project carefully timed. So we have discussions ongoing and we are in terms of our long-term plan according to plan. Andreas Austrell: Thank you. Helene also asked about the input costs. I think we have covered that. Another one from Helene, to what extent can we expect the solid D&C gross margin in Q4 to be repeated? Terje Pilskog: Yes. Here, I mean, we have commented on that in our outlook, and we're saying that with regards to the NOK 1.8 billion that we have remaining in construction revenues or contracts, we are expecting and we are indicating that we will continue to reach in the range of 10% to 12% gross margin of those contracts. Andreas Austrell: Thank you. Another one from Jørgen Lande, Danske Bank. You guide 2026 Power Production to a midpoint of 5.4 terawatt hours, which is higher than the midpoint of consensus while EBITDA implies a very softer margin. Can you comment on how you think about our Power Production EBITDA in 2026? Hans Jakob Hegge: Yes. So I understand -- I think I understand at least where Jørgen is coming from. So is there a misalignment on the EBITDA side, and it has to do with the composition of the contribution. So I think we have to stick to the guiding that we have provided today and NOK 3.8 billion to NOK 4.1 billion is explained also in contrast to last year, the one-offs, any divestments is, of course, a potential deviation but also the impact on the pace of the new projects coming in. And I think it feels at least a bit special for us taking the development into account Kenhardt and then doubling to Obelisk and then we have Energy Valley. But we're not pre-announcing anything. We just signed a PPA, but we are working very hard to mature this project, and that is, of course, a significant potential contribution. How this is forecasted? I think we have to stick to professional secrets. Andreas Austrell: Thank you. We have some questions from Anis Zgaya from ODDO BHF, one on Ukraine. I think we covered that one. Another one on the Philippines, you show a sustained contribution from ancillary services and a favorable water fee settlement in 2025. How should we think about AS, ancillary services pricing and volumes in 2026 versus 2025? And what's your assumption for hydrology normalization embedded in the guidance? Terje Pilskog: I think when it comes to the ancillary services market, there are 2 elements of the ancillary services revenues that we are currently generating. It's partly related to a contract that was secured a couple of years ago, where we have very predictable revenues. And that contract is representing maybe around 50% of the volumes that we are typically seeing in that segment. And in general, when it comes to the pricing, on a short medium-term basis, I mean, it's very difficult to provide input and outlook in terms of prices, but we don't see a reason on a short medium-term basis that the prices in the ancillary services market is going to change. Hans Jakob Hegge: Yes. And on normal hydrology, it's just that when you use these data for up to 10-year period, you see variations. And last year, I think we agreed that it was above normal hydrology. And it's a bit hard to start the year without normal hydrology as an assumption. So that's where we start off, just being transparent about the relative change. Terje Pilskog: And obviously, the interesting thing when it comes to the Philippines now is that we have 2 new projects, 2 new battery storage projects that are in construction and that we are anticipating to reach financial COD in the first half of this year, and that is increasing our capacity related to battery storage from 24 megawatts to 80 megawatts in the country, so a tripling of capacity that comes into operation first half this year that enables us to increase our participation in the ancillary services market. And then on top of that, we are also intending to move more projects. We have more projects in backlog also related to battery storage, but we will also aim to move into financial close and start of construction also relatively soon, and that will further then increase our capacity on the ancillary services market and increasing our flexibility in the Philippines and increasing our ability to tap into several revenue streams, as I talked about in the commentary. Hans Jakob Hegge: I just flip to the slide that you showed how significant ancillary services has been sustained over several quarters. So with the ramp-up of battery capacity, it's even more robustified. Andreas Austrell: One follow-up on your Ukraine. Any insurance recoveries or compensation mechanisms you can detail? Terje Pilskog: No, currently in the current situation in Ukraine, and we have to remember that the war is soon entering its fifth year. It's not really possible to get insurance, which is going to cover these kinds of events in Ukraine. Andreas Austrell: Okay. Quite a lot of questions today. Just I think, 2 more. Lars Christensen, Fearnley Securities. Congratulations on the strong results. For the Energy Valley project in Egypt, should we expect any asset rotation to help fund the investment? Terje Pilskog: As we said, we are continuing to work on our divestment program, and we will continue to work on optimizing our portfolio over time and have a very active perspective on our portfolio. And then we also, in previous presentations, discussed the fact that we will, in certain projects, also go down in ownership stakes through a layered structure, where we are still able to maintain control over the project, but to take down our direct equity investment into the project and through that, manage also the capital investments over time. Andreas Austrell: Okay. I think we'll take just one last question. Do you see any problems of the power grid in any of your countries you have -- where you have large projects? And how do you solve these problems? Terje Pilskog: It is clear that sort of with the increased penetration of renewables, especially intermittent renewables, there are situations, I think in all grids, in all countries, where, you will have temporary challenges with the grid that will either have to be managed through strengthening the grid over time or also with the addition of storage capacity and batteries. And there, I would like to draw the attention to Energy Valley projects. It's 3 installations, 2 pure battery installations at 2 different locations and 1 hybrid facility. And obviously, those stand-alone battery installations, they are put where they are in order to help balance the grid and mitigate those types of concerns in those situations. Similarly, same thing is happening in South Africa, where we are now building one stand-alone battery project and where we have another one in our backlog. And these batteries are obviously also put into places where they help balance the grid and mitigate the challenges that will, in certain places, come into the grid. So this is an important part of our business going forward. We have to be very -- we have to be on top of the grid situation in the markets where we operate and make sure that we focus on the areas where there is grid capacity and where we will be able to implement new renewable energy projects and deliver the energy onto the grid. Andreas Austrell: Thank you, Terje and Hans Jakob. One more from Andreas, SEB? Unknown Analyst: Just a final question on asset rotation, the NOK 3.4 billion when you refer to asset rotation, that relates to projects already in operation as of today, right? Terje Pilskog: That's correct. Andreas Austrell: One more from Andreas, Nordea. Andreas Nygard: So just the last one on your investment target, NOK 1 billion of equity annually. The Energy Valley project, I guess, you will structure it perhaps the same way you're doing Obelisk, aiming for an equity bridge perhaps. The way you're seeing your backlog now, are you actually using the full of your NOK 1 billion equity injection capacity the way you're looking to structure that backlog? Terje Pilskog: I think Terje will fight to answer that question, do you want to go? Okay. Under construction and in backlog, there is equity around NOK 3 billion, and that is excluding Energy Valley. So Energy Valley is sizable as you could imagine. And we will come back to more granularity on the project as it is progressing, but we are well underway to reach our target and the guiding from the strategy update. That's basically directionally what I would like to say. But under construction and backlog is around NOK 3 billion equity. Andreas Nygard: And will that be cash? Hans Jakob Hegge: We haven't provided super detailed analysis of this today, and I think we will come back to it. But I read your question, Andreas, is this in line with what you said you would inject of equity. And I think we are fairly aligned what we have on the plate as is. Andreas Austrell: Okay. With that, I think we say thank you to everyone and end today's presentation. Thank you. Terje Pilskog: Thank you very much.
Operator: Welcome to Hemnet's Q4 and Full Year 2025 Conference Call. [Operator Instructions] Now I will hand the conference over to the speakers. Please go ahead. Jonas Gustafsson: Good morning, everyone, and a warm welcome to this 2025 Q4 release call and full year review for Hemnet Group. My name is Jonas Gustafsson and I'm the Group CEO of Hemnet. With me, near my side today at our headquarters in Stockholm, I have our Chief Financial Officer, Anders Ornulf; our Chief Operating Officer, Lisa Farrar; and our Head of Investor Relations, Ludwig Segelmark. Today, we've called for an extended session to cover an update on some important strategic and commercial topics and will, therefore, have a slightly longer presentation than usual. Firstly, we will start with a normal quarterly presentation where we go through the financials from Q4 and the full year of 2025. After that, we will follow up with a deep dive on Hemnet's market position as well as our strategic and commercial focus areas going into the first part of '26. Anders will also quickly break down what this means for our financial reporting going into this new year. As always, there will be opportunities to ask questions at the end of the presentation, and we will combine the Q4 Q&A and the deep dive Q&A into one session. Today's presentation will be moderated by our operator, so please follow the operator's instructions to ask questions through the provided dial-in details. So with that, let's get started, and let's move on to the next slide, please. Despite a very difficult market backdrop, Hemnet demonstrated strong performance and resilience in the fourth quarter. Net sales decreased by 4.4% in Q4 driven by a continued weak market with low published listing volumes. New listings were down with 26.4% in the quarter. Around 5 percentage points of the volume decline during the quarter was attributed to a new business rule introduced in February 2025, impacting the year-on-year comparison. This new business rule is allowing sellers to change agents without buying a new listing. ARPL, average revenue per listing grew by an impressive 29.2% in the fourth quarter driven by a continued increasing demand for Hemnet's value-added services fueled by a continued conversion towards Hemnet premium. EBITDA declined with minus 12.8% to SEK 154 million as the low listing volumes lead to lower net sales and lower fixed cost leverage. For the full year of 2025, the results demonstrated strong resilience with net sales increasing by 9% to SEK 1,526 million and EBITDA increasing by 7% to SEK 768 million, corresponding to an EBITDA margin of 50.3%. This was driven by yet again strong ARPL development of 28% for the full year, and this underscores our ability to maintain strong underlying value creation even in a challenging and unpredictable market. Going into this new year, we have several exciting product launches planned for the first half in 2026. This includes the rollout of Sell First, Pay Later”, which will start on Monday next week in Stockholm. We will talk more about why we're so excited about the new product launch later on in the presentation, but the pilot results have indicated a fantastic opportunity to drive both more and earlier listings to Hemnet. Now let's turn to Page 3 for a quick look at the financial performance. Net sales amounted to SEK 348 million, down by 4.4% compared to the same period last year, driven by the significant decline in listing volumes during the quarter. EBITDA decreased by 12.8% to SEK 154 million. The decrease was driven by the lower listing volumes, which drove lower net sales and reduced fixed cost leverage. The EBITDA margin amounted to 44.2%. As per usual, Anders will break down these profitability dynamics in more detail as we move further on into the presentation. Now let's turn to Page 4 for a look at the property market and the listing volumes. On the left-hand side of this slide, you'll see a combined chart showing published listings per quarter and yearly as well as the year-on-year change between quarters. Published listings decreased by 26% year-on-year in the fourth quarter and by 13% for the full year. The slow market continues by negatively impacted by longer selling times and the average listing duration on Hemnet has increased by 20% year-on-year to 55 days in Q4 compared to 46 days in the same period last year. In addition, a sell first mentality is continuing to impact the value chain and the industry dynamics. The volume decline was partly attributed to the changed business terms in February 2025 for changing agents, which explained approximately 5% of the new listings decline compared to last year. While the overall picture remains bleak, there have been some positive signs of renewed activity during 2025 with rising prices, record villa sales and a supply that started to decrease towards the latter part of this year. With that said, the inflow of new homes remains constrained going into the new year as the market positions itself for a stronger expected market from the second quarter and onwards. Let's move on to the next slide to look a bit closer on the strong ARPL development. ARPL, average revenue per listing grew by 29% in the fourth quarter. The ARPL growth was again mostly driven by a strong demand for value-added services. The conversion rate to higher-tier packages continued to increase during the quarter and is at all-time high levels. Hemnet Premium which was launched in late 2019 is the main driver of our ARPL growth in the fourth quarter. When looking back on its history, it's important to keep in mind, and it's important to remember the Hemnet Premium was initially met with some skepticism from both agents and buyers, and it took more than 2.5 years after the launch before Hemnet Premium was able to reach double-digit conversion. With that in mind, Hemnet Max is well positioned to capture the next level of demand for customers seeking to maximize their chances of a successful sale and become a key growth drivers for many years to come. The initial results and the product performance of Hemnet Max has been stellar. Before moving into the financial section, let's have a look at what has happened during 2025 from an overall Hemnet and from a product perspective. While 2025 was characterized by resilience, it was above all a year in which we geared up for the future. Through an increased pace where AI tools have notably helped us to become more efficient, we entered the new year with a significantly strengthened product portfolio and an organization ready to drive the market forward. In 2025, we made significant progress in developing our consumer-facing proposition and we've taken actions to strengthen our relationship with the industry, and we're well prepared for our large strategic product initiatives being brought to the market in early 2026. With these elements in place, we do look forward to 2026 with great pride and confidence, ready to deliver more value to our users, to our customers and to the real estate agents than ever before. And with that, I will hand over to Anders for the financial update, starting with Page 7. Anders, please take it away. Anders Ornulf: Thank you, Jonas. Let's turn to Page 8 and the financial summary. As Jonas alluded to, we ended the year in a property market that remains challenging, characterized by continued hesitation to list new properties. This resulted in a decline in published listing of 26% for the quarter. However, despite the significant headwind in volumes, our financial model demonstrated resilience. Net sales for the quarter amounted to SEK 348 million, a decrease of only 4.4%. Another noteworthy point is the average listing time, which on a rolling 12-month basis increased from 46 days in '24 to 52 days in Q2 2025 and now 55 days in Q4 2025. The year-on-year effect of the longer listing time is a positive SEK 12 million in revenue for the quarter, and the sequential effect of the 3 additional days from Q3 to Q4 is negative minus SEK 2 million. To smooth out system variation, we recommend tracking ARPL growth on a rolling 12-month basis, as shown on Page 4 of the presentation. The bridge between the volume drop and the revenue performance is once again the ARPL. You can see that it grew by 29% to SEK 10,900, historic high for a single quarter and was driven by continued strong demand for our value-added services, specifically Hemnet Premium. Looking at profitability on the top right, EBITDA for the quarter came in at SEK 154 million. The EBITDA margin was 44.2%, margin contraction compared to last year is primarily a function of lower listing volumes. Since a large portion of our cost base is fixed, lower volumes naturally lead to lower coverage of these fixed costs. I will walk you through the specific cost dynamics in more detail on the following slides. One important component in the margin development is, of course, the compensation to real estate agents. When expressed as a percentage of property seller revenue, this ratio increases year-on-year from 31.5 to 32.3 in Q4 '25 driven by a further improvement in both recommendation rates and actual conversion. Higher commission reflecting a substantially stronger underlying improvement of our Bas products. And as always, the effective commission is a variable component and tends to fluctuate somewhat between quarters, making what's suitable to measure over longer periods. Free cash flow. Free cash flow was SEK 745 million, a 7% increase year-over-year. This robust cash generation underscores both the scalability of our business model and our strong profitability even in a very soft housing market. Our operations continue to convert a high portion of revenues into cash, highlighting the quality of our earnings. We continue to uphold a strong financial position. Net debt leverage ended the quarter at 0.7x. The increase in leverage is primarily an effect of our active capital allocation strategy, combined with the low listing volumes during the period. Notably, during this year, we expanded our share buyback program from SEK 450 million to SEK 600 million following the mandate approved at the AGM 2025. We have continued to return capital to shareholders, while at the same time, maintaining a conservative balance sheet. Importantly, this demonstrates the strength of our position, we're able to execute the capital returns and still retain a very high degree of financial flexibility going forward. Headcount increase of 15 largely reflects the organization has been selectively strengthened, primarily within tech and product as well as new leadership within marketing. However, regarding the total number, it's important to take into account that we had an usually high number of vacant fills at the end of '24, which impacts the year-on-year comparison. With that overview, let's turn to Page 9, the revenues by segment to take a closer look at the Q4 figures. Starting with our largest segment, property sellers revenue amounted to SEK 298 million which again, very modest relative to the drop in listing volumes. Turning to the B2B segment, net sales decreased slightly by 0.8% to SEK 50 million -- SEK 51 million. Within this segment, revenue from real estate agents grew by 3% to SEK 24 million. This growth was driven by strong performance in our Sold by Us product and other value-added services for agents, which effectively offset the impact of fewer published listings. Revenue from property developers decreased by 14%, sector remains under pressure, fewer project starts and the general cautiousness regarding marketing spend from these customers. Finally, revenue from advertisers grew by 4% to SEK 16 million. This is a positive deviation from the trend we've seen in the recent quarters despite the challenging macro environment for display advertising, we managed to grow this line item due to strong sales to banks and other advertisers. Let's go deeper into the profitability dynamics on Slide 10, showing the EBITDA bridge for the fourth quarter. First bar shows the net sales impact, which then, of course, had a negative effect of SEK 16 million. Next, we have compensation to real estate agents, costs decreased by SEK 2.5 million since commission is largely linked to seller revenue, the decrease in seller revenue naturally leads to lower absolute commission payments. Moving to other external expenses. They are flat year-on-year. We have maintained cost discipline with slightly higher costs but licenses were balanced out by lower spend on consultants and marketing compared to the same period last year. Personnel costs increased by SEK 10 million, representing a 17.7% increase in the quarter and is driven mainly by increase in number of FTEs and annual salary inflation. We ended the year again in the headcount with 167 employees. Finally, other costs had a minimal positive impact brings us to Q4 EBITDA of SEK 154 million. Now let's zoom out and look at the full year '25 on Slide 11. While Q4 was impacted by specific volume headwinds, the full year picture demonstrates the robust growth profile of Hemnet over time. For the full year '25, net sales grew by 9.5% to SEK 1.5 billion. This was achieved despite a full year decline in published listing of 13%, driver again is ARPL. Full year ARPL increased by 28% to 8.1 -- SEK 8,200. This consistent ability to grow ARPL faster than volume is, of course, core. EBITDA for the full year increased by 7% to SEK 768 million, corresponding to a margin of 50.3%. The effective commission is a significant component of the P&L, again, and it's increased from 30.4% in full year '24 to 30.7%, driven by the strong conversion to our value-added services and the compensation model launched in July '24. Turning to Slide 12 for the full year revenue breakdown. Property sellers revenue grew by 11% to SEK 1.3 billion. This segment now accounts for 86% of the total revenue in the year. And again, it really underscores the strength of our business model. B2B revenue for the full year was essentially flat, declining 0.7% from lower display sales partly as a result of lower number of published listing in later part of the year. Real estate agents revenue grew by 3%. The highlight here is our Sold by Us product, which grew by more than 2x compared to 2024. This product, as an example, is becoming a big part of the agents marketing mix. But it's also a further proof that we are able to launch new products that create real value for the customers, even if it may take some time before it's fully gained traction. Property Developers revenue was flat year-on-year, which we consider a stable result given the severe headwinds in new construction markets. Advertisers revenue declined by 7% for the full year, reflecting the broader weakness in the digital advertising market and lower traffic resulting from fewer listings. All in all, very encouraging that we are able to maintain revenues in our B2B segment despite the low level of listings, which negatively impact impressions. We have carefully offset -- we have successfully offset this to growth in our Hemnet Premium products, which creates value for the priority customers, real estate agents, property developers and banks. On Slide 13, we see the EBITDA bridge for the full year '25. Starting from SEK 720 million in '24, the primary positive driver was, of course, the net sales growth, which contributed SEK 132 million to EBITDA. Compensation to real estate agents increased by SEK 44 million. The increase is the direct result of the higher revenue from property sellers and the successful launch of the new compensation model, which rewards agents for high recommendation rates of our premium products. Other external expenses labeled C increased by SEK 24 million, reflecting the decision to normalized investment levels in marketing and product development after a more cautious '23, '24. Personnel costs increased by SEK 20 million, driven by mainly the salary inflation in headcount investments I mentioned earlier. All in all, this resulted in an EBITDA growth of SEK 48 million for the year, landing at SEK768 million. Finally, let's turn to Slide 14 to review the cash flow and financial position. On the left, you see our free cash flow on a rolling 12-month basis, generating SEK 745 million of free cash flow over the last year with increase of 7%. I would like to briefly comment on the operating cash flow for the isolated fourth quarter. In addition to the impact on weaker listing volumes, we also saw a more technical effect of negative change in working capital driven by the timing of settlements for our payment service providers. This is a temporary timing effect and does not affect any underlying change in the cash generation. Our strong cash flow allows us to continue returning capital to shareholders. And as you can see in the middle of the chart, we have been very active with the share buybacks. In Q4, we repurchased share for SEK 160 million. Looking at the right-hand chart, our leverage is increasing, but put in perspective very low. Net debt-to-EBITDA ended the year at 0.7 slightly up as I commented earlier, but also remaining well below our financial target of 2. Reflecting our strong financial position and confidence in the future, the Board of Directors has proposed a dividend of SEK 1.90 per share. This represents an increase of 12% compared to last year and corresponds to approximately 1/3 of our earnings per share, in line with our policy. With that, I will hand the call back to Jonas to wrap up the first section. Jonas Gustafsson: Thank you, Anders. And let's move on to the summary slide on Page #16. To summarize the fourth quarter, the full year of 2025 and the news we announced today. First of all, we saw a continued pressure on new listings published in Q4, negatively impacting both net sales and EBITDA in the quarter. A strong ARPL growth of 28% for the full year offset the negative impact from lower listing volumes, leading to a total net sales growth of 9.5% in 2025. Going forward, we have a clear focus on addressing market friction and being a partner throughout the entire property journey. We have everything in place to start rollout Sell First, Pay Later on Monday next week on the 2nd of February. We look forward to 2026 with our focus set on delivering more value to our customers and the Swedish property market than ever before. With that, let's move on to the second part of today's presentation, a deep dive into Hemnet's business update on Slide 17. In this second part of the presentation, we wanted to take the opportunity to do a deep dive on Hemnet's strategic initiatives going into 2026. Some updated related to our financial reporting as well as some additional color to the market dynamics. So let's move on to the agenda on Slide 18. So for today's agenda on the Hemnet business update, firstly, I will go through and discuss Hemnet's current market position and what the Swedish property market looks like today and how it has changed over the last years. Secondly, our Chief Operating Officer, Lisa Farrar, will provide an update on our key product initiatives and commercial road map. Thirdly, Anders, our Chief Financial Officer, will cover how we structure our financial reporting in 2026. Lastly, I will provide a summary and a wrap up before we move into the Q&A session. With that, let's start by looking at Hemnet's market position on Slide 19. To start it off, Hemnet is the #1 property portal in Sweden. Hemnet continues to have a fantastic market position. Over 95% of property sellers in Sweden know our brand and close to 90% consider Hemnet that the first choice when selling a property. If you look at our weekly active users, we've had an average of 2.7 million weekly users in 2025. Despite the soft Swedish property market during especially the second half of the year when market activity and interest went down, we see that our users to a very large extent, continue to come back to our platform on a weekly basis. This is also shown in the reach that we have. When comparing Hemnet with other websites in Sweden, regardless of industry, Hemnet is the third largest commercial website after the 2 largest Swedish tabloids and newspapers being Aftonbladet and Expressen. Hemnet is a strong brand and engagement are also evident from the share of direct traffic that comes to our website. Between 70% and 75% from our traffic comes directly to us, either by typing Hemnet straight into the browser or going straight to our app. The high share of direct traffic shows that Hemnet is top of mind for users, and we have limited dependency on external traffic sources. Lastly, Hemnet has more than 25 years as the #1 property platform in Sweden. Our platform is deeply integrated into the working ways of the entire real estate industry. With that, let's move on to our role in the ecosystem on the next slide, please. The Swedish property market has a long history of being efficient and attractive and Hemnet has played an instrumental role in creating that ecosystem over the past 25 years. The market has been characterized by short sales cycles, a buy before sell mentality, ease of transacting and strong underlying price development. The attractiveness of the market has further been aided by highly professional of well-respected real estate agents coming from a professional educational background. In addition to these dynamics, the market demand is spurred by high-income ownership, limited buy-to-let segment and the dysfunctional rental market. This has led to a highly attractive market over time. Hemnet platform is at the center and the heart of this market and serves as the natural meeting point where agents, where sellers and where buyers meet. As you can see here on the next slide, Hemnet has been able to build an impressive business based on the strong market position. Hemnet has shown strong revenue and EBITDA growth in the past couple of years. The lion's share of the growth development has come through growing ARPL, average revenue per listing over time. This has been achieved through adding and growing new packages and products to our proposition. In late 2019, when Hemnet launched Hemnet Plus and Hemnet Premium, and these packages have grown in popularity steadily every single year and single quarter since then. In late '25, Hemnet Plus, Hemnet Premium and newly launched Hemnet Max together announced accounted for more than 75% of all listings, more than 3x compared to the end of 2020. The product-driven growth paired with price increases and payment alternatives, have been a key driver of financial success and has fueled investments into the platform, which has helped Hemnet maintain its strong position as the largest property platform in Sweden. If we then move on to the next slide, please. Hemnet is the undisputed #1 property platform in Sweden in terms of traffic and reach. Our traffic has been stable over time with the exception of the outlying years during the pandemic. When most digital platforms saw a significant surge in peak in traffic and activity as people spend more time at home and spend more time on digital platforms. When looking at Hemnet's traffic over time, it is important to understand the relationship between market activity and traffic. When market activity goes up, and more properties are listed for sale, so does activity and engagement on the platform. As seen on the graph on the right-hand side, there is a clear correlation between the number of newly published properties on the platform and the user behavior. In 2025, we saw a slight decrease in the average vehicle users, especially during the second half of the year as the number of new listings on the market decreased. Today, between 40% and 50% of Hemnet session come from the Hemnet app on iOS or Android. Hemnet's platform is mobile first, and the user on the app are typically much more sticky and much more engaged than the average browser user. With that, let's move on to the next slide, please, to elaborate a bit on our overarching ambition going forward. Our ambition is simple. We want to create value across the entire property journey. But what does that mean for us in practice. First of all, we want to have all relevant listings. If a property is for sale in Sweden, you should find that property listing on Hemnet. We know our users and provide them with a superior experience. Searching for a property on Hemnet should be a great user experience that is personalized to your needs and to your preferences. We are the #1 partner for agents, property developers and banks. And as a partner, it is clear that Hemnet generates superior value. We have the most comprehensive and valuable data. We can leverage more than 25 years of data on search behavior to further enhance the consumer experience and customer proposition. We are top of mind and have the largest property audience in Sweden, and we can never take our possession for granted. This is all enabled by the strong relationship that we've built with the real estate agent industry over the past 25 years. So let's move on to the next slide to take a closer look at what happened with the market in the past few years. Looking at the data, it's clear that the Swedish property market has gone through a few difficult years since 2022. The post pandemic era has brought changes to the Swedish property market dynamic. As you can see in these 3 graphs below, multiple trends have changed the industry dynamic. First of all, we've seen selling times increasing by almost 3x since 2022, driving a less efficient and less transparent market. Secondly, we have also seen a shift in buy behavior where 2/3 now sell before they buy a new property compared to the inverse ratio in early '22 and the years before. This has impacted the way of working for agent and has been driving a less efficient market. Thirdly, price development has been very weak since the pandemic years compared to historical levels, both real price development and nominal price development. The price development has led to lock-in effects impacting the overall market, especially in the apartment segment, which is a high-volume segment. This new dynamic has led to a more prominent pre-market that is characterized by lower seller intent, longer sales processes and a changed way of working among real estate agents. Let's continue on this topic on Slide 25. The role of the pre-market has become increasingly important over the last years. Lower seller intent, lower sales -- longer sales cycles and a changed way of working from agent has fueled a larger so-called pre-market. The pre-market is commonly defined as the stage of the market where a property is not outright listed for sale, and this part of the sales cycle has become longer and more pronounced. This has become problematic for buyers, for agents and for sellers as the pre-market is characterized by lower efficiency and a high variation when it comes to actual seller intent. Today, large proportion of the so-called Swedish premarket is actually old content with low seller intent. Approximately 50% of pre-market listings in Sweden today are older than 6 months. From a Hemnet perspective, that means that not all of the pre-market is relevant. But there is an active part of the market that Hemnet historically has not addressed in a satisfactory manner. This is now something that we are clearly and actively looking to change and will address with our strategic initiatives that we will elaborate further on in the presentation today. Next slide, please. Hemnet's value proposition has predominantly in the past, focus on the own sales segment. The core strength of Hemnet's model align very well with traditional for-sale segment. When the goal is to sell the property as quickly as possible at the highest price as possible, Hemnet has a very strong and undisputed customer proposition. With Hemnet, you maximize the number of eyes on the listing, increasing the chances of attracting more potential buyers to open house and maximizing the bidding process, which hopefully will lead to a successful sale at the highest possible price. The core model of Hemnet remains strong, which is important as it addresses the needs of the absolute majority of the market but we also need to ensure that we adapt our value proposition to cater for the current market environment that has changed over the last years. With a larger share of sales cycles taking place on the pre-market, we see that some more properties are being sold before reaching Hemnet. Looking at 2025, transactions on Hemnet decreased by approximately 5% compared to the overall market that was stable year-on-year. We're now addressing this. We're now executing on several strategic actions, including strategic partnership and the launch of Sell First, Pay Later, to ensure that we better serve the full market spectrum and have the strongest possible customer proposition in all different types of markets. Let's quickly look at this on Slide 27. We're now moving into execution on significant strategic actions to address the full market. Our key strategic actions in the first half of 2026 are Sell First, Pay Later, which will be rolled out in Stockholm from Monday and onwards. Thereafter, it will follow with a Western Sweden launch, a rest of Sweden launched in March and April. We will speak more about the findings that we've seen from the pilot and why we're so excited about the launch. Secondly, we are going into a number of different strategic partnerships, and this will also start to be rolled out in February. Already today and what we have announced today with more than 60 strategic partnerships in the early days. Leveraging AI and product innovation will ensure that we consistently update and improve our customer experience. And lastly, an increased sales and marketing focus continuing to build on the increased focus that we implemented during 2025, where we need more agents than we've ever done in the past. We work closely with the industry, and we invest in marketing with relevant returns. With that, I wanted to wrap up this initial session and hand over to Lisa to do a deep dive in all these exciting product initiatives and product launches that we have ahead of us. So with that, over to you, Lisa. Lisa Farrar: Thank you, Jonas. Let's move over to Slide 29, please. As Jonas has pointed out in his section, we are now launching 2 key strategic initiatives under the umbrella Hemnet hela vägen” or Hemnet all the way. The first initiative is Sell First, Pay Later. This is a new model where sellers pay only if they successfully sell their property. We're also rolling out strategic partnerships our next step in our 25-year collaboration with the Swedish real estate agent industry. As the pre-market place has become increasingly important, Hemnet is now accelerating our role earlier in the housing journey. By lowering the threshold for early publication and strengthening our collaboration with agent industry, we are reducing fragmentation, improving transparency and creating better conditions for sellers, buyers and agents to fully leverage the value of our platform. Today, we will also elaborate on how we work with AI at Hemnet. As the leading and most trusted property platform in Sweden, Hemnet has a fantastic position to leverage AI to further strengthen our position and significantly elevate our user experience. I will spend some time today describing our general approach to AI, but also disclosed a number of exciting customer-facing AI product features that we are rolling out on the platform as we speak. These 3 areas will be accelerated through our existing marketing and sales engine built over the past 2 years. By continuing to target brand investments and fully leveraging our strength in CRM and digital marketing capabilities, we can drive traffic and engagement efficiently ensuring strong execution of our strategic initiatives without adding material cost. Our sales team remains a strategic pillar of our go-to-market execution and a key competitive advantage through our close collaboration with the real estate agent community. In '26, we will continue to strengthen this proximity by meeting more customers and engaging on the full Hemnet value proposition, including the supply side of the Hemnet platform. Now let's dive into some of the different initiatives on the next slide. With Sell First, Pay Later, we are expanding Hemnet's present throughout the sales journey and driving more volume to the platform by significantly lowering the threshold to list your property on Hemnet. As we announced in the Q4 report, we ran a pilot between the first of October and 31st of December last year across 10 real estate agent offices in Sweden. The data and feedback from the pilot has been very supportive and exceeded our expectations. Volumes in the pilot were significantly stronger compared to the nonpilot population with the pilot offices having almost 40% higher year-on-year listing volume change compared to the nonpilot offices. That means that in a soft market, where listings on Hemnet were down by 26%, the pilot offices increased their number of listings on Hemnet year-on-year with 4%. In addition to the very strong volume effects, we also saw a larger willingness from both agents to recommend and from sellers to choose our value-added services and to use the Hemnet pre-market product. Moreover, when asking the participants in the pilots, more than half of the sellers stated that Sell First, Pay Later played a role in their decision to list on Hemnet, showcasing the strong value proposition of the new model for sellers. I want to point out that the business rules of the pilot differed from those that will apply when the actual rollout and therefore, these results should be treated with some caution. But with that said, we're extremely encouraged by the pilot results, and we look forward to rolling it out in Stockholm County next week. Let's move on to some of the feedback that we have received. The feedback that we have received from both sellers and partners have been very positive throughout the pilot. For sellers, the Sell First, Pay Later model helped lower the barrier to list what has been an uncertain market with longer sales cycles and weaker price development. As seen in one of the seller quotes from the surveys sellers said, no reason not to list on Hemnet when the payment becomes success-based. For agents, removing the upfront risk made it easier for them to pitch Hemnet already in the intake meeting ensuring that the listing received maximum reach during the full sales process. And for buyers, more high-quality listings were made available from committed sellers. And with that, let's move on to some of the technicalities of the new model on the next slide. Sell First, Pay Later will be available to all agents who choose to go with Hemnet all the way and publish a listing on Hemnet within 2 days from the time the listing is published on the agency website. That means that all real estate agents in Sweden will get access to the model, and it will be available regardless of what package you recommend. Sell First, Pay Later will be added as an additional alternative to pay now and pay when listing is removed. It will also be priced at a premium to pay when listing is removed. The way the payment to Hemnet works is that once the listing is sold, the agent is liable to mark the listing as sold and the invoice will be sent to the seller. The seller is liable to pay for the Hemnet listing as long as the property is sold during the time the listing is live on Hemnet or within 6 months of deactivating the listing on Hemnet. And the agent commission is paid once the property has been marked as sold. This model will be rolled out in Stockholm County from the second of February, which is Monday next week, followed by Västra Götaland on the second of March and the rest of Sweden on the 30th of March. In connection with the launch, there will be a grace period when agents will be allowed to publish all the listings on Hemnet, similar to what was done in the pilot. Let's move on to the next slide, please. Let's talk about the strategic partnerships that we announced in the Q4 call and that we are rolling out from February. We're incredibly excited to be able to roll out what is the next step in our 25-year win-win partnership with the Swedish real estate agent industry. With this partnership model, we are taking a more holistic approach to how we interact with the entire industry. Historically, Hemnet has focused a lot on engaging with franchise owners as this is where we have the existing commission model that incentivizes agents to make a tailored recommendation of the best product fit for each property seller. Now we are addressing both the HQs and brand owners as well as the actual agents to a much larger degree. The strategic partnerships at HQ and brand owner level are built around our brand concept Hemnet hela vägen or Hemnet all the way. The changed market dynamics of recent years where behavior has shifted towards selling first and buying later has led to more homes being published late on Hemnet. This means that sellers risk missing out on important product values, including upcoming, which is included in all listing packages and which has recently been enhanced to strengthen the value of early exposure on Hemnet. We are continuing to develop Hemnet to maximize the value for sellers, buyers and agents across the full sales journey. Our data shows that earlier listings on Hemnet drives higher interest and create stronger conditions for a successful sale. These strategic partnerships create a clear win-win for both real estate agent brands and Hemnet. Partners integrate Hemnet across the full sales journey, including the premarket phase, driving earlier and increased supply on the platform. In return, partners gain enhanced brand visibility, increased lead generation, access to under the radar listings and monetary compensation linked to successful use of Hemnet's pre-market offering. The desired outcome is this collaboration around the pre-market with shared incentives to use Hemnet as a marketing channel throughout the entire sales journey. Initial market reception, as Jonas mentioned, has been very strong with agreements signed with more than 60 real estate agent brands across Sweden, including major agencies such as Svensk Fastighetsförmedling, Notar, Erik Olsson and Croisette. This represents 1/4 of the market and 5 of the top 15 brands in Sweden. Additional discussions are ongoing, and we expect to onboard further partners in the coming months. Let's move to the next slide, please. As part of the strategic partnerships, we are introducing performance-based compensation to further incentivize agents to use Hemnet across the full sales journey and fully leverage the value of the platform. Compensation is linked to the share of premarket listings published on Hemnet relative to the total number of premarket listings available on the agent's own website. To qualify, an agency must increase its share of premarket listings on Hemnet compared to its baseline level at the time of entering the partnership. Partners have successfully increased their premarket listing share and exceed defined thresholds are eligible for compensation ranging from 1% to 5% of revenues, net of agent commission. The different tiers and thresholds are illustrated on the right-hand side of the slide. This performance-based model is similarly structured to our existing compensation model, creating a clear win-win for agents, sellers and Hemnet, while supporting growth in both top line and EBITDA. Let's move on to Slide 35 to see some examples of what the strategic partnerships look like in practice. As I outlined, the strategic partnerships include a set of new features and added values for agents. These include enhanced branding on listing pages, increased agent exposure in the My Home tab and the ability to surface under the radar listings on Hemnet. Several of these branding features are already live on the platform with additional functionality and partner onboarding planning for the coming months. With that, let's move to the next slide. As the leading and most trusted property platform in Sweden, Hemnet is uniquely positioned to leverage AI to further strengthen our market leadership and materially enhance the user experience. We operate in one country, one vertical and one market-leading platform with fully rights cleared data, resulting in a level of data quality and depth that is unmatched in Sweden. This allows us to move faster, go deeper and deploy AI in ways that is compliant, scalable and sustainable over time. The combination of historical, behavioral, geographic and transactional data is difficult to replicate and provides Hemnet with a durable competitive advantage. We are currently executing along 3 parallel AI tracks. Each designed to embed AI deeply into the core of our product and operations while leveraging our key strengths. Our first focus is to build a strong and reusable AI foundation. We have completed large-scale semantic tagging of more than 1.4 million listings and historical content. This capability underpins multiple AI-driven features across the platform and provides high operational leverage through a shared foundation. We continue to develop AI-enhanced models across the business, including the property valuations, where AI-driven image recognition feeds directly into our automated valuation models. Internally, we're also increasing efficiency through an AI-enabled operating model. This includes AI-assisted product and technology development as well as conversational analytics directly connected to our data warehouse. The result is shorter lead times, higher output and tangible efficiency gains, allowing us to execute our AI strategy at pace while maintaining disciplined cost control. Our second track focuses on delivering a materially improved user experience. We are using AI to personalize discovery, recommendations and insights enabled by our unique behavioral data and deep understanding of listing contents. We are rolling out conversational search on our platform to complement, not replace our existing search experience. This improves intense understanding and makes discovery more relevant and intuitive. We're also deploying AI-generated summaries that help users quickly understand complex information and make more confident decisions. These summaries are tailored to user intent and behavior while also preserving the full access to the underlying data. Our third track focuses on exploring new AI-driven frontiers and products. We are present with selected AI ecosystems and we'll expand our presence where it is strategically beneficial for Hemnet. From a risk perspective, we view AI-driven discovery as a potential shift in distribution rather than a disintermediation. While traffic from large language models currently accounts for less than 0.1% of our total traffic, we want to ensure that Hemnet is present where users are and where they will be in the future. Our approach is to treat large language models as distribution channels, not platforms. We integrate selectively and under strict data governance and control principles. This ensures that traffic, trust and user relationships remain anchored with Hemnet while still allowing us to benefit from innovation across multiple AI ecosystems. Finally, we continue to roll out consumer-facing products built on increased personalization, using our data to meet user needs with high accuracy, create partner value and unlock new revenue streams for Hemnet. Let's move to the next slide to see some product examples. We're shipping several AI-enabled products to meet emerging user needs and to accelerate how people discover and engage with homes on Hemnet. This week, we launched a conversational search beta that bridges human language and housing data. It improves discovery today while shaping how users will search and interact with Hemnet over time. We have also submitted a Hemnet in ChatGPT app for an integrated experience within ChatGPT. As outlined earlier, we view large language models as distribution channels rather than competitors. By integrating early, we ensure Hemnet is present, where users are beginning to experiment with new ways of discovering properties rather than reacting to distribution shifts after they occur. Go-Live is subject to OpenAI's approval. And as with all LLM integrations, this will be done selectively and on the strict data governance and control, ensuring that traffic, trust and user relationships remain anchored with Hemnet. On Monday, we are rolling out a personalized starting page built on AI. It introduces a personalized searches and recommendations, creating clearer and higher relevancy entry points into property discovery. And next week also marks the Go-Live of All Properties. This feature allows users to explore approximately 1.6 million homes directly in the map view, follow multiple properties and engage more broadly with the housing market beyond listings that are currently for sale. So to summarize the product and commercial update today. We are being more ambitious than ever in our product development. We're moving faster, being bolder, catering for a more dynamic market and deploying products that solve real user pain points. By deepening our connection with customers and leveraging AI at scale, we are strengthening the Hemnet experience today while building the foundation for long-term growth. And with that, I'll hand you over to Anders on Slide 38. Anders Ornulf: Thank you, Lisa. Let's move on to the next slide. So as you know by now, we are rolling out a number of changes to our business this year with the start on Monday next week with the launch of Sell First, Pay Later in Stockholm. These changes come with a few implications for how we structure our financial report in 2026. Revenues from sales with a Sell First, Pay Later option are recognized at a point in time when the invoice is issued i.e., when listed object market sold on Hemnet. The reason for the difference in revenue recognition compared to our existing payment models has to do with factors that need to be met in order for revenue to be recognized under IFRS 15. This means that the launch of SFPL will have a timing impact on reported revenues when launched. How big that timing effect will be is highly dependent on the uptake on SFPL and how that changes over time. In addition to the revenue recognition effect, the rollout of SFPL will also have a short-term cash flow impact, which will impact our working capital. This will be financed through a temporary increase in our existing revolving credit facility. Let's move to the next slide to see an example of what the revenue recognition effect could look like in practice. On this slide, you see an example on how different level of SFPL adoption will impact reported revenues in a highly hypothetical scenario. Please note that this example is based on certain assumptions and should, under no circumstances be seen as guidance from the company. For the sake of simplicity and to be able to understand the timing effect, we have assumed a scenario where 100% of properties on Hemnet is sold within 15 months. In this case, we assume no volume or price upside, which is obviously different from what we will see when we roll this out next week as the price for SFPL will be higher than the current payment options. We believe that it's easy to understand the timing effect in all else being equal scenario, not lending in too many assumptions. In this scenario, a 30% SFPL adoption will negatively impact the amount of recognized revenue in Q1 after launch by minus 11%. Similarly, a 50% SFPL adoption will negatively impact the amount of recognized revenue by 18%. As time goes and more properties are sold, the revenue recognition effect goes away. On average, approximately 50% of Hemnet listings are sold within the first 2 months and 70% are sold within the first 6 months. Very few listings are sold after the first 15 months. Moving on to the next slide, we will look a bit more on how long it takes for properties to be sold on Hemnet. As Jonas pointed out in his section, the steep market downturn in the spring of 2022 had a negative impact on the market as a whole and on how long it takes to sell a property. However, even though sales duration times have increased significantly, there has not been a large movement in how many properties that are eventually getting sold. Historically, between 82% and 92% of listed properties on Hemnet have been sold depending on the state of the market. In a strong market, like we had in '16, '17 or 2021, properties tend to transact very quickly, as you can see in the graph on this page. As stated on the previous slide, in the current market, approximately 50% of the properties are sold in the first 2 months and approximately 70% are sold within the first 6 months. After the first 12 months, roughly 81% are sold and roughly 85% are sold within the first 24 months. After 24 months, 2 years, very few transact. Let's move on to Slide 42. To be able to monitor the performance better going forward, we will update the definition of our ARPL, alternative performance measure, APM. The reason behind this change is to increase transparency and provide a better snapshot of the actual ARPL generated in the quarter. As the sales duration times have increased in the past 3 years, the ARPL metric has become more and more volatile on a quarterly basis. Therefore, we will start in 2026, we will change the ARPL definition from average revenue per published listing to average revenue per paid listing. As you can see in the graphs on the left, this will decrease quarterly volatility in the performance measure, but will have more or less no impact on the LTM numbers. We are confident that this definition change will make it easier for the capital markets to understand our business performance. The 9-quarter historical disclosure as seen in this graph has also been made available over the Q4 release this morning. Let's move to my last slide. We do recognize that the new launches we are doing this year makes it slightly more difficult to track and predict the short-term performance of our business in 2026. Therefore, we want to ensure that we are as transparent as we can when it comes to disclosure. And as a result, we will report preliminary sales figures on a monthly basis in 2026. Please note that our ambition is to only do this during 2026, and then go back to our normal reporting calendar in 2027. This means that starting in early March, Hemnet will report preliminary sales figures for February. The reporting will be issued in the press release 2 times per quarter, but only one time in Q1 as SFPL was not launched in January. Moreover, monthly volumes will continue to be published on the first working day of each month. The monthly volumes will include the breakdown of both paid and published listings from February and onwards. That sums up the changes to our financial reporting. And with that, I will leave it -- over to Jonas to summarize today's session. Jonas Gustafsson: Thanks, Anders, and thanks, Lisa. So we have now covered an update on our very exciting market position, the very exciting opportunities that lie ahead of us and how excited we are to bring our new initiatives and products to our consumers over the coming months. Looking more long term, we do see multiple growth levers for Hemnet. To elaborate a bit further on this, let's move on to Slide 45. We're very confident and eager to deliver strategic actions, but we're equally excited about the growth prospects that lay ahead. Hemnet has a unique market position and a great step of growth levers to pull to continue our success growth journey. We will start looking at value-added services. Value-added services have been the main driver of our ARPL expansion over the last years, and we see room for additional growth in this area. Please keep in mind that Hemnet Plus and Hemnet Premium were introduced back in 2019, and continued expansion of these packages has been the main driver of the 28% year-on-year ARPL expansion that we saw in 2025. 6 years after the launch. We need to enhance our customer proposition and the features that are included in our existing packages to optimize the packages and the overall package composition. During 2025, we launched Hemnet Max that will allow us to continue to grow ARPL over the years to come. Max penetration is still at low levels, but the product performance has been stellar. We see that Hemnet Max gets more engagement, more visitors and has a positive effect on the bidding price to justify a premium price level. Pricing. Pricing represents an important component for our value creation toolbox. We will continue to invest into our proposition to increase exposure on the platform and the value we deliver to sellers, to our agents and to our buyers. Our data shows that the estimated value of 1 additional bid in an auction process is worth around SEK 80,000. And even in a small increase in the number of interested buyers can have a significant impact on the financial outcome for a seller. That is a healthy investment if you compare the SEK 80,000 upside compared to our ARPL. In addition, with our dynamic pricing model, we see significant opportunities to add more granularity and work with data-driven pricing to better reflect market demand. Payments. Payments is the third lever to continue to drive ARPL expansion. With the launch of Sell First, Pay Later, we're taking the next natural step in our customer journey to improve the value proposition for sellers, buyers and agents. By lowering the threshold to list on Hemnet and tying the payment to a successful transaction, we make it easier for sellers to list on Hemnet and increase their chances for a successful sale. Going forward, we will continue to work closely with our real estate agent partners to further enhance our different payment options to ensure that we have a smooth and flexible payment options that are well aligned with traditional payment flows of a property transaction. And there is more to come in this area. Our B2B offering today has been strengthened over the last years despite being highly exposed towards cyclical underlying markets like new property development and more traditional display ads. We've taken significant steps ahead and are now launching a new package tracker towards property developers as well as our bank customers. Going forward, this area offers significant opportunities ahead. Hemnet is a powerhouse in terms of traffic and engagement. At the same time, we are very close to the actual property transaction, meaning while we have high-quality data. If we combine high-quality data with a high quantity of traffic that we do have, you have a currency. That data and that currency is currently undermonetized, and we will capitalize more on this going forward. 2025 was a tough year for the overall market, but we do see positive underlying fundamentals moving into 2026. If we please move to the next slide, please. There are several metrics that point towards an improved 2026 underlying market trajectory with increased levels of supply. Projecting the market development depends on numerous factor and easily turns into active crystal ball gazing. However, there are a number of key indicators that are pointing in the right direction. First of all, ease of credit restrictions will be implemented by 1st of April. Historically, we've seen that these rules and regulations have had a large impact on market activity and Hemnet's listings volumes. We expect that the easing proposed for 1st of April will stimulate mobility and have a positive effect on both prices and activity. Secondly, improved market conditions. Looking at the overall market situation, there are also positive signs in terms of macroeconomics. We see healthy interest rate levels in Sweden paired with an expected uptick in GDP growth. We also expect to see higher disposable incomes on the back of proposed tax release and an expansive budget. Rising price expectations. Signs of optimists are already returning among prospective buyers. 43% of those planning to buy a home believe in rising prices over the coming 6 months according to our Hemnet buyers barometer for January. That represents an increase by 10 percentage points compared to the December levels. We also see that several banks and financial institutes are predicting a stronger property market on the back of the strong price development. After a tough 2025, we look forward to 2026 with confidence and look forward to a year that has [ in store ] for sellers, buyers and agents on the Swedish property market. So let's now move on to the next slide for a brief summary of today's session. To summarize today's session. First of all, Hemnet is the #1 property portal in Sweden with a large and stable audience, reaching almost 3 million active users on a weekly basis. We're highly integrated to the ecosystem with plus 25 years of experience and have a unique set of data. Secondly, Sweden's property market dynamics have changed post-pandemic, which has favored the pre-market. This has been visible through longer sales cycles, Sell Before You Buy dynamics, and a very weak price development. Thirdly, building on our strong core business, we are now implementing significant strategic initiatives to cater for the changed market conditions. Sell First, Pay Later, the pilot has shown very strong results, both in terms of getting earlier listings to Hemnet and more listings on Hemnet, as Lisa elaborated on, given the 40% difference. I'm now very excited to start launching this in Stockholm next week. We've launched strategic partnerships, and we are in the early days but we've seen a strong initial response with more than 60 brands joining in the initial phase, including some of the biggest agent brands in the country. Last but not least, Hemnet has an unmatched position to leverage AI and significantly elevate our user experience. AI has changed the way we operate our business internally and created significant efficiency gains across our organization. We're now moving faster. We are acting more broadly, and we're happy to be able to announce a number of product news, including conversational search, an AI-enabled personalized starting page all properties and the Hemnet ChatGPT app for approval. Finally, before we open up for the Q&A, we wanted to take today's opportunity to invite you all to the Capital Market Day ahead of the summer. If we kindly could move over to Slide 48, please. We're happy to announce that we will arrange a Capital Markets Day in June this year. The exact date is yet to be confirmed and we will be able to share more details within a short period of time. The event will feature a presentation from Hemnet's management team on a number of various topics, including Hemnet's business strategy, our financials, our product and commercial road map but also our AI strategy. So with that, we very much look forward to seeing you all in Stockholm in June. So that was it. Let's now open up for the Q&A. Operator: [Operator Instructions] The next question comes from Thomas Nilsson from Nordea. Thomas Nilsson: I'd like to ask how you intend to price the pay only upon sale offer for Sell First, Pay Later? And exactly how was it priced in the trials you ran with 10 real estate agent firms? And second, what are your expectations in terms of volume in 2 years' time. How large a share of your total volume do you think will be connected with the Sell First, Pay Later payment option? Jonas Gustafsson: So 3 different topics. So on the first one, as we mentioned as part of the presentation, what we communicate now is that the Sell First, Pay Later will be priced at the premium compared to the payment alternative of Pay Later if removed. We are rolling this out on Monday, and we will have various price points. And please keep in mind that if you look at the overall price dynamic of Hemnet, we have more than 70,000 price points per day, but you'll see it on Monday. When it comes to the actual pilot, we elaborated on different price points. And obviously, the outcome of that trial and elaboration both from a qualitative perspective, but also from a quantitative perspective led to the price point that we're now launching. The last question in terms of volume, it's too early to tell. We are excited about the results that we've seen from the pilot, but we don't know exactly in 6 months' time, 12 months' time or in 24 months' time. Operator: The next question comes from Georg Attling from Pareto Securities. Georg Attling: So just the first one on the transactions. You said down 5% on Hemnet versus, say, a flat market. So just wondering if you have any more color on this where you're missing out? Is it ads that only reached the premarket? Is it under the radar listings or even those that actually come all the way to for sale? Jonas Gustafsson: The simple answer is that the exact details we don't know. What we've seen is that number of transactions or number of properties that have been marked as sold and taken down from Hemnet was down with 5% compared to the year before. As you know, Georg, we have -- we've had a strategy in the past where we use 1 source of data to provide our market share, and that comes from the SCB, the Swedish Statistical Bureau. And also for 2025, this will be published in mid-2026. Please keep in mind and also, I mean, if you look at our historical market share development, it's been fluctuating between 90% and 86%, depending on what market we're in. Georg Attling: Yes. That's clear. Second question, you say that 25% of the markets have signed up for these commercial partnerships, 60 agent brands. I mean, to me, that sounds like quite a low number. I understand this is a ramp up, but are there any agent brands that have said no? And what's the pushback in those cases? Jonas Gustafsson: I think -- and I would disagree with you. I'm quite happy with the results that we are already now at a sort of adoption rate of a 1/4 of the total market. And I think, please keep in mind that this is a completely new way of working for Hemnet, but it's also a completely new way of working for the agents. And it takes time to change a way of working. And there is many positive ongoing dialogues, and we haven't received a single no but there's ongoing discussions. And I think many people are waiting to see sort of what this means and how many other that go. But I would disagree with you, Georg, to say that it's quite low, given the fact that we're now sort of in end of January, and we announced this just a few months back, it takes time. And as you could imagine, signing 60 deals takes also quite some time. So it's a quite sort of operational work included into this as well. Georg Attling: Understood. And I'm just thinking of how you view the net effect of this fee sold. I mean you say that 8% to 18% of listings are sold within 2 years. And this is -- I mean, you mentioned the other day that this will be priced at a 7% premium to pay later. So it sounds like this will have a net negative effect on sales. Is that correctly understood? Jonas Gustafsson: I think when it comes to -- I can start and then Anders can jump in. When it comes to the Sell First, Pay Later business case, it's pretty simple and straightforward, I would argue. It's 3 components. I mean the first one is, will we get more volumes? Will we get more listings and implicitly more revenue? Our hypothesis is that we will get that. Secondly, per your point, and as you referred to, there are a share of the listings that will not get sold. So that's a downside compared to where we are today. Thirdly, we have a price component, per your point, and that will have an upside to this. We do like positive business cases at Hemnet. And I think -- I mean, if the first 2 parameters, how large share of volumes we will get an increase of and how large share is on. So those are unclear, but price is something that we can steer on a direct basis. And we always have that tool to play with to ensure this is an attractive and positive business case. Anders Ornulf: I can just add that the price point you referred to is versus the Pay Later option. And we are quite certain we know that we will have customers, property sellers coming from the Pay Now option as well. So you can -- you cannot use that 7% and take that into a model. Also commenting on price, we're launching on Monday. And as Jonas said, it's not a fixed price forever. We will launch in Monday, we will monitor in Stockholm, and we will learn from that. And we will follow conversion uptake and outcomes in real time. So if adjustments are needed, we will make them. And you had a comment on the volumes Jonas, but also there was an upgrade in the conversion. We will see what happens with that as well. It was a positive sign from the pilot, as Lisa stated. So yes, we're in a good shape. Georg Attling: Yes. That's clear. Just final question for me. I mean, when you think of the phasing of this year's price increases, will that look sort of similar to the last few years? We see what you did here in January, of course. But how should we think of price adjustments for the remainder of the year? Anders Ornulf: It's hard to say. Look, over the last year, because it has been very different '22, '23, '24, '25. So you should not take anything into account. We didn't -- we did look at the prices 1st of January and did some adjustment there. We look at it all the time. Now our focus is very much on SFPL but like-for-like pricing is always up for debate and discussion. But yes, that's what the focus is at the time being at least. And then we'll see how the year evolves. Jonas Gustafsson: And I think just to add one final thing there, Georg. I think also what we spoke about when we look at future ARPL growth from a more long-term perspective at Hemnet, payments was one of the options or levers that we mentioned as part of that toolbox. And I mean the most concrete example that we're launching today is obviously Sell First, Pay Later. We do see this as a long-term ARPL growth driver as well. Operator: The next question comes from Eirik Rafdal from DNB Carnegie. The next question comes from Will Packer from BNPP. William Packer: Three, if I may. So firstly, thanks for sharing the update on the progress of the testing. And it sounds pretty encouraging with a kind of healthy rebound in listings. Could you just help me think through where that rebound comes from? I suppose you framed that you haven't really been losing market share to the likes of Booli. So is the right way to think that, that is a phasing of listings that would have come to you eventually, or is there kind of more substantive underlying market share gain, which you're getting back from your peers from the pre inventory? Secondly, could you help us think through the cost outlook for 2026? In the context of the presentation, I think it's very fair to say the revenue visibility is low and perhaps the commission visibility is low in terms of personnel costs, in terms of marketing spend? Is there anything you could share for the year ahead and help us think through the scenarios in which margin expands or contracts, depending on the revenue growth? And then finally, there's been some noise around regulator. So my understanding from the trade press is that you complained regarding the SBAB's involvement with Booli, and how that was distorting the market? What's been the response there? On the other hand, there's been some press speculation that you've had to separate out your partnership from your prelisting product. Is that fair? Or is that accurate? Any visibility on the sort of the regulatory response to those items would be helpful. Jonas Gustafsson: So I think we'll be a bit back and forth between me and Anders on the various topics. So firstly, if we go to the uptake on the pilot, and I think, I mean, it's a mix. What we allowed as part of the pilot and what we also will allow when go live now next week in Stockholm is that we allowed the agents to also take old listings that they have in their premarket inventory. And so that is obviously a sort of a catch-up effect. And I mean eventually, they would most likely have ended up at Hemnet, but it's a phasing effect because we get the listings earlier at Hemnet, which is also -- I mean at the end of the day, that's the strategic ambition that we do have with this product launch, get more listings and get earlier listings on Hemnet. So there is definitely a catch-up effect. Whether that's sort of -- it's difficult to say whether there are listings that would not have ended up at Hemnet. But part of the -- sort of the qualitative assessment, the analysis of the pilot indicates that the threshold is definitely lower to use Hemnet, and that's really what we wanted to achieve. Secondly, there was a question around the cost outlook. So if you could take that, Anders. Anders Ornulf: I can. Regarding the cost development in Q4, yes, thanks for your questions, Will. Fixed OpEx, excluding admin and commission were up 11%, driven by the cost increases I went through in the call earlier. Very much related to personnel, but also marketing and sales. We don't do guidance. You know that, and you comment on that yourself. And looking ahead to 2026, that strategy remains. And we will continue to invest. We believe it makes a significant difference for the long-term position, particularly coming back to sales and marketing efforts and the examples supporting the rollout of SFPL and the new strategic partnerships. I also want to say that one of the reasons we don't guide on cost is we believe that agility is core, but we have to make sure that we have to be prepared and whatever happens with the market or whatnot. So without giving a guidance full year, in '25, we grew by 14%. The year before, we grew by 30%. So as a CFO, I like 2025 more. But as always, with OpEx, we monitor, and we'll see what happens. When it comes to effective commissions, I think you've heard me say this many times before, I hope it increases because then again, we hope to see more recommendation and conversion to especially Max, but it would also be offset 1st of January because of the -- that the admin fee is fixed, right? So we saw that in '25, and we will see that in 2026 as well. That was a bit of color on the OpEx and outlook. Jonas Gustafsson: And if we go to the third question, Will, so we can confirm that we, as Hemnet has turned to the Swedish Competition Authority regarding SBAB and its subsidiary Booli. This concerns a fundamentally important issue of assuring that the state-owned companies comply with their specific competition rules designed to protect the market from competition being restricted by public actors. We note that Booli is a loss-making business that has built its position through extensive state support via SBAB and it's our assessment that these operations are conducted in violation of the specific rules governing anticompetitive activities by state actors. And we've now referred this matter to the Swedish Competition Authority for investigation, and it's up to them to investigate this further, and we will not sort of comment that more in detail. Then there was another topic on your question, William, that I'm -- maybe I misunderstood it, but was that the question? If not, please elaborate a bit further. William Packer: Just maybe just sort of moving on to one other topic I wanted to cover, I think you've covered the rest of the stuff. On Slide 34, you talked about monetary incentives of successful partnerships. Is the right way to think about that if the partnerships really scale that becomes kind of a new cost outflow associated with incentivizing agents to help Hemnet product, which is an additional to the commission, or I misunderstood? Anders Ornulf: No, you haven't misunderstood. It refers to the partnership program. It's a performance-based model where -- when a partner, signed up partner, agrees to commit to Hemnet, if they increase the share of premarket listing on Hemnet above an agreed baseline, we reward them with the share of net revenue. The revenue is, of course, based on the revenue after the ordinary compensation, admin and commission to agent offices. It only pays out for meaningful growth, and it's -- even then the payout is capped at 5%, as you can see on the slide you referred to. It will be included as a separate cost item in interim reports going on, and it will be rolled out gradually as part of the launch, so we will see how it evolves. Jonas Gustafsson: I think just to add there, Anders, I think it's definitely something that will drive revenue and it will drive EBITDA, right? So it is a self-financing approach. Anders Ornulf: Absolutely very similar. The structure, at least, is similar to the one we have already with the real estate agent offices. Operator: The next question comes from Eirik Rafdal from DNB Carnegie. Eirik Rafdal: Yes. I got a couple. We can do them one by one. On the trial, you say 9 out of 10 SFPL sellers choose Bas. Could you share some light on the relative share of Plus, Premium and Max within those 90%, and also how that compares to the Bas in kind of similar regions? I know you said 75% of total, Jonas, but just good to know if that 90% and 75% number is comparable. Jonas Gustafsson: Eirik, good to talk to you. So when it comes to the trial and when it comes to the Bas penetration, you're right, we've seen roughly 9 out of 10 of the packages having a Bas component. And I think -- I mean if you look at, just a step back, I think this has been done in 10 different offices across Sweden. So I think there's not a specific geography that is overrepresented. So that's part of it. What we've seen is that no major differences in terms of sort of variation of the various packages compared to that sort of the underlying or the nonpilot offices. So it is no material differences in that area. Eirik Rafdal: That's very clear. And also kind of on the same slide, you say 6 percentage points higher upcoming listing market share on Hemnet versus the pilot start. Would you be able to share the market share at the start and finish? Jonas Gustafsson: No, we wouldn't be able to do that. But sort of -- we saw a material movement of 6 percentage point market share increase during 3 months and something that we're very happy with. Eirik Rafdal: Perfect. That's very clear. I just wanted to follow up on some of the questions around the relative pricing of SFPL and our understanding based on channel checks, is that around 7% to 8% higher price than Pay Later? And I think you mentioned that as well, Anders, which in turn is 7% to 8% higher than Pay Now, which means that the ultimate difference between Pay Now and Sell First, Pay Later is 15%. Can you confirm this number? And also just on your being on relative pricing, in my opinion, at least, it seems like it's fairly small price to pay to significantly reduce your risk as a seller. Just your thoughts there would be good. Jonas Gustafsson: I think when it comes to -- I mean, it was pretty clear before that we didn't mention the exact price point. But I think what you're sort of getting to the 15% is ballpark right, and then we will have variations, given the fact that we have a quite complex and dynamic pricing model given the fact that we already today have more than 70,000 different price points. So that's one thing. I think please keep in mind that when we're now rolling this out, there's -- we don't know what penetration and uptake it will have. From a strategic perspective, it is important that this should drive more listings and earlier listings to Hemnet. So we want to ensure that we get more volumes on this. But in terms of price, we can steer price. Price is something that we can move every single day, I was about to say, but sort of in real time. And we can change it, and we will make sure this becomes attractive. But we're very eager to also get a broad uptake on this, given the fact that I think this will also have a very positive effect in terms of how satisfied the agents are and also very positive for the seller NPS of Hemnet. Anders Ornulf: And I can also, as a reminder, the price effect will also be very much dependent on the uptake from Pay Now and Pay Later listing is removed, right? So it's not really that easy to just say, 15% or 8%. Definitely correct, so.... Eirik Rafdal: Very fair point. And just one final one, if I may. I know it's been a bit of an investor concern around how you handle content quality for maybe particularly the coming for sale ads, like how would you deal with ads, for instance, like photos or asking price? How will you kind of structure the UX for the buyers? Just any thoughts there would be good. Jonas Gustafsson: I mean I think at the end of the day, we want to have more listings, and we want to have more listings earlier. I think, I mean, Hemnet is today a quality property portal, and we will make sure it remains a quality property portal. Please keep in mind that, I mean, Sweden compared to many of our international -- sort of other geographies outside Sweden, Sweden has a highly functional property market. We have a highly professional, highly educated agents. It is -- if a listing is going to go on Hemnet, it always needs to go through an agent. And I have full trust in the agents' community that they will ensure that we sort of remain the high quality at Hemnet. Sweden is very different compared to other markets. And at the end of the day, I mean, what matters for an agent is to sell the property. That's where they make their money. The quicker they could sell a property, the more property they could sell, the more happy they would be. And using Hemnet and using the Sell First, Pay Later will be a perfect way to get there. Operator: The next question comes from Ed Young from MS. Edward Young: Two questions from me, please. First of all, on Max. Could you talk a little bit about what the plans are there? You said that it's sort of the next leg of driving package improvement, but you've not really touched on what that might include today. And as part of that, could you perhaps comment on whether you expect Sell First, Pay Later initiative to influence the adoption of Max relative to other listing tiers significantly? And then second one, on the pre-listings, you spoke about areas you're actively looking to address. Is that just essentially fresh pre-listings or are there certain segments like the higher volume apartment area that you were talking about sort of segments you're trying to attack. So any color on what it is you're looking for from pre-listings or alternatively what you're not? Maybe, as you said, you've got a big jump on these targets, 30%, 40%, 50%. So I'd be interested to know what you're really trying to focus agents attention on? Jonas Gustafsson: Yes. So in terms of Max, I think digging one step back, Max was launched back in April 2025. So it's been around now for more than -- slightly more than half a year. We've seen quite slow adoption. I think a large part of that has been driven by a very slow and challenging market. I think -- I mean, if we would have launched Hemnet Max during like a peak market like 2020 or 2021, you would have seen a different development. But also keep in mind what we refer to as part of the presentation that Hemnet Plus and Hemnet Premium also had a very slow uptick in the initial phase. In terms of Max, and we're continuously working on -- I would say it's two-folded. I mean, first of all, the product performance that we do see with Hemnet Max, the engagement, the number of listings or number of views per listing and also the speed that we can sell a property when you use Hemnet Max, those results are great. So it's a lot about spreading that goals also in the agent community and ensuring that seller understands that this is, if you pay for a Hemnet Max, it's a product that you get benefits from. We need to be better and we need to communicate that in a clear way. Second to that, I would say that Hemnet Max is still, if it's -- even though it's been around the block for 6 months, it's still a baby. We are continuing to develop the various product features and kicking in an open door, we're running a marketplace here with a tiered product structure. It's all about relative differences both in terms of relative price differences but also in terms of relative feature differences. So the team are testing various things now to see sort of what could catalyst further penetration when it comes to Max. Then in terms of the pilot. It's clear that what we saw is that we said that in Q3, we had roughly 75% of all our packages having a Bas component. And then we said that the pilot had a -- sorry, the Sell First, Pay Later pilot had a Bas conversion of 90%. So there's obviously an impact across the broad regardless if you talk about Hemnet Plus, Hemnet Premium and Hemnet Max. But it's a bit too early to tell. I mean the Sell First, Pay Later pilot was a sample, and we're looking forward to continue to follow this. In terms of the premarket, it's -- I mean, at the end of the day, the ultimate goal, which is embedded into our strategic ambition, is to get the properties that sell in Sweden that they should be on Hemnet. That obviously means that the sort of the higher the seller intent is the more attractive it is from our perspective. So we want to focus on ensuring that we get the premarket listings where there's an intent to sell. That's our primary goal with this. But we also want to have the broad volume. Operator: The next question comes from Marcus Diebel from JPM. Marcus Diebel: Just 1 more question on the pricing of Sell First, Pay Later, again. Obviously, you talked about it in detail, you said clearly you can't give any more sort of data on pricing, we're going to see this very soon. But more conceptually, what has driven the decision to really price this as a premium? Is it not now the time to really get the listing sped relatively quickly, have a very strong sort of like current developments, why do you feel that this should, at this point, still deserve a premium? Second question will be on your comment on rolling out an app within ChatGPT. If you can just comment a bit more what has driven this? Why do you feel this is the right move to do. And also if you could talk about the terms here? Is it just a partnership? Or how free, or so free or how should we think about it? Jonas Gustafsson: Marcus. So in terms of the price point for Sell First, Pay Later, I think that we've elaborated on the more sort of financial aspects of it more from a strategic level. I think that -- I mean, it's so clear to us that this comes with a fantastic customer value. The results from the pilot, both from a quality but also from a quantity perspective comes out very, very clear. This is something that the consumers are willing to pay for. This is a threshold reduction parameter, and it is a component that sort of reduces the barriers to use Hemnet to a large extent. And we've done a comprehensive pricing work looking at all those various parameters. And I think it's very clear to me that given the pilot test that we ran, that this is a fantastic customer value and a fantastic proposition towards the consumer. Then if I sort of -- if we move over to the ChatGPT question, we have Lisa here who's the expert. So I'll hand over to Lisa to elaborate a bit on that. Lisa Farrar: Thanks, Jonas. Marcus, I would describe our app within the ChatGPT app as a move to learn, both for us but also for our users. We want to be where our buyers and sellers are going to be both now but also in the future. So this is an early stage way for us to integrate with new technology, a new ecosystem, and learn from that. In this app, you will still be circled back to Hemnet, so we're not losing our users. We're just seeing it as a distribution channel. And I would say this is the first move to learn and go from there. Marcus Diebel: Yes. Anything if you can just comment a bit more about the sort of like terms. I mean -- do you feel that this will be exclusive? Do you see others will follow and also sort of like how the dialogue with OpenAI has been, if you can share anything more would be very helpful. Jonas Gustafsson: I mean, I think it's difficult for us to comment any on our competitors if they would follow. I think we stand very strong in our foundation with more than 25 years of experience and more than 1.4 million homes of user tagging, which makes us feel that we have a benefit in also the AI world. In terms of the exact sort of details in the discussions with OpenAI, there's -- I mean, we don't want to comment on discussions in terms of details with our partners at this stage. Operator: The next question comes from Nikola Kalanoski from ABG Sundal Collier. Nikola Kalanoski: So firstly, on the SFPL model. When these pilot offices tested the new model, they were, in essence, I guess, you could say, given a super power compared to some of the other offices in terms of being better able to win listings, if you will. As an agency, you're a little bit more attractive, of course, if you can offer this. Has this discrepancy, do you recon, helped drive new strategic partnership signings with more agencies and offices being eager to take part? And do you expect that this will drive additional signings going forward? Jonas Gustafsson: Nikola, I mean, so just to clarify the background and the circumstances. I mean, this SFPL product will be available to all agents regardless if you have a strategic partnership or not. So this goes out to the full market, right? This is not part of the strategic partnership just to make that clear. However, if you look at -- you referred to it as a super power and just looking at the results, I think that, that's a fair analogy. I think -- I mean, obviously, they had a benefit being part of the pilot during this 3-month period of time. And we know for a fact that day 1 number of sort of competitive discussions with their competitors just because of the fact that they have this tool or the super power, as you referred to it, I think that given the fact that we will open up for the full market, you will still have a super power towards the consumers if you're actively using Sell First, Pay Later. So I think this is something that will drive and accelerate the development of Sell First, Pay Later. Nikola Kalanoski: Yes. That's very good. And I guess this is just technicality then, but I think in your slides you referred to a disclaimer that says that the business rules of SFPL differed for -- from that of the pilot versus the actual role. Are there any big differences here that we should take into consideration qualitatively? Jonas Gustafsson: I think when it comes to -- I mean, we elaborated -- I mean there was a question before, I think -- we had a question before around how we price the SFPL. I mean, one thing that was an important part of the pilot was obviously to test different price points. And the price point that we now landed on and that we will go broad with starting off on Monday, it was not the same across all offices. Obviously, it was for 1 or 2 offices in that range, but we test the different price points. So that's one difference. Also, I mean, what we allowed was that as part of the -- as part of the pilot, we also allow them to take old listings. Now when we go live, we will have a grace period of 30 days. And so that's the initial hypothesis when we rolled this out. So there are some differences. And that's why we don't want you to just take the number of 1 by 1, but this should give you a good indication. We're very happy with the results. Nikola Kalanoski: Yes. That's very good. And just a final one for me. And I believe there was a question before on the cost base, but this is more specifically with respect to the ChatGPT integration. Does this change in any way your cost structure? Or is there any meaningful costs associated with doing this integration? Lisa Farrar: No, nothing there to add to our cost base today. Nikola Kalanoski: Yes. Perfect. That's all for me. Operator: The next question comes from Annabel Hames from Deutsche Bank. Annabel Hames: Just 1 for me. And is there a cost with monitoring the Sell First, Pay Later to ensure that it's not being abused? Anders Ornulf: No, no, it's not. We have many things in place, all from technical to agreements with the customers. So we sit very well on that front. Operator: [Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Jonas Gustafsson: So first of all, many thanks, everyone, for tuning in today for a bit of an extended session. And thanks, everyone, for joining the call. A lot of great questions that are, as always, truly appreciated from our side. So with that, that is all from us. Make sure to have a good day, and thank you.
Adrian Mulcahy: [Audio Gap] meet the CEO quarterly update with CEO, Coby Hanoch from Weebit Nano. So we're going to step through. I'll get Coby to make some introductory remarks with respect to the quarter, and then we'll work through your questions. We've got a pretty strict time line. So we're going to hopefully, we can conclude it in just around about an hour, but I'll be the timekeeper on this, Coby. So don't be concerned about that. But look, thanks, everybody, for joining us, a really big group that has joined us, Coby. So why don't I throw it to you for some opening remarks on the quarter to get us underway? Jacob Hanoch: Thanks, Adrian. So welcome, everyone. Glad to have everyone here and talk to you again. Yes, we had another good quarter, strong quarter. Obviously, the big highlight was at the end of the quarter with signing TI. I think that was a really important milestone for us. I think you can follow the trend that we went through from SkyWater. We grew an order of magnitude to DB HiTek, another order of magnitude to onsemi and now another order of magnitude to TI, and we're really now dealing with the biggest semiconductor companies. And this is really exciting. The reaction from the world in the semiconductor space and in general, has been remarkable. And I think with TI and onsemi and DB HiTek, people see that this is really catching. This is moving forward. I always said that each deal makes the next one a little easier. So it doesn't make it easy. It makes it easier. We're still pushing forward. We're still not in what I call the tornado, but we're really heading there. And it's really exciting, and we're hitting the ground running with them. We're having a big kickoff meeting next week and really pushing forward this project. So that's very exciting. We had a lot of other good things happened in the last quarter. We finished the qualification of DB HiTek. So now we saw that we meet all of the JEDEC requirements, et cetera. And it's in the hands of DB HiTek now to really take it and do all the final bureaucracies and work on officially announcing to their customers, et cetera. There still are several steps that they want to go through, but it's definitely going in that direction. We already have some product companies that are designing with our ReRAM planning to tape out at DB HiTek. So we're starting to see the light towards that mass production that everyone is waiting for. It's everything always takes so long with these fabs, but it's moving. And we actually got wafers from onsemi, which was kind of record timing. And in a year from when we signed with them, we got the wafers. We have the dies now being tested. We have good initial results with those dies. So that's another important step forward and they are already working obviously as an IDM, they're working on their products and things. And we're very excited about the partnership with onsemi. And I would say the last point, of course, to note is we had another quarter of record cash coming in. I repeat what I said last quarter. This is based on all kinds of milestones and sometimes you just have several milestones hitting together or things like that. So I don't want anyone to have the expectation that every quarter will be a record cash quarter or that this is an indication of the future, but it is very nice to have that. So we are maintaining the guidance of having over $10 million revenue in fiscal year '26. Yes, I guess that's -- I'll let you go to the question part. Adrian Mulcahy: Thanks, Coby. The question have started coming in. So what -- but one that's popped up straight away. I'll just get you to address, which is obviously part of the quarter and a good announcement. So Weebit has licensed, it's ReRAM technology to Texas Instruments. So can you talk us through the deal and the significance of the agreement for Weebit? Jacob Hanoch: So Texas Instruments or as everyone refers to them, TI, they are really one of the top, I would say, 5 IDMs and really a major player in the semiconductor space. I think everyone knows they've been around for ages, and they've managed to maintain their position. TI has over 80,000 products in their price book. Of course, a lot of them are variants of each other, et cetera, but they're a very big player. They're the #1 analog player in the world. And it was a very long process. Actually with TI, it was almost 3 years to close this. So when I was saying even 2 years ago that we're talking to the majority of the big players, I meant it obviously. And you can see just some of these deals really, really took a long time. Weebit insisted on terms that it should get. Obviously, it's very easy to say, "Oh, we want to get this big player on board, and we'll just cave in and give them all kinds of crazy terms just to have them signed," but we're building a company that needs to be a big and strong company moving forward and with strong future revenues and everything. So we are well aware of what we have in our hands and the fact that today, I think the fact that TI, and obviously, they were looking around trying to see if they can get another option, something else that won't be with royalties or all kinds of things like that. So the fact that we ended up closing the deal for me is a great sign that we really -- we have a great technology. They were definitely impressed by it. We really are the only supplier, only, let's call it, serious supplier. There's obviously all kinds of other small things or whatever. But if you look at anything that's really serious, and we're feeling very comfortable, very bullish with this. They wanted to push straight to advanced geometries. They're not allowing me to say which one, but they are starting with an advanced geometry. They obviously have the option, which I'm quite confident they will want to materialize of going to the additional geometries once the first one is working. So we have definitely high expectations of this deal. The relationship is really good. We already have delegations that went to Dallas and sat with their teams. And as I mentioned, next week, there's going to be a big kickoff with a lot of Weebit people going to TI and spending several days getting the project off the ground. So it is a very exciting agreement I was at CES in the beginning of January. And everyone was all over us with this announcement, the bankers, the different institutions. Of course, customers and the press and everyone. So it was very exciting, and I think we're off to a very good start for '26. Adrian Mulcahy: Just one question. Will we -- obviously, somebody is getting pretty enthusiastic. Will we see the same enthusiasm for Texas Instruments as we have from onsemi when it comes to tape-out time frames? Jacob Hanoch: Each company is different and has its own internal bureaucracy and things like that. So I can't really say right now, but I can tell you that the beginning is very exciting. They are excited about the technology. They are very -- now that the agreement is signed, it's really -- you can sense that they are going to be putting a lot into this, and this is going to be moving very nice and very fast. Adrian Mulcahy: Just another one on Texas. You mentioned in the past that a particular customer wanted an architectural agreement. Is Texas Instruments that customer? Jacob Hanoch: So I won't go specifically into these things. There were -- we've been going with many of the customers that we're talking to. We've been going through a lot of different business models. And sometimes they get excited and they say we want to have one type and then they go and they say, no, actually, we checked it. And financially, we prefer another type of agreement. I think also the architectural license -- when we refer to architectural license, there was one of the fabs that just wanted on day 1 to say, "I want access to everything on all geometries. Then there were all kinds of backtracking and so on. At the end of the day, both onsemi and TI, I mean they want to look at this for not just one geometry and that's what's important. I mentioned TI has the option to go to additional geometries, and I'm quite confident once they see the first one that they'll decide to expand to additional geometries. So the terminology and whatever is more of a technicality for me, what counts is really the fact that we're moving forward now, and I do expect to expand in both of these major players to other geometries. Adrian Mulcahy: Turning to AI. Is the new AI offering that's being led by Giddy and just storing weights in ReRAM? Or is it using in-memory or neuromorphic computing? Jacob Hanoch: The near memory compute is actually more of using ReRAM in kind of the traditional sense. So you basically have an embedded ReRAM that replaces the big SRAM that people have. But in essence, you don't really need something very special for it. The place where ReRAM really shines is when you move to in-memory compute and then to neuromorphic. And Giddy is really looking at those kinds of applications and how to really make our ReRAM easily accessible. There's going to be a lot around it. One of the best examples is when you look at how NVIDIA grew. NVIDIA had hardware and GPUs for a long time. I think what's really pushed NVIDIA forward was when it added also the user interface layer, the CUDA. And that really made it so much easier for people to use their technology and really it made the whole AI thing blow. And I think that's what we're looking at. We want to have both the hardware and the in-memory compute requires the ReRAM to be designed in a different way. And there are all kinds of ways to do it, and we need to really research and decide how exactly we want to do it. And then there will be the algorithms, the software layer interface and all of that. So we really want to do something that gives a real solution for customers and not just some basic hardware sales or something like that. I think this is a very fast-growing space in-memory compute has huge applications. When you think about it, and without going too much into technology. But in AI, one of the key activities, the thing that it does almost all the time is what's called multiply accumulated, it multiply matrices basically. So it's not a broad, I want to do anything and you don't need these very complex programming and being able to do a lot of different functions. It's really one main function that you do most of the time. And it turns out that -- and by the way, that function when you do it in a traditional computer, you basically have a processor and you have a memory and the processor keeps reading from the data from the memory and then writing data to the memory, and there's a lot going on. And that's where a lot of time and a lot of power are spent. When you do in-memory compute, you basically don't move the data. It's in the memory and it stays in the memory and it doesn't go anywhere. And that makes the whole computation, orders of magnitude faster and low power consumption. So ReRAM is an ideal solution. I obviously think it's the most ideal solution for this. There are other memories that you can do in-memory compute with but ReRAM has the additional value that it's just very cheap to manufacture. It's much lower cost to manufacture and makes it -- and it's easy. You manufacture it basically on a CMOS line on a standard manufacturing line. So that's the big advantage that we have, and we want to capitalize on it. And Giddy is the best person for it. He has such a background and such a broad understanding of this that I can't think of anyone better than him to lead this activity. Adrian Mulcahy: Next one. Last year, you spoke of possible future fab IDM customers, which may include a household name and an architectural agreement. Looking forward into 2026, are there any other descriptors which may describe future signings? Jacob Hanoch: Well, I think after we signed TI now, you can't really go a lot higher than that. It's kind of you're already, as I said, in the top 5 IDMs, and you're really in a good position. I think TI is very much a household name. I mean onsemi in many parts of the world is also pretty much or close to a household name. TI is definitely a household name. It was a disappointment for me that we didn't manage to close the third deal that we were talking about, onsemi and TI both under the category of between AGM '23 and the end of 20 -- I'm sorry, AGM '24 and the end of '25. We really believed and hoped that we would have a third one. Some of these agreements, again, they just drag. Now with the TI announcement, it did give others a certain push forward, and we are meeting these guys. We are going to push forward. I believe, I hope that this year, we'll see additional agreements with people big and small and I can't commit yet to who and what, but we're definitely going to see much more activity moving forward now. Adrian Mulcahy: With a lot of fabs selling out 100% of 2026 production. Will this reduce access to potential customer fabs and delay any deals with fabs and IDMs? Jacob Hanoch: That is actually one of the factors that's impacting us sometimes when a fab is at full capacity, and it sees that for the next year, it's going to continue to have a full capacity. They have less of an appetite to go and make this big investment now on ReRAM. And by the way, when they make that investment, it's also -- they need to run ReRAM wafers through the line at the expense of running stuff that generates revenue. So that has been over the years when we're in touch with some of these big guys. That has been one of the factors that delayed the negotiations or really -- a strong engagement, I mean there's been an engagement, but really progressing forward. With some of the guys, it's just that, hey, the fab is full. We can see that it's going to be full for another year. We just -- management wants us to focus on getting the money in, right? And it's normal, and I can definitely understand them. So we just wait for the moment that they can start seeing that they're going to have a downtime and that makes it much easier to engage. Adrian Mulcahy: Coby, here's kind of a simple question, but probably pretty important from a commercial perspective. So I'm hoping to get a better understanding of what Weebit Nano AI product offering may look like. What are the types of companies who would visit target market end users? And how does Weebit charge derive revenue? Jacob Hanoch: So we are -- we are in the process of defining what we're going to be doing in AI. That's kind of the initial task of Giddy is to really analyze the market, analyze all the requests that we've been getting and talk to the customers that we've already had engagements with and define what we want to offer them. So I think it's a little too early for me to say what exactly that offering is going to be. I want to let him go and do his analysis and come with. He'll probably have several options, and we'll have a brainstorming session on how do we prioritize and what we want to do first. It is -- I mean I've been talking in the AGM and different meetings about how in-memory compute is something huge and so many companies are interested in it, and it is reaching commercialization already. In-memory compute is something that it's really consumer -- or commercial companies are already looking at it and wanting to move forward with it. So we really want to get something good. We want to learn the market. And we'll be, I guess, hopefully, in the next months or year. Over the next year, we'll be releasing more information on what exactly the plans are and it's probably going to be obviously a staged plan where we'll have some initial offering, and then we'll improve on that and grow and add, et cetera. Adrian Mulcahy: Another very fundamental question. So your group suggested that ReRAM is forecast to increase 45-fold over the next 6 years, representing more than half of the USD 3.26 billion of embedded emerging NVM market by 2031. How does this directly relate to the TAM, total addressable market for Weebit that Weebit can address? For example, if Weebit gets 20% of the ReRAM market, would we get 20% of the $3.3 billion? Jacob Hanoch: So the old analysis always challenges me because Yole did not think of Weebit revenues or the revenues of the semiconductor IP companies. What we understand from Yole is that -- what they did was they basically said a key market is MCU, microcontrollers. And in an MCU, the nonvolatile memory takes about 10% to 15%. So if the MCU market is USD 30-something billion, then we expect the NVM part of it to be 10% of that, and that's how they got to the 3 -- whatever billion that they put there. Now that's obviously the emerging NVM that they're expecting to see there. I mean, they took the 10% of the of the MCU market and then they extrapolated how much is going to be emerging, what percentage, and that's how they got to those numbers. So for me, the old numbers are, first of all, an indication of just how rapid the growth is going to be. And that's what I think most people or people should be taking from it is this is a leading analyst and according to -- I mean, when they do an apples-to-apples comparison of what they think is happening now and what they think will happen in 2030, they're kind of seeing this huge growth, and that's what people really should take. If you want to start doing your own extrapolation and say, "Oh, wait a minute. So if $3 billion is 10% of the MCU market, and Weebit can get -- I mean, average numbers that people normally talk about are 1% to 3% royalty from that, then this is how much potentially royalties are going to be, and this is the market share that I'm expecting Weebit to have. And everyone can do their own research and analysis on that and then think about the fact that there's beyond MCUs, there are other markets and so on. And of course, there's going to be the AI market, which is an adjacent market, but that's one. So I mean people need to do their own research here. This is kind of roughly how the basics of what we understood from Yole in how they did their analysis. For me, the important thing is just the message this market is going to really grow rapidly. Weebit has to be very focused. A company undergoing such rapid growth it's so easy to make mistakes, and we need to be laser-focused on what we're doing. I'm very glad to say we have the team that knows how to do it. And we have the plan, and we have been setting the infrastructure this past year, the announcements that you didn't see are all of the infrastructure that we set up, bringing in all these different tools that help you manage projects in an organized way tracking even the simple things like how many hours did this engineer put into onsemi and how much how many hours did they put into DB HiTek or into the R&D work or whatever, being able to track what's going on, being able to have the management and everything in an organized tool where you can get easy snapshots. Having -- we have now a PMO that's defining all the internal processes and procedures and really defining how do you do this? How do you do that? How do you manage all these things? So I mean, the customer success team that we set up, all of these things are going to enable us to go through this massive growth, really crazy growth, and it's going to be a lot of fun. Adrian Mulcahy: Next one. Now the qualification at DB HiTek has been successfully completed. Can you explain expected time lines to earning license fees and/or royalties from that agreement? Jacob Hanoch: So we basically went through the tests and we showed that we're ready. Now it's really in DBH, DB HiTek's hands. They need to see how they bring it to the production line or to their customers. They have their internal procedures and their internal ways of dealing with things, working on things like yield, et cetera. And so we are obviously waiting to see this move forward faster. But foundries, as you can understand. And I think as people have already learned, they have their own pace and so on. So we -- I definitely expect that this year we'll be seeing getting to mass production. But it's not going to happen tomorrow. They still need to go through their procedures. And I hope it will be done faster and not just drag over a long period of time. Adrian Mulcahy: And Coby, just following on from that same kind of question. So the quarterly report mentioned that Weebit has several products in design and with the expectation of first product will tape out this year, is that through DB HiTek? Jacob Hanoch: Well, we definitely have designs that are in DB HiTek right now, and I think it is reasonable to expect that we'll have tape-out of designs at DB HiTek this year, yes. Adrian Mulcahy: Okay. Stepping back. So how far off are Weebit from signing deals with Tier 1 customers? Are we mainly dealing with smaller customers at this stage? Jacob Hanoch: No, we're dealing with all sizes. We are definitely engaged with big companies, I guess, order of magnitude of TI and also smaller ones, and there's -- I know people are tired of hearing me say we are engaged with the majority of the big guys, but it is true. And with TI, it took us 3 years to close. I hope that with -- others will start closing faster. There are other big guys that we're engaged with already for a long, long time. That's how it works in semiconductor. Weebit is -- I think the key message to the shareholders is we want to build a big, strong, solid company, and we are not caving in or agreeing to what I consider unacceptable terms just in order to be able to announce that we have yet another customer or whatever. I could have done things -- we could have agreed to different terms that have enabled us to get big-name customers a long time ago. But it's not how you build a strong company. And in the beginning, it's very tough, and there's nothing that I would have loved more than to come and tell the shareholders, hey, we have another customer. I mean this it uncomfortable situation that I have to keep telling everyone we are engaged with these guys and we are pushing forward and people roll their eyes already, okay, how many times are you going to tell me that, but this is the only way I know to build a strong company, is to hold your ground, to know the value of what you have and to end up -- these guys will be coming in. They will come in. They don't have another option. They need to work with us. Now they're seeing that their competitors are moving forward. And this is what will enable Weebit to be a very big and strong company, and that's my goal. Adrian Mulcahy: Yes. And Coby, I think it's probably fair, in this last quarter, there's evidence of investment in people, which is obviously a necessary pathway to executing on some of these opportunities. So I can encourage you on that. So next question. Outside of NDAs, does the partner section of the website list all product companies signed with Weebit? Or is there a lift maintained elsewhere? Jacob Hanoch: I have to admit I haven't looked at the website for a while, so -- but I would say, Weebit, I think the shareholders have already learned. I try to be as transparent as I can, and we -- the partners, we haven't signed any agreement that is not -- I mean, any final agreement, definitive agreement that is not public. I won't go into what level of NDA and MOU and whatever other types of agreements we signed with companies. Once we get to a definitive agreement, that's when we announce it, and I believe that that's what you're seeing on the website. Adrian Mulcahy: Sure. Next one, is testing of the demo chips at onsemi now complete? Or are there additional steps before qualification commences? Jacob Hanoch: Well, we actually just got them. I mean, again, as I said, it's really a record time in 1 year to finish, to get to the point where you take out and to -- you already have silicon in your hands. That in itself is just amazing. The first tests are positive, but we have a lot of testing to do, a lot of checks to do before we get to the point that we say we feel like we're ready for qualification. So it's just the very beginning of the testing phase. Adrian Mulcahy: Thanks, Coby. I think I know your answers to these questions. Did TI look at other ReRAM providers? And if so, what were the winning factor -- factors for Weebit? Jacob Hanoch: Well, it's a question to TI. I can tell you that from what we saw and we understood and actually, they even told us, I mean, they definitely and you would expect a company like TI to check the market, right? You wouldn't expect such a big company to just say, oh, we like Weebit. They -- Coby waves his hands in a nice way or whatever, and we want to work with them. They did a very, very, very thorough analysis. They talk to their customers. They did the market check. They looked around. I'm sure that they looked around to see what other ReRAMs were available. I guess I have indications that they looked around. And I think that, at the end of the day, the combination of -- I mean, our technology is here. It's qualified. It's qualified at AEC-Q100. It's qualified for very extreme situations. For analog dies, it's really a great solution. I believe that the onsemi deal was also something that helped give them a little bit more confidence, but they met our team. We -- as I said, we sent people over to their site. They were sitting there for days in conference rooms and reviewing the technology and analyzing it. I mean it was a very, very thorough analysis that they did, and I'm glad that they were impressed by the team. I think that's the key factor. They saw the quality, the unbelievable level of experience that the Weebit team has. They saw the results, the technology. And I believe that -- again, it's a question for TI, but I'm sure that those were the key factors that they were looking at. Adrian Mulcahy: Thanks, Coby. So what is the latest on the sub-22 Newton meters, 12, 14, 16 or teens process fab? Is this the fab that slipped from 2025 to 2026? Jacob Hanoch: I really can't go into that. I apologize. But as I said, we're in different steps with different companies at a very, very, very broad range of geometries. So from the teens up to the 130 and even 180 sometimes, so it's really a very broad range. And once something materializes, we'll announce it. Adrian Mulcahy: Thanks, Coby. Next one, how are discussions progressing with other foundries, IDMs? And have you seen an increased urgency from them since the TI deal was announced? Jacob Hanoch: I mean things are progressing. I think I can definitely say that the TI announcement did make an impact. People noticed it. And I think that it did give a nudge to some of the people. Let's see now how much we actually managed to really leverage that and push them to closure. So it will be very interesting. Adrian Mulcahy: A difficult one to answer here, Coby. But what sectors are you seeing the most customer interest from? Jacob Hanoch: Well, I think the first one is easy. You look at onsemi and you look at TI and even to a certain extent, DB HiTek, they're all very strong on the analog side and the power management, et cetera. So obviously, that's the first sector that has been moving forward. By the way, when you look at the whole analysis on the slide that we normally show on the right-hand side, you can see that the first market they expected to grow was analog and that prediction is true. We also see a lot of interest from automotive. I mean, especially when we did the AEC-Q100, we see a lot of interest from automotive. But we get a lot of interest from medical companies, from industrial, from IoT. We have had discussions, quite a few even, with companies in the aerospace. So it's pretty across the board. But the first ones are really the analog, power management, automotive. Those guys are -- they have such huge advantages with ReRAM and onsemi and TI or their direct competitors. So those guys are the ones that are now feeling the least easy in their seats right now. Adrian Mulcahy: Thanks, Coby. So recently, BM LABS ran a competition for their in-memory compute. Does that mean the Weebit product will optimize the ReRAM and include the algorithms? Jacob Hanoch: Yes, I mentioned earlier, we don't want to just look at the hardware side of things. We believe that in order to really be successful in this market, you need to have the software and the algorithms and give people a development kit. So I mentioned NVIDIA, and that's a great example of a company where the real growth came when they delivered CUDA. So I -- for me, that's kind of the example that I'm looking at, and that's what Giddy's role is, to define not just the hardware but what should be the package, the development kit, what makes it really easy for people to adopt the -- our ReRAM for in-memory compute that it won't be just bare metal and then they need to develop everything on top of it. Adrian Mulcahy: Thanks, Coby. Turning to the U.S., sort of the comments made with respect to the U.S. subsidiary. Can you provide some more details about the subsidiary in the U.S.? Is it aimed at building sales support? Or do you intend to build a technical team to support engineering projects, to accelerate commercial deployment as a result of a large number of engagements? Jacob Hanoch: Yes. So actually, I forgot to mention that already with all the stuff that happened last quarter. I forgot to mention it when I talked about the summary but definitely -- I mean, we're seeing significant interest in Weebit, in our ReRAM in the U.S., in North America. And it really became -- the time has come that we needed to set up already a local presence, a local subsidiary. It is focused on sales. Now sales is a very broad word. It's -- for me, sales means, more than anything, very, very strong customer support. I want every customer working with Weebit to be successful, to be happy. I've been doing sales for so many years, and I know that when people are happy, yes, they might tell a friend or so. When people are not happy, they'll tell the whole world, and you have a real problem. So I just want to make sure that we have really good success stories with these customers, that everything goes well. People know that when they come to Weebit, they get quality support. We definitely demand to be paid for it, but people will know they get a good technology, good support. We have already a lead technical person in the U.S. now who's setting up the technical support activity there. And then he is a very experienced person. He came from another ReRAM company and has done a lot of work there. So he's very experienced in ReRAM. He knows what we're doing. And I'm very happy to have him onboard. So yes, this is going to be a very strong sales organization. Adrian Mulcahy: Thank, Coby. Next one. The quarterly report says Leti have achieved many milestones this quarter. What are they? Jacob Hanoch: We talked about Leti milestones? I somehow don't -- I don't think we mentioned Leti milestones. We -- I mean, oh, okay. I think I know what you're talking about. So traditionally, when you look at the Weebit reports, and this thing comes up every year after December, Leti works according to the calendar year, and they kind of structure the different work packages. So many of them have a major milestone in December because they want to be paid before the end of their fiscal year or calendar year. So you can see it every year that the big expense that Weebit has on R&D is in the last calendar quarter. And that's what happened to us now. So we basically -- in the notes to the expenses, we mentioned that there was a big expense to Leti because of these payments. There wasn't anything special specifically in this quarter. We have very good cooperation with Leti. We have ongoing -- a lot of R&D work that we're doing with them. They are a great partner. I said that many times, and I'll say it again. We're very happy to work with Leti. And the payments just happen to always kind of somehow coincide in December. They really like us to pay us as much as we can in December. That's how their finances work. Adrian Mulcahy: So on AI now. Will the AI offering be aimed at the edge or data center? Jacob Hanoch: I think the edge is really where we see ReRAM shining at this point. The edge also in terms of capacity of memory, et cetera, we are able to address much easier. So I mean, it's really Giddy's job to define what he wants -- what he thinks we should be doing. And I want to give him his space to really analyze the market and come with his recommendations. So again, we'll just have to wait until -- by the way, we already hired a PhD in AI to work with him, and that's a team that we'll want to grow so that they can really do a good analysis and come with good recommendations. I don't want to just decide on what their conclusions will be before they do their studies. Adrian Mulcahy: Thanks, Coby. There are a couple of anonymous attendee questions, and we normally -- it's not really a great way to submit your questions, but let me just go through a few of them because everybody else has actually nominated who they are, which I think is really important for them. But Coby, just this one. Jacob Hanoch: I agree. Adrian Mulcahy: Yes. But some of these are interesting, so let me just go -- and I think probably this would be on the minds of some of the audience anyway. But the company previously targeted 3 new licensing agreements with fabs, IDMs by the end of 2025. With onsemi and TI secured, the third has slipped into 2026. Can you provide color on the status of negotiations for this third agreement? Jacob Hanoch: Actually, there have been several that were candidates to be the third. It's not just one. These things sometimes, as I said, drag out for all kinds of reasons. So we are continuing the discussions with these guys. I -- again, we'll announce when we close it, when we do because many times, there are surprises that just cause things to drag a little longer than we expect. So I don't want to just try to predict and then -- it's really in the hands of these fabs, the speed that we progress. Adrian Mulcahy: This is a question that I've had from a number of investors, Coby, and you have, too, but just probably worth sharing with this audience around DB HiTek qualification. So can you explain why this wasn't announced to the market via the ASX? And what are the next steps with DB HiTek, which I think you've spoken about already? Jacob Hanoch: Well, maybe it's a good opportunity. People know that I've been struggling, that was an understatement, with the ASX regulation, disclosure regulation, et cetera. I won't go here into the issues there. But sometimes, I joke that closing the announcement on TI was harder than closing the actual TI agreement, and it sometimes feels that way. So it is a challenge for us, the whole ASX regulation. I believe that, moving forward, many times, we will not be making ASX announcements. We'll just wait for the quarterlies to announce things. It will just be easier. There's just so much time and effort that I can spend on these things. And yes, let me stop at this point. Adrian Mulcahy: No, no, that's fair point. I can hear and feel your frustration, Coby. So just -- you may not be comfortable answering this question. But outside GF, have any opportunities been lost? Jacob Hanoch: I don't consider GF lost by the way. I don't -- I mean, I -- you can see, GF is right now struggling to try to make whatever they're doing work, and they haven't qualified it. I mean they are late on their schedules. But I don't want to go into GF. I believe that Weebit has and will definitely, in the future, have the best ReRAM technology in the market. This is our goal. We're investing a lot in R&D. You know how many people asked me in the last month, so when is Weebit going to be breakeven? And guess what, I can just stop the massive R&D investment and I'll be breakeven today, right? But that's -- I'm sure that that's not what the shareholders want. We are investing heavily in R&D. We want to continue to improve our product. We want to be -- to have undoubtedly the best ReRAM in the market hands down to the point where -- and I tell people, to me, it's a fact. I don't even consider it is an if. One day, someone will come and go to GF, go to TSMC, go to UMC and all these other guys and say, hey, guys, I want to manufacturer here, but Weebit has a much better ReRAM for my application, in my specific SoC or whatever. They give me better support, or I want to use Weebit, and that customer will be big enough to actually move the needle. And those fabs will agree because, at the end of the day, these fabs are making money off of selling wafers. They're not making money off of ReRAM. I mean the decision to try to develop a ReRAM at GF, that's something that you need to ask their CEO, what the logic was. I won't go into his considerations, and I don't understand his considerations. But all of these guys, all of them, I do look at them as potential customers. I don't look at any one of them as a lost opportunity. Adrian Mulcahy: Kind of coming to our final questions now, we seem to have exhausted the audience, and there's a bit of feedback saying thank you for the session, by the way. I just thought I'd share that with you. But just going back to the investment in the people, which, as I called out, is a really important initiative for your business. So which parts of the business have the new staff been appointed? And where do you expect new staff to be appointed over the next couple of years? Jacob Hanoch: So I think that right now, the place where we need more people is the whole -- the staff that supports sales, that supports customers. So we need -- on the design side with each new customer, especially when we start talking to product companies -- and maybe this is a good place to kind of explain a little bit how good IP company functions. A good IP company always wants to have a lot of royalties come in. And when you talk about the royalties, when you talk about the product customers, the goal is to have as many of them use your standard modules. So you want to have a certain set of modules that you develop. And then most people, the vast majority will take one of those, and you'll basically have 100% margin on those sales. So that's really where I'm focused. I -- we want to get to the point where the product company -- well, we have a lot of product companies coming onboard, et cetera. Obviously, that's not now. That's not this year, but it's going to happen. And we want to have that offering of these base designs or modules and then basically get very, very high margins on the royalties that we get there. But some of the customers will need additional tailoring, additional help. They will be paying us NRE so that we help them optimize the module in their SoC, and that will happen also. So right now, the work on the design side is where we need to have some growth as we -- especially the first product companies, they require more support. We don't have that big library of modules yet, so we need to develop it. And right now, we're going to have -- if I look at the budget for this year, the biggest growth is going to be on the design side and supporting the sales activities. Adrian Mulcahy: Thanks, Coby. So there is one other question here, a relevant question. Are there any plans to get additional broker coverage? I think I know the answer to this one. Jacob Hanoch: Well, it was challenging to start getting some of the brokers to cover us, and I'm very thankful for both UCP and MST now. I think they're doing, by the way, an amazing job. I have to give the complement to both [ Jona ] at UCP and Andrew with MST. It's unbelievable how they picked up. They both started from practically 0 knowledge of semiconductors, and they really went through very intensive studies in order to give coverage, but I think they're giving very good coverage. So I recommend people to actually go and look at that. And I really hope to see more coverage starting this year. Hopefully, now more people are realizing that this is an interesting technology and an interesting company. Adrian Mulcahy: That's very good. I'm sure that [ Jona ] and Andrew would love that, but they're both high-quality analysts as you and I both know, Coby. Here's a bit of a tongue-in-cheek question to finish the meeting. Coby, if I offer you a year of free ice creams and by the end of February, will you sign Analog Devices? Jacob Hanoch: Someone knows me. I don't know if that was anonymous or not, but someone knows me. Adrian Mulcahy: No, it wasn't. It wasn't. It's very good though. And just a final one. Just a final question, too, and then we'll get you to wrap up with some final comments, Coby, as well. So comparing Weebit to eMemory in terms of people, does -- Coby, do you forecast Weebit will have more design people? Jacob Hanoch: Well, I just mentioned we're going to be hiring. That's the team that's going to grow the most this year. So we do need more design people. I am, by the way, very, very cautious with hiring. I had someone make the comment to me that he was looking at another nonvolatile memory that was in Israel in the past called Saifun, and he said, you know that today with 40 people, you're managing to do what Saifun had 200 people doing. So yes, we are very cautious in the hiring. We hired very high-quality people, but I'm very, very cautious with the shareholder money. I know that the money that we have today is basically money that we got from shareholders, and I'm very cautious in how I spend it. So we're trying not to grow to huge numbers, but at the end of the day, when sales grow when you have more customers, you need to grow. So we're doing a very delicate balancing act between these 2 things. Adrian Mulcahy: No, that's good. I think investors always like to hear executives and boards talk about the discipline about deploying capital. So well done, Coby. So we've exhausted the audience, so wanted to throw back to you with any kind of closing remarks before we wrap up. Jacob Hanoch: Well, I think calendar year '25 was a really, really good year for Weebit. It was a transitional year. I mean it started a transition. We're now engaged with big-name customers, onsemi and TI. We built that infrastructure being ready for the big growth. I think we're going to start seeing that during this year. It's still going to be tough. These guys don't move so fast. So '26 is going to be a year of really getting things moving a little bit more, I think maybe '27, the way that I see it, is going to be the year where we really will have that big tornado happening. But it's very exciting. We're having a lot of fun in the company. The AI activity now is very exciting as well. So I'm looking forward for another amazing year in '26, and I wish all of our shareholders a great '26 and that we'll all celebrate together. Adrian Mulcahy: That's great, Coby. Thanks. It was great to share your insights with the group. And thanks, everybody, for joining us this afternoon. That's a wrap. Enjoy the rest of your day. Cheers. Jacob Hanoch: Thank you.
Operator: Good morning, and thank you for holding. Welcome to Aon plc's Fourth Quarter 2025 Conference Call. At this time, all parties will be in a listen-only mode. I'd also like to remind all parties that this call is being recorded. If anyone has an objection, you may disconnect your line at this time. It is important to note that some of the comments in today's call may constitute certain statements that are forward-looking in nature, as defined by the Private Securities Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results. For information concerning these risk factors, please refer to our earnings release for this quarter and to our most recent quarterly or annual SEC filings, all of which are available on our website. It's my pleasure to turn the call over to Greg Case, President and CEO of Aon plc. Good morning, and welcome to our fourth quarter and full-year earnings call. Gregory Case: I'm joined by Edmund Reese, our CFO. The financial presentation, which Edmund will reference in his remarks, is posted on our website. 2025 was a year of great strategic progress and performance milestones for Aon. Among the highlights, we advanced the disciplined execution of our three-by-three plan, which continues to accelerate our Aon United strategy by further integrating risk capital and human capital, expanding Aon client leadership, and leveraging Aon business services to drive greater capability, innovation, and efficiency. This work is enhancing our relevance and delivery capability to meet rising client demand amid increasing complexity. We outlined this momentum at our first investor day in two decades, where we demonstrated the strength of Aon United and the central role of the three-by-three plan, including the power of ABS. We believe our performance this year is proof that our strategy is working, producing tangible, sustainable results today, and positioning us for long-term success. We continue to innovate; ABS provides the foundation to deliver innovative solutions and deploy AI where it drives real value across our business. We expanded our risk analyzers, launched Aon Broker Copilot, and more recently, launched Claims Copilot. In addition, we help clients access alternative forms of capital through cap bonds, which may include parametric triggers, where market issuance rose more than 40% in 2025 and Aon's issuance increased more than 50%. Operator: Under a single integrated facility, this solution continues to gain traction. We recently announced a billion-dollar expansion, increasing total capacity to $2.5 billion. We substantially advanced our middle market strategy, including great progress in building upon our independent and connected strategy with NFP. The business is performing well with strong producer retention as we build upon NFP's strong client relationships with the full breadth of Aon's capabilities. We're also accelerating the connection of NFP onto our ABS platform, which we believe will further enhance performance over time, highlighting our even greater conviction in the power of ABS to onboard middle market companies. And we continued our very effective tuck-in M&A strategy, further accessing the large $31 billion North American addressable market. As we close 2025, we ended the final year of our three-by-three plan with strong momentum, fueled by our client-centric strategy and integrated capabilities that enable us to win more opportunities, deepen client relationships, and deliver more value in an increasingly complex macro environment. Turning to our results, we finished the year strong with continued momentum in the fourth quarter and delivered on our full-year objectives, including 6% organic revenue growth for the second straight year, 90 basis points of adjusted operating margin expansion, strong adjusted EPS growth, and double-digit free cash flow growth. These results demonstrate the consistency and durability of our business model and the impact of our Aon United strategy. They also reflect investments in revenue-generating talent and the impact of our To set the context for our results, I will highlight four representative examples that are driving results and fueling momentum into 2026. First, a client story, which shows how our teams are trusted strategic advisers to clients and how we bring the best of Aon to the market. After partnering with a large international construction client for several years, the company needed a dedicated broker to support the full life cycle of a new data center project. We combined our role as a trusted adviser with a united global team, bringing together account leadership with construction, data center, energy, and cyber specialists to deliver an integrated proposal. Our winning response showed the full capabilities of AI, including DCLP, advanced climate analytics, and proprietary risk analyzers, all aligned to the client's long-term growth strategy. We demonstrated a distinctive ability to support both construction and operations, leveraging data and insights to improve capital efficiency and resilience. The client credited our team's expertise and our global connectivity and capabilities as central to the win, reinforcing our strength in leveraging trusted relationships and leading analytics to create high-quality growth opportunities. Second, we continue to innovate and lead in the data center opportunity. In addition to our DCLP capacity increase and the client story I just referenced, our reinsurance team recently designed and placed the first-ever data center-specific treaty, delivering a solution that aligns up to $5 billion of capital through the insurance value chain behind a single leading insurer. And we're actively engaged with several others to help them expand and strengthen their capabilities to provide capacity for clients. Our advisory capabilities around site selection, design, and engineering, as well as tremendous data and advanced analytics, are critical to informing effective capital protection decisions in the face of extreme weather, supply chain, and cyber risk. And while we're still in the very early days of this generational opportunity with data centers, we have some exciting wins under our belt, and our leadership in this space is another factor that supports sustainable organic revenue growth. It's also another impressive example of Aon innovating to solve client problems. Third, talent continues to be a critical driver of our success and ability to achieve sustainable growth. Our client-centric strategy remains focused on attracting, developing, and retaining top performers who see the value they can bring to clients and grow their business with our best-in-class analytics and capabilities. We continue to hire in high-growth priority areas, and revenue-generating talent increased a net 6% this past year. We're also expanding with existing clients through Aon client leadership and seeing higher new business and better retention with ACL-covered clients. Finally, our capital position, which Edmund will detail further, puts us in a position of strength and flexibility. This year, we continue to generate strong free cash flow and further strengthened our capital position through disciplined portfolio management, including the sale of NFP Wealth. Our enhanced capital position is well-positioned to continue our strong execution. The four megatrends we've highlighted—trade, technology, weather, and workforce—are as relevant as ever. We're building momentum with clients as our globally connected team is equipped to deliver data-driven insights and better outcomes for our clients. At the same time, we're committed to delivering strong performance, including sustainable organic revenue growth supported by our investments in ABS and talent. It's inspiring to see all that colleagues have accomplished on behalf of our clients to achieve greater resilience and growth over the last year. Our conviction and level of excitement as we execute our strategic vision have never been greater. Aon United is more than just delivering on objectives in any given year. It's about delivering for our clients, colleagues, and shareholders over the long term. And in an increasingly complex world, Aon is better positioned than ever strategically, operationally, and financially to achieve this mission. Finally, to our over 60,000 colleagues around the world, thank you. Thank you for your relentless commitment to our clients, each other, and our Aon United strategy. Now let me turn the call over to Edmund for his comments and insight. Edmund? Thank you, Greg, and good morning, everyone. Edmund J. Reese: I'm energized to be here discussing Q4 2025, a quarter that delivered results within our guidance expectations and capped off strong full-year performance that continues to reflect our disciplined execution of the three-by-three plan, the power of our financial model, and the momentum we have built across the firm even in this macro environment. Throughout the year, we've been focused on communicating our strategy and the consistency of our delivery. Our team is executing, and it is reflected in our results. Before diving into the quarter's results and our outlook for 2026, I want to take a moment, consistent with how we frame this section each year, to underscore the core growth drivers that are underpinning our momentum. These drivers reflect the intentional choices we've made over the first two years of the three-by-three plan and are not only delivering in the current period but also fortifying our ability to sustain performance through 2026 and beyond. Operator: First, Edmund J. Reese: with two consecutive years of 6% organic revenue growth, we have more conviction than ever in our ability to deliver sustainable top-line growth. This conviction is grounded in the strength of our three-by-three plan, now in its maturity phase, and in the deliberate investments we've made to support long-term growth. We continue to add revenue-generating talent, strengthen Aon client leadership, and accelerate our presence in the middle market, where demand signals remain robust and clients continue to benefit from our broad capabilities. These investments are contributing to top-line growth today, and they have a cumulative and compounding impact that benefits the years ahead. Second, we achieved critical milestones by integrating NFP and delivering double-digit free cash flow growth in 2025. These results are the product of disciplined prioritization and execution. And third, our strong operating cash generation, coupled with our disciplined portfolio management, including the sale of the NFP wealth business, brings our total capital available in 2026 to $7 billion. This means that in addition to our organic revenue growth, we are in an even stronger position from which to execute our balanced capital allocation model, including the pursuit of high-return inorganic investments that amplify our organic growth momentum. Operator: Overall, Edmund J. Reese: our performance this quarter and for the year demonstrates the power of our disciplined execution and the strength of the strategic choices we've made to drive the durable growth reflected in our results. With that context, let's turn to the detailed results. Our full-year performance is right in line with our guidance for mid-single-digit or greater organic revenue growth, adjusted operating margin expansion, strong earnings, and double-digit free cash flow growth. Organic revenue growth was 6%, and total revenue increased 9% year-over-year to $17 billion. Adjusted operating margin expanded by 90 basis points over last year and reached 32.4%. Adjusted EPS was $17.07, up 9% year-over-year. And finally, free cash flow increased 14% over 2024. For the fourth quarter, organic revenue growth was 5%, and total revenue, impacted by the wealth and straw dispositions, increased 4% year-over-year to $4.3 billion. Adjusted operating margin expanded by 220 basis points over last year and reached 35.5%. Adjusted EPS was up 10% to $4.85. And finally, free cash flow increased 16%. Let's get into the details of these results, starting with organic revenue growth on slide six. Organic revenue growth was 5% in the quarter, with both commercial risk and reinsurance delivering 6% or better growth on the back of new business and continued strong retention. This performance reflects the importance of hiring in priority growth areas and the strength of our analytical and advisory capabilities, which are helping clients capitalize on favorable pricing conditions. In commercial risk, 6% growth reflected continued strength in our core P&C business globally, including strong growth in the US, EMEA, and Latin America. Additionally, construction delivered another quarter of double-digit growth driven by ongoing demand for large global infrastructure projects, including data center construction for major technology clients. I'll also note that while the lift from M&A services was modest, we remain well-positioned in this space and expect M&A activities to support our mid-single-digit or greater growth as we enter 2026. Reinsurance delivered 8% growth driven by double-digit growth in both insurance-linked securities and our strategy and technology group, as well as continued strength in facultative placements. Insurance-linked securities benefited from record cap bond issuances, which reached $59 billion outstanding as investors increasingly seek uncorrelated asset classes. STG also saw elevated demand for our analytics, which help clients access alternative forms of capital. Looking ahead, our data indicates softer January 1 property renewals with rate declines of 15 to 20%. Even with this market headwind, we continue to expect full-year 2026 organic revenue growth in line with our mid-single-digit or greater objective, supported by higher limits, ongoing strength in international facultative placements, record activity in insurance-linked securities, and growing demand for STG analytics. We are uniquely positioned at the intersection of insurance and capital markets, helping clients access alternative capital at scale. This positioning becomes even more valuable in a softer rate environment where innovation matters as much as price. Health solutions grew 2% this quarter, and this growth reflects mid-single-digit growth in our core health and benefits offerings across the US and EMEA, partially offset by delayed closed sales moving into Q1 2026 and slower discretionary spend in Talent Solutions. While consulting services in areas like talent may experience short-term deferrals, these needs are structural, and demand typically rebounds as conditions normalize. We continue to expect health to remain an area of strength and well within our mid-single-digit or greater objective. Wealth generated 2% growth, in line with the 1 to 2% we guided to last quarter. Performance for the quarter and the full year was led by strong advisory demand in the UK and EMEA related to ongoing regulatory change. Importantly, for the full year, all four of our solution lines were in line with our mid-single-digit or greater objective. Growth was broad-based, with commercial and reinsurance at 6%, and each of our human capital solutions delivering 5%. Let me walk through the components of our Q4 organic revenue growth on slide seven. We extended our consistent track record of new business, contributing nine points to organic revenue growth, supported by steady new client acquisition and expanded mandates with existing clients. Our investment in revenue-generating talent, particularly in high-growth sectors like construction and energy, has supported the 10 points new business contribution to organic revenue growth for the year. In 2025, despite intense competitive pressure for talent, revenue-generating hires were up 6%, firmly within our 4 to 8% objective. The 2024 and 2025 cohorts are tracking to similar seasoning curves for both incremental revenue and timing and together contributed approximately 50 basis points to 2025 organic revenue growth. Operator: We Edmund J. Reese: expect continued momentum and compounding benefit from the seasoning of the 2024 and 2025 cohorts. We plan to continue investing in growth and to expand this population by an additional 4 to 8% in 2026. And, again, this is because we see specific opportunities in high-growth priority areas. Q4 2025 retention remains strong at a mid-nineties rate, supported by continued improvement in commercial risk and reinsurance. Increased engagement through our enterprise client group and enhanced service delivery from our ABS capabilities are playing a meaningful role in sustaining and strengthening client relationships. Net new business contributed three points to organic revenue growth in the quarter. Net market impact, which captures the impact of rate and exposure, contributed one point to organic revenue growth, consistent with each quarter this year and within our zero to two-point estimated range. Reinsurance was down primarily from rate declines on January 1 renewals, and that impact was offset by limit and coverage increases across cyber and commercial risk, supporting clients managing rising health care costs in health, as well as rate benefits in wealth. And one final point on revenue. Fourth-quarter fiduciary investment income was $63 million, down 17% versus the prior year. Its higher average balances were more than offset by lower interest rates. Our full-year 2025 results underscore why we have high conviction in our durable, mid-single-digit or greater organic revenue growth model. We are executing on each component of the model. First, delivering nine to 11 points of growth from new business. We delivered 10 points with significant contribution from our investment hires and NFP revenue synergies. Second, maintaining a mid-nineties high retention rate, we improved 50 basis points over last year. Finally, achieving a zero to two-point net market contribution in this macro environment. We consistently delivered one point in each quarter this year. Turning now to margins on slide eight. Q4 adjusted operating income increased 11% to $1.5 billion, and adjusted operating margin expanded 220 basis points to 35.5%. For the full year, adjusted operating margin was 32.4%, and we delivered 90 basis points of margin expansion. We continue to expand margins primarily due to ABS-enabled scale improvements, ongoing disciplined expense management, including the NFP OpEx synergies, and the benefits from the restructuring initiative to accelerate our three-by-three plan. We ended the year with $160 million in restructuring savings, $10 million ahead of our plan, supported by $50 million of savings in Q4. Restructuring savings contributed 115 basis points to adjusted operating margin in Q4 and approximately 90 basis points to full-year margin expansion. As we enter the final year of the accelerating Aon United (AAU) restructuring program, we have identified additional opportunities to accelerate the NFP integration into ABS, leveraging our global capability centers, and deepening integration across our technology platforms. We now expect to complete the AAU investment at $1.3 billion, and we are firmly on pace to deliver $450 million in total savings. We have used the AAU program to strengthen our foundation for ongoing margin expansion within our core business operations. And we have clear visibility to growth at higher profit margins, driven by continued operating leverage through ABS. Moving to interest, other income, and taxes on slide nine. Interest income was $14 million in the fourth quarter, up $10 million over last year, driven by interest earned on proceeds from the sale of NFP Wealth. Interest expense came in at $191 million, $16 million lower than last year, primarily due to lower average debt balances. We expect Q1 2026 interest expense to be approximately $185 million. Other expense was $21 million compared to a $2 million benefit last year, driven by gains from balance sheet currency exposure, gains from the divestment of our non-core personal lines business, and our hedging program. We estimate Q1 2026 other expense to range between $20 and $25 million. Finally, the Q4 tax rate was 20%, bringing the full-year tax rate to 19.5%, 60 basis points better than last year, and in line with our estimate of 19.5 to 20.5%. Turning now to free cash flow and capital allocation on slide 10. We generated $1.3 billion of free cash flow in the fourth quarter, bringing our full-year free cash flow to $3.2 billion, an increase of 14% compared to 2024. As we expected, our double-digit free cash flow was driven by strong adjusted operating income, including contributions from NFP as integration costs wound down. Turning to capital on the right-hand side of the page, our strong free cash flow growth enabled us to continue to execute our capital allocation model. We paid down $1.9 billion of debt in 2025, and coupled with strong earnings growth, lowered our leverage ratio to 2.9 times. Both the level and the timing are consistent with the 2.8 to 3 times Q4 2025 objective established when we announced the NFP acquisition, again reflecting our disciplined execution. Additionally, we remained active in M&A, continuing our programmatic tuck-in acquisitions across high-growth priority areas, including middle market acquisitions through NFP, which acquired $42 million of EBITDA for the full year in line with our expectations. And finally, in 2025, we returned $1 billion in capital to shareholders, including $1 billion in share repurchases. Operator: I will conclude my prepared remarks on slide 11 with our 2026 guidance and some forward-looking perspective on our growth objectives. As we enter the final year of our three-by-three plan, the drivers of growth are stable, and we are executing on both our strategy and the financial model with precision. We carry substantial momentum into 2026. And in summary, our full-year '26 guidance includes mid-single-digit or greater organic revenue growth, operating margin expansion, 70 to 80 basis points of adjusted strong adjusted EPS growth, and double-digit free cash flow growth. And let me walk through the key drivers of each guidance point, starting first with organic revenue growth. We expect mid-single-digit or greater organic revenue growth fueled by recurring new business wins with both existing and new clients, the compounding contribution from revenue-generating hires in priority areas and within the enterprise client group, and accretive growth in the middle market, including revenue synergies from NFP. We also expect continued mid-nineties retention and zero to two points from the net market impact, which assumes we continue to offset rate pressure in property and treaty. On adjusted operating margin, we expect 70 to 80 basis points of expansion driven by three key components. First, the impact of lower interest rates on investment income from fiduciary balances is expected to dilute margins by 20 basis points. Second, we expect $180 million in restructuring savings over 2026-2027, including additional savings from accelerating the NFP integration. From 2026, $100 million of savings will contribute approximately 50 basis points of margin expansion. Third and most important, we expect 40 to 50 basis points of margin expansion from the operating leverage in the scalable ABS platform. Our ABS growth engine continues to deliver scale benefits, capacity for growth investments, and margin expansion that drives earnings growth. Our expectations for mid-single-digit or greater organic revenue growth and 70 to 80 basis points of adjusted operating margin expansion support a strong adjusted EPS growth outlook for 2026. Embedded in this earnings guidance is a two-point EPS tailwind from FX based on today's FX rates remaining stable, a two-point headwind from the sale of the 19.5 to 20.5% excluding any extraordinary discrete items, and a non-cash pension expense of $80 million. Our financial model is built on sustainable top-line growth, consistent strong earnings, and reliably converting those earnings into double-digit free cash flow growth. In 2026, we expect $4.3 billion of free cash flow generation from operating income and working capital improvements. The tax impact from the over $2 billion in proceeds generated from the NFP wealth sale will be reflected in operating cash flows and will reduce free cash flow by approximately $300 million prior to any benefit from the usage of those proceeds. Of course, with over $2 billion in proceeds, we have significantly strengthened our capital position with approximately $7 billion of available capital and substantial strategic flexibility. In 2026, we will remain committed to disciplined capital allocation, balancing investment for growth with capital return to shareholders. We plan to return at least $1 billion in share repurchases while continuing to evaluate our inorganic pipeline for high-margin, high-growth areas across risk capital and human capital. In closing, our performance in 2025 demonstrates the resilience of the firm and the precision with which we are managing the business. Executing the three-by-three plan, delivering on our financial model, and allocating capital with a sharp focus on returns. Our disciplined execution is evident in our organic revenue growth, margin expansion, and enhanced earnings power. This consistency gives us confidence that what you're seeing today is not episodic. It is the result of our strategy and financial model producing durable outcomes and gives us even greater conviction in our ability to continue creating long-term value for shareholders. So with that, let's open up the line for questions. Kevin, back to you. Operator: Certainly. We'll be conducting a question and answer session. If you'd like to be placed in the question session, you'd like to remove yourself from the queue, please press star two. Once again, that's star one to the queue, and please ask one question, one follow-up, then return to the queue. Our first question is coming from Bob Huang from Morgan Stanley. Your line is now live. Jian Huang: Good morning, and congratulations on the quarter. Maybe if I can just ask a question to follow-up on talent and retention in today's environment. Obviously, NetHire has been a strength to your growth. But can you give me can you maybe give us a little bit more color in terms of what competition for talent looks like today? Obviously, there are some brokers that are extremely aggressive out there. Does that significantly impact you in terms of talent retention and hires? Especially in key growth areas, like data centers, energy infrastructure, things of that nature. Just curious about attrition and retention, things of that nature. Thanks for that question. Appreciate it. And I'll offer a couple of thoughts and Evan jump on in here. First of all, for us, talent is fundamental. You know this, Bob. We've talked about this pretty much on every call. And what you see us doing is continue to invest not just in additional talent in priority areas. We talked about construction and energy and health and mid-market and data centers, etcetera. But helping that talent be more effective. Literally, the tour de force investment around Aon Business Services is really around content capability, so not only our existing colleagues, but new colleagues who come into the firm have an opportunity to do things clients they've never done before. As such, Bob, we are uniquely positioned to bring talent into the firm. That's why, you know, in the current environment as Edmund described, you know, we're well up on a net basis from a talent standpoint. And we're gonna continue to make investments to support our mission and our efforts here and look forward to it. And the reaction we're getting as colleagues come in is incredibly positive. But it's met and exceeded by the interaction of our existing colleagues who see the opportunity that we bring to their backdoor on behalf of clients really no one else can bring. So for us, it's always been competitive out there. We'll continue to be, and we're gonna Edmund J. Reese: we're gonna enter the fray with a lot of confidence and excited on behalf of our colleagues and clients. But, Evan, what else would you add to that? I'll just emphasize the one point that you have and then talk a little bit about Operator: the contribution on that point. I mean, clearly, it's an aggressive and competitive intense environment right now. And as you just said, Greg, our talent, the attractiveness of it, we're not immune to that. But the point you made about being up 6% net in revenue-generating hires for the year means that not only were we in line with our objectives, but we're on our front foot. And this continues to your point to be a high area of focus for us right now. I mentioned in the prepared remarks that the 24 and the 25 cohorts five, are contributing the strong growth, 50 bps of contribution, and that means that the 24 cohort was right in line with what we guided to earlier. We said 30 to 35 basis points for the full year. They're tracking in line with that, and so is the 25. And that's showing up to your question in the priority areas. I mentioned double-digit growth in construction, strong growth in energy, and in our core health and benefits business. Also showing up in new business where we finished the year with 10 points of contribution. From new business. Those things are being impacted by our hiring in those priority areas. So we expect, again, to Greg's point, we have the capacity through ABS to continue making this investment. Our objective again going into 2026 is another 4 to 8%. We're gonna stay focused on creating this capacity. Building the capabilities that Greg just mentioned to attract them, and retain them. That's part of our strategy for growth moving forward. Got it. Really appreciate that. Sounds like the Jian Huang: talent is strong. Bench is deep in core areas. Maybe the other question is really on acquisition and inorganic growth. You're obviously very optimistic in the middle market environment. Just given the broader market volatility pricing deceleration, Operator: do you foresee Jian Huang: more attractive valuation for M&A, or do you in other words, do you see more opportunities for inorganic growth? Or is it something that just given the current environment, how do you think about is there a way to think about are you stepping on the gas, so to speak, or is it something more of a time to dial back a little bit on that side? Edmund J. Reese: Well, let's first just because it's an important question, and we should just take our time. Make sure that we understand this just to talk about capital allocation first and maybe Greg and I both can make a comment on your question about valuations. But I think the first part is capital allocation. I just first need to reiterate that we are just really pleased first with the free cash flow generation in '25 and then the execution of our capital allocation model over '25, paying down $2 billion of debt and meeting the leverage objective paying a dividend that was 10% higher, over $40 million the question that you're asking of middle market acquired EBITDA, primarily through NFP and a billion in capital return versus share repurchases, that means we continue our track record of disciplined execution on this capital allocation model. As we go into this new environment, into 2026, we're focused on continuing that strong free cash flow generation, and we're in a position of strength with $7 billion in available capital. So what does it look like? How do we allocate that? First, I think now that we've met the leverage objective, focused on paying that again, increasing dividend, but M&A is gonna be a key part of the capital allocation model. As I said in the prepared remarks, it complements the organic revenue growth and we've been a great acquirer. It is important to highlight the point we made at Investor Day that our acquisitions over the last decade have generated 12% revenue growth after we've owned them for a year that the portfolio IRR of acquisitions over the last decade have been above 20%. And we continue to lead the industry in ROIC. So we evaluate opportunities for that strategic fit. For that type of financial profile. When we look at the environment, getting to your point now, getting to your question, the portfolio of pipeline opportunities to unlock growth, we got a robust pipeline. But, again, we're gonna be focused on the high margin, high growth areas across both risk capital and human capital. We're gonna continue to scale in middle market through NFP, particularly in North America commercial risk. And there are some geographic areas of priority for us where we think there's specific opportunities. So that will be a part of it. I think the market is attractive. We have a strong pipeline. But, again, they have to meet the criteria financially and strategically. And finally, I'll just say the share repurchases will continue to be a part of the balanced capital allocation model as well. We hit the commitment that we made for 2025. Sitting here in January, we feel very comfortable about at least a billion in share repurchases, and any changes of that will be dependent on the pipeline opportunities meeting the criteria that I just talked about. So we won't let any excess cash sit on the balance sheet. And all this, I would just say, is a continuation of our capital allocation model that's about balancing investment for growth and capital return to shareholders. That's a discipline that we've had that I think benefits shareholders, and allows us to maintain industry-leading ROIC. On valuations, I'll make my final point. I think there's always a lag. Sellers anchor and trailing EBITDA and prior transaction comp, so you don't necessarily see sort of lower valuations in this market right now. I think debt costs drive the lag here. The quality assets, the type of assets that we're looking at remain resilient. They're high growth, high margin assets. So I think you see strong valuations there. The bid-ask spreads are changing in these markets. But, look, we will continue to have our criteria for assessment and evaluation, and we'll make decisions for high return that allow us to continue to be leading ROIC. That's more of a comprehensive answer than you asked, but I think this is an important topic, and I wanted to hit on all of that. Jian Huang: No. I really appreciate that. Thank you very much. Operator: Thank you. Next question today is from Elyse Greenspan from Wells Fargo. Your line is now live. Hi. Thanks. Good morning. Elyse Greenspan: I guess my first question, I'm gonna follow-up on Bob's question capital. Right? So Edwin, you outlined or you said you have $7 billion of total capital available in 2026. The buyback was set at $1 billion. So I guess from a timing perspective, do you guys have line of sight on a deal potentially deals for the first half of the year that will consume a lot of that $7 billion? And is that why you're only expecting to buy back the $1 billion at least at first, Edmund J. Reese: it's important to add two words before $1 billion. That's at least $1 billion. We want to have the strategic flexibility given the pipeline right now. There's not a specific deal or asset that we're looking at. We, as I just said, have a robust pipeline of opportunities in some of the spaces that we talked about. They have to meet the strategic criteria. They have to meet the financial criteria. And we want to make that decision. We think that we've been very good at balancing the investments for inorganic growth and capital return. In fact, we put up a slide during Investor Day that showed roughly a fifty-five forty-five balance. And, ultimately, and over time, we expect to have a balance like that. So we want to make sure that we have the strategic flexibility to make the right decisions on behalf of the investors here. But, Greg, let me let you comment on that. Gregory Case: Listen, Edmund. I think you've covered it well, Elyse. Listen. Edmund answered the prior question with really a layout of how we think about capital allocation. It's exactly consistent with what we've done historically. And the ethic around that is high. They went through all the different aspects. I would add one to that. We are so dedicated to actually generating capital that gets the maximum possible return to shareholders. We also executed a very our divestiture. NFT Wealth really our NFT teams to come together, our Aon teams to come together. In the context of bringing NFT into the hold, we actually executed a divestiture to additional capital so we could prioritize. What I'm trying to do here for you, Elise, is highlight this is how strongly we feel about the principles that Edmund laid out. So we're essentially applying those in the current environment. The environment's moving around. It'll be what it'll be. But watch us do what we do. And that's another proof point on how focused we are on the highest possible return on capital allocation we can get. Elyse Greenspan: And then my follow-up is on the data center opportunity. Appreciate some of the comments and prepared remarks, but I guess I was hoping you know, just give us a little bit more color. You know, how much of a contributor were data centers to organic in the Q4? And how would you expect, I guess, the tailwind from that opportunity to benefit your organic growth in 2026? Gregory Case: Well, first of all, Elyse, the data center opportunity let me just offer a couple of thoughts. And we can really just talk about the mechanics of how we're thinking about it for '26 and '27. But remember, the data center opportunity it is unique. It is it's never been seen before. It is monumental. It also requires a level of response and complexity that's beyond what the traditional industry has ever accomplished. Just be clear about that. This requires real new, net new innovation. Around alternative forms of capital, how we think about risk, how we how we how we pull risk, all those pieces. All I'm trying to highlight is and while, you know, I think we probably do a third or more with the data centers that are out there now, we're incredibly well positioned, and we're having the dialogues no one else is having. But we're at the beginning of this process. So for you know, if you think about it, there are lots of data centers out there, thousands of them. But as we think about the build that's going on now, you know, last week at Davos, this was one of the primary discussion points and it was really this and AI and how they fit together. This race is just beginning. The opportunity is just beginning. So, you know, I would characterize Edmund, wanna get your input here as well. This is another proof point on both our ability to innovate and drive net new insight into the market. And second, it just reinforces mid-single-digit or greater organic revenue growth. That's really all we're trying to do. And so that's what I would factor in. It's another it's another weight on the scale if you think about sort of what's gonna drive that over time, and we'll see how it plays. But it's a unique opportunity, and we're very well positioned. But, Edmund, what else would you add? Great. You hit that so thoroughly. Operator: The only thing that I'll add is just backing it up. To our commercial risk business where we see this contribution showing up. We've now had 6% for the year in commercial risk and 6% or better for the last three quarters. Again, very much in line with what we've been talking about. And I highlighted earlier global strength in core P&C, the contribution from net new business Jian Huang: retention, Operator: but the priority growth areas construction, which is where we see our data center contribution show up, being at a double-digit growth and contributing to that. I think in addition to the innovation that you just mentioned on data center, we also sort of have the tailwind from potential, a pickup in M&A to support that growth. In commercial risk as well. So to your point, Greg, we just feel very much confident in the mid-single-digit or greater growth for commercial risk that'll be supported by the as leading in this data center space. Elyse Greenspan: Thank you. Operator: Thank you. Next question today is coming from Matthew Harriman from Citi. Your line is now live. Matthew Harriman: Hi, good morning, everybody. I wanted to follow-up on your comment to that last question, Greg. And one of the things I'm trying to understand is Operator: there's a totally different set of constituents really driving a lot of this investment, I'm curious whether or not we should think about market share in this new opportunity correlating at all the historical market share in historical data center builds. Gregory Case: There's an entire consistency that lays out here. And the response is, as we talk about mid-single-digit or greater in Elise's question, is really around it isn't just commercial risk. It's reinsurance. It's why for us, Matthew, risk capital matters so much. As we described, you know, this is we didn't we didn't show up and say, well, we need to coordinate so we can actually meet client demand here. We didn't just coordinate. We changed structure, risk capital. It's connecting reinsurance into the commercial risk environment in a way that's never been connected before. So for us, you know, we don't take anything for granted. Our view is we need net new innovation no matter where we are in our current position, leading or not, this race is just beginning. It is not in mid-game. It's not in end-game. It's profound, but it is in it is beginning. And so for us, our obligation on behalf of clients, all categories I just described, is massively more innovation. This is why you know, we I must say, you go back to 2023. We doubled down on an integrated AI embedded capability and we doubled down on risk capital and human capital. We changed organization, and we applied it through enterprise client. We did that two and a half years ago. In some respects, we're preparing for what we need now in order to deliver against this marketplace. So we're feeling good about that progress. It's one of the reasons we spent a billion dollars to accelerate it. So for us, we like our position. We love the demand profile. We see opportunity that's very, very unique. We see a level of investment players who have, you know, who have capital that no one's ever seen before with an absolute focus to drive. So for us, think this, by the way, is an industry opportunity. So it's not any one single player question is, can the industry respond and make a difference and be relevant? If our industry can respond and make a difference and be relevant, this is profound for everyone. And we certainly think, you know, if we can serve a primary role in the tip of the spear here, we're thrilled to do it on behalf of our clients. Thanks for that. I guess, you know, relationships matter too. So I'm just curious with respect to the M&A practice you have given the some of the asset owners are financing parties, how big of an advantage that is? If at all? Listen. Being able to sit down with the prime with the primary players here at the top of the house and help them understand that in the end, this isn't just brute isn't just brute force investment. This is very much around an integrated risk management strategy will change the economics of how these play out over time. Beyond just the build, but also the operations. When you think about, you know, business interruption measured at million dollars a minute now, there's a way to think about this differently, and you have to think about it differently. So you know, you're right. Being able to actually access the principles is fundamental, and we are in a very privileged position to do this. It's one of the aspects of our M&A services business and with financial sponsors that puts us in a unique position. In addition to the work we do with hyperscalers, addition to the work we do with the asset gatherers, addition to the work we do with the constructors, the builders. Because make no mistake about it, they're in a very unique position. They're being called on to do things they've never done before, and they're being asked to take on risk. On behalf of the scalers that is also uncomfortable. So how one thinks about that risk management profile and how we deliver against it. And then remember, Matthew, this only matters if our analytics can convince capital to come in and buy down the volatility. Otherwise, we don't have a transaction. So we have to get the capital to work to do this. This is why in the end, this is tour de force analytics, the analyzers, the capability. It's tour de force reinsurance, you know, access markets, and it's tour de force commercial risk. And then to be clear, one of the piece here I just have to throw in, and this is man, this is front and center at Davos last week. The human capital application of this is going to be massive. And everyone was gonna is gonna talk about AI and job reduction. Don't we don't think about it that way. We think about it as how we amplify the we've got and help our clients navigate the path of the from to on as you embed this of capability into their firms, not just the hyperscalers. We're talking about the users now, The human capital opportunity here, we think, is profound as well. So anyway, I know that's maybe more than you wanted, but, you know, we're pretty optimistic about this opportunity. And for Aon, certainly, but, you know, equally for our industry. Appreciate all of it. Thank you. Thank you. That's question today is coming from Charlie Lever from BMO. Your line is now live. Charles Lederer: Hey, good morning. Thank you. Maybe I'll move off of data centers. You maybe put a finer point on the incremental opportunities you identified with the upsizing of the AAU savings and with NFP? I guess, what's the pacing of these savings and how much is the 50 basis points you laid out for this year and this year? Well well, maybe, Charlie, if I Gregory Case: I just we do wanna start with just maybe a quick overview of literally the discipline of which we undertaken this is really sort of at the helm of Edmond, and I really want him to describe exactly the discipline and the approach and the and the progress. But remember, me provide, you know, the quick overview. What got us here? You know, what drove this was our initial investment and an incredible progress we've we've actually we've actually made so far against it. And and and now what we're talking about doing is taking this proven progress and applying it into the middle market. So that's in exactly the same time frame that we had before. But remember, I alluded to it in in the prior discussion with Matthew. What we did in '23 is made a decision to double down on AI business services connected to the to the rest of the firm. By the way, embedded in AI business services is an AI platform. I mean, I kid you not. Literally, on Monday, you know, two days from now, we're literally going to show up on Orlando. There will be literally 1,600 clients and markets in the property symposium and casualty symposium of Aon. The entire world's gonna shut down on property and casualty for the most part for three days. And that will be driven by a set of analyzers and content capability that's come out of the investment that we've made. That's why we're so excited about it, the power of it. And now we see that opportunity. This is probably way, an AI platform at scale globally that no one else. Has. We've spent two and a half years working on that. And now we're gonna finish in the third year. And what Edmund highlighted was in addition to what we've done in the core business and the work we began with NFP, the success of NFP for the last you know, now coming on, you know, first full year of a two years, two and a half years in this effort together has truly proven the opportunity inside the middle market. We always had high expectations. Now we see them even greater than ever before, and that's what we're talking about, the additional spend on in the current time frame. But, Edmund, how else would you describe Edmund J. Reese: I mean, the I think the key I'm just excited about our opportunity here, what we've accomplished, and the opportunity, Greg. The key is that we are staying consistent with completing the AAU program this year in 2026, and the savings have moved from $350 million to $450 million. And I stepped back and looked. We started this program in 2023 when we announced it, and we've accomplished a lot. Mindy and I have both been talking about our applications going down 25%. About the application's going into the cloud, 80% of them by the end of this year here. We now to help drive revenue, have a full suite of analyzers. In EMEA and US given the investment that we've made as part of AAU. And we are continuing to move our colleagues, but have a quarter of them today in our global capability centers, standardizing our operations and creating operating leverage. So and we knew that building this foundation was sort of a catalyst that allowed us to continue to bring on these middle market platforms. Greg, you know that me and the NFP team, we went to our global capability centers over the past months in in in many different countries. And the NFP team saw that they could standardize their operations your specific question. They can integrate their technology Operator: platforms, and Edmund J. Reese: innovate and drive product development that was applicable to the middle market. Given that we're so focused on this $31 billion middle market opportunity, we think this is a significant opportunity for us in Aon. So as opposed to doing this over multiple years, we'll accelerate this into 2026. We'll see revenue growth and synergies from it. And it's all because ABS is the scalable foundation that enables us to do this and expand margins in the near term and over the medium and long term. So we're quite excited about this. Charles Lederer: Thanks. Operator: For my follow-up, this is dovetailed to that question. Also sort of Lisa's capital question. On the free cash flow guide, you laid out you're committed to the $4.3 billion had Investor Day. I guess if I just look at the adjusted earnings growth, you're implicitly kind of forecasting in your guide, and and factoring in these upsized costs and the tax payment you mentioned on the NFT wealth sale. Can you help us think about the moving pieces you of how you're going to get to that $4.3 billion in 'twenty six? Thanks. And to clarify, the $4.3 billion is Edmund J. Reese: prior to the tax impact from NFP wealth is driven by the same items that have allowed us to drive double-digit free cash flow over the last ten years to drive it in 2024 as well. The operating cash flows that we have in the continued working capital improvement. And right now, what we're experiencing is the completion of the AAU program that we just talked about in the last question. And the wind down of the original NFP integration costs that we have here. So I think about going into 2025 2026 with an outlook for double-digit free cash flow growth. In line with our history. I think that's anchored in completing the restructuring program, including the acceleration of NFP the operating income growth, the working capital law, working capital improvements offset by the tax. On the NFP wealth proceeds here. So we have momentum going into '26, and confidence in the double-digit growth for 2026. Operator: Thank you. David Motemaden: Our final question today is coming from David Motemaden from Evercore ISI. Your line is now live. David Motemaden: Hey. Thanks. Good morning. I I also just wanted to clarify just on the $7 billion of available capital in 2026, do you guys expect to deploy all of that Edmund J. Reese: in 2026? And then relatedly, in the past, you guys have given David Motemaden: acquired EBITDA target Edmund J. Reese: Is that something you guys can share for 2026? On the first so two questions there. In terms of the deployment, of course, in that is the capacity that we have maintaining our leverage objectives as well. So if there's acquisition, of course, we would use debt capacity associated with that. But outside of we would either return just as we do each year any excess David Motemaden: capital through share repurchases and not allow excess cash to be sitting on the on the balance sheet here just as we've done in all the other path in in the past years. As we think about the pipeline of opportunities, again, we're very pleased with the $42 million in acquired EBITDA after selling NFP Wealth. We said $35 to $40 million expectations for the year coming in at, $42. We feel very pleased with that. We have a pipeline and a desire for high capital deployment in NFP, but we'll continue to balance that with the other opportunities in the pipeline as well. And think about using capital for the entire pipeline as opposed to just one component of the business given that we have strong opportunities across all of risk capital and human capital. Great. Thank you. Operator: Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over for any further or closing comments. Edmund J. Reese: I think we are good. Thank you for joining us, today. We're very excited for our results in 2025 and the momentum that we have going into 2026. I just wanna end the call with exactly what Greg said, an appreciation in the shout to our over 60,000 colleagues around the world. We thank you for all that you're doing. Each day, and we look forward, to going into 2026. With that, Operator: Kevin, I think we should end the call. Operator: Certainly. That does conclude today's teleconference webcast. You may disconnect your line after this time, and have a wonderful day. We thank you for your participation today.
Operator: Good morning, ladies and gentlemen, and welcome to the BayFirst Financial Corp. Q4 2025 Conference Call and Webcast. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call, you require immediate assistance, please press 0 for the operator. This call is being recorded on Friday, January 30, 2026. I would now like to turn the conference over to Thomas Zernick, CEO of BayFirst. Please go ahead. Thomas Zernick: Thank you, Vanessa. Good morning, and thank you for joining our call today. Once again with me is Robin Oliver, our President and Chief Operating Officer, and Scott McKim, our Chief Financial Officer. Today's call will include forward-looking statements and non-GAAP financial measures. Please refer to our cautionary statement on forward-looking statements contained on Page two of the investor presentation. The 2025 marks the completion of several significant milestones. We have executed and completed a number of strategic initiatives, including the exit from the SBA 7(a) lending business, the sale of a substantial amount of seven loan balances, a significant reduction in headcount and expenses, and a complete focus on our community bank. The results of these efforts are lower risk, more efficient operations, and a better position for sustainable growth and enhanced shareholder value. We are also pleased to report that we closed the year well-capitalized, providing a strong foundation as we move forward. You have heard me talk about our community banking mission of delivering excellent service to our customers across the Tampa Bay and Sarasota markets. The next chapter for BayFirst is our focus on what matters most: being the premier community bank in Tampa Bay. To that end, the bank organically grew deposits by $12.5 million in the fourth quarter, and 85% of our deposits are insured. Our net interest margin was stable at 3.58%. Treasury management revenues continue to grow, showing a 69% improvement as compared to 2024. As we previously reported, we recorded additional provision expense in the third quarter in connection with our exit of the SBA 7(a) lending business, specifically allocated to our small loan program, SBA loans. In the fourth quarter, net charge-offs from unguaranteed SBA 7(a) loans were elevated, and this additional allowance for credit losses covered a substantial portion of those charge-offs. Our provision expense for the fourth quarter was $2 million, and we acknowledge the risk in this legacy portfolio, but our efforts around credit administration are designed to make an impact to manage future risk. Although the SBA 7(a) portfolio is winding down, and efforts to sell additional unguaranteed balances are ongoing, I will note that additional charge-offs are likely to continue into this year, but we expect a lessening impact over time. As BayFirst CEO and on behalf of the entire team, I want you to know that we take full ownership of these results. They fall short of our expectations, but we understand the responsibility we have to our shareholders to address these challenges and deliver better results. As I have already noted, outside of a legacy SBA 7(a) business, community bank metrics look strong. Furthermore, I want to highlight that the company's liquidity ratio was over 18% at year-end. As we work through our deposit pricing strategy, this additional liquidity will support efforts to reduce high-cost deposits and improve the bank's cost of funds to levels more in line with peers in our market. These actions are expected to drive improvements in profitability and competitive loan pricing while enhancing the bank's net interest margin. Now I will pass the microphone to Scott McKim, our CFO, to provide an overview of our financial performance. Scott McKim: Thank you, Tom. Good morning, everyone. Today, we are reporting a net loss of $2.5 million in the fourth quarter. This compares to the net loss of $18.9 million we reported in the third quarter, which also included a restructuring charge of $7.3 million and additional provision expense of $8.1 million, as Tom had already explained. Loans held for investment decreased by $34.8 million or 3.5% during 2025 to end at $963.9 million, and total loans held for investment decreased $102.7 million or 9.6% over the past year. During the quarter, loans held for sale decreased by $94.1 million, reflecting the Bonesco USA transaction. Deposits increased $12.5 million or 1.1% during 2025 and increased $40.7 million or 3.6% over the past year to end at $1.18 billion. The increase in deposits during the quarter was primarily due to an increase in time deposits of $26.4 million and an increase in interest-bearing transaction deposits of $20.9 million. This partially offset decreases in non-interest-bearing account balances of $10.2 million and in money market and savings accounts lower balances of $24.6 million. Furthermore, as Tom already mentioned, 85% of the bank's deposits were insured by the FDIC on December 31, 2025. Shareholders' equity at quarter-end was $87.6 million, which is $23.4 million lower than the end of 2024. Net accumulated other comprehensive loss decreased by $109,000, ending the quarter at $2 million. Our tangible book value decreased this quarter to $17.22 per share from $17.90 per share at the end of the third quarter. Our net interest margin was 3.58%. This was down three basis points from the third quarter. Net interest income was $11.2 million in the fourth quarter, which is down about $100,000 compared to the third quarter, yet it was up $500,000 from the year-ago quarter. During this quarter, the bank wrote off about $160,000 of unamortized premiums related to a single USDA guaranteed loan, which was liquidated during the quarter. Non-interest income was a negative $104,000 for 2025, which is $900,000 better than 2024, which included the impact of the loan sale and a decrease of $22.3 million in 2024. I should note that 2024 included an $11 million gain from our sale-leaseback transaction that we closed during that quarter. The year-over-year decrease is primarily, however, from the decrease in gains from the sale of 7(a) SBA government-guaranteed loans. As I mentioned when we spoke last, with the exit of the SBA 7(a) lending business, revenue from gains on the sale of government-guaranteed loans will no longer impact non-interest income as it has in prior periods. Turning now to non-interest expense, which was $11.9 million in the quarter, which is a decrease of $13.3 million compared to the third quarter. Most of this decrease, $7.3 million, represents the restructuring charge. Additionally, compensation expense was $2.9 million lower, data processing was $350,000 lower, loan servicing and origination expense was $2.2 million lower, slightly offset by an increase in professional services of $200,000. On a full-year basis, non-interest expense was $3.6 million higher. However, excluding the third quarter restructuring charge, non-interest expense was actually $3.7 million lower year-over-year. Notable reductions this year include reductions in compensation of $2.6 million, bonus and commission expense was lower by $3.6 million, and marketing was lower by $500,000. These were offset by higher occupancy costs, primarily the rent expense from the sale-leaseback of $1.2 million. Data processing was $1.2 million higher, and loan servicing and origination expenses were higher by $1.6 million. Finally, higher regulatory assessments were $700,000. The provision for credit losses was $2 million in the fourth quarter compared to $10.9 million in the third quarter and $4.5 million in 2024. Net charge-offs were $4.6 million, which was up $1.3 million compared to the third quarter, which came in at $3.3 million. Unguaranteed SBA 7(a) loans account for $1 million of the $4.6 million of net charge-offs during the fourth quarter. Our on-balance sheet, unguaranteed SBA 7(a) loan accounted for $3 million of the $3.3 million of net charge-off which we reported in the third quarter. To highlight the basis for this risk, the bank had $171.6 million unguaranteed SBA 7(a) loan balances on December 31, 2025. This is down $50.4 million from September 30, 2025, and also $51.4 million lower than it was at the end of 2024. Total annualized net charge-off as a percentage of average loans held for investment at amortized cost were 1.95% for the fourth quarter, which was up from 1.24% in the third quarter and also up from 1.34% in 2024. The ratio of allowance for credit losses to total loans held for investment at amortized cost was 2.43% on December 31, 2025, 2.61% as of September 30, 2025, and 1.54% as of December 31, 2024. The ratio of allowance to credit losses to total loans held for investment at amortized cost, excluding government-guaranteed loan balances, was 2.59% at December 31, 2025. It was 2.78% on September 30, 2025, and 1.79% as of December 31, 2024. At this time, I am going to turn the call over to Robin Oliver to continue with our discussion. Robin Oliver: Thank you, Scott. Good morning, everyone. I want to further follow-up on credit risk management as it is a major focus for organizations. First off, total nonperforming loans, excluding government-guaranteed balances, were $16.9 million at the end of the fourth quarter, relatively flat to $16.5 million at the end of the third quarter. The percentage of nonperforming loans, excluding government-guaranteed balances, compared to total loans held for investments was 1.8% at the end of the year, up 11 basis points from September 30, 2025, and up 45 basis points from December 31, 2024. I want to note that of the $16.9 million in nonperforming loans, $3.4 million of these balances were current and paying as agreed. And one loan with an unguaranteed balance of $815,000 was paid in full in early January. As I have mentioned previously, throughout this past year, we worked to strengthen credit administration practices to ensure the timely resolution of problem credits as well as ensuring those same problem credits are resolved timely. Management has significantly increased its focus and resources to ensure all loans are properly risk-rated and accounted for. And as I mentioned last quarter, management scrubbed a significant portion of the portfolio to take an aggressive and conservative stance on problem credit. While that increased nonperforming and classified assets in the short term, management is focused on reducing nonperforming and classified assets expeditiously. I want to point out that as we manage classified assets going forward, more and more we are seeing classified loans paying current, paying off, and nearing resolution altogether. As of year-end, 64% of the bank's classified loans were current performing loans whereby we are working with the borrowers towards resolution. As we move forward into 2026, the goal will be the continual reduction of nonperforming and classified credits to bring these balances more in line with peers. The overall wind-down of the SBA loan portfolio, the potential sales of additional SBA unguaranteed balances, and the continued workout of problem loans is expected to improve asset quality in the coming quarters without significant additional provision for credit losses being necessary. Switching gears outside of our focus on credit, the retail and commercial banking teams are actively engaged in our community and working to attract deposits to the bank, with a focus on small businesses where we can serve as their primary financial institution and offer an array of treasury and merchant services. We saw significant growth in treasury and merchant services revenue this past year, and our team is dedicated to continuing to expand on that success. In addition, we are continuing to promote our kids club and trendsetter club programs, which have proven to be catalysts for deposit gathering and customer referral. I want to end by being clear that our full-service community bank is poised to thrive in our fantastic Tampa Bay market. And at this time, I'll turn it back to Tom for his final thoughts. Thomas Zernick: Our board of directors and leadership team remain fully committed to driving resilience and innovation as we position the company for long-term success and enhance shareholder value. With our 2026 strategic plan firmly in place, we are focused on its two central pillars: fortifying the balance sheet and focusing on maintaining a culture of disciplined risk management. We are confident in this plan and in our ability to execute it, and these priorities will enable us to flourish as a community bank and drive sustainable revenue growth. We trust that these efforts will position both the company and our bank to thrive in a dynamic banking landscape. Thank you for joining our call. Operator: At this time, we'd like to turn it over for questions. And thank you. Ladies and gentlemen, we will now begin our question and answer. Should you have a question, please press star followed by the one on your touch-tone phone. You'll hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you're using a speakerphone, please lift the handset first before pressing any keys. And it seems we have our first question from Ross Haberman with RLH Investments. Please go ahead. Ross Haberman: Good morning. Thank you for the discussion. Could you please focus on the, I think you said it was $171 million of unguaranteed government loans proportion. What is the specific allowance against that, and what's been your recent default experience on that category? Thank you. Scott McKim: Hey, Ross. This is Scott. I'll tackle that one for you. So the $171.6 million represents all of our SBA 7(a) unguaranteed balances that we have on December 31. So that portfolio is going to run off and will continue to shrink. Thomas Zernick: Within our allowance for credit losses. What was that number, what is that? P10, I suppose? Ross, you faded out there at the end. Would you ask that again, please? Ross Haberman: Sorry. I thought a good portion of that went away with your loan sale. What does that number peak at? Scott McKim: Which number? The unguaranteed. The unguaranteed. The unguaranteed portion. Yeah. So as I mentioned in my comments, it was about $50.5 million higher at the end of the third quarter. Ross Haberman: Okay. Okay. Thank you very much. Thank you for the help. Scott McKim: Sure. Thanks, Ross. Operator: And thank you. Our next question is from Julienne Cassarino with Sycamore Analytics. Please go ahead. Julienne Cassarino: Hi. Good morning. Scott McKim: Hi, Julienne. Good morning. Julienne Cassarino: Hi. I was wondering if you could talk about the deposits. I was wondering if you could talk about where the growth is coming from. And just doing some quick calculations, it looks like your deposit cost came down nicely. So, whatever the mix, it looks like it came down over 13 basis points or close to 13 basis points sequentially. And I was just wondering, it sounds like that's local customer relationships. And if those are coming in in part from the treasury management platform. Scott McKim: Thanks for the question, Julienne. Let me kind of, like, answer that quickly. First and foremost, I want to give credit to our retail and operations team people, our frontline people, our branch managers, and also everybody working in our branches. They are the ones that are working hard to address this organic deposit growth, and they are also very actively helping us reduce the overall cost of funds. And they're doing that by growing and nurturing relationships with their customers. Some are existing. Some are new. And, really, it's we're just starting to see the positive impact of doing that. I think, you know, if you recall Tom's comments at the beginning of last year, where that we really wanted to focus on this, and we wanted to really get our cost of funds better in line with our peers in the marketplace. Granted, they're higher. You can look at any number of different sources that support that, you know, they first tend to pay a little bit more on deposits. As we move forward and exit out of the SBA 7(a) business, which typically brought lots higher loan yields for us, and we could afford to pay promotional rates on deposits. Being much more disciplined around it. So the growth that you see is appropriate for how the bank is growing its assets at the same time. Plus, you know, it would be remiss if I didn't point out there was also a couple of rate changes during the quarter as well. That assisted with some of that happening. But, you know, you can't reduce rates on deposits without some form of customer outreach. And engagement, helping them understand what's going on. You know, we still have, I think, premium pricing on a number of our deposit products, but what you're seeing is the result of better management of that. And building relationships. And, Tom, Robin, don't know if you guys want to add anything to that, but this is kind of our top priority. Robin Oliver: Yeah. I would say treasury, to your point, Julienne, our treasury team, is very busy and continues to be very busy. And, you know, they're really partnering with the market execs and the banking center managers, you know, to bring in those deposits and show people what BayFirst can do and that we have all the products that these, you know, small to midsized businesses need. So, you know, it's really a group effort and then being very careful. We certainly don't want a lot of deposit runoff, so we're balancing reducing rates appropriately without creating any undue runoff that we don't want. And I think so far, we're striking that balance, but that's going to be our continued focus in 2026 is to, you know, bring down any of those promotional rates, reduce any reliance on broker deposits, etcetera, to help reduce that cost of funds. Julienne Cassarino: Just from a big picture perspective, how does the deposit franchise breakdown roughly between commercial deposits and retail? Scott McKim: I'm going to answer the question this way, Julienne. It is a very granular portfolio. So we have a lot of what I'll call individual family type of relationships that, you know, they treat us as their preferred financial institution. As far as how much is from the business side of things, we're very focused on growing our business and making sure that as we establish new lending relationships, they're compensating deposits. We want to make sure that we're the preferred financial institution for those businesses that get it. That or that we write loans to, I should say. I think, really, to call it granular is the best definition versus just a breakdown between how much is commercial and how much is not commercial. Julienne Cassarino: Okay. Thank you. Scott McKim: Sure. Operator: And we have no further questions at this time. Ladies and gentlemen, this concludes the BayFirst Financial Corporation Q4 2025 conference call and webcast. Thank you for your participation. You may now disconnect.
Operator: Hello, and welcome to Charter Communications' fourth quarter 2025 investor conference call. We ask that you please hold all questions until the completion of the formal remarks, at which time you will be given instructions for the question and answer session. Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. I will now turn the call over to Stefan Anninger. Stefan Anninger: Thanks, operator, and welcome, everyone. The presentation that accompanies this call can be found on our website ir.charter.com. I would like to remind you that there are a number of risk factors and other cautionary contained in our SEC filings, and we encourage you to read them carefully. Various remarks that we make on this call concerning expectations, predictions, plans and prospects constitute forward-looking statements, which are subject to risks and uncertainties that may cause actual results to differ from historical or anticipated results. Any forward-looking statements reflect management's current view only, and Charter undertakes no obligation to revise or update such statements. As a reminder, all growth rates noted on this call and in the presentation are calculated on a year-over-year basis unless otherwise specified. On today's call, we have Chris Winfrey, our president and CEO, and Jessica Fischer, our CFO. With that, let's turn the call over to Chris. Thanks, Stefan. Christopher L. Winfrey: In 2025, we continue to compete for customers by delivering great products. Video customers despite well-known headwinds. The video product improvements we've made over the past two years which improved connectivity relationships, are having an impact. In Internet, competition for new customers remains high, but customer losses improved year over year. Driven by customer losses, our revenue was down about 0.5% in 2025, and a challenging political advertising comparison. While EBITDA grew by about half a percent. The operating environment for new sales, in particular Internet, continues to reflect low move rates and higher mobile substitution. Along with both expanded cell phone Internet competition and fiber overlap growth similar to earlier in the year. Collectively, that drove fourth quarter Internet sales slightly lower year over year. Churn improved year over year, as expected, given last year's ACP-related impacts. And Internet churn, including non-pay churn, remains at low levels. With 2026 in full swing, our shareholders should know that we are a highly competitive group, and we intend to win in the residential and business connectivity marketplace. In this environment, getting back to positive net additions is a game of inches. We're incredibly focused on one, while clearly messaging our superior value and utility and two, providing the best quality service in the market in a way that is recognized by our customers and our service is a competitive advantage. Let me go through how I believe Fortinet Assuming regulatory approval of Cox, Spectrum will cover over 70,000,000 households, which gives us additional scale to develop new products and services serve more business customers, and save customers significant money. In 2026, we'll nearly complete our rural build-out providing us with over 1,700,000 new subsidized rural passings with growth for years to come. As well as upside from the densification of higher growth areas in places like Texas, Florida, and The Carolinas. We're gig capable everywhere. And by the end of this year, 50% of the current spectrum network will be upgraded to symmetrical and multi-gig service. With significant work on the remaining 50% in flight and moving to completion in 2027. Those capabilities matter long term, as customer data usage continues to increase. And we're working with content owners in Silicon Valley to create applications and next-generation products like Spectrum Front Row, That's immersive content with Apple and the NBA, that makes full use of our ubiquitously deployed largely fallow fiber-based network. Bandwidth-rich products have always followed our network capability, And think of the last few 100 feet of our fiber-powered network as 1.8 gigahertz of contiguous spectrum. Delivered at full capacity to each individual home and business. With the ability to place cellular radios nearly everywhere along the way, fiber deep, power, and right of way. We already have a fully converged connectivity service in 100% of our footprint. Now with expanding hybrid MNO capabilities, through CBRS and Wi-Fi to drive our seamless connectivity advantage, at gigabit speeds wherever you go. So data usage will continue to increase for both wired and wireless networks, and customers don't know or care which network they're on as they move about. It just has to work. That is the service we uniquely provide. In mobile, we have a structural and strategic mobile reselling agreement with Verizon for current and future services. And we'll launch an additional MVNO for business with T-Mobile in the next six months. Nearly 90% of Spectrum mobile traffic goes over our network already at higher speeds, making us the fastest mobile operator with the best prices. Mobile's profitable, It'll continue to grow. And improves broadband churn meaningfully with the opportunity to drive more Internet sales. Our network carries more mobile traffic than any operator in our footprint. So we are a facilities-based provider of mobile services. With five gs macro cell towers as backup. Our owners' economics of a differentiated network create long-term advantage, which means we can save customers over $1,000 in a single year with Internet and mobile. And now we can do the same with video. Our video product and platform is now a killer app. When our video customers activate their included apps, video and broadband churn improvement is meaningful. Our video product can become another unique selling tool. Seamless entertainment with all the key programmer apps included as part of our service over $125 of value per month. And finally, customers have a platform in Zumo that brings unified search discovery for all your live TV and apps. Utility and value. Competitive advantage. And we continue to invest in technology, including AI, to increase customer satisfaction through self-service where customers want and enhancing our employee service capabilities. That's across sales, call center services, field operations, and the network itself. In 2026, for the first time, granule incentives will include net promoter scores. We have competitive advantage with our service capabilities, and we're gonna make sure we earn credit the reputation that reflects that significant investment from our customers one by one. And we're gonna guarantee all of it. Guarantee Internet service through a new invincible Wi-Fi product we'll launch in February. Symmetrical and multi-gigabit service with a Wi-Fi seven router and battery backup and backup five g service. Seamlessly switched on the same SSID for storms or outage. As well as Wi-Fi seven extenders for larger homes. Invincible Wi-Fi is a market-first product combining Wi-Fi seven with five g and battery backup. Over a year ago, we deployed the nation's first wireline and wireless service commitment, guaranteeing transparency, reliability, and same-day installation and service. Internally, we're now moving that service window target to two hours. And one hour for business. At your doorstep from the time you call. None of our competitors match our service here. In addition to backing our customer service guarantee with credits, beginning in February, we'll now guarantee you a thousand dollars of savings per year when you take Internet and two lines of mobile from Spectrum. If we can't save you a thousand dollars or more when compared to the big three telco carriers, we'll credit the difference on your bill during the first year. Guarantee connectivity, guaranteed service, and guaranteed savings. With the best products in The US, uniquely serviced by U. S. Employees 24/7. We want to be America's connectivity company. With hyper-local service delivered by your neighbors where our local employees and with community investment, including unbiased hyper-local spectrum news. All of this will expand to Cox following closing, assuming regulatory approvals. Our plan there is to introduce spectrum pricing and packaging, rapidly grow mobile, similarly return to Internet growth, and giving Cox's low video penetration and our capabilities we expect to grow video in the Cox footprint for a period of time as well. I also believe the combination of our very complementary b to b will create gross synergies we didn't anticipate when we did the deal. Winning connectivity in a cyclical and newly competitive environment is a game of inches. I'm not projecting broadband relationship growth this year. We expect to see an improved trajectory from the investments we've made over the past three years. The recipe for winning here is Sybil. Best connectivity, best overall value, with the best service. And we aren't perfect. We own our mistakes with customers. But we are improving the way we communicate our value, utility and quality service across our But I do believe we're the best-positioned company in the connectivity industry, and we will get better. From a financial perspective, we expect our operating plan to deliver EBITDA growth this year. And the investments we've made to lower service transactions and our efficiency programs including early benefits from customer and employee-focused AI tools, will continue to provide a tailwind for many years to come. 2025 was our peak year of capital expenditure. And capital expenditures after this year will decline significantly. Free cash flow will take off from an already significant amount We expect our capital intensity to return to 13% to 14% of revenue by 2028 at Charter standalone. And we can probably do the same even with the Cox integration. One of the bigger debates around Charter has been about the best way to deploy our significant free cash flow. And that cash flow is meaningful. It's about to become much larger. Debating how to allocate that cash flow is a first-class problem to have my mind, and Jessica will provide an update on their balance sheet strategy and capital return priorities in a moment. But the key focus for me real driver of the team and for value creation of our company is to make sure we deliver long-term customer EBITDA and cash flow growth and demonstrate that long-term growth rate for investors along the way. If we do that, rest will take care of itself. Now I'll pass it over to Jessica. Thanks, Chris. Jessica M. Fischer: Before covering our results, I want to mention that we made several reporting changes to our customer and financial data this quarter, which are detailed in the footnotes to the trending schedule we issued today. To better reflect the converged and integrated nature of our business and operations, we now present our customer relationships statistics inclusive of all mobile customers, including mobile-only customers. We've also added a total connectivity customer section to the trending schedule, which represents all receiving our Internet or mobile connectivity services. We've also revised our mobile lines reporting methodology better align with how we report our other services. Please also note that any forward-looking financial or customer information that we provide in today's discussion or presentation does not include Cox or any transition costs related to Cox integration planning consistent with how we reported during the TWC BHN transactions. Now let's please turn to our customer results on slide nine. Including residential and small business, we lost 119,000 Internet customers in the fourth quarter, better than last year's fourth quarter with lower connects year over year. More than offset by lower disconnects driven by last year's ACP-related disconnects. In mobile, we added 428,000 lines, with higher gross additions year over year and higher disconnects on a larger base. Net adds in the quarter were lower due to heavy device sub subsidy activity by the big telco competitors, including the new iPhone 17 through the holiday sales cycle. Video customers grew by 44,000, versus a loss of a 123,000 in 04/2024. With the improvement primarily driven by lower churn year over year resulting from the new pricing and packaging we launched last fall Zumo, and seamless entertainment product improvements, including our programmer app inclusion packaging. New connects and upgrades to our fully featured video package with apps were up year over year. Our video customer results also include a small benefit related to the YouTube TV Disney dispute. Wireline voice customers declined by a 140,000. With year over year improvement primarily driven by lower churn. In rural, we continue to see a strong customer relationship growth We generated 46,000 net customer additions in our subsidized rural footprint in the quarter. And in the fourth quarter, we grew our subsidized rural passings by 147,000. And by over 483,000 over the last twelve months. Above our 450,000 target. We expect subsidized rural passings growth of 450,000 in 2026. Our last large build year. In addition to continued non-rural construction and fill-in activity. Moving to fourth quarter revenue, on Slide 10. Over the last year, residential customers declined by 1.2%. And residential revenue per customer relationship also declined by 1.2% year over year. Given the growth of lower-priced video packages within our base, a decline in video customers during the last year, dollars 165,000,000 of costs allocated to programmer streaming apps and netted within video revenue, versus $37,000,000 in the prior year period. And our free months promotion for new residential customers that we mentioned on our last call and which is no longer in the market. Those factors were partly offset by promotional rate step-ups, rate adjustments, the growth of Spectrum mobile lines, and $34,000,000 of hurricane-related residential customer credits in the prior year period. By the way, the streaming app gap allocation headwind to residential revenue that I mentioned a moment ago should continue to grow over time as more customers authenticate into our streaming app offers. It could be as much as $1,000,000,000 for the full year 2026. And as a reminder, the GAAP adjustment is ultimately neutral to EBITDA. As an equal and offsetting benefit is applied to our programming expense line every quarter. As slide 10 shows, in total, residential revenue declined by 2.4% and was down by 1.2% when excluding costs allocated to streaming apps and netted within video revenue in both periods. Turning to commercial. Total commercial revenue grew by 0.3% year over year. With mid-market and large business revenue growth of 2.6%. And when excluding all wholesale revenue, mid-market and large business revenue grew by 3%. Small business revenue declined by 1.3% reflecting modest year over year declines in small business customers and in revenue per small business customer. Fourth quarter advertising revenue declined by 20%, including the impact of less political revenue. Excluding political, advertising revenue was essentially flat year over year. Other revenue grew by 7.3%, driven by higher mobile device sales. And in total, consolidated fourth quarter revenue was down 2% year over year, and down 0.4% when excluding advertising revenue and programmer app allocation. Moving to operating expenses and EBITDA on Slide 11. In the fourth quarter, total operating expenses decreased by 3.1% year over year. Programming costs declined by 8.4% due to a higher mix of lighter video packages, a 2.2% decline in video customers year over year and $165,000,000 of costs allocated to programmer streaming and netted within video revenue versus $37,000,000 in the prior period. Partly offset by higher programming rates. Other costs of revenue increased by 2.4% primarily driven by higher mobile service direct costs. And mobile devices. Partly offset by lower advertising sales costs given lower political revenue. And lower franchise and regulatory fees. Cost to service customers, which combined field and technology operations and customer operations decreased 3.9% year over year primarily due to lower labor costs and lower bad debt expense. Excluding bad debt, cost of service customers declined 3.2%. Marketing and residential sales expense was essentially flat year over year due to lower labor expense, offset by a change in sales mix to higher cost sales channels. Transition expenses related to the pending Cox transaction totaled $15,000,000 in the quarter. Finally, other expense declined by 3.1%. Primarily due to lower labor expense. Adjusted EBITDA declined by 1.2% year over year in the quarter. And for the full year 2025, EBITDA grew by 0.6%. For the full year 2026, we are planning for slight EBITDA growth, excluding the impact of transition costs. Note that first half 2026 EBITDA will be more challenged than second half EBITDA, given the onetime benefits we saw in 1Q last year. And the benefit of political advertising that we expect in the 2026. Turning to net income, we generated $1,300,000,000 of net income attributable to Charter shareholders in the fourth quarter. Compared to $1,500,000,000 in the prior year period. Given lower adjusted EBITDA and higher income tax expense. Turning to Slide 12. Fourth quarter capital expenditures totaled $3,300,000,000 $273,000,000 higher than last year's fourth quarter primarily due to two multiyear software agreements that were accrued in the quarter and higher network evolution spend, which lands in upgrade rebuild spend, 2025 capital expenditures totaled $11,660,000,000 slightly above our recent expectation for $11,500,000,000 given the new software agreements I just mentioned. Which will drive other benefits across the business. We expect total 2026 capital expenditures to reach $11,400,000,000 On Slide 13, we have provided our current expectations for capital at spending through the year 2029. And now now including line extension spending associated with the Bead program. Which totals about $230,000,000 and is mostly in 2027-2029. For the years 2025 through 2028, the outlook you see on Slide 13 is in line with what we have provided in January 2025. With the inclusion of Bead, some modified timing across years, and slight changes across categories. As I mentioned, we have added 2029 to our outlook and expect it to exhibit about the same amount of spend as we expected for 2028. Looking beyond 2026, we expect total capital spending in dollar terms to be on a meaningful downward trajectory. And after our evolution and expansion capital initiatives conclude, our run rate capital expenditures should be below $8,000,000,000 per year. Just to highlight, that reduction in capital expenditures on its own from $11,700,000,000 in 2025 to less than $8,000,000,000 in 2028. Is equivalent to $28 of free cash flow per share based on today's share count. Turning to free cash flow on Slide 14. Fourth quarter free cash flow totaled $773,000,000 about $200,000,000 lower than last year given a less favorable change in working capital and higher CapEx, partly offset by lower cash taxes due to the One Big Beautiful Bill Act, and cash paid for interest. Turning to cash taxes, fourth quarter cash taxes totaled $139,000,000 And while year 2025 cash tax payments totaled just under $900,000,000 We currently expect that our calendar year 2026 cash tax payments will total between $500,000,000 and $800,000,000. We finished the fourth quarter with $95,000,000,000 in debt principal. Our weighted average cost of debt remains at an attractive 5.2%. And our current run rate annualized cash interest is $4,900,000,000 During the quarter, we repurchased 2,900,000.0 Charter shares totaling $760,000,000 at an average price of $259 per share. As of the end of the fourth quarter, our ratio of net debt to last twelve month adjusted EBITDA remains at 4.5 four 0.15. And stood at 4.21 times pro form a for the pending Liberty Broadband During the pendency of the Cox deal, we plan to be at or slightly under 4.25x leverage. Pro form a for the Liberty transaction. As you may recall, when we announced the Cox transaction, we committed to move our target leverage to the midpoint of a 3.5 to four times range. We're very comfortable with our balance sheet. And our ability to pivot rapidly given our significant free cash flow generation. Which provides flexibility to reduce leverage by up to zero five turn annually over the next several years. But we have also heard our shareholders' preference for less leverage during a lower growth period. So today, we are moving our post transaction target leverage to the low end of a new 3.5 to 3.75 times range, which we expect to achieve within three years following close. Even with this delevering, we continue to expect significant ongoing capital returns to shareholders. Lower leverage will drive some impact to our weighted average cost of capital, which should in turn positively affect valuation. It should attract a broader constituency of holders to the stock, and open the potential for improved debt ratings, including an investment grade corporate family rating. Although that is not an explicit goal. We will continue to generate very meaningful and growing levels of free cash flow. And while we always reinvest in the business as our top capital allocation priority, there are no large scale projects like RDOF or Network Evolution on the horizon. We expect to revert to normalized CapEx in the range of 7.5 to $8,000,000,000 per year by 2028. We will have significant additional capital available to return to shareholders. To overcome the perception of negative perpetuity growth implied in our valuation today, we need to win in the marketplace. And as Chris outlined, that's where we are focused. And where we believe we can drive value going forward. With that, I'll turn it over to the operator for q and a. Thank you. Operator: At this time, if you would like to ask a question, please click on the raise hand button, which can be found on the black bar the bottom of your screen. When it is your turn, you will receive a message on your screen from the host allowing you to talk, and then you'll hear your name called. Please accept, unmute your audio, and ask your question. As a reminder, we are allowing analysts to ask one question today. We will wait one moment to allow the queue to form. Our first question will come from Craig Moffett with MoffettNathanson. Your line is now open. Please go ahead. Craig Eder Moffett: Hi. Thank you. Good morning. Let me start with wireless. First, you signed a new agreement that both Comcast and Verizon have talked about. I wonder if you could just say anything about what that new agreement looks like and whether it has any impact on your strand mount and offload strategy, And then on that point, Chris, you said that you're close to 90% offload. I think you had previously said 85 a couple of quarters ago, and then last quarter, I think, said 88. That already is a 20% reduction. In how much you're sending over the wholesale network that you're leasing from Verizon is the 90% just a reference to that similar to 88, or is it gotten even has the offload gotten even better since then? Sure. Look. Christopher L. Winfrey: For obvious reasons, we'll stay consistent with what Comcast and Verizon have said as well. But you know, that's for the most part, we've amended and modernized our long-term MVNO agreement with Verizon, and continued to support profitable growth for both Charter and Verizon. It is a very good deal for them and a relationship for both. You know, as you know, it's long-term, and, you know, the market evolves over time. And so it's just natural that you have, you know, partners inside of a deal take a look and want clarity on certain things. So I'd look at it more as in that context as opposed to anything else. You know, we have a structural and long-term, you know, agreement that underpins everything that we're doing here, and that hasn't changed. On the 90%, you know, I think it's around 89% or something like that. It's bumping in that area. So it's moved up bit. It's but it's it's on a steady climb. And as we've always talked about before, the reality is that we have a very attractive structure and partnership with Verizon and so we can be opportunistic here. But because of the favorable economics that we've always had with Verizon continue to have know, there's a balance there in terms of the pace of 23 markets last year that we talked about for CBRS. Probably do, I think, maybe 20 or so more, but we'll be in all the states where we have you know, CBRS power licenses, you know, within this So we continue to roll out there at an opportunistic pace. Thanks, Craig. We'll take our next question, please. Operator: Your next question from Ben Swinburne with Morgan Stanley. Benjamin Swinburne: You know, Chris, you guys have been competing in the market with the converge strategy for a number of years now. I'm wondering if you could maybe assess the position of of spectrum Mobile in particular in the market with consumers. You guys have been marketing the product for a long time. You've got very attractive price points. But, you know, you've been building a new product and new brand for some time. Where do you think that sits with consumers today? Is there more work to do and maybe tie in how the how the sales force is, is executing in your mind on on you know, selling that into the base, into new customers. Obviously, it's core to the long-term growth of the company. Christopher L. Winfrey: It is. So the conversion strategy is working. You can see that in our results. You would one hand, you would look and say, well, the net add rate ticked down a little bit, but it ticked down in environment with a tremendous amount of, you know, flooding the market subsidies that we didn't match, and yet we continued to grow, which shows and demonstrates the value of the product that customers perceive that we have. I don't think that customers are ultimately, at the end of the day, fooled. They can be entertained with an offer at one point in time, but at the end of the day, you look at the total amount that's on your bill. And if you compare that with our competitors to what our bill looks like, you can buy a lot of advanced telephone. Telephones, cellular devices, with that savings that we provide. So we're the all in you know, best product for both speed as well as savings. Now your question about market perception, Spectrum Mobile is still a relatively new brand in the marketplace. And Yeah. And getting that product from your cable providers and, you know, still relatively new concept. So our brand awareness continues to go up every year. The reputation of the product continues to improve and settle in. The savings recognition and the word-of-mouth I think, is improving. But it'll take time for that to continue to develop. And if you think back to some of the things that we did around video, there are other products broadband, video, and you can phone, can both be an asset as well as can be a liability to the mobile reputation a particular moment in time. And so, you know, when we have programming related rate increases that go through on the cable bill and impacts the spectrum, customer there. It flows through a little bit to mobile. So that's a piece that we try to manage and think through as well. But I think the do I think there's more that we can do? Of course. And but we're on a steady path to increasing brand awareness I think the increasing capabilities, the convergence, is recognized. Most customers still today haven't picked up on the fact that as you're moving around across the country, both inside our markets as well as other MSO cable markets that you're actually connecting to faster speeds through Wi-Fi. And for those of our investors who live in, for example, New York City or LA, I just encourage you as a Spectrum Mobile customer to drive drive around walk around, and what you'll notice is that you're actually attached not to a five g network, but you're attached to a Spectrum mobile. At a vastly superior speed than you would have gotten with five g. And we haven't in my mind, we have work to do to really show and demonstrate that product capability in the way that we go to market, and I think that's upside for us. Because it is better speeds. It's at a better price. So eventually, word-of-mouth gets around that it is a great product. It's better than anything else out there, and it saves you money. So I'm positive. And the fact that we can do that in an environment that had so much, you know, as I said, flooding the market with subsidy know, I think gives us a lot of confidence. Benjamin Swinburne: Got it. Great. So much. Christopher L. Winfrey: Yep. Thanks, Ben. Operator, we'll take our next question, please. Operator: Your next question will come from Vikash Harlalka with New Street Research. Vikash Harlalka: Hi. Thanks so much for taking my question. I have one for quick one for Jessica. Quick, could you just provide us any details on how your market share has trended in markets where you're competing against fiber operators for a few years now and how do you see that evolve over time? And then one for Jessica. Jessica, you said you expect EBITDA growth to be slightly positive this year. By our estimate, political advertising adds about a percentage point to EBITDA growth. Could you grow EBITDA higher than 1% this year? Christopher L. Winfrey: Sure. So I'll take the first question related to fiber competition. I mean, we've competed well against fiber for many years. We expect to continue to do so. The reality is that's been going on for fifteen years, so we have a lot of experience, and we have a lot of data and trends there. We have greater penetration than our fiber competitors, even in mature fiber markets. And, you know, when it happens, overbuild impact tends to be limited to a few percentage points Internet penetration during the first year. Of a new overbuilt vintage, as it were, coming online. It's not ideal for us, but, you know, the pace of that's tied to the pace of overbuild. And that's been, you know, fairly consistent. And the meantime, as a result of all that, you know, we really don't see overbuilders reaching their ROI goals within our footprint now or in the future. The piece that I would, you know, add to that is you know, and I know you've done some analysis around this. Obviously, the introduction of fixed wireless access you know, has impacts on everyone's penetration. I think that needs to be factored in as well. But inside of our footprint where we have a lot of experience, a lot of years of fiber overlap, As I mentioned in the prepared remarks, that's not new. And while it is new competition and that in and of itself presents some challenges, it's one that we've dealt with over time. The bigger issue over the past three years is the macro environment in terms of housing, low moves, and the introduction of even though it's an inferior product, it's a brand new competitor in the marketplace with expanding footprint through phone, Internet, or fixed wireless access. So on on your second which I think is will we grow EBITDA when excluding advertising, think the answer is maybe. It's certainly our goal. Look. EBITDA EBITDA growth has challenged in 2026 given the headwind from broadband subscriber declines. But we think we can overcome that with the combination of mobile growth changing mix of Internet driving positive ARPU growth, continued operational improvements, and attentive expense management in addition to what we see from the from the political advertising space. Vikash Harlalka: Thank you. Operator: Your next question will come from Jessica Reif Ehrlich with BofA. Jessica Reif Ehrlich: Thank you. I guess two questions. Of course, I'm gonna ask on video. Chris, what do you think the sustainability of the video sub gains are? And is there any color that you can provide on first quarter trends And then just to follow-up on your comments, just something really quickly about Silicon Valley. Can you you give us some color on what the what you're doing you know, what the endeavors are, what's the goal, and, you know, what's the timing of of maybe some products coming out? Christopher L. Winfrey: Sure. Look. For video, I wanna be really clear. Our north star here, our goal is not to have net gain of video just for net gain stakes. Our goal is to have a video product supports broadband acquisition and broadband retention, and I think it's a powerful tool to do that if we can provide value and utility for customers. I do and I know you spend a lot of time in this space. I do think it's good for the ecosystem, everything that we've done. And, you know, of course, we pleased about that, but that's you know, that's not what our shareholders ask us to do, and so it's a nice side benefit. But in getting there, I think does help broadband You know, I think it's important to thank the programmers here. And particularly some of the key execs. I'm not gonna name them out, but it's a handful, and they know who they are. They leaned in, and they continue to lean into help us. I think they believed in what we were doing. It wasn't easy to get there, but, you know, eventually, you know, did believe what we're doing. And the reason is because you know, again, with the viewpoint of solving for our broadband customers, we're really solving for customers first and providing that value. And we're unique. In a relationship with the programmers because we bring a broadband distribution capability that most others don't have, and that means we can serve all of these customers with the programmers product, whether that's a skinny bundle, whether that's the full expanded product with apps. You know, we get to put in ad-free upgrades that, you know, benefits the customer at a much lower incremental cost as well as the programmer. Then you know, from their perspective, the direct to consumer apps that we sell a la carte to our 30,000,000 customers now. And that's gonna be an increasing component. And so what we've been able to do with video is create the best economics and choice for the customer which means that we're actually I think we're the best channel distribution path to maximize the opportunity for the programmer as well. And so back to your question about video growth. I mean, the ecosystem is still really challenged. Programming costs, you know, continue to go up and particular retrans is is a real problem. And but around that, I think you'll see us continue to innovate We do have some new product ideas. You know, we'll talk to the programmers about that in the course of this year. But the key, you know, for us to go back to, you know, connectivity, you know, acquisition insurance. So I on your net gain question, it's not the goal that you're on the razor's edge. You know, if you use that parallel, There's and you say, well, what happened in Q4? Q4 was really no different than Q3. So You know, there's a slight difference between Q3 and Q4 that went from net loss to net gain. So can just as easily, you know, float back into the net loss category and it's you know, the net gain isn't our goal. I think the parallel there is you know, when you're on the edge, and you have a high amount of gross adds and a high amount of you know, gross or disconnects, it's a dangerous place to be in terms of volatility. I think there's some parallel there to Internet in a way that we need to get ourselves out of that space. And when I talk about game of inches, you know, that really applies to all subscription businesses. And you know, if you can get a more commanding lead through the things I talked about, the ways I think we win, I think that helps us in Internet, which really is is the goal here together with mobile. Silicon Valley, the big overarching thing that we're trying to do there is communicate to the people who develop products and software that they should stop developing to the least common denominator in terms of network capabilities. That because the cable ecosystem covers nearly the entire country, unlike fiber overbuilders who do a lot of cherry picking redlining, You know, we upgrade everywhere. We have already, we have a gigabit everywhere we operate. We're upgrading to symmetrical and multi-gig speeds. Effectively nationwide. And that's the platform with low latency, by the way. And that's the platform that software developers and product developers should be developing to. They have, you know, unfettered access to that network. Convergence multi-gig, and the product capabilities that come about as a result of that I think, are significant, and our networks put us in, you know, a unique place to go deliver that. And so the product that we supported Apple in the NBA with Spectrum Front Row Do we need to own those rights? Do we need to own that product? No. Absolutely not. In fact, what we're just trying to do is show the way that a ubiquitously deployed network in The US exists that can carry that type of eight k or 16 k product provides an immersive experience. That can actually have caching you know, at the local edge in a way that hasn't been thought of before. And given the fact that just a charter loan, we have a thousand hubs or data localized data centers. That provide local edge compute. And so we have a lot of assets that aren't being used today Our experience has been once people understand that these networks exist and their capabilities there, that they'll develop products to go do that. And so our time out in Silicon Valley has really been spent around making people understand that this platform has been built for them There there are things that we can do with it. If you take a look at what we've done with you know, Amazon in terms of convergence and offloading. Think about the things that we could do in the electrical vehicle market in terms of offloading. In a way that's attractive for them and really make use of the tools that we have So that's that's the major goal. The biggest one is, you know, we've internally, we've called it the fill the pipe tour. And to go really explain to people that this network's available there for them, and they should develop to Jessica Reif Ehrlich: Thank you. Christopher L. Winfrey: Thanks, Jessica. Operator, we'll take our next question. Operator: Your next question will come from Michael Ng with Goldman Sachs. Michael Ng: Hey, good morning. Thank you so much for the question. I wanted to ask about operating expense growth next year and investment opportunities. You guys are obviously seeing really good momentum on the video side and streaming app inclusions and obviously, also with convergence and Spectrum Mobile. So how are you balancing the commitments to EBITDA growth with the potential to invest to drive these opportunities a little bit faster And, you know, how do you balance that with efficiencies that you could potentially realize? Thank you. Christopher L. Winfrey: I think Jessica can chime in for a second. But if you know, strategically, if you step back we've made the investments. So if you think about the place we're coming from, we've made the investment by keeping our pricing low We've made the investment by having a fully US-based in-source sales and service capability across the country. We've made the investment in our technology platforms And so that gives us the ability to have increasing efficiency through the business and still be able to innovate and develop new products along the way and to be able to manage both your foot on the gas and foot on the brake at the same time. Jessica M. Fischer: Yeah. I think that's right. And if you think about how that translates into you know, something like cost to service customers, like, ultimately, I expect that to service customers to be slightly down over the year. In the year versus last year. But a big chunk of that is related to improvements in operating efficiency, and in the way that we utilize technology to make our services more efficient. I guess top of that, you know, in marketing and resi sales, last year, we had seen some substantial growth in the year over year I expect that to be meaningfully slower this year than what we saw last year, largely related to of investment that we already made sort of bringing the expense rate up and then changes that we've made that I think Chris talked quite a bit about inside of last quarter. To really try to find the right way to drive our message into the marketplace. And to do so efficiently. And so I think with those you know, we believe in our ability to generate EBITDA growth while still doing the right things for the business. To drive medium and long-term growth, which ultimately has always been sort of the strategic goal of the management team. Michael Ng: Great. Thank you, Chris. Thank you, Jessica. Appreciate the thoughts. Jessica M. Fischer: Thanks, Michael. Operator, we'll take our next question, please. Operator: Your next question will come from Michael Rollins with Citi. Michael Rollins: Thanks, and good morning. There's been a bit of discussion lately around pricing strategies for these services, and what are companies should move to everyday value pricing versus that you know, lower, higher promotional stack? And just curious, Charter's latest views on how you're approaching pricing in that strategy and the sustainability for what Christopher L. Winfrey: Sure. You know this, but by way of background for everybody else, in September 2024, we introduced new pricing and packaging Bundled. At those lower prices. And despite that, we've been able to maintain consistent ARPPUR in many cases growing. And in parallel, use that to first reactively and then proactively migrate good portions of the existing base to lower product pricing. And but in the meantime, maintain or actually grow customer relationship ARPU through that process. Absent some of the video tier mix that is well known. Because people are taking more products per household. And so that's been a long-held strategy at Charter that can keep your product pricing low and you can have higher customer relationships ARPU by getting higher product penetration And that's that was the goal of that pricing and packaging. At the end of 2025, we were about 40% of our footprint had that new pricing and packaging. We'll probably be at 60% at the end of this year. And so we've been able to manage an environment where you are really lowering your broadband pricing at promotion and at retail. Both in standalone, but more importantly, in bundled pricing and packaging in a way that creates significant savings for customers. And whether that's mobile where we save you, you know, over a thousand dollars a year, or it's in video where actually now we can also save you over a thousand dollars a year because the inclusion of the apps We're using these tools that we have that are really unique in the marketplace. We can offer mobile everywhere, we can offer video everywhere. And I know, you know, you didn't ask it, but so I was thinking about mobile everywhere. I know one of our large competitors the other day mentioned that in a in their wireline footprint, you know, which is limited to where they offer mobile, they thought they could get mobile penetration to 75% to 80%. I thought that was interesting because if that's true, and it was said by one of our large competitors, I mean, the implications for Charter and Comcast are, I think, dramatic. If you can get 75 to 80% penetration, you know, on our broadband footprints and that's sustainable. You know? You would say, well, you know, maybe to the earlier point, we don't have the brand you know, to go do that. But we have a structural advantage without the same macro cell tower and spectrum investments that's required out of the big telcos. And 90% of our traffic goes on a much faster multi-gig network. So yeah, we have a we have a product advantage and we have the ability to offer those products. You just ubiquitously. We cover all of our DMAs, essentially. And so that provides a marketing and service advantage. And then we can save customers a lot of money with the pricing strategies that we have back to your original question. So we're pleased with where we're heading. It's you know, there's this is a you know, it's a tough migration path to manage, but we've got a lot of experience doing it, and we've done it many times. And we'll actually end up doing the same thing with Cox and look forward to doing that assuming we get regulatory approval there. And Chris, maybe that'd be helpful there and translate a little bit of that into financials as well because I know folks are focused on sort of what does that mean for ARPU across the business. And we don't often talk about product ARPUs, but I'm gonna go there because I think it's helpful in this context as we're sort of doing the pricing migration. Ultimately, I think we expect Internet ARPU grow this year, though more slowly than it has in prior years. As we drive spectrum pricing and packaging through the footprint. I think mobile ARPU has been declining as more customers take our gig product, which includes unlimited press plus at unlimited pricing. And as we see some contra revenue from phone balance, dial plan, I think that we're at a low point there. And so there might be additional mobile ARPU declines in the year over year going forward. But sequentially, I think that we've we've bottomed out on that front. And then, you know, there are multiple headwinds that impact video ARPU. That make that one difficult. You've got programmer streaming app allocation which continues to accelerate. You have some more unfavorable bundled revenue allocation. And you have a higher mix of skinnier video tiers. If you think about that together with programming and programming cost per video sub, I expect that programmer cost per video sub will be up in low single digits when you that program or streaming app allocation. And we did pass through some programmer costs in our video pricing at the beginning of this year. So ultimately, what what happens then, you know, to think about it in March, instead of individual costs. So you might have video ARPU continuing to decline But it's really based on those impacts. Michael Rollins: Very helpful. Thanks. Thanks, Michael. Christopher L. Winfrey: Thanks, Michael. Operator, we'll take our next question, please. Operator: Your next question will come from Steven Cahall with Wells Fargo. Steven Lee Cahall: First, Chris, just going back to fiber. You know, you said you don't expect the fiber overbuilders to reach their ROI goals, and we haven't necessarily seen that pressure translate into a slowdown, especially from the telcos. Don't know if that's due to lower cash taxes or something else, but I was wondering if you could just speak to how you expect you know, the competitive environment to play out when we might actually see a slowdown in that activity that could lessen some of the competitive pressure? And then also just on the promotional environment, I thought slide five was interesting with, maybe a $40 gig offer in the market. Was just wondering if you see a really attractive to be more promotional this year or if I'm misreading that slide, But if you are, what you think that could do to subscriber trends as we move through the year? Thank you. Christopher L. Winfrey: Yeah. So let me start with that one first. The $40 gig is when bundled with either two mobile lines or video. That's been in the market since you know, since September 2024. So that's that's our, you know, everyday pricing that's out there that's been in the market. And clearly, it's had a big impact on the percentage of gig uptake in amongst acquisition. So it's not new, and we agree with you. We think it's positive. The ROI question I mean, I've said this for twenty five years that when we take a look at ROI, we think about classic IRR cash from cash payback. You know, years for that return to take place. And I guess the danger is always that other people's ROI may be based on a going concern, That as opposed to a real financial ROI. I'm not sure that you should be investing for growing concern ROI because I think most shareholders would say, you know, we'd rather have that capital back as opposed to deploying it in a in a poor return way. But that's not new. I mean, that's existed in with telcos for at least I've been in it for almost thirty years, and it's always been the case. So that makes it dangerous. When your competitor isn't focused on traditional financial returns, and shareholders are, you know, either confused or willing to look the other way and not insist on, you know, understanding what those ROI ROIs are. I think that's and know, that's not me complaining. That's just saying I think that's what the case is. I don't think it's gonna change, and we have to be able to compete irrespective of that. And we do. And we've been doing that, you know, for know, for a really long time. So you know, given what I just said, I don't know when the competitive slowdown occurs I do know that as you get deeper into the market, density gets lower. And the cost per passing ultimately has to increase when the density gets lower so there's a natural throttling mechanism that exists there relative to what they've done in the past. You know, whether it's taxes or interest rates that, you know, put an additional lever on that, I'm not sure. But we're that's not that's not our job. And so our job is to go compete against whatever's you know, being brought to us, and that's what we've been doing since fiber's been doing overlaps for the overbuilds for the past fifteen years or so. Steven Lee Cahall: Thank you. Operator, we will take our last question please. Operator: Your last question will come from Frank Louthan with Raymond James. Frank Louthan: Great. Thank you. When you looking forward here, on as far as some of the promotional activity that you have, how how long do you see the need for for price locks? And and what is sort of your your thoughts on that as a long-term solution? And then how quickly do you think you can get the charter the Cox customers up to levels wireless penetration that you experience in your your base footprint? Thanks. Christopher L. Winfrey: Look. We don't have any change you know, plans to change our pricing strategy. I think the price locks is both a good competitive reaction on our part it's something that gives customers a lot of comfort and the ability to switch. And so I think that's here to stay. You know, could you see over time that you know, we evolve that further into a next evolution? Yes. But we're not not at that stage today. You know, we actually think what we have is is working and will work. But we'll always continue to modernize our pricing strategies So I don't see any big change today. On the wireless or the mobile penetration at Cox, I think you should take a look at you know, maybe not our early days of spectrum mobile penetration, because we were still putting the product together, getting, you know, larger brand awareness. So but I think you can take a look at the Spectrum mobile penetration at CharterCurve, I think that's a good indication. I would expect the earlier days to be much faster. Than that simply because we were a better operator in that space than we were whatever it is six, seven years ago. In terms of our platforms, our sales channel, our marketing, our, you know, national brand awareness it's all in a much better place. But I think an improvement to that original curve is probably a good starting point for people to think about how we can get into into the market there. Frank Louthan: Alright. Great. Thank you. Christopher L. Winfrey: Thanks, Frank. Operator, I'll pass it back to you to close out. Thank you. Operator: Thank you for joining today's call. You may now disconnect. Christopher L. Winfrey: Thank you all.
Operator: And gentlemen, thank you for standing by. Welcome to the American Express Q4 2025 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. You will hear a tone indicating you have been placed in queue. You may remove yourself from the queue at any time by pressing star then two. If you are using a speakerphone, please pick up the handset before pressing the numbers. Should you require assistance during the call, please press star then 0. As a reminder, today's call is being recorded. I would now like to turn the conference over to our host, Head of Investor Relations Mr. Kartik Ramachandran. Thank you. Please go ahead. Kartik Ramachandran: Thank you, Donna, and thank you all for joining today's call. As a reminder, before we begin, today's discussion contains forward-looking statements about the company's future business and financial performance. These are based on management's current expectations and are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these statements are included in today's presentation slides, and in our reports on file with the SEC. The discussion today also contains non-GAAP financial measures. Comparable GAAP financial measures are included in this quarter's earnings materials, as well as the earnings materials for the prior periods we discussed. All of these are posted on our website at ir.americanexpress.com. We'll begin today with Stephen Squeri, Chairman and CEO, who will start with some remarks about the company's progress and results. Then Christophe Le Caillec, our Chief Financial Officer, will provide a more detailed review of our financial performance. After that, we'll move to a Q&A session on the results, with both Stephen and Christophe. With that, let me turn it over to Stephen. Stephen Squeri: Thank you, Kartik. Good morning, and welcome to our fourth quarter earnings call. We had another year of strong performance continuing the momentum we delivered since introducing our long-term growth aspirations in January of 2022. Full-year revenues were up 10% to a record $72 billion and EPS was $15.38, up 15% over last year excluding the gain. Card member spending was strong throughout the year. Card fee growth continued in double digits, for thirty straight quarters and we maintained excellent credit quality. Importantly, we continue to invest in areas that strengthen our membership model and drive our growth. For example, we continued our successful product refresh strategy with refreshes in close to a dozen countries around the world, including the launch of our new US consumer and small business platinum cards. We renewed and expanded our relationships with key international program partners, including British Airways, ANA, and Air France KLM. We continue to build our membership assets with new lounges, the expansion of our hotel network, and the momentum we're generating from our investments in the business, and the flexibility we have to drive leverage in our business model. We expect 2026 revenue growth of 9% to 10% and EPS of $17.30 to $17.90. We will also continue our strong track record of returning capital to shareholders with a planned 16% increase in the quarterly dividend to 95¢. For the last several years, we've been managing a company with a focus on accelerated revenue and EPS growth. This has generated consistently strong momentum which gives me confidence in our ability to not only deliver on our 2026 guidance, but also to continue driving strong growth over the long term. The key to driving our growth has been our investment philosophy. We consistently invest to strengthen our competitive advantages across key areas including our customer value propositions, marketing, technology, partnerships, and coverage. In 2025, for example, we invested $6.3 billion in marketing, an increase from around 75% since 2019. And in just the last two years, both marketing and technology investments are up 20 plus percent. We apply a rigorous return discipline focusing on outcomes that drive growth. For example, after a product refresh, in addition to its financial results, we measure customer demand and engagement, credit quality, retention, and relationship expansion. In evaluating our marketing investments, we measure the spend and revenue efficiency of our marketing dollars across thousands of campaigns. As a result of this process, we've created a robust pipeline of ideas where we fund the best opportunities from across the company. This return discipline combined with our investment flexibility enables us to dynamically reallocate resources to those opportunities that represent the highest returns. A great example of this is our recent decision to quickly redirect marketing investments to our US platinum products given the strength we saw towards the end of the year. One of the key lessons we've learned in executing this philosophy is that the investments we make in our value propositions pay off in multiple ways, including increasing customer demand and engagement, driving business to our merchant partners, maintaining strong credit performance, and driving efficiencies by enabling our marketing dollars to go further. We're seeing this in our new US consumer platinum card, which continues to perform even better than our expectations. Customer demand is high, engagement is up, credit quality continues to be excellent. We're seeing no change in retention rates as the new fee kicks in. At the same time, investments in our marketing capabilities have driven acquisition incentives to some of the lowest levels in the last couple of years. Powering the success of our product refresh strategy and our growth overall, are the investments we're making in technology. This enables us to quickly introduce new capabilities that drive customer engagement and satisfaction, add new partners and categories that our card members value, and develop new customer experiences that enrich American Express membership. We now spend $5 billion annually on technology. At a high level, we categorize our tech spending into two broad categories. One, I would call run the business investments, things like infrastructure, software licenses, and cybersecurity. Investments in development activities. Development includes things like new mobile experiences and capabilities, and the ongoing modernization of our core systems which we upgrade regularly similar to our product refresh strategy to stay on the cutting edge. For example, we're rolling out our new third-generation data and analytics platform. Which will enable greater personalization in marketing, improve servicing experiences, augment our industry-leading fraud capabilities, and enable new GenAI and AgenTic use cases. The new platform, is built on the public cloud, is already reducing the time for key processes in marketing and fraud by 90% and we expect to migrate 100% of our data and analytics processes to the new platform by 2027. We continue to invest in enhancing our app experiences. In a number of ways, from the new platinum onboarding experience and the launch of our travel app to digital journeys that enable self-service. As a result, we're driving more revenue-generating engagement via the apps we're creating operating efficiencies from digital self-service. Over the last three years, for example, the number of calls per account coming into our service centers has dropped by 25%. We're also expanding our digital capabilities for business customers. Including the integration of Center's expense management solution including those already in market, such as our travel counselor assist tool, our dining companion experience, as well as the deployment of GenAI tools to nearly all our colleagues worldwide. By successfully executing this investment philosophy over the last several years, we've delivered on our goals of accelerating revenue and EPS growth. While maintaining best-in-class credit performance. At the same time, we are substantially increasing capital returns to shareholders. Our expectations for 2026 are no different. We expect to continue delivering the pace and quality of growth we've seen in recent years, while also continuing to invest in areas to sustain our growth, and deliver strong capital returns to shareholders. In summary, we are operating from a position of strength thanks to our loyal premium customers and the dedication of our world-class colleagues. And I'm confident in our colleagues' ability to continue to innovate for our customers as we invest for growth to drive long-term consistent results. Now I'll hand it over to Christophe for more details about the quarter and full-year results, and then we'll take your questions. Christophe Le Caillec: Thanks, Stephen, and good morning, everyone. In 2025, we generated 10% revenue growth and EPS of $15.38, up 15% excluding the gain. If you look back at our performance over the past three years, what you see is a track record of delivering consistent and strong results. We have driven average return growth of 11% per year and have generated mid-teens EPS growth for three consecutive years. Importantly, we delivered these results while maintaining a disciplined focus on premium products and high credit standards. Our momentum continued in 2025. We saw healthy spending and loan growth throughout the year and continued demand for our premium products. Net card fee grew at 18% and reached a record of $10 billion for the year. And we drove greater scale of the business through increased investment enhancing our ability to drive operating leverage over the long term. Overall, our business model is performing as we expected driving our growth in the year ahead. Turning to billed business trends for the quarter, total spend was up 8% FX adjusted consistent with Q3. Both goods and services and T&E continued to grow at a fast pace than during the first half of the year. Retail spending continued to show good momentum in the quarter, up 10%. And spending at luxury retail merchants was up 15%, reflecting the continued strength of our customer base. Growth in airline and lodging spend was largely stable and restaurant spending was up 9% once again this quarter. Our dining assets are driving high levels of engagement, with spend at US restaurants by US consumer customers, up by more than 20%. Momentum from younger card members from younger customers also continued. As of Q4, millennial and Gen Z customers now make up the largest share of US consumer spending, and they remain the fastest-growing cohorts. That momentum is driven by our success in attracting younger customers into the franchise. For example, the average age of new customers is 33 on the US consumer platinum card, and 29 on the US consumer gold card. Giving us a long runway to grow our relationships with these customers over time. International also delivered another very strong quarter, with spend up 12% FX adjusted. Growth remains broad-based across consumer and business customers, and across geographies. Overall, transactions growth of 9% was consistent with what we've seen throughout the year and reflects continued engagement from our customers. Looking at the first three weeks of January, we continue to see good momentum in spend. As we look ahead to 2026, we are encouraged by the strength and stability that we continue to see across our customer base. Turning to new acquisition. Demand for our premium products remains very strong. We reallocated marketing dollars away from lower-cost cash back products to platinum, and platinum new acquisitions were up significantly. In fact, the percentage of fee-paying products for US consumer is up 8 percentage points year over year. Turning to balance growth and credit. Loans and card member receivables increased 7% year over year FX growing at a similar pace to billed business. There was about a one percentage point impact on balanced growth from our held-to-sale portfolios again this quarter. In 2026, we expect loans and receivables to continue to grow largely in line with billed business. Our credit performance throughout the year was remarkably strong and stable. Delinquency rates were flat throughout the year, and write-off rates remain best in class. Notably, both delinquency and write-off rates are still below 2019 levels. In 2026, we expect credit metrics to remain generally stable with some seasonal variation in provision across quarters. Turning to revenue on slide 14. Revenue was up 10% FX reported for both Q4 and the full year. Momentum was broad-based across revenue lines with net card fees, NII, and service fees and other revenue all growing at double-digit rates. Net card fees reached record levels driven by continued success in acquiring new customers onto fee-paying products, our ongoing cycle of product refreshes, and our high retention rates. In Q4, card fees were up 16% FX adjusted moderating a bit as we expected. In 2026, we expect card fee growth to pick up as the year progresses as we see the impact from the platinum refresh, exiting the year in the high teens. We have now started applying the new annual fee for US platinum card members reaching their renewal anniversaries. For those customers, we have seen no change to our very high retention rates relative to pre-refresh. Net interest income was up 12% again this quarter. Continuing to grow faster than balances. We expect NII growth to continue to outpace growth in loans and receivables in 2026. Turning to expense performance. The VCE to revenue ratio was 45% this quarter. The VCE ratio stepped up from earlier in the year as we expected driven by the investment we made in the value propositions of our US platinum cards. As Stephen noted, VCE investments are an important part of our model. They support revenue growth by driving customer acquisition and engagement, they improve credit outcomes by attracting highly creditworthy customers and they drive marketing efficiency by increasing demand for our products. In 2026, we expect the VCE to revenue ratio to be around 44%. Driven by these investments and ongoing mix shift towards premium products, and assuming a similar spend environment to what we've seen recently. We continue to drive leverage from our operating expenses with OpEx as a percentage of revenue down four points since 2022 even as we increased our technology spend by 11% for the year. In 2026, we expect operating expenses to grow in the mid-single digits. Marketing expense totaled $6.3 billion for the year, up 4% year over year. We expect marketing expense to be up in the low single digits in 2026. As we look to generate efficiencies from the investment in product value propositions, and technology as Stephen discussed. Before leaving expenses, let me add to Stephen's comments about our investment approach and where those investments sit in the P&L. At a high level, when we think about growth, we consider three types of investment. The first is spent on welcome offers and distribution channels that generate demand for our cards. These expenses are reported on the marketing line. Second, a significant part of our technology spend drives growth. For example, the new travel app or the enhancements we made to the American Express app for the platinum refresh. These expenses are reported in operating expenses. And third, are the customer benefits and partnerships associated with card membership. Which generate demand and customer engagement. The recent step up in card member services on the platinum card is a good example of this type of investment. These expenses show up in VCE. Every year, we balance how much of these investments to deploy for growth across these investment categories. For 2026, we plan for investment levels to continue to be high with a record level of technology development, the step up in the value proposition of our US platinum cards, and with a large marketing budget. We plan to invest at these levels while generating strong bottom-line growth in line with our aspirations. Moving on to capital. We continue to deliver very strong returns with an ROE of 34% for the full year. We returned $7.6 billion of capital to our shareholders including $2.3 billion of dividends and $5.3 billion of share repurchases. In 2026, we expect to increase our quarterly dividend by 16% to 95¢ per share. Consistent with our approach of growing our dividend in line with earnings, and our 20 to 25 target payout ratio. With this planned increase, the dividend will be up by more than 80% since 2022. And we have reduced the share count by 7% since then. While maintaining capital well in excess of regulatory minimum levels. This demonstrates our confidence in the sustainability of earnings generated by our model and our disciplined capital management. We also have a robust and diverse funding stack. Supported by our continued demand for our high-yield savings accounts. With balances up 8% year over year. The majority of those balances come from our account members. Who, on average, hold higher deposit balances than non-account members. Given strong engagement with our brand and the premium nature of our card member base. With less than 10% of our US consumer card members currently holding a high-yield savings account with us, we see a long runway for growth. This brings me to our 2026 guidance. We continue to run our business with an aspiration to achieve 10% plus revenue growth and mid-teens EPS growth. As shown on slide 21, for the full year 2026 we expect revenue growth of 9% to 10% and earnings per share between $17.30 and $17.90. 2025 was a very strong year for the company. We are well-positioned to continue our track record of strong growth into 2026 and we feel good about the year ahead. With that, I'll turn the call back over to Kartik, and we'll take your questions. Kartik Ramachandran: Thank you, Christophe. Before we open up the lines for Q&A, I will ask those in the queue to please limit yourself to just one question. Thank you for your cooperation. And with that, the operator will now open up the line for questions. Operator? Operator: You'll hear a tone indicating that you've been placed in queue. You may remove yourself from the queue at any time by pressing star then 2. If you're using a speakerphone, please pick up the handset before pressing the numbers. One moment please for the first question. Our first question comes from Ryan Nash of Goldman Sachs. Please go ahead. Ryan Nash: Hey, good morning, everyone. Stephen Squeri: Good morning. Good morning. Maybe to start with the net cards acquired. Stephen, can you maybe expand on the comments regarding allocating away from cash back and putting this towards fee-paying products? And do you expect this remix to continue? And maybe just talk about how it will impact the results going forward. Thank you. Yeah. So I think, you know, as I said in my comments, we have the ability when we see opportunity to be really flexible with our marketing investment. And we saw a tremendous demand for premium products, particularly the platinum card. And, you know, as we go forward, we'll continue to adjust as necessary. I feel again, I don't think this affects the overall results because we don't really focus so much on acquiring cards as much as we focus on acquiring revenue. And, you know, we're hitting all our revenue targets and we're hitting our return on investment targets. So you know, again, I wouldn't focus too much. I mean, if you look at it sequentially, it's a little bit down. If you look at it year over year, it's a 100,000 cards. And, you know, that led to an increase in platinum cards. So we're really happy with those decisions. And we think it was the, you know, obviously, right thing to do. Christophe Le Caillec: Maybe I'd add two small things. The first one is that there are variations among the quarters. Some of that is just a function of our own marketing plans, whether we're running LTU limited time offers or not. And so that drives volatility from one quarter to another. And as you saw, Q4 last year was also lower. The other thing that I mentioned is that if you focus just on fee-paying cards in the US consumer business, the percentage of NCA paying a fee went up by eight percentage points from Q4 last year to Q4 this year. This is not exactly visible to you in the numbers that we are sharing with you, but this shows, you know, that the efficiency of our marketing dollars is improving. And that's the end, what matters. Kartik Ramachandran: Thank you. The next question is coming from Sanjay Sakhrani of KBW. Please go ahead. Sanjay Sakhrani: Thank you. Good morning. I had a question on Commercial Services. Obviously, SME spend still remains pretty weak. Saw a slight deceleration. I'm just curious as we think about next or this year, like what gets things going a little bit more, some of the investment you've made. Obviously, some of your competitors have made some M&A moves and are getting deeper into this space. How do you think that changes sort of competitive backdrop in which you operate? And how would you compare your products? Thanks. Stephen Squeri: Yeah. Look. I think you know, when you tease out SMB, you've gotta look at middle market, and you've gotta look at small business. I think small business is really, really strong. I think middle market is where you see a little bit of the slowdown. Think as far as, the competitive space and, look, you just saw Capital One just acquired Brex. You've got Ramp out there. We acquired Center last year, which we'll be launching, you know, probably by midyear. And you know, it's a highly competitive space. Having said that, we're still three times larger than anybody else. Our platinum refresh has gone very, very well. And we're looking for a pickup as the year goes on, and we'll be communicating more in terms of just what's gonna go on in our overall commercial strategy as the year goes on from a product refresh perspective. So, yes, it's a highly competitive market. I think the other thing to look at is it's not just us that is sort of, you know, slow on the overall growth as it relates to SMB. And I think most of it is middle market from an industry perspective. So again, competitive, I like the hand what we have. I like the plans that we have going forward, and we'll be communicating more as the year goes on on that. Kartik Ramachandran: Thank you. The next question is coming from Don Fandetti of Wells Fargo. Please go ahead. Don Fandetti: Good morning. Stephen, can you talk a little bit about 2026 in terms of US consumer billed business and the health of the premium consumer? I know there's this sort of scenario where we could run a little hot. There's a lot of stimulus and just want to get your kind of sense. I mean, if you're running at 9% now, is it like, steady state from here or could we accelerate? Stephen Squeri: Look. You know, we saw a big uplift in platinum over the holidays. And I think the momentum that the new platinum launch has given us, the momentum that gold has given us, we're really bullish from a consumer perspective. Will it go ahead of nine? I don't know. But, I like what our card members are doing with the product. They're really engaging. I think one of the big things that is sort of lost on a lot of people was the Platinum app that we launched and the ability for our card members to really engage with the product and to go out there and spend. I mean, if you look at restaurant spending, for example, for the quarter, it's up 9%. It very well from us. So as again, I'm not projecting more than 9%. But we do have very, very strong momentum. And that momentum, and, you know, as Christophe just talked about, as well, that momentum from a platinum acquisition perspective, expect to continue. Kartik Ramachandran: Thank you. The next question is coming from Erika Najarian of UBS. Please go ahead. Erika Najarian: Yes. Good morning and thank you. I just wanted to revisit, you know, the net cards acquired number because this is a big talking point with investors. Before the call began. So you know, completely understand the message. And, of course, you know, the focus should be on revenue generation and not that number. But as we think about this remix strategy, as you refocus more of your dollars towards the fee-paying cards, does that over time then impact the trajectory of net card fees, for example, on slide 15, or get you closer to that plus part of your long-term aspiration in terms of revenue growth? Stephen Squeri: Hey. Good morning, Erika. So, yes, you're right. The overall portfolio is slowly getting more premium. Either the platinum portfolio is growing at a very fast pace. The spend because of the strong engagement is also growing at a faster pace than the rest. And we have celebrated on this call for many quarters the growth and their sustained growth on card fees, which just reached $10 billion. Right? And there is in the slides that we talked about this morning, you can see the trajectory over time. A lot of that is coming from the premium cards, especially platinum. And as you think about that card fee line in the P&L for 2026, which is right now growing at 16%, which in itself is like an amazingly strong number for a base, like, that is reaching $10 billion annually. We expect that growth rate to pick up in the balance of the year as the year progresses. And as more and more of our card members on the platinum card are facing their renewal anniversary, and we are moving them to the new price point. So that's very much the dynamic indeed that is happening. The other proof points that are either visible that the portfolio is getting more premium, is there incredible performance on the credit side, you see those delinquency rates, those write-off rates that are not only best in class, but they are flat. And I compare and contrast that with many of our competitors that have guided for a small increase there while we're talking about stability. When it comes to those metrics. So the portfolio is indeed moving towards a more premium portfolio and a lot of the P&L lines are reflecting that. Kartik Ramachandran: Thank you. The next question is coming from Rick Shane of JPMorgan. Please go ahead. Rick Shane: Thanks for taking my questions. It's sort of a follow-on to what Erika just asked. You know, when we look at 2025, marking the strong the low expense on credit on a relative side allowed you to aggressively ramp marketing and rewards. When you we think about the '26 guidance, it feels like it is more in balance in terms of more normalized growth and credit expense. If credit expense continues to be low, as Christophe, you just alluded to, is there incremental opportunity for investment or is that something we would see fall to the bottom line? American Express has historically reinvested those excess returns. Stephen Squeri: Yeah. So to your point, Rick, credit is very low, and there is a hard limit to how low these numbers can be. Right? And 2% is pretty much at that limit. You know, the other component of the model, which we also try to illustrate this quarter, is the efficiencies that we're getting on operating expenses. Right? So as we are expanding their increasing the value proposition on our premium products, as premium products are getting a bigger share of our portfolio, it's putting a downward pressure on credit. And we are generating efficiencies on marketing acquisition as well as on our operating expenses. And that's very much how the model is working. And we try to illustrate that also by saying that this is not by constraining technology growth. We're actually growing technology. I think the CAGR is 11%. It's all the other operating expenses that are generating efficiencies. So, you know, as you think about modeling American Express and thinking about how the business is working, that's very much how you think about it. Now when it comes to potential upsides and what we would do with it, you know, we're guiding towards mid-teen EPS growth. We're providing a range. This includes, you know, a lot of scenarios, including where we overperform on some lines and underperform some others. The idea here is just like we are committed to that EPS, but there will be certainly movements between the lines as the year progresses. Kartik Ramachandran: Thank you. The next question is coming from Mark DeVries of Deutsche Bank. Please go ahead. Mark DeVries: Yeah. Thank you. I had a question about kind of the impacts you see on engagement and the level of spend from existing customers when you do a meaningful product refresh like you did with Platinum. Do you see existing customers actually change the way they use their card when you layer on new value? And if so, is there also a delay in that? Is it they take time to kind of gain awareness of what's kind of new and incremental? You know, kind of in contrast to new customers acquired who presumably are being acquired because they are aware of that and very immediately engage around the new value you've layered on. Stephen Squeri: Yeah. I think with existing customers, they don't uptake it as quickly as new do, but what I will tell you is that it goes very quickly. The engagement with Lululemon, the engagement with Resy, the engagement with the hotel credit was pretty quick with our existing customers. With the new customers, it's what draws them immediately. And I think what's really important there is that that draw is why as you move forward when you have a new value proposition, you don't need to heavy up as much as marketing. I mean, Christophe's point about movement between lines. So there's movement between VCE, marketing, there's better credit performance, there's operating expenses. You gotta look at the entire thing. But the bottom line is new customers look at the product, get very rational about it, and they engage everything they wanna engage in. Existing customers have a little bit of inertia, but then all of a sudden, they start to engage. And one of the things that really made a huge difference for us was the Platinum Travel app. The Platinum app. It made it so easy to enroll in all the benefits. And, you know, we didn't I don't think Christophe mentioned this, but we certainly have it in. We had an uptick of 30% in our travel bookings in the fourth quarter. It is a direct result of that platinum launch and the engagement of our cardholders. So get a lot more engagement across the board, and you just see what's going on with Resy, our restaurant spending is up 20%. So all of the metrics that we look at speak to the fact that this was a wildly successful product launch. It attracted new cardholders. And it engaged existing cardholders to spend even more. Kartik Ramachandran: Thank you. The next question is coming from Craig Maurer of Feet Partners. Please go ahead. Craig Maurer: Yes, thanks. Good morning. I actually wanted to ask the flip side of the last question, which is, when we think about Card Member Services growth as we move through the year, you know, how much of I'm trying to think of how much the growth rate itself could moderate while expecting it to remain high until you lap the relaunch of platinum. But, you know, how much do you think the fourth quarter growth rate was related to this being the new product? And now that we're moving through, into the early part of the year, some of that new car smell kinda wears off and so engagement might wane a little bit versus where we were. So I'm just trying to think about the cadence of that spend through the year. Stephen Squeri: Yeah. I'll make a couple comments, and I'll let Christophe go a little bit further. But I think that, you know, during that you know, look. We launched on September 18 or so. And I think we got to certain engagement levels. I think those are probably the engagement levels we're gonna get to. I think what you'll see is as new people come on, they will engage. But I think the existing card base has planted their flag, if you will. This is what they're gonna use out of the new product. A new card base. They've done what they're gonna do. So as we plan for this, and we're fine with where these with where the VCE levels are. I mean, it's expected. But as we plan for this, I think Craig, you're right. I think you get to a point where it sort of stabilizes. Right? Not every card member uses every single benefit. It's just that's not how we really design the product. Right? We design the product so that it appeals to a wide variety of people. There are core benefits that you know, a lot of people eat. Right? So they'll use the Resy credit, and people take Ubers and things like that. But then there are other credits on the side that they may not use. They may not use a Walmart Plus. May not use a Lululemon and so forth. So you get to that sort of balance, if you will, where it's a lot easier to project what's gonna happen. You know, some things you get more uptake than you thought you were gonna get, and other things you get less uptake than you thought you were gonna get. But in balance, we're very happy with the overall engagement which then leads to a wide variety of spend and more spend on the product. Christophe Le Caillec: I don't have a lot to add. I would just say that in the guidance that we gave you, we are assuming that the VC to revenue ratio will be around 44%, and we'll see whether we land there or not. The current level of spend, of course, because another big driver of that VC is the rewards cost. But, you know, we are assuming 40 around 44% for the balance of the year and we'll be watching it. Kartik Ramachandran: Thank you. The next question is coming from Jeffrey Adelson of Morgan Stanley. Please go ahead. Jeffrey Adelson: Hey, good morning, Stephen and Christophe. Wanted to just ask about the 10% credit card cap proposal out there. You know, obviously, everybody's been quite vocal about this, the unintended consequences, etcetera. Just wondering what your view is of that? What might happen to American Express in the industry if this goes through? Obviously, seems like American Express is more of a defensive mode against us with a premium card focus. But maybe just discuss that as well as maybe any conversations you've had with the administration. Stephen Squeri: Look. I think everybody's pretty much said everything that there is to say on this. I think, look, affordability is really important. I don't think a 10% credit card cap is the answer to that. I think it would reduce the number of cards ultimately in the marketplace. I think it would reduce line sizes. America pretty much runs on credit. I think that would impact small businesses and so forth, and it just has it just has this sort of effect of a downward spiral from my perspective. So I don't think that's the answer. And, you know, I mean, obviously, we have conversations. I'm not gonna get into those. But we just we don't think it's a good idea. Kartik Ramachandran: Thank you. The next question is coming from John Fandetti of Evercore ISI. Please go ahead. John Fandetti: Good morning. Stephen, you mentioned on the competitive backdrop, I know you mentioned the commercial dynamics already. Can you discuss a little bit more on the consumer side? I know competing card players are leaning in still to their travel rewards programs and all that. And then what poses the greatest risk to your 2026 outlook? Is it that competitive dynamic? Or would you say it's more macroeconomic or political at this point? Stephen Squeri: I would say it's, you know, if you look at risk, it's more macroeconomic or political. The competitive dynamic has been here since the financial crisis. I mean, this became a very interesting business after the financial crisis because it's a great return. It's a category that continues to grow about 8% every year. It's a great return on assets for people, and it's a great way to deploy capital. So the competitive dynamic in consumer is as tough as it's ever been. You know, JPMorgan's out there. Citi's out there. Capital One's out there. And, you know, the challenge for us has been the challenge that we faced for the last fifteen years is to stay one or two or three steps ahead of our competitors. And, you know, when you look at what our competitors are doing, they are following our playbook. And so our goal is to continue to move, you know, that playbook to a higher level, and that's what we'll continue to do. And to execute and provide fantastic service to our customers. The one thing I'll say that nobody has really been able to replicate is our customer service. And we continue year over year to perform and win the JD Power Award for service. And I think service is sometimes an underlooked component of the overall value proposition, and it's one that we invest in quite heavily. So, it's a highly competitive market. We never rest on our laurels, and you know, we'll keep fighting and keep anticipating where the competition is gonna go and, you know, and beat them to that point. Kartik Ramachandran: Thank you. The next question is coming from Moshe Orenbuch of TD Cowen. Please go ahead. Moshe Orenbuch: Great, thanks. Most of my questions have actually been answered. I was hoping you could expand a little bit on how you're positioning American Express with your recent acquisitions versus, you know, in that small business arena, you know, given the competition, which obviously has always been there. From, you know, some of those larger private companies and now, you know, obviously, one of them would be combining with, you know, with a large bank. Stephen Squeri: Yeah. Look. I think that, as I said, you know, with our Center acquisition, especially from a small business perspective, you know, rather than partnering with expense management providers as we've done with whether it was Concur or IBM before that, we'll now have our own expense management offering. I think it's what small businesses want. It's what middle market companies want. Think, additionally, you know, and I'm not gonna get into details on this call, but we will be sharing over the next couple of months just a road map of where we are going from a commercial perspective both from a product perspective, an integration perspective, and, you know, other technical capabilities that we will be adding. I think the small business and middle market space is highly competitive. It's been very competitive as it relates to a value proposition perspective. And I think, you know, now the puck is now moving and has moved to from a software perspective. I think the combination of Capital One and Brex is a, you know, it's a very good move for Capital One. It's probably a good move for Brex as well. It's great software, and you put a balance sheet together. And I think that works. They'll work on their integration issues and challenges like you do when you have an acquisition like that. But I think when we're out in the marketplace, I feel that we're gonna be able to compete quite effectively. So more to come on it, but it is, you know, it'll be a battleground just like it has been. It's just that it's gonna be a battleground on even more multiple fronts now. Kartik Ramachandran: Thank you. The next question is coming from Mihir Bhatia of Bank of America. Please go ahead. Mihir Bhatia: Hi, good morning. Stephen, you kind of may have preempted a little bit of question with that last answer. But I was just wondering, obviously, 2025, the platinum refresh, was a big thing at American Express. As we go into 2026, are there two or three initiatives that are really high impact that you're working on that we should be thinking about? Just, like, what are the priorities, I guess, for 2026? Stephen Squeri: I mean, look, the priorities are pretty much, you know, if you think about even the platinum refresh, you go back to sort of strategic priorities that we have from a company perspective, which is really to win in the premium space, to continue to build our position in commercial, you know, obviously, our coverage and our network. And we're gonna continue to focus on those things. I mean, you know, listen. The platinum card is launched. Right? Now we wanna continue to get value out of that platinum launch in both consumer and in small business. We're gonna continue to build coverage, obviously, in international as that continues to grow and continues to be the fastest-growing overall part of our business. And we're gonna continue to build more capabilities both digital capabilities and capabilities as we just discussed for our small business customers. And then, you know, we've got Resy and Tock, and we're gonna be combining those as the year goes on as and I think those two acquisitions have been really great for us as you see the differential in overall restaurant spending and overall restaurant Resy spending, which is not only good for our card members, good for us, but good for the restaurants as well. So, I mean, you know, as I said to somebody on, you know, one of our calls recently, I think when you sort of look at this year, it's more of the same for us. Right? It'll be we're still gonna have product refreshes not as big as we had from a platinum perspective this year. But the fact that we continue to refresh our products that we continue to refresh our technology base, we continue to make more things available to our consumers, that we continue to build on partnerships and that we continue to use those partnerships to bring value to our card members something that we're gonna continue to lean into. Kartik Ramachandran: Thank you. The next question is coming from Brian Foran of Truist. Please go ahead. Brian Foran: Hey. Good morning. I guess you've on my question a little bit through various answers. I just wanna circle back I do hear a lot of investor concern for American Express and for the market as a whole. You know, just whether the cost to grow is getting too high. And it is tough to measure from the outside, partly because of the investment required upfront to get premium customers. And then partly, you shared some of them with us here. You've talked about the rigor behind measuring that. Is this kind of cost to grow concern in the market right now really just kind of economic and accounting dynamics showing us all the costs upfront and the benefits more on the lag? Stephen Squeri: Well, I'll let Christophe comment after I comment. I'd look at the last four or five years, and I'd look at what our guidance is. What we're basically saying here is consistently we're gonna grow 10% and consistently we're gonna deliver you mid-teens EPS growth. Not a lot of companies do that. And we are committed to doing that. And one of the earlier questions was well, if you have extra flexibility, you're gonna drop it down to shareholders. A couple of years ago, we had extra flexibility with the certified gain. We dropped it down to shareholders. I think one of the reasons we have been able to have this consistent growth trajectory over the last, really, five years now and going into this year is the plan is because we have stayed true to who we are, and we have made investments for the longer term and not taking any short-term shortcuts. And so, you know, while people may not be happy all the time that, hey. You had some extra money and you invested it. Why didn't you drop that to shareholders this year? It's because our goal is to drive some consistent shareholder returns year after year over year after year to continue to grow our dividend and line with how we're growing EPS, to continue to do our share buyback program, to continue to return capital to shareholders which has allowed us to drive our market cap up and has allowed us to be consistent. You know, it's really been the same old story with American Express, for the last four or five years, and that's what we're gonna continue. So I don't look at the cost to grow as all that expensive right now. I mean, we've we stay out of things that we think are noneconomical. And there are portfolios out there that we do not think are economical. We do not bid on it. You know, we have a large co-brand portfolio, and we believe that that portfolio is a one plus one equals three for us. And we have a great premium customer base. We're growing very strongly internationally. And we still see those growth prospects over the horizon. As I said earlier, this is a market that continues to grow. On a global basis by about 8%. So I you know, again, I don't share the it looks like it's too expensive to be in this business. I think you may see from time to time, you'll see some rewards cost that get a little bit higher. You might see some attendance office get a little bit higher. But I think what people fail to do is to look in aggregate at the entire expense base and how one investment plays off another investment. And so when Christophe and I sit down and look at the expense base, we look at an investment, how it impacts our operating leverage, how it impacts our credit performance, how it impacts our ability maybe to dial back marketing or maybe we have to dial up marketing. So there's a lot of levers that we're pulling. We've been doing this a long time now. And so we feel really good about '26 and beyond at this point given the macro environment that we have, the you know, with all the you know, with all the contingencies that are out there, but, yeah, I don't I don't view this as an overheated market in any way, shape, or form for us. It's competitive, no doubt, but I don't think it's overheated from a cost perspective. Christophe Le Caillec: Yeah. I'll add two more thoughts, Brian. The first one is you know, when you look at the quarter we're reporting, these are an outcome of a lot of decisions we made two years ago five years ago, ten years ago, twenty-five years ago. And that's the way we think about the decisions we're making now. When we are acquiring a new card member, we're thinking about that card member not only in terms of what that card member will do to us this year or next year. We're thinking about the next twenty years. That's very much critical to the way we make all our decisions. And when you think about specifically the cost of growth, on the back of this platinum refresh, when I look at the cost of acquiring and welcome offers that we put on the market. We've seen some of the lowest cost of acquisition for platinum. And so it's definitely a very competitive place. In the last two years happening, like, in Q4. Have invested in value proposition. Have an amazing brand. We have a technology that allows us to personalize those offers and optimize the cost of origination and acquisition. And when you put all of this together, and you combine that with that long-term view that we have on those relationships, I can tell you the economics are very compelling. And that's why we and that's how we are locating our investment dollars. Kartik Ramachandran: Thank you. Our final question will come from Christophe Kennedy of William Blair. Please go ahead. Christophe Kennedy: Good morning. Thanks for squeezing me in. You've given a lot of great engagement metrics. And you do have the new data analytics platform on the horizon. Can you just talk about that journey and the tools that you'll have to drive more card member engagement as you get into AI, etcetera? Stephen Squeri: Well, I think as you know, look. And we're constantly this is I think in the last ten years, the third big data mart conversion that we've done here is you know, the technology gets better and better. I think what's really exciting for us is to be able to take large language models that are out there and take our data and insert that in and really come up with great card member offers, great card member insights, be able to create archetypes of various cardholders, be able then to treat cardholders in a and target cardholders in a much more effective way. And so and we'll roll those tools out and access to that entire data mart across the entire company. And so it takes till 2027 because you're doing it sort of organization by organization. Process by process. Application by application. But we're already seeing some benefits of that in some of our card member marketing, which again, leads to some of the reduction in overall cost. So we're excited by that. We're excited that it's on the cloud. Which gives us the ability to expand that on a very dynamic basis. And so I think as we go on, we'll be able to talk more about just how the proof points of that come out. But this is a business that you know, not only you have to invest in value propositions, but you really have to invest in a light way in the technology behind it because, ultimately, it's technology that drives those value propositions, and it's a technology that drives the appropriate engagement with your cardholders. With that, we will bring the call to an end. Thank you again for joining today's call, and your continued interest in American Express. The IR team will be available for any follow-up questions. Operator, back to you. Operator: Ladies and gentlemen, the webcast replay will be available on our Investor Relations website at ir.americanexpress.com shortly after the call. You can also access a digital replay of the call at (877) 660-6853 or (201) 612-7415. Access code +1 375-7801 after 1PM eastern time on January 30 through February 6. That will conclude our conference call for today. Thank you for your participation. You may now disconnect.
Lucy: Hello, everyone, and thank you for joining the Financial Institutions, Inc. Fourth Quarter and Year End 2025 Earnings Call. My name is Lucy, and I will be coordinating your call today. During the presentation, you can register a question by It is now my pleasure to hand over to your host, Kate Croft, Director of Investor Relations, to begin. Please go ahead. Kate Croft: Thank you for joining us for today's call. Providing prepared comments will be present in CEO, Marty Birmingham, and CFO, Jack Lance. He will be joined by additional members of the company's leadership team during the question and answer session. Today's prepared comments and Q&A will include forward-looking statements. Actual results may differ materially from forward-looking statements due to a variety of risks, uncertainties, and other factors. We refer you to yesterday's earnings release and investor presentation, as well as historical SEC filings, which are available on our Investor Relations website for our safe harbor description and a detailed discussion of the risk factors relating to forward-looking statements. We will also discuss certain non-GAAP financial measures intended to supplement and not substitute for comparable GAAP measures. Non-GAAP to GAAP reconciliations can be found in the earnings release filed in exhibit to Form 8 or in our latest investor presentation available on IR website, www.fisiinvestors.com. Please note that this call includes information that may only be accurate as of today's date, 01/30/2026. I will now turn the call over to President and CEO, Marty Birmingham. Marty Birmingham: Thank you, Kate. Good morning, everyone, and thank you for joining us today. The fourth quarter rounded out what was a very strong year for our company, marked by consistent execution and profitable organic growth across our enterprise. We delivered net income available to common shareholders of $19.6 million or $0.96 per diluted share for the fourth quarter and $73.4 million or $3.61 per diluted share for the full year. Return on average assets was 120 basis points for the year, while return on average equity was 12.38%. Both measures exceeded our annual guides, supported by growing net interest income of $200 million and durable noninterest income of $45 million. Our efficiency ratio for the year was 58%. We are incredibly proud of these results and excited about the coming year and opportunities ahead. Veggie. Our disciplined approach to long-term value creation. In the fourth quarter, capital actions included the repurchase of 1.7% of outstanding shares, totaling nearly $11 million, and the successful completion of an $80 million sub-debt offering. Sub-debt notes have a five-year fixed rate of 6.5%, which is favorable to the 2015 and 2020 issuances that were subsequently redeemed earlier this month. 2025 notes received a BBB minus rating from Kroll, with a stable outlook reflective of our improved profitability and capital position. The strength of the company's credit rating and favorable coupon on our recent debt issuance are clear testaments to our commitment to achieving higher financial performance. We delivered solid loan growth, with total loans increasing 1.5% in the fourth quarter and 4% year over year to $4.66 billion. This growth was reflective of strong competitive positioning and demand in commercial lending across our Upstate New York markets. Commercial business loans were down modestly on a linked quarter basis and up 11% year over year. Commercial mortgage loans were up about 4% from the end of the linked quarter and 6.5% year over year, led by healthy activity in our Rochester region. We remain highly confident in the durability and growth potential of our Upstate New York markets. This includes Syracuse, where Micron Technology's long-anticipated $100 billion investment officially broke ground earlier this month. We build out an operation of an entire semiconductor supply chain is expected to bring thousands of jobs and drive significant economic expansion. While the results will take years to fully materialize, we were excited to see the shovel in the ground and anticipate more meaningful lending activity beginning this year as infrastructure, housing, and health care expand to support a larger anticipated population. Residential lending grew modestly, up 1% during both the three and twelve months ended 12/31/2025. Originations were led by Buffalo and Rochester, where the housing market remains tight and prices have continued to increase. That said, inventories are starting to loosen in our overall geography. Application volumes were up year over year. We are beginning to see increased refinance activity. New 2025 continue to build their clientele and pipelines, supporting our expectations for stronger residential production in 2026. Consumer indirect loans were down 3.7% during the fourth quarter and 4.5% for the year, to $807 million. We manage this portfolio based on business unit profitability targets, and have been comfortable allowing runoff to outpace originations, given current market conditions. As we maintain a strong focus on profitable spreads and favorable credit mix, we expect consumer indirect loans to drift down modestly in 2026. As a reminder, we are applying indirect lender for individual vehicle purchases through a network of more than 350 new auto dealers across New York State. The portfolio has an average loan size of approximately $20,000 and a weighted average FICO score exceeding 700. Period-end total deposits were $5.21 billion, down 2.8% from September 30, driven by seasonal public deposit outflows and lower broker deposits. Deposits were up 2% year over year despite the ongoing wind down of our banking as a service line of business. As a reminder, we announced plans to exit BaaS in September 2024 and since then, have worked closely with our fintech partners to onboard their customers in $100 million of associated deposit balances. We had approximately $7 million of these deposits on the balance sheet at year-end, and continue to expect they will roll off in the first quarter to a new banking provider. While we did leverage broker deposits throughout the year as planned, to help offset the outflow of the BAS deposits, strong growth in our reciprocal deposit business allowed us to reduce broker in the fourth quarter. Our reciprocal deposit base is a differentiator, one anchored in deep and often long-tenured commercial and municipal relationships. More than 20% of these customers and 30% of the balances have had a relationship with Five Star Bank for more than a decade. The average relationship tenure across the portfolio is five years. Through the reciprocal product offering, we were able to meet the deposit needs of individual, municipal, and commercial customers requiring collateralization above the $250,000 FDIC insurance limit for full insurance coverage. This allows us to keep important customer relationships in-house. Additional details on our performance, and a look at our 2026 guidance. Thank you, and good morning, everyone. As Marty shared, we are very proud of our 2025 results, and we are committed to pushing higher in 2026 as we continue to unlock more potential from our commercial banking, consumer banking, and wealth management offerings. Our full-year 2025 return on assets exceeded initial expectations, reflecting the sustained momentum and our ability to raise the bar on operating results. We anticipate higher performance for the full year 2026 with a targeted return on average assets of at least 122 basis points, return on average equity exceeding 11.9%, and an efficiency ratio of below 58%. We also expect margin expansion in '26 as we continue to shift our earning asset mix and actively manage funding costs. NIM is expected to incrementally build through the year, supporting a full-year target in the mid-three sixties. As a reminder, this is based on a spot rate forecast as of year-end, which does not factor in potential future rate cuts. Looking at our 2025 results, margin was 3.62% for the fourth quarter, and 3.53% for the full year. As expected, quarterly NIM was down three basis points from the linked period, in part to FOMC activity, given the timing of deposit and variable rate loan repricing. However, the primary driver of the compression was the impact of December sub-debt offering coupled with the mid-January call of our preexisting sub-debt issuances contributed about two basis points of declines. Average loan yields decreased nine basis points as compared to the third quarter, primarily reflecting the timing of the October rate cut. As a reminder, approximately 40% of our loan portfolio is tied to variable rates, with a repricing frequency of one month or less. Cost of funds decreased four basis points from the linked quarter. Higher rate CDs matured alongside overall downward deposit repricing. Year over year, our quarterly margin expanded by 71 basis points, reflecting the transformative securities restructuring we completed in 2024. In addition to high-quality loan growth, supporting an improved earning asset mix, and effective management of funding costs. For 2026, we are targeting annual loan growth of about 5%, driven by commercial. Given the number of loans that closed in the fourth quarter, coupled with larger anticipated payoffs and paydowns that we have seen in recent years, we expect commercial growth to be lighter in Q1 and build through the year. Deposits remain a top priority for us, amid a highly competitive landscape. We are guiding to a low single-digit deposit growth year over year, and remain focused on growing lower-cost core deposits, including demand, now, and savings across both our consumer and commercial lines of business. Turning to fee revenues, Noninterest income was $11.9 million for the quarter, $45 million for the year, supported in part by several unique factors. This included higher than typical company-owned life insurance, for quality income in 2025. The year prior, noninterest income reflected the $100 million net loss associated with the investment securities restructuring, and the $13.7 million gain on our insurance subsidiary sale. COLI revenue was $2.8 million in the fourth quarter, a 2.1% decrease from the linked period, and $11.4 million for the year, compared to $5.5 million in 2024. The year-over-year increase was due in part to higher revenue in 2025 following the surrender and redeploy strategy we executed last January, the carrier's late June redemption of the surrender policy proceeds. We originally expected third and fourth quarter income to each be approximately $275,000 less than the level reported in the second quarter. However, results exceeded expectations given the performance of the underlying policies. Accordingly, we expect COLI income to normalize in 2026, to approximately $10.5 million on a full-year basis. Full-year investment advisory income of $11.7 million was an increase of $1 million or over 9% from 2024. Career Capital experienced positive net flows. As new business and market-driven gains offset outflows, pushing AUM to $3.6 billion at year-end, up $500.4 million or 16% from one year prior. Career Capital is one of the largest RIAs in our region, providing customized investment management, retirement planning, and consulting services, for mass affluent and high-net-worth individuals and families, businesses, institutions, and foundations. We look forward to continuing to nurture its growth and are targeting a low to mid-single-digit increase in investment advisory income in 2020, which is partly dependent on market conditions. Commercial back-to-back swap activity was again strong in the quarter, with associated fee income of $1.1 million, up $263,000 more than 31% from the third quarter. Full-year 2025 swap fee income of $2.5 million was up $1.8 million from the prior year. We expect swap fees to moderate to a range between $1 million and $2 million, which is more in line with the 2022 and 2023 levels experienced. We reported quarterly noninterest expense of $36.7 million compared to $35.9 million in the third quarter, reflecting accruals for performance-related incentive compensation in 2025. Owner expense was $142 million compared to $178.9 million in 2024, where results were impacted by the previously disclosed fraud event and auto lending settlements. The year-over-year increase in salaries and benefits expense was driven in part by higher claims activity in our self-funded medical plan. We have discussed throughout much of 2025. We expect the higher claims trend to continue into 2026, and a higher run rate is reflected in our 2026 expense guidance. Higher occupancy and equipment expense also contributed to the variance and primarily reflects the ATM conversion and upgrade project that we completed in 2025. Prudent expense management remains a top priority, reflecting our commitment to maintaining the positive operating leverage we have achieved. We are targeting low single-digit noninterest expense growth in 2026, primarily driven by a mid-single-digit increase in salaries and benefits reflecting the full impact of investments made in talent during the year and annual merit-based increases. The 2026 effective tax rate is expected to be between 16.5% to 17.5%, including the impact of the amortization of tax credit investments placed in service in recent. This was down from the 18% we reported in 2025, primarily due to the taxable COLI surrender and redeploy transaction executed during the year. We were budgeting full-year net charge-offs of 25 to 35 basis points of average loans. While our experience in recent years has been lower than this, including the 24 basis points we reported in 2025, we are being conservative with our outlook at this time. As a reminder, we finished 2025 with an ACL total loans ratio of 102 basis points, a coverage ratio that is aligned with our credit risk framework. That concludes my guidance for 2026. And I will turn the call back to Marty. Thanks, Jack. We are proud of the progress our team has made and confident in our ability to execute on our strategic plan. As we look ahead, we are focused on organic credit discipline growth, centered on deep relationships. Prudent management of expenses, balancing people and technology investments with a firm commitment to positive operating leverage. And continuing to build a strong capital position that supports our efforts to deliver meaningful long-term value to shareholders. As a small-cap financial holding company primarily serving Upstate New York, we believe our size, scale, and market position create distinctive advantages. Both competitively as an investment opportunity. Having simplified our business and strengthened our balance sheet over the last twenty-four months, we are intently focused on driving sustainable growth through our community bank and wealth management firm. With more than $6 billion in assets on our balance sheet and another $3.6 billion under advisement, our size and scale are differentiators. Our deep roots and long history going back more than two hundred years in some of our legacy markets are complemented by exciting growth opportunities in the metros of Buffalo, Rochester, and Syracuse. And supplemented by the high returns of our Mid Atlantic team. We look forward to delivering organic growth in support profitability and high-quality earnings. That we believe support a higher multiple. I would like to thank you for your attention this morning. That concludes our prepared remarks. Operator, please open the call for questions. Thank you. Kate Croft: When preparing to ask your question, please ensure your device is unmuted locally. The first question comes from Damon DelMonte from KBW. Your line is now open. Please go ahead. Damon DelMonte: Hey, good morning, everyone. Hope you are all doing well today. Thanks for taking my questions. First question, just wanted to start off on the margin, Jack. I appreciate the guidance here. Just kind of curious as far as, like, your expected cadence of the margin over the course of the year. I mean, is there a little bit of step down from where we ended 25 before we kind of grind up higher over the course of the year or are there other variables in play? Jack Lance: Thanks, Damon. So when we the year, December margin was at about three fifty-six. And that was impacted partially by the sub-debt raise that we did mid-month. And then the retirement of the $65 million of the two outstanding facilities did not occur until mid-January. So margin was impacted by about six basis points on a monthly basis because of that. You know, after that retirement that occurred in January, we can see margins start to expand incrementally on a monthly basis throughout the year. Damon DelMonte: Got it. Okay. That is helpful. Thank you. And then, I guess, staying on the margin topic, you know, I know your guidance does not contemplate any rate cuts, but if we do have a 25 basis point cut, can you just remind us how you expect the margin to respond in the near term? Jack Lance: Yeah. I think we have demonstrated the ability to reprice deposits pretty aggressively. So as you saw in December, there was a modest amount of margin compression. Absent the sub-debt repricing, margin would have been largely or sorry, the sub-debt issuance margin would have been largely flat in the fourth quarter. So I think that our guidance holds up. We saw 25 basis points of rate adjustment. Damon DelMonte: Got it. Okay. And then with regards to the outlook for loan growth, I think, Marty, in your prepared comments, you indicated that the indirect auto portfolio will likely trend lower this quarter and the growth would be driven on the commercial side. I guess first, what is the, is it intentional runoff on the indirect auto? And then secondly, do you feel better about your C&I prospects or your CRE prospects for the growth? Thanks. Marty Birmingham: So we have been being very intentional with the management of the outstandings of our indirect portfolio, Damon. So yes, that is how we are planning to drive our footings in that portfolio in terms of what Jack talked about and our outlook for it. And relative to commercial, we have had a very strong year in '20. We had a very strong fourth quarter with closings. Our pipeline has consistently been around, as for the company, around $700 billion ish. For the last several years. And we see good opportunity geographically enough state. New York. And we see it kind of being equal weighted relative to C&I and CRE. I think we have seen an increase in small business, CRE, and confidence of in our borrowers of all types and sizes. C&I, starting in the '25 and really continuing this point. So I think it is Jack commented, it is going to be a little bit lumpy and our timing will probably be towards the back half of the year in terms of the materialization of loan production and commercial. Yeah. And just to add a little color on the equal weighting there, that would be on a percentage basis, Damon. So CRE having a larger portfolio, we would anticipate some more balance sheet growth in the CRE portfolio versus C&I, but both are continued drivers of growth. As is the small business lending unit. Damon DelMonte: Got it. Okay. Great. And then if I could just sneak one more in. Nice to see some share buyback during the quarter. Just curious, you know, on your thoughts going forward into '26. Seems like shares are probably still attractive at these levels, but just curious on your thoughts. Jack Lance: So I think we are very pleased with what how we were able to execute in the fourth quarter. I think it is fundamental, as we think about it, one of our constraints is our common equity Tier one at 11%. And we were able to buy back 337,000 shares think the earn back was a year or less. And remains attractive capital allocation option for us. We did, as shared, roll over our sub-debt, we borrowed an incremental $15 million. So that could provide some opportunity for us. But as I say, we want to be judicious relative to our constraint capital. Relative to CET1. Damon DelMonte: Great. Thank you very much for answering my questions. Jack Lance: Thanks, Damon. Kate Croft: Thank you. As a reminder to ask a question, please press star. The next question comes from Manuel Navas from Piper Sandler. Your line is now open. Please go ahead. Manuel Navas: Hey, good morning. Just wanted to I appreciate the ROA improvement target. I just wanted to hear a little bit about potential areas for upside or downside on the ROA. Jack Lance: Yeah. Yeah. You know, this is Jack, I guess. What are the areas that could push on ROA is you know, accelerated pace of asset originations. But I think we are, you know, pretty prudent in our model as far as we are focusing our growth. We have pretty strong pricing constraints out there. While we remain competitive, we do prioritize profitability over growth. Fairly comfortable with the ROI getting ROA guidance that we put out. Manuel Navas: That is great. And and with the going back to the pace of buybacks for a moment, it growth is a little bit more back half a year. Is that mean you can use my have a little bit more buybacks in the first half of the year? Is is that reasonable assumption? How does that work with your progression of growth across the year? Jack Lance: Yeah. As as Marty mentioned, we we raised $15 million of additional liquidity through the December sub-debt offering. And deployed a portion of that throughout December. There is still some liquidity available from that issuance. On the common equity tier one side, the the low mark for us is 11%. That is basically where my my threshold is where I do not want to break below. We ended the year at 11.1%, and we are projected to add another 40 to 50 basis points of CET1. So we have capacity to continue to execute on that additional activity. In greater depth about any of the initiatives that you have to to kind of generate that low sum digits for the year. And and then I will step back into the queue. Yeah. This is Jack. I can take that one again. So as we mentioned in the in the call, we are focused on mainly on core deposit acquisitions. So that is DDA, savings, Now accounts, we are really projecting our money market and time deposits to remain flattish throughout the rest of the year. So that growth in those core deposits is kind of comes along with inflow of loans and spread throughout the year. So I would not expect much volatility outside of the seasonal flows we have from public deposits. And then as far as initiatives are concerned, the past year or so, we have spoken about the success of our treasury management offering on the commercial side and commercial deposit growth. Was a success for 2025. We expect to continue that momentum in 2026. Typically, the deposit relationships follow the extension of credit. I think we put a lot of effort into positioning our sales force commercial, retail, those dealing with our relationship businesses understanding the importance of deposits and and getting incentives reset this year so that we can report strong performance there. So we feel good about our preparation as we turn the calendar to 2026 to really pursue this aspect of what can possibly influence our NIM. Thank you. Thank you for the commentary. Thank you. Kate Croft: We have no further questions at this point, so I would like to hand back to Marty for any final remarks. Marty Birmingham: Thank you very much, operator, for your help this morning. Thanks so much for all who have participated. We look forward to continuing to update you on our performance after the conclusion of the first quarter. Kate Croft: This concludes today's call. Thank you all for joining. You may now disconnect your lines.
Operator: Good day, and thank you for standing by. Welcome to the Third Quarter Fiscal Year 2026 Cavco Industries, Inc. Earnings Call Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Mark Fusler, Corporate Controller and Investor Relations. Please go ahead. Mark Fusler: Good day, and thank you for joining us for Cavco Industries Third Quarter Fiscal Year 2026 Earnings Conference Call. During this call, you'll be hearing from Bill Boor, President and Chief Executive Officer; Allison Aden, Executive Vice President and Chief Financial Officer; and Paul Bigbee, Chief Accounting Officer. Before we begin, we'd like to remind you that comments made during this conference call by management may contain forward-looking statements. Forward-looking statements include statements about our future or expected business and financial performance and are not promises or guarantees of future performance. They are expectations or assumptions about Cavco's financial and operational performance, revenues, earnings per share, cash flow or use, cost savings, operational efficiencies, current or future volatility in the credit markets or future market conditions. All forward-looking statements involve risks and uncertainties, which could affect Cavco's actual results and could cause its actual results to differ materially from those expressed in any forward-looking statements made by or on behalf of Cavco. For a discussion of material risks and important factors that could affect our actual results, please refer to those contained in our filings with the SEC, which are also available on our Investor Relations website and at sec.gov. This conference call also contains time-sensitive information that is accurate only as of the date of this live broadcast, Friday, January 30, 2026. Cavco undertakes no obligation to revise or update any forward-looking statements, whether written or oral, to reflect events or circumstances after the date of this conference call, except as required by law. Now I'd like to turn the call over to Bill Boor, President and Chief Executive Officer. Bill? William Boor: Thanks, Mark. Welcome, and thank you for joining us today for our third quarter results for fiscal 2026. There are a lot of moving parts in our Q3 results, mostly due to the closing of the American Homestar deal and its impact on the quarter. Later in my comments, I'll discuss the integration activities and our solidifying view of the deal synergies. But I'd like to start by framing the discussion that Allison and Paul will fill in around the profit and EPS results. The year-over-year EPS decrease is best dissected starting from the bottom of the income statement. Our tax rate was considerably higher than a year ago, partly due to declining tax credits from the phasing out of the Energy Star program and partly due to nondeductible deal costs. Moving up the P&L to SG&A, the increase this quarter was mainly the result of bringing American Homestar overhead costs into the company and the aforementioned onetime transaction costs. These SG&A and tax rate items represent a considerable part of the year-over-year EPS difference, but not all of it. So now let's get into the underlying business environment and results. Based on HUD shipment data, industry shipments slowed in October and November. Those 2 months were down 13% from the calendar 2024 period. We don't yet have the December data point to round out the quarter. We were not immune to the overall decrease. Excluding the volume pickup we got from American Homestar, our volume was down about 4% compared to last year and 6% sequentially. From an operational perspective, we took some additional down days around the holidays where it made sense, but we deliberately maintained our daily production rate or floors per day so that we could stay positioned for opportunities in the spring selling season. While we're all looking to see how orders shape up in the weeks ahead, the bias in our plants generally is to hold pace and go up from here whenever orders and backlogs allow. As part of staying poised for market opportunities, we utilized about a week of overall backlog, similar to what we did last year in the third quarter, and we finished this quarter in the 4 to 6 weeks range. Early indications are that backlogs are stable and could increase or if we pick up production pace, be maintained at this level heading into the spring. Last quarter, I referenced some relative slowdown in the Southeast region of the country compared to other regions. I said at the time that we didn't see any systemic reason for the variation and sure enough, the Southeast stabilized and saw higher volume in Q3 versus Q2, while most all of the other regions had decline in shipments. Regarding channels, communities represented most of the reduced volume we experienced. Retailers remained steady quarter-to-quarter. A positive indicator of underlying demand continues to be average selling price, which grew sequentially despite the volume drop-off. After considering the impacts of product mix and retail integration, both of which pushed average selling price upward, single-section home prices were roughly flat and multi-section pricing was up. We have seen the trend toward multi-section homes for a while now, both in the HUD data and our results. It's difficult to pinpoint any one reason. However, it seems fair to conclude that affordability at the lowest price levels is increasingly strained. In other words, households that are seeking to become homeowners of the lowest-priced homes seem to be increasingly priced out or they're lacking the confidence to purchase in this environment. Sequentially, our gross margin dropped in the quarter despite the average selling price increase. While usually the primary factors driving movement in factory-built gross margin are manufacturing costs, those period-to-period changes roughly netted out. We saw some compression between retail and wholesale prices in our retail operations, which drove the bulk of our gross margin decrease. And to be clear, those retail comments are based on our pre-Homestar network, not due to the addition of the acquired operations. And it's worth noting that retail -- our retail operations remain primarily centered in the South Central region. We don't believe that price compression is either an indication of the broader market or that it represents a meaningful shift over time. I know the focus is rightly looking forward and trying to figure out where the industry will go from here in the coming quarters. While the uncertainty remains, the tone we are picking up in both our operations and in the market is optimistic. The leading indicators such as [ quotes ] and retail traffic remain healthy. Notably, policy discussions are increasingly focused on affordable housing and specifically on increasing supply of first time -- poor first-time buyers. Affordable housing is one of the highest voter priorities heading into the November election and policies to increase supply, remove barriers, enable innovation and help buyers are all supportive of Factory-built Housing. It will be interesting to see the proposals shape up in the coming months. It's important to comment on financial services, where the trend continued with another strong quarter, driven by our insurance operations. Our lending operations have been less of a contributor in recent periods. However, we've been making progress identifying buyers of our loans, and I expect the originations and loan sales to pick up in the coming quarters. Both of these operations are important strategic contributors to the integrated value of Cavco and our ability to provide complete solutions for our homebuyers. Now I'd like to take a few minutes to talk about the American Homestar integration. First, we had a solid integration plan heading into the combination and both organizations have come together, really hitting the ground running as one company. We're right on that plan with impressive execution from HR benefits and payroll to finance, IT and operations. Now that we've been together for over a quarter, our view of synergies is starting to firm up. What I'd like to share today is our view of the most tangible cost reduction synergies. We spoke previously about this deal offering meaningful purchasing, labor and SG&A cost savings. Our total view of these tangible and measurable synergies is now above $10 million on an annual basis, and we estimate that about half has been achieved in the run rate as we entered Q4. The positive impact didn't show itself in Q3 because the gains were achieved as the quarter progressed, and they were offset by integration costs that will decline going forward. I thought it important to provide this information at a time when we are well into our integration work and can provide a more informed view. It's good news that the current picture is significantly higher than our pre-deal internal estimates. Additionally, there are a number of areas where precise quantification is difficult, but where we know value is being created. Areas like the ability to optimize product within and across plants as the system grows and the ability to fill out company store offerings with Cavco product from various plants are examples of the very real ways in which the strategic benefits of a combination like this show. Again, these are very real synergies and are not included in the tangible cost savings I laid out. And finally, we continued our share repurchases during the quarter with another $44 million used to buy back company stock. With this return of capital and the significant use of cash for the acquisition in the quarter, our unrestricted cash balance at the end of Q3 was a healthy $225 million. Now I'll turn it over to Allison to give more details on the financial results. Allison Aden: Thank you, Bill. Net revenue for the third fiscal quarter of 2026 was $581 million, up $59 million or 11.3% from $522 million in the prior year quarter. Sequentially, net revenues increased $24.5 million, driven by the addition of American Homestar, which contributed $42 million and an increase in average revenue per homes sold, partially offset by a reduction in base business units sold. Within the Factory-Built Housing segment, net revenue was $558.5 million, up $57.6 million or 11.5% from $500.9 million in the prior year quarter. The increase was primarily due to the addition of American Homestar and an increase in base business average revenue per homes sold, partially offset by a decrease in the number of base business homes sold. The increase in base business average revenue per home was largely due to a higher proportion of homes sold through our company-owned stores, more multi-wise in the mix, along with product pricing increases. Financial Services segment net revenue was $22.5 million, up $1.3 million or 6.2% from $21.2 million in the prior year quarter and sequentially up $1.1 million. These increases were due to the addition of American Homestar Financial Services and higher insurance premium rates, partially offset by fewer loan sales and fewer insurance policies in force. In the third fiscal quarter, consolidated gross margin as a percentage of net revenue was 23.4%, down from 24.9% in the same period last year. In the Factory-Built Housing segment, gross profit was 21.7% in the third quarter, down from 23.6% in the prior year quarter. The reduction was broadly due to higher per unit cost. Financial Services gross margin as a percentage of revenue increased to 65.2% in the third quarter from 55.5% in the prior year quarter. This increase is primarily due to lower weather-related claims, the growing impact of rate increases and underwriting changes on policies. Selling, general and administrative expenses in the third quarter were $81.4 million or 14% of net revenue compared to $66 million or 12.6% of net revenue during the same quarter last year. Expenses rose primarily due to the addition of American Homestar, which contributed $6.9 million in operating costs and $2.9 million in deal-related expenses, along with higher year-over-year compensation. The American Homestar operating costs are expected to decline as we realize projected synergies. Interest income for the third quarter was $3 million, down from $5.4 million in the prior year quarter, primarily due to lower cash balances after the purchase of American Homestar at the beginning of the quarter. Pretax profit was down 16.9% this quarter to $57.6 million from $69.3 million for the prior year period. The effective income tax rate was 23.5% for the third fiscal quarter compared to 18.6% in the same period in the prior year. This increase was driven primarily by a reduction in tax credits and nondeductibility of certain American Homestar deal costs. Net income was $44.1 million compared to net income of $56.5 million in the same quarter of the prior year, and diluted earnings per share this quarter was $5.58 versus $6.90 in last year's third quarter. Before we discuss the balance sheet, I'd like to take a minute to talk further about capital allocation. During the quarter, we repurchased just over $44 million of common shares under our Board-authorized share repurchase program, leaving approximately $98 million under authorization for further repurchases. Additionally, we've closed our acquisition of American Homestar. Our capital deployment will continue to align with our strategic priorities, which include enhancing our plant facilities, pursuing additional acquisitions and consistently assessing opportunities within our lending operations. Share buybacks will then serve as a mechanism to responsibly manage our balance sheet after considering these initiatives. Now I'll turn it over to Paul to discuss the balance sheet. Paul Bigbee: Thank you, Allison. In the quarter, we had a decrease in cash and restricted cash of $157.5 million, bringing our balance to $242.5 million. Cash provided by operating activities was $66.1 million. Cash used in investing activities was $179.7 million, primarily related to the American Homestar acquisition and cash used in financing activities was $43.9 million, primarily due to share repurchases. As you would expect, when we compare the December 27, 2025 balance sheet to March 29, 2025, several of the balances increased from the addition of American Homestar, including inventories, notes receivable, property, plant and equipment, goodwill and intangibles, accrued liabilities and deferred income taxes. Base business accrued expenses and other current liabilities increased from higher volume rebates and warranty accruals. And finally, treasury stock increased due to stock buybacks executed in the period. With this, I'll turn it back to Bill for closing remarks. William Boor: Thanks, Paul. Before I turn it over to questions, I'd like to briefly comment on our continuing brand and market strategy progress. I know everyone is focused on the numbers this call, but I think this is really important, and it reflects a long-term strategy that's been unfolding really nicely for us. Over a long period, you've heard me talk initially about a redesign of our digital marketing infrastructure. We then rolled out dramatically improved websites, not only for our operations, but micro sites for our retail partners. Last year, we talked about rebranding 19 manufacturing brands to 1 under the Cavco name. And most recently, at the Louisville show just a couple of weeks ago, we unveiled our product line framework that organizes every home made across our system under defined lines that we can then market locally and nationally. This is a huge milestone and a long-term strategy aimed at helping a potential homebuyer more easily find their best fit Cavco home and helping our retail partners with more and better leads. A lot of very impressive teamwork continues to be exhibited to transform our go-to-market strategy all the way from concept to customer conversations across the system. And I believe we're really well positioned to be a great partner for our retailers and to get more deserving families into quality homes. So I imagine there may be a couple of questions. So Marvin, go ahead and open up the line. Operator: [Operator Instructions] And our first question comes from the line of Daniel Moore of CJS Securities. Dan Moore: Let me start with utilization, obviously ticked a little bit lower than I think some people expected. Last quarter, you talked about keeping production steady overall. Where did you see maybe some pockets of weakness that caused you to pull back a little bit or take some more days of downtime? And I guess, probably more importantly, how should we think about production as you see the world in Q4 relative to Q3? William Boor: Yes. It was interesting. I mean, October and November were kind of the downtick. And like I said, for the industry, it was pretty sizable. As I commented in my opening remarks, we talked quite a bit about the Southeast last time because I just wanted to point out that it was standing out relative to the other as kind of struggling or just not as much pickup there as in other regions. That really reversed. And to be honest, Dan, I could kind of tick through them, but the Southeast was the strongest quarter as far as holding volume and gaining a little bit this quarter. And as you can imagine, I mean, there's -- we always talk about seasonality. I think the dropoff in October, November was more than you would expect from seasonality, but everything across the north is going to slow a bit going into that quarter. But yes, you picked up. I'm trying to make it clear to folks that increasing production in a plant is tougher than pulling back production because you've got to have the teams in place, you've got to have a level of training. And so our tactical decision, very similar to what we talked last year, even when you expect the third quarter to possibly be a little bit slower, we, at our plants, really held production rate. We held our staffing. We held production rate. And where we had to, which wasn't across the whole system, if backlogs were just too lean, those folks -- those plants just took a little extra time at the holidays and down days. And that's how we balance the market. If we had done it the other way, we would have probably not been as well positioned now for the possibility of a nice increase in the spring season. So that's how we've tried to position ourselves. We don't -- may be frustrating to some people on the calls, but we don't do a lot of predicting and forecasting. We do a lot of making sure we're able to adjust accordingly upward and downward when necessary. And our plants right now because we maintain that production rate are just in a really nice spot to be able to continue moving up if we get the spring selling season we're hoping and expecting. There is -- I think people might get tired of us saying at this time of the year, but when you're at the Louisville show and when you're talking to our plants and operating reviews and when you're talking to customers, there is not a feeling of gloom. People are generally optimistic, and we'll see how it develops. We started off the quarter. I'm jumping beyond your question, Dan, and I apologize if I'm going too far. Yes, we -- as everyone knows, the weather here in the beginning of the calendar year has been a bit challenging. And so that's likely to show us in January as straining some traffic and also delaying some shipments and setting of homes. But the way I think about that is it's early in the quarter and those sales don't go away. So our plants, even ones that had to miss some time in the -- due to the recent weather, we've got a number of plants, not a small number of plants that are running this Saturday because they want to keep up. And so that's a good indication of their optimism going into the spring. Dan Moore: Very helpful. I'm going to maybe just pull on that string a little bit more and go back to the comments you made in the prepared remarks, which is we're in position, I think, if I heard correctly, to hold -- in general, hold production here with backlogs potentially ticking higher unless we decide to increase production, in which case they might stay flat. So net-net, it feels like flattish sequentially and maybe a little upside to that is where you're seeing the world for fiscal Q4, but tell me if that's wrong. William Boor: Yes. Yes, you caught me. I slid in a little bit of an update there, mid-quarter update, right? Because what I was trying to convey -- and I didn't mean to be too subtle about it. What I was trying to convey is that as we sit here today, we're pretty comfortable that our backlogs are holding. And if we get the uptick, you're almost inevitably going to get an uptick from the spring selling season. But we'll have kind of complete control and choice about whether to increase production rate and let the backlog kind of sit where it is or let the backlog move up a little bit for us. And 4 to 6 weeks is not a bad place to be if you feel like it's stable. So yes, that's a little bit of a mid-course update on the first quarter that we're not feeling like that backlog has fallen out from under us. Dan Moore: Really helpful. Shifting to gross margin, factory-built gross margins. You mentioned higher per unit costs. Wondering, Allison, if we can just tease that out a little bit. I mean the questions I'd have is, is there any lingering impact in acquisition accounting? And how do we think about the impact of kind of lower utilization versus mix in the quarter? Allison Aden: Yes. Thanks for that. On a year-to-year basis, I think it's what we'll just kind of reflect on. There was no -- consistent with what we foreshadowed last quarter in our statements, there really was no impact to gross margins from the acquisition. And when we think about margins year-over-year, they were down due to increases in input costs. And just in summary, prices were stable and they were resilient, even less so in forward markets. It really speaks to kind of a consistent underlying demand. But the reality was the prices did not increase enough to offset the input cost. This is a little unusual, particularly when we reflect on the retail side, but we don't think -- we don't see that as a systematic change. Dan Moore: And as you mentioned, the retail margin was a little lighter, and I assume that flowed through there as well. Allison Aden: That's correct. Dan Moore: Okay. [indiscernible] 1 or 2 more... William Boor: That was like a little bit of -- we haven't seen that historically. And while we wanted to call it out to help explain where we saw some of the downward impact on gross margin, at the same time, I'm going to encourage people to listen when we say that our retail operations still are, even as we've expanded them, they still are largely concentrated in Texas and surrounding states in the South Central. And -- so I just wouldn't want people to project that retail margins across the country for independents or the industry in general necessarily saw the same thing. It was one quarter where they kind of compressed their cost of buying a home and then their cost of selling it, but it's localized. And we also don't think in Texas, we're reading a whole lot into it at this point. But it was a factor that was more significant than we've seen in the past on gross margin. Dan Moore: Helpful. Is -- in terms of mix, is retail slightly lower margin than producing homes? Or is it not necessarily the case? Allison Aden: Typically, we don't see that as the case. Dan Moore: Okay. Last for me, I'll jump out. Deal-related costs, I think you said $2.9 million. Are those largely behind you? And can you quantify at all the impact of integration plan spend in the quarter and what that kind of looks like in fiscal Q4 and beyond? Allison Aden: Yes. The deal costs would have concluded in the third quarter when the deal was closed. And when we think about integration costs, we also, as Bill mentioned, absorbed a good bit of integration costs this quarter, which kind of tend to mute the uptick that we saw from early synergies. I would say that both -- as the synergies begin to take hold and we see an uptick there, we'll also see the integration costs continue to decrease slightly as we go forward. Dan Moore: Perfect. [indiscernible] with my follow-ups. Go ahead. William Boor: This felt like an investment quarter to kind of get us positioned with American Homestar. I mean some of those deal-related costs are things that -- things like adviser fees that are contingent on success of the deal that can't be capitalized. So a lot of those, obviously, they're paid and they're behind us. So this quarter kind of got all the negatives out of the way on that. And I think going forward, we'll see the positive synergies really come to the front. Operator: Our next question comes from the line of Greg Palm of Craig-Hallum. Greg Palm: I guess just digging in a little bit more about activity by channel. Bill, I think you mentioned that you saw maybe relative weakness or underperformance, I forget the term you used in communities versus retail. So can you talk a little bit about what you're seeing from some of the REITs in the community in general and as a whole? William Boor: Yes. No, you heard me right. I mean when we look at the volume decrease that we saw, which -- well, I'll just stop there. When we look at the volume decrease we saw, it was pretty focused on the community side. And we went back and looked over quarters, and I will tell you that communities can be pretty volatile, right? You look quarter-to-quarter. And what we're looking at actually is our revenue by channel. That can move up and down quarter-to-quarter, sometimes without explanation. As we come to the end of the year, I think there could be a lot of reasons for it. Things like them -- they have allocations to various suppliers. We did pretty well earlier in the year. It could be a little bit of evening out there. Even their capital management as they come to the end of their calendar year, I think, can play into the third -- our third quarter being down at times. What I haven't heard and did kind of go out to try to listen and see if it was a factor, I'm still not hearing communities with pessimism or feeling that if they set another house, they won't be able to find either a buyer or a renter for that house. They're not concerned about the end consumer. And they're not -- we talk -- sales to communities to larger REITs really occur at different levels. We talk at higher levels about their overall plans for the coming year and years at times and then the actual sales happen actually on a plant-by-plant basis. At those higher-level discussions, I'm not hearing any bearish tone about slowing down their plans for the coming year or years. So it's an observation that communities were probably the biggest part of the weakness in sales this quarter. And I feel like I say this to you guys on a lot of things, I want to call it out. It's something we're watching, but I don't know that we should call it a trend at this point. Greg Palm: Yes. Understood. And are you able to -- I know you mentioned October, November a few times, but are you able to comment on kind of what you thought in December just from the standpoint that I think you sort of hinted that October was maybe trending a little bit better. And so -- but at the same point, you mentioned or alluded to that really bad production data. So I'm just trying to figure out kind of how December went and what -- how sort of the cadence of activities played throughout the quarter? William Boor: Yes. My comments about October, November were only called out because that's the industry data that's available. I wasn't trying to not talk about what happened internally in December. So as you know, I mean, we're all still waiting for the December shipments data. But I'm doing this off the top of my head. I think through the year, through the calendar year, we saw seasonally adjusted rates of shipments. In the early part of the year, it was pretty strong, up 106-ish -- 106,000 or so. October, I think it dropped to -- Mark is pulling up the data, to 96,000 seasonally adjusted rate and November, it dropped to 93,000. So those were significant moves down, no denying it. And we just wish we had the data before this call to report on the industry data in December. The shape, I would say, because we have told you guys in some quarters, the shape of how the quarter shaped out, I would actually tell you that this was lower October through December. And I don't feel like the market -- even though that November seasonally adjusted rate for the industry was down compared to October, I don't know that internally, we felt like we were on a steep downward slope during the quarter. It was a holiday quarter, right? So you always have to figure that in. But it didn't feel like things were falling apart incrementally month-to-month. Greg Palm: Yes. Okay. William Boor: [indiscernible]. Greg Palm: Yes. No, that's helpful. And on the gross margins, you talked about what a little bit of compression at retail. And I'm just wondering, was this some sort of company-specific strategy because you said it was not an industry thing. It kind of sounded like it was more, I don't know, certain geographies within your footprint, but I just wanted to better understand exactly what you meant. William Boor: Yes. I don't know if I can capably comment on other people. So I can't tell you whether that same dynamic was at play for others. I'll tell you, I mean, just to be very frank about it, our volume in retail was pretty strong compared to the market they're operating in. And I still -- sometimes I talk about our retail as if it's still just Texas and that area. It's broader than that now, but a lot of our retail results are still driven by Texas. So we saw a quarter where our volume was strong relative to what we were seeing in the market, and we had that compression. So we're going to be looking at it and trying to figure out if we were under the market, to be frank. But I think it's that kind of a tactical discussion. It's something that I think from everything we can tell is isolated, and we'll jump on it and figure it out. Greg Palm: And just to be clear, there were no purchase accounting inventory step-up impacts in gross margin in the quarter. And is there a meaningful difference in Homestar gross margins versus Cavco? Allison Aden: So no, there was no real impact on the consolidated gross margins, gross profit due to any purchase accounting associated with the acquisition as we had experienced in previous acquisitions. I think that's consistent with comments that we also shared last quarter. So in general, as we've mentioned, when we look at the acquisition, their margins tend to be broadly in line with Cavco margins. William Boor: That's at both retail and manufacturing. Allison Aden: Yes, within the company. William Boor: The other thing we've commented on last time people had asked questions about it was they're more integrated on average. They were about 60% selling their homes through their stores versus previous Cavco was in probably the 22% range. So while they're small relative to the rest of the system, just directionally, that means that those integrated sales are upward pushing on the gross margin. So if anything, we have a little bit of an upward push from bringing American Homestar into the company. Greg Palm: Yes. Okay. And by the way, just last one on that. Do you have a metric for -- or an updated metric on the homes sold through company-owned stores, both as what it was in the quarter, including Homestar and maybe I don't know if you have it on a like-for-like or same-store basis, if you exclude that impact since they sell a lot more through company-owned than you? Mark Fusler: Yes, Greg, American Homestar was 343 homes. William Boor: Total, not just through retail. Mark Fusler: Not just through retail, right. So this quarter, our company-owned store was 1,339. And the prior year quarter was 1,075. So it's up 25%. William Boor: And that would be, I think, consolidated with American Homestar. Greg Palm: I'll run the math and maybe follow up offline. Operator: Our next question comes from the line of Jesse Lederman of Zelman & Associates. Jesse Lederman: I appreciate all the color thus far. I wanted to dig in a little bit more on kind of the cadence through the quarter and maybe into the beginning of the year here. Appreciating you don't have national industry shipments yet for December. Are you able to comment on internally, maybe your progress, how things might feel if you're not willing to share specific numbers going from November to December and then December to January and maybe your outlook for the spring selling season? William Boor: Yes. December -- if everything is equal, December is going to be a holiday month and everything is going to slow down, right? So if you think about it on a seasonally adjusted average rate, which I find helpful, just -- and let's just think conceptually on that basis of was December a dropoff considering that it's always going to be a relatively slow month, right? I don't think December felt like it was a drop off from November, just as far as looking at our data and kind of the tone of what was going on in the industry. So I don't know if that's helpful because I can't be real quantified lacking the industry data. But if I had to guess what the industry data is going to come in saying for December, it's probably going to be similar seasonally adjusted rate to November, and we'll see if I'm right. But it didn't feel like it was slowing down. I guess you're also asking for the -- a sense of how we're doing so far this quarter. The one thing that we have talked about already in this call is that we're pretty comfortable that backlogs aren't dropping off for us. So that's a positive. And the thing that makes it really hard to give an update even to the extent we're willing to share, Jesse, is that, man, the weather. I mean we're just a few weeks in, and that storm really is going to kind of shake things up for the month, but it will be muted by the time we get to the end of the quarter is my expectation. So I wouldn't expect people to overly react to that comment about the January weather when you're thinking about what Q4 might look like because, again, those sales don't go away, and our plants are already actually running Saturdays and doing things like that to make up for that lost time. So over time, that just moves activity from 1 week or 1 month to another, not something that we're overly concerned about. So I apologize if that's not as complete as you'd like, Jesse, but that's kind of my reaction to the question. Jesse Lederman: No, that's really helpful. I appreciate the comments there. When you say backlogs aren't dropping off, it seems they've kind of stabilized in the near term. Is that at a similar utilization that you ended the quarter with? Or have you slowed things maybe just a touch quarter-to-date, maybe given the weather, given some other trends you've seen? William Boor: No, we haven't slowed things. I mean think about our production rate in 2 pieces, right? It's how much we make a day across the whole system and then how many days we operate. We have not slowed -- we didn't slow in the third quarter as far as production rate. And we haven't slowed -- I'm giving you the update, but we haven't slowed here early January. However, we have lost operating days due to the storm. And that's where I said we're doing things to try to recapture that time. So we're not in the mode at this point of feeling like we got to pull back our daily production rate in the plants. And instead, we're trying to make sure we hold it and are ready to go up. Jesse Lederman: Okay. That's great to hear. What is your sense from conversations maybe at the Louisville show or from communities or other dealers that's driving some of the optimism for the spring selling season that makes you think that you could see an increase in backlog or perhaps an increase in capacity utilization? Are there any early indicators that you're hearing or you're seeing or you're looking for that give you that confidence? William Boor: Yes. The tone at the show, and I actually wasn't able to go, but I'll tell you, I talked a lot with people that did go because it's always a great interest, and our team was pretty -- actually pretty jacked up about the show, frankly, which made me feel really good. They were happy with how we showed up, but they were also happy with the discussions they had with our customers, the dealers and the communities about their prospects for the new year. And I think we all look at similar things. Traffic, I look at quotes, which I think is a bit of a directional long lead indicator. If we see quote activity drop off, then that makes me think about what are our orders going to be like in a month or 2. We have not seen them drop off. They've been actually pretty healthy. So I think everybody kind of hits the Louisville show excited about what spring could offer. So that's just the nature of our attitudes and our mindsets. But then the more tangible measures around traffic and quotes and activity like that still seems to be pretty strong. So that's what we're reading at this point. And we're real anxious as we get to this point in the year, it's always interesting when we have our conference call because it's a little early even for us to have a feel for how early spring is shaping up, right? We're not there yet, but we get pretty anxious this time of year to look at even weekly sales activity because it gives us an early indication of the spring. We're just not there yet. Jesse Lederman: Got it. Okay. Two more for me. One is from an inventory level perspective, is there any evidence maybe across your captive retail that you're aware of that there's any evidence of destocking that could pressure near-term orders even if end demand is recovering a bit? William Boor: You're saying destocking? Or are you worried about overstocking? Jesse Lederman: Overstocking, sorry. William Boor: Yes. Yes. No, I actually think that from the time when we had that big problem, now it feels like at least 1.5 years, 2 years ago, people have been pretty disciplined. I don't think there's any -- I certainly haven't heard of anyone stocking up, and there's a reason for that. I mean, let's think about just the dealers, right? They can order a home and because backlogs are where they're at, it's not a long wait to get that home. So they're not jumping back in line with multiple orders because they're worried about the pace at which they can receive a home. So that causes them to really stick very close to whatever their individual store target inventory is. So I really don't think we've seen any buildup there. Jesse Lederman: Okay. That makes a lot of sense. And the last one for me is a little bit more high level. Given you have great exposure in Texas, particularly bolstering that with the American Homestar acquisition, we're aware of some legislation that's been passed that's set to be effective in the middle of 2026, just statewide to level the playing field a little bit more, at least as it pertains to zoning for manufactured homes relative to single-family homes. Quite frankly, surprised. We haven't heard much about that or even other statewide legislation reform over the last few years. What are your thoughts on that? Why maybe have we not heard of it? Is there optimism surrounding it? Any clarity there would be great. William Boor: Yes, I read your note on that, and you also cited Kentucky, which is a big market and Kentucky's changes are a little bit more sweeping, right, more -- possibly more impactful on a local basis. So I don't know why we haven't heard more about it. I thought it was good that you covered it. I think maybe people just aren't keeping tabs on what's going on in those legislatures, but it's a great example of that slow progress, but definitely progress that the industry is going to make over time about zoning. Having states actually put legislation in place to either encourage or actually push local municipalities to open up a little bit to these solutions is a great development. So I think we should be excited about it. I don't know if the next obvious question is how big of an impact do we think it's going to make. I don't have that for you, but man, it's something that we should be looking at and you put a spotlight on it. Operator: [Operator Instructions] Our next question comes from the line of Daniel Moore of CJS Securities. Dan Moore: Just a couple more lots -- you covered a lot of ground, but maybe any color on sort of bucketing the updated and upgraded synergy targets? I think you said $10 million. How do we kind of think about the -- where those are coming from? And you mentioned roughly half actioned or we should see starting in the March quarter. How do we think about the cadence there going forward as well? William Boor: Do you want that one? Go ahead. Allison Aden: Sure, I'll go for it. So we talked -- Bill talked about leading on an annualized rate of $5 million into the quarter and ultimately being at like a $10 million level, right, which would be about $2.5 million a quarter. So as we think about the next quarter ahead of us, if we've exited at -- the third quarter at, call it, $5 million on an annualized basis, that puts us at perhaps like a $1.25 million positive uplift to profitability in Q4. If you think about it, the areas that we've talked about as far as where the synergies would hit on the geography of the P&L. When we first talked about the acquisition and so consistent today is we look to have purchasing savings and optimization. We also look to have direct labor savings at the COGS level. And certainly, through the course of time, we've proven that we're very effective and efficient in driving synergies through our shared services, which is our SG&A area. So those would be broadly the buckets that we would qualify -- quantify the $10 million. Dan Moore: Perfect. On the ASP front, jumped to $107,000 during the quarter. How do we think -- how much of that is mix from American Homestar, which obviously includes a higher percentage of homes through captive retail? And is that a number that you think is sustainable as we move forward here? Mark Fusler: Yes, Dan, this is Mark. So it increased a little bit as -- due to the high proportion of homes sold through company-owned stores, but it was about $1,000 increase of -- the sequential increase that you saw. Unknown Executive: Due to American Homestar. Mark Fusler: Due to American Homestar, yes. William Boor: Kind of a lot of things. We talk about all these variables that make our average selling price so hard to dissect. This was a period where a lot of things were kind of pushing it upward. American Homestar pushing it upward mostly because of their integration with -- between manufacturing and retail. I know I'm using integration in different ways on this call. The shift overall, even in our previous business toward retail a little bit, we had that going on. Definitely a product mix shift moved toward multi, which we've seen for a number of quarters. And then I think I commented about the -- what we think is the best proxy for what is a given product selling for now versus the previous period, that was up a bit. So this was a quarter where everything was kind of pushing the price up. Dan Moore: Got it. We talked a lot about the -- dissected the factory-built gross margin in Q3. Kind of any thoughts about factory-built gross margins looking at Q4 and how we should expect it relative to Q3 over the next quarter or 2? William Boor: I think Allison commented that I think on the commodities, if you just look at them, there's some movement up. I mean lumber is starting to move. Some steel increases have been announced, and we'll see how they flow through. So Allison, you might have more color, but I think directionally, there is going to be some cost of goods -- bill of materials -- focused on bill of materials, there is going to be some bill of materials movement, right? Allison Aden: Yes. I mean -- and to build on that a little bit, we haven't touched on it yet, but let's introduce it here, right? We know that tariffs are having an upward impact on our COGS. However, it's getting really difficult to precisely estimate the impact. But if we think about it this quarter, our best estimate overall that COGS was impacted by about $3 million this quarter. And the reason for the challenge of really being able to project that going forward, which, to your point, would fall within manufacturing. The challenge is that just simply put, the suppliers' ability to pass through tariffs, it's also partially a function of the level of demand for the products. So for example, if the demand for lumber or steel starts to heat up, we're likely to see the full impact of tariffs. So that's the area that, we'd be watching for as far as pressure on the margins. Dan Moore: Helpful. And last one, the tax rate. I appreciate you kind of delineating some of those pressures this past quarter. What do we think about where that should settle out in fiscal Q4? And how much is transitory, how much is kind of permanent? Allison Aden: Yes. No, thanks for the question. I think just high level, it's reasonable to use the Q3 rate of 23.5% that we experienced in Q3 and then subtract out of that the nonrecurring item of about 1%, which hit the tax rate or increase the tax rate, and that was really due to the nondeductibility of the American Homestar deal cost. So that won't reoccur in Q4. So you take that 23.5% down by 1%. Operator: I'm showing no further questions at this time. I'll now turn it back to President and CEO, Bill Boor, for closing remarks. William Boor: Yes, I'll be brief. We've talked a lot here in this one, but happy to have follow-up calls. We're looking forward to the coming months. I think we're positioned well to execute when the market improves. Part of that positioning is just having the ability to adjust quickly to near-term conditions. And I think we've shown our ability to do that. Over time, we don't get too nervous because we know that Factory-Built Housing is the primary solution to the housing unit shortage in the country. And that's what we're working every day to step up to that challenge. So I really do appreciate everyone's interest and joining us for the call, and we'll look forward to keeping you updated. Thank you. Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Operator: Welcome to the Regeneron Pharmaceuticals Fourth Quarter 2025 Earnings Conference Call. My name is Shannon, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. Please note that this conference call is being recorded. I will now turn the call over to Ryan Crowe, Senior Vice President, Investor Relations. You may begin. Ryan Crowe: Thank you, Shannon. Good morning, good afternoon, and good evening to everyone listening around the world. Thank you for your interest in Regeneron Pharmaceuticals, Inc., and welcome to our fourth quarter 2025 earnings conference call. An archive and transcript of this call will be available on the Regeneron Investor Relations website shortly after our call concludes. Joining me on today's call are Dr. Leonard Schleifer, board co-chair, co-founder, president, and chief executive officer; Dr. George Yancopoulos, board co-chair, co-founder, president, and chief scientific officer; Marion McCourt, executive vice president of commercial; and Christopher Fenimore, executive vice president and chief financial officer. After our prepared remarks, the remaining time will be available for your Q&A. I would like to remind you that remarks made on today's call may include forward-looking statements about Regeneron Pharmaceuticals, Inc. Such statements may include, but are not limited to, those related to Regeneron Pharmaceuticals, Inc. and its products and business, financial forecast and guidance, development programs and related anticipated milestones, collaborations, finances, regulatory matters, payer coverage and reimbursement, intellectual property, pending litigation and other proceedings, and competition. Each forward-looking statement is subject to risks and uncertainties that could cause actual results and events to differ materially from those projected in that statement. A more complete description of these and other material risks can be found in Regeneron Pharmaceuticals, Inc.'s filings with the United States Securities Exchange Commission, including its Form 10-Ks for the year ended 12/31/2025, which we plan to file with the SEC next week. Regeneron Pharmaceuticals, Inc. does not undertake any obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise. In addition, please note that GAAP and non-GAAP financial measures will be discussed on today's call. Information regarding our use of non-GAAP financial measures and a reconciliation of those measures to GAAP is available in our quarterly results press release and our corporate presentation, both of which can be found on the Regeneron Investor Relations website. Once our call concludes, the IR team will be available to answer any further questions. With that, let me turn the call over to our President and Chief Executive Officer, Dr. Leonard Schleifer. Glenn, take it away. Leonard Schleifer: Thanks, Ryan, and thanks to everyone for joining today's call. Regeneron Pharmaceuticals, Inc. caps 2025 with another solid quarter of commercial execution with fourth quarter total revenue up 3% year over year driven by double-digit net sales growth with three of our leading products. Compared to the fourth quarter of last year, global net product sales for Dupixent as reported by Sanofi increased by 32% and Libtayo by 13% at constant exchange rates, while EYLEA HD in the United States grew by 66%. Global Dupixent net sales were $4.9 billion in the fourth quarter and $17.8 billion for the full year 2025. Dupixent is currently the most widely used innovative brand in antibiotic medicine with more than 1.4 million patients on therapy globally. Now approved in 80 indications, most of which remain significantly underpenetrated, Dupixent is well positioned for future growth. Global net Libtayo net product sales were $425 million for the fourth quarter and $1.45 billion for the full year 2025. In the U.S., Libtayo continues to be the market-leading immunotherapy for advanced non-melanoma skin cancers. Following FDA and EC approvals of Libtayo for adjuvant CSCC in the fourth quarter, we are making great progress launching this potential blockbuster opportunity. With this indication expected to be a significant growth driver for Libtayo in 2026 and beyond. Libtayo also continues to build share in advanced non-small cell lung cancer, where in the U.S., it is now the second most prescribed immunotherapy in the first-line setting. With new patient market share in this setting, greater than Opdivo, Tecentriq, and Imfinzi combined. Eylea and HCL Eylea HD net product sales in the United States were $506 million in the fourth quarter, up 66% and $1.6 billion for the full year 2025, up 36%. Despite continued patient co-pay affordability issues that have dampened branded NIVEGF category growth. In November, the FDA approved Eylea for macular edema, following rectal vein occlusion, or RVO, and monthly dosing across all approved indications further strengthening the EYLEA HD competitive profile. Our FDA submission seeking approval of the EYLEA HD prefilled syringe using a new manufacturer has been accepted for review. A standard pre-licensing inspection has been scheduled. And the decision on our filing is expected in late April. In addition, as a backup, Catalent, Indiana continues to work with the FDA to resolve findings from a previous inspection. We continue to believe that all three of these product enhancements are key to fully unlocking EYLEA's HD commercial potential. While we anticipate continued growth in EYLEA HD this year, EYLEA two milligrams will continue to be under competitive pressure. Which is expected to intensify at the 2026 as multiple biosimilar products are launched in the United States. Regarding patient affordability, we are pleased that we matched a $60 million donation to the Good Days Retinal Vascular and Neovascular Disease Fund in the fourth quarter. Today, we reiterated our commitment to helping patients afford their medicines by extending our matching program through the end of this year up to $200 million during the announcement negotiations with the United States government regarding to reduce drug costs for American patients. We are actively engaging in constructive discussions with the Center for Medicare and Medicaid Services and other federal agencies and we anticipate reaching agreement in alliance with the framework's previously established by other companies. We remain optimistic about striking a deal with the administration to achieve our shared goals ensuring timely and affordable access to groundbreaking medical advancements for American patients, maintaining the United States leadership in biotechnology innovation and manufacturing, and addressing the longstanding imbalance in distribution of cost for medical innovation which has historically placed a disproportionate burden on American patients. Finally, looking ahead to the next twelve months, Regeneron Pharmaceuticals, Inc. has several key objectives that I'd like to share. First, we anticipate at least four FDA approvals. Including three for new molecular entities across three distinct modalities, plus approval for the EYLEA HD prefilled syringe. As well as several additional regulatory submissions. We expect registration enabling data from multiple programs, including fianlimab, RLAK3 antibody, in combination with Libtayo, an advanced melanoma, as well as the combination of Cemviserant and bezelimab in PNH. In addition to the ongoing pivotal studies in key areas such as myeloma, anticoagulation, execution year. and complement mediated diseases 2026 will be an important clinical development as we anticipate initiating, 18 additional Phase III studies. With cumulative target enrollment of approximately 35,000 patients over multiple years. Setting the foundation for Regeneron Pharmaceuticals, Inc.'s next wave of potential blockbuster products. We also plan to begin clinical development of at least three first in class antibodies that address novel targets. Of which two were discovered and validated by general Genetics Center as well as our long acting IL-thirteen antibody, in atopic dermatitis. We expect strong commercial execution to continue maximizing the potential of our leading brands across key therapeutic areas. And finally, we plan to continue prudently deploying capital through share repurchases, dividends, and complementary business development all with the goal of driving long term shareholder value. Obviously, a busy and ambitious year ahead, one that I'm particularly energized and excited to embark. We look forward to reporting our programs and these goals as we move through the year. With that, I'll turn the call over to George. George Yancopoulos: Thanks, Len. Earlier this month at the JPMorgan Conference, we highlighted the breadth and depth of our pipeline, which is expected to generate clinical data over the next few years spanning oncology, hematology, complement mediated diseases, anticoagulation, and obesity. As well as in other areas. In 2026, we plan to build on our established leadership in ophthalmology as well as immunology and inflammation. While advancing key late stage programs. Starting with ophthalmology, Eylea HD was recently approved by the FDA for monthly dosing and for the treatment of RVO. Further strengthening its clinical profile. Data supporting these approvals will be presented at the upcoming Angiogenesis Meeting further highlighting efficacy, safety, and durability of IVHD along with dosing flexibility designed to support more personalized patient care. In terms of our ophthalmology pipeline, for our C5 program, for geographic atrophy we expect interim data from our phase three study in the 2026. We are currently evaluating our C5 siRNA simdysiran, as monotherapy and also with positazolamib are potentially best in class C5 antibodies. With the goal of providing a systemic treatment that avoids the safety issues from repeated intravitreal injections associated with currently approved GA therapies. In case intravitreal delivery is required to adequately treat this disease, we've also begun clinical development of an intravitreal formulation of filvelmab to evaluate local C5 inhibition, for appropriate patients. Beyond GA and ophthalmology, we have initiated a study of a novel intravitreal and delivered T cell receptor blocking antibody. For noninfectious uveitis. A disease generally driven by autoimmune T cells. This advance was made possible by our unique antibody capabilities as we are not aware of any other company that's been able to generate such an antibody. This year, we also plan to initiate clinical development for long acting antibody targeting a novel genetically validated target for glaucoma. Along with the long acting antibody that aims to treat thyroid eye disease and Graves' disease. Moving to immunology and inflammation. We are committed to strengthening our leadership by advancing several next generation therapeutic approaches. As we first revealed at the JPMorgan Conference, in addition to exploring longer dosing intervals for Dupixent, we are progressing velocity derived fully human, long acting antibodies with enhanced binding product release that target the alpha the same target as Dupixent. As well as antibodies targeting IL-thirteen, IL-four, and a bispecific antibody targeting both IL-four and IL-thirteen. All of these approaches are designed to enable extended dosing. A long acting IL-thirteen antibody expected to enter the clinic in the coming months embarking on an expedited development plan in atopic dermatitis that we believe will enable us to remain competitive. Other industry players are pursuing related approaches. Our other long acting antibodies are expected to enter the clinic by 2027 each with a custom development plan. At the same time, our Regeneron genetic center has utilized its large scale genetics approaches to identify several exciting new immunology and inflammation targets. Similar to Dupixent, we believe these may represent future pipeline and product opportunities. The first of these antibodies is expected to enter clinical development in the first half of this year. After initially evaluating healthy volunteers, we plan to rapidly advance this candidate to establish proof of concept in several genetically linked diseases such as lupus, Sjogren's, and primary biliary cholangitis. Turning now to allergens. Our initial cat and birch phase three study demonstrated that allergen specific monoclonal antibody cocktails can meaningfully address ocular endpoints. Adding to earlier data that showed significant reductions in nasal, respiratory, and skin endpoints. These phase three data from the cat and MERS programs will be presented at the upcoming Quad AI Conference. We anticipate initiating the confirmatory Phase III study for pathology in the first half of the year while the confirmatory phase three study for Birch allergy is already underway. We are also advancing an innovative strategy with the goal of eliminating all IgE mediated allergies. Our initial clinical effort is in patients suffering from severe food allergies. Involving transient lithotripsy treatment followed by long term DUPIXENT maintenance. This approach demonstrated proof of principles with the first four treated patients all achieving over 90% sustained IT reductions. These results validate our approach of first removing IgE producing plasma cells and then preventing their return. Building on this, we are developing next generation agents specifically targeting IT producing cells with the first expected to enter clinical development over the next year for potentially more rapid and broader allergy applications. On to oncology at the animal a LAG-three antibody combination with. Our pivotal study in first line metastatic melanoma remains on track to read out in the first half of this year. Early clinical data from our first acute study across multiple advanced melanoma cohorts suggested a potentially differentiated best in class profile. Also in the first half of this year, we're expecting an interim analysis for a study of adjuvant melanoma as well as Phase II data in advanced non small cell lung cancer a more speculative setting when clinical validation has not yet been established for LAG-three and PD-one combinations. Moving to hema. Rolinazepic, or BCMA by CD3 bispecific, is establishing a new benchmark in multiple myeloma. In late line disease, and with the caveat of cross trial comparisons, linazific has demonstrated nearly double the complete response rate compared to other BCMA by C3 bispecifics at similar follow-up times. With lower rates of cytokine release syndrome, shorter hospitalization requirements, and more convenient dosing intervals. Building on its remarkable monotherapy activity, across multiple lines of therapy, we are undertaking an ambitious development plan to simplify the existing myeloma treatment paradigm. Which currently relies on highly complex, intense, and burdensome triple and quad drug combinations. By exploring monothermy as well as in simple combinations in early nine cells. In our phase II study in newly diagnosed multiple myeloma, all non evaluable patients treated with relativic monotherapy at the planned phase three dose achieved MRT negativity. An endpoint the FDA recently endorsed as a registrational enabling this malignant disease. Even more compelling are the early signals in myeloma precursor and related settings, For example, in evaluable patients with high risk smoldering myeloma, linazipic once again achieved 100% MRT negative in all twelve of those patients. Whereas the standard of care, daratumumab, achieved less than 10% complete response Similarly, in second line patients with light chain linagrific monotherapy normalized abnormal light chain levels in approximately two weeks. Whereas in a separate study, the diagtumumab containing quad combo regimens, took approximately five months to approach these levels. In first line patients. Both of these promising results could herald market advances to existing standard of care, which could involve complex and toxic multi drug combinations. With four pivotal studies underway, and four more initiating by the middle of this year, we are rapidly advancing our relinogenic development program with the hopes of transforming the myeloma treatment paradigm and ultimately preventing progression to malignant disease. Onto complement mediated disease. Our C5 program consists of customized approaches to treat different diseases. Which require different levels of target inhibition to maximize efficacy for each condition. I previously summarized above our C5 efforts in geographic atrophy. Our pivotal study for generalized myasthenia graphitis we showed that cendicia alone achieved differentiated efficacy and convenience. With every three month subcutaneous dosing delivering a potentially best in class profile. With a placebo adjusted improvement in the myasthenia grafts activities of daily living score of 2.3 endpoints at twenty four weeks. The primary endpoint of the study and the best result among C5 inhibitors to date based on cross trial comparisons. We remain on track to submit our US regulatory application in the first quarter with potential approval anticipated later this year or early next year. In paroxysmal nocturnal hemoglobinuria, or PNH, we are phase three leading data shows the combination of syndesura and epithelamid was necessary to achieve potentially best in class disease control. With 96% of patients controlled in the pivotal trial leading cohort. And with the ability to rapidly rescue patients treated raplanzumab, who had not been well controlled. These results once again have the potential to deliver a best in class profile with pivotal data expected late this year or early next year. Positioning this combination of C5 complement inhibitors as a new standard of care for PNH. Moving to anticoagulation. Plot prevention remains a critical unmet need. Since less than half of eligible patients receive anticoagulant therapy. Primarily due to concerns about their bleeding risk. To address this, we are developing two complementary Factor XI One, optimized for maximal antisrobotic activity and the other designed to further reduce bleeding risk. Enabling a tailored approach based on individual patient's benefit risk profile. Initial clinical data support this strategy showing impressive efficacy and a favorable bleeding profile compared to current standards of care. Pitoral studies are already underway in prevention of post surgical venous thromboembolism, or VTE, with pivotal studies of cancer associated VTE prevention cancer associated thrombosis, stroke prevention in patients with atrial fibrillation, and peripheral artery disease all expected to initiate this year. Moving to obesity, We continue to pursue a differentiated strategy that includes olororepiti, our in licensed GLP GIP agonist entering pivotal monotherapy studies in 2026, as well as a co formulation of ondorepitide with Praluent, our antibody to PCSK9. Since current GLP agonists do not meaningfully lower LDL cholesterol, this co formulated combination is designed to treat the large population of people living with obesity who also suffer from hyperlipidemia. With a single convenient and similarly affordable once weekly subcutaneous injection And now is this to the currently approved GLPs. Moreover, imagine if someone had invented a new GLP that in addition to delivering profound weight loss, could also lower bad cholesterol by 50% to 60%. It would create an important and differentiated opportunity for the many obese patients simultaneously suffering from with elevated cardiovascular risk. Our clinical program for this novel combination that we believe can deliver these same dual benefits expected to begin later this year. Before I turn the call over to Mary, I would like to quickly address a couple of additional developments in our pipeline. In rare diseases, our DV auto gene therapy continues to produce transformative outcomes. With meaningful hearing gain in eleven of the 12 treated children born with profound genetic deficits. This program was selected as the first new molecular entity to receive the FDA Commissioner's National Priority Voucher designation. And we are awaiting a regulatory decision in the first half of this year. In Vibral Dysplasia Ossus Cancer Progressa, or FOP, a debilitating disease in which the soft tissues of the body are progressively replaced with abnormal bone, arm, Gartel Samad program demonstrated more than 99% reduction in abnormal bone formation at fifty six weeks. An unprecedented result. And we are waiting on regulatory decisions in The US and EU the second half of this year. Our commitment and dedication to these types of rare diseases particularly those that affect children. Not only speak to the heart and soul of regenera, but have also proven to pave the way for broader opportunities in the future as we would hope would be the case here. In summary, our scientific and clinical momentum continues to accelerate across the R and D enterprise. With multiple pivotal readouts regulatory milestones, and first in class programs advancing in 2026. I have never been more excited about the breadth, depth, and potential impact of our pipeline. With that, let me turn it over to Marion McCourt. Marion McCourt: Thank you, George. The fourth quarter delivered a strong finish to 2025, completing a successful year across our commercial portfolio, our market leading brands, Eylea HD, DUPIXENT, Libtayo, continue to deliver sustainable growth, based on their clinical profiles, as well as our ability to execute effectively and markets. In 2025, we expanded use of our existing brands and successfully launched new medicines and indications across therapeutic areas and geographies. We begin 2026 well positioned to advance our portfolio and are excited by upcoming opportunities to change the lives of even more patients. Starting with our retinal franchise of EYLEA HD and EYLEA, which delivered combined U. S. Net sales of $1.1 billion in the fourth quarter, Eylea HD net sales reached $506 million representing 18% sequential growth. Performance was driven by a 10% increase in physician demand, compared to the third quarter, highlighting EYLEA HD's strong clinical profile and commercial momentum. Despite a 7% sequential decline in the overall anti VEGF category. This fourth quarter dynamic is typical for the anti VEGF category, For full year 2025, the category maintained approximately 5% growth versus 2024, while the Innovative Branded segment which excludes Avastin and biosimilars, declined by approximately 12%. Importantly, EYLEA HD represents a growing proportion of Regeneron Pharmaceuticals, Inc.'s total anti VEGF franchise now contributing nearly half of total net sales. Following recent label enhancements to include monthly dosing in retinal vein occlusion, at Leigh now has the broadest label and greatest dosing flexibility of any anti VEGF medicine. Physicians were eagerly awaiting both label enhancements, and we are seeing positive early launch signals in our efforts to get this important medicine to even more patients. The combination of this new dosing flexibility with EYLEA HD's demonstrated durability further strengthens its position in the anti VEGF radical category. New real world market data shows that on average, patients with ongoing anti VEGF therapy who switch to Eylea HD able to extend their treatment duration by almost four weeks. This underscores EYLEA HD's durability profile, in addition to its well established efficacy and safety. We look forward to the potential FDA approval of our prefilled syringe which if approved will provide additional convenience for retina specialists and further enhance EYLEA HD's profile. While EYLEA HD grew EYLEA two milligrams fourth quarter US net sales declined 15% sequentially to $577 million. Together EYLEA HG and EYLEA continue to lead the innovative branded anti VEGF category. Looking ahead, we remind you of two separate factors that will impact early 2026. The first quarter is typically impacted by patient reauthorizations, And as we disclosed earlier this month, wholesaler inventory levels were elevated by approximately $30 million at the end of the fourth quarter for EYLEA HD as well as EYLEA We expect first quarter net sales will be negatively impacted as inventories absorbed. For Eylea HD, we anticipate high single digit sequential demand growth in the first quarter while EYLEA demand is expected to decline at a double digit rate based on competition and importantly, ongoing conversion to EYLEA HD. Turning now to Dupixent, which delivered $4.9 billion in the fourth quarter global sales, representing 32% year over year growth on a constant currency basis U. S. Net sales grew 36% year over year to $3.7 billion based on broad demand growth and strong performance across several ongoing launches. Dupixent is now approved in eight Type II inflammatory diseases, and is the number one prescribed biologic among dermatologists, pulmonologists, allergists, ear, nose, and throat specialists based on the combination of its differentiated efficacy safety, treatment experience. Across Dupixent's established indications including atopic dermatitis asthma, nasal polyps, and eosinophilic esophagitis, Dupixent continues to deliver robust demand growth supported by strong physician preference in each of these indications. We've also seen remarkable uptake in our more launches, including COPD, chronic spontaneous urticaria, bolus pen forward, and with physicians regularly sharing their experiences and how DUPIXENT has changed the lives of their patients, many of whom previously had no approved treatment options. With many indications still significantly underpenetrated, Dupixent continues to be well positioned to deliver near medium- and long term growth. Turning to oncology and hematology. Libtayo reported $425 million in global net sales in the fourth quarter, up 13% year over year on a constant currency basis. And The U. S. Net sales grew 14% year over year to $285 million based on strong demand growth across all approved indications. Libtiv is a leading immunotherapy for advanced non melanoma skin cancers, and our recent launch in adjuvant CACFP is off to a great start. Including the recent addition of Libtayo in the NCCN guidelines as the only category one preferred immunotherapy in this setting. In advanced non small cell lung cancer, Libtayo is now the second most commonly prescribed treatment for patients receiving their first immunotherapy. Physicians increasingly recognize Libtayo, as a preferred treatment option, based on clinical experience, versatility as a monotherapy in combination with chemotherapy, supported by an increasing body of robust clinical data including recently reported five year survival results. Briefly turning to lenazipic, our new treatment for relapsedrefractory multiple myeloma. We are encouraged by the launch progress to date. With physicians appreciating Lenoxifix's differentiated clinical profile less burdensome hospitalization requirements, and convenient dosing regimen, we expect adoption to continue to steadily build over time in this late line setting with the larger commercial opportunities in earlier lines therapy. In summary, in the fourth quarter, we delivered strong growth across NDHD Dupixent and Libtayo, and we continue to progress several launches, including In 2026, our commercial portfolio is well positioned to capitalize on many near term growth opportunities enabling us to deliver more treatments to patients. With that, I will turn the call to Christopher Fenimore. Christopher Fenimore: Thank you, Marion. My comments today on Regeneron Pharmaceuticals, Inc.'s financial results and outlook will be on a non-GAAP basis unless otherwise noted. Fourth quarter 2025 total revenues of $3.9 billion grew 3% compared to the prior year, reflecting higher collaboration revenue driven by strong global Dupixent sales growth continued growth in net sales of EYLEA HD and Libtayo as well as higher other revenue. Partially offset by lower net sales of EYLEA two milligrams. Fourth quarter diluted net income per share was $11.44 on net income of $1.2 billion. Beginning with the Sanofi collaboration, fourth quarter total Sanofi collaboration revenues were approximately $1.6 billion of which $1.5 billion related to our share of collaboration profits. Regeneron Pharmaceuticals, Inc.'s share of profits grew 42% versus the prior year, primarily driven by Dupixent and improving collaboration margins. The Sanofi development balance was just below $600 million at the end of the year reflecting a reduction of approximately $300 million since the end of third quarter and over $1 billion in full year 2025. Dupixent's continued strength enabled a rapid reimbursement of the development balance in 2025 which we now expect to be fully reimbursed by mid-2026. Once fully reimbursed, Sanofi collaboration revenues will reflect our full share of global profits for Dupixent and Kevzara. Moving to Bayer. Fourth quarter net sales of EYLEA and EYLEA eight milligrams outside the U.S. were $817 million. Inclusive of $312 million of EYLEA eight milligram sales. Total Bayer collaboration revenue was $319 million of which $270 million related to our share of net profits outside the United States. Other revenue, which includes profit share and royalties associated with license agreements, as well as amounts earned for contract manufacturing grew 33% in the fourth quarter to $239 million. This included $179 million related to Royal royalty income from Elaris plus our share of profits from Arcois. Alaris net sales exceeded $1.5 billion in 2025, achieving the top royalty tier of 15% for the first time. Per our agreement with Novartis, escalating royalty tiers which range from 4% to 15% are applied to cumulative net sales from the start of each calendar year. This leads to step ups in royalty income each quarter as higher royalty royalty tiers are applied to cumulative net sales. Now to our operating expenses. R and D expense was $1.3 billion in the fourth quarter, reflecting continued investments to support Regeneron Pharmaceuticals, Inc.'s innovative pipeline, including multiple late stage opportunities. Fourth quarter SG and A was $691 million inclusive of a matching contribution to the Good Days Vascular and Neovascular Retinal Disease Fund for approximately $60 million. Our effective tax rate in the fourth quarter was 17%, the increase in our tax rate from the prior year primarily reflects a lower tax benefit from stock based compensation. Regeneron Pharmaceuticals, Inc. generated $4.1 billion in free cash flow in 2025 and ended the quarter with cash and marketable securities less debt of $16.2 billion. We returned $3.8 billion to shareholders in 2025, primarily through $3.4 billion in share repurchases. We continue to be opportunistic buyers of our shares with $1.5 billion remaining authorized for repurchases as of December 31. We also initiated a quarterly dividend last year providing us with additional flexibility to return capital to shareholders. In 2025, we paid nearly $400 million in cash dividends, and announced this morning that our Board of Directors has authorized a quarterly dividend of $0.94 per share payable in March equivalent to $3.76 on an annual basis. We continue to view our dividend as a way to expand the pool of potential Regeneron Pharmaceuticals, Inc. shareholders to include funds with a dividend mandate while share repurchases will remain the primary means of returning capital to our shareholders. I will conclude with our financial guidance for 2026. Consistent with what was provided at the JPMorgan Conference a few weeks ago, we expect 2026 R and D spend to be in the range of 5.9% to $6.1 billion. The increase versus 2025 is driven by cost to support our expanding late stage pipeline including new Phase III studies in oncology and hemop, our factor XI antibodies, and our obesity program. In addition, as you heard from George, we plan on advancing several new molecules into the clinic across a number of different therapeutic areas, including ophthalmology and I and I. We expect 2026 SG and A to be in the range of $2.5 to $2.65 billion reflecting investments to support the ongoing launches of Libtayo and adjuvant CSCC, and linuxifix in late line multiple myeloma. As well as other potential launches, including sevdisiran in gMG. We expect our gross margin and net product sales to be in the range of 83% to 84%, this guidance reflects a changing product mix as well as cost to support expanding our bulk manufacturing capacity and fillfinish capabilities. We also expect 2026 capital expenditures to be in the range of $1.1 billion to $1.3 billion primarily related to the ongoing expansion of the R and D facilities at our Tarrytown headquarters, and investments in our manufacturing network to support our growing commercial portfolio and pipeline. Finally, we expect our 2026 effective tax rate to be in the range of 13% to 15%. It is important to note that our 2025 effective tax rate benefited from a favorable tax audit settlement which reduced our 2025 ETR by 1.2 percentage points. A full summary of our guidance can be found in our earnings press release published earlier this morning. In conclusion, Regeneron Pharmaceuticals, Inc.'s strong performance in 2025 positions us well to continue investing in our differentiated pipeline to deliver significant advances for patients and deploying capital to drive long term value for shareholders. With that, I'll pass the call back to Ryan Crowe. Ryan Crowe: Thank you, Chris. This concludes our prepared remarks. We will now open the call for Q&A. To ensure we are able to address as many questions as possible, we will answer one question from each caller before moving on to the next. Shannon, can we please move to the first question? Operator: Thank you. To withdraw your question, please press 11 again. Our first question comes from the line of Alexandria Hammond of Wolfe Research. Your line is now open. Alexandria Hammond: Thanks for taking the question. So clearly, there's a ton of interest in the upcoming RIOS for Libtayo plus bimlimab. So in metastatic melanoma and adjuvant, any update on when we could receive this data beyond first half? Should we expect to get an adjuvant interim update with a metastatic? And I guess as a follow-up, we have several interims for the adjuvant. So if we don't get an on the adjuvant with a metastatic readout, when could we expect that next interim? Thank you. Ryan Crowe: Thanks, Alex. We don't really have any additional clarity right now on the timing for the advanced melanoma readout. First half is the best estimate at this time. Terms of the adjuvant timing, that's also in the first half. They may coincide, they may not. Once we have the data, we will read it out shortly thereafter. Shannon, let's move to the next question. Operator: Our next question comes from the line of Christopher Raymond with Raymond James. Your line is now open. Christopher Raymond: Thank you. Just a question on Dupixent IP. I'm sure you're aware of Sanofi's commentary. Yes. Yesterday about taking potential for taking the runway out you know, well beyond you know, the current thinking. And I think their commentary took things out maybe to the 2040 or beyond range. I know you don't want to give too much detail here, Len, but maybe any commentary you could provide in light of those comments yesterday. Thank you. Leonard Schleifer: No. No additional comments. I thought Sanofi did a good job laying out what the realm of possibilities are. I think we should, though, highlight the fact that we have also a lot of exciting follow on opportunities in this space particularly with our collection of what we hope will prove to be the best in class long acting IL 13, IL four, and IL four thirteen bispecifics as well as we call a new soupy doopy molecule that is a new version of Dupixent that was naturally selected that might have even more improved properties. I think it's worth just highlighting again because a lot of people don't realize how special DUPIXENT is. In terms of not only its remarkable efficacy, how it delivers it just help a little, it really dramatically benefits patients who cost these eight now approved diseases. But the thing that I think is underappreciated is its incredible safety profile. I think that we've all seen this. So many people are trying all sorts of other approaches to go after some of the same diseases like atopic dermatitis, We've seen data, let's say, OX40 and OX40 ligands which I think most people now realize are somewhat disappointing, not only from the efficacy side, but perhaps even most importantly from the safety side. What people, I think, don't appreciate and understand is when we discovered Dupixent and this whole, understood this whole pathway, we realized that this was a specific pathway that was driving only allergic disease And it was a vestigial, largely a vestigial part of the immune system. That was no longer required to fight most pathogens. That's why unlike most other immunomodulators, it doesn't suppress overall immunity. When you suppress overall immunity with things like JAK inhibitors or things like POPS40 ligands, You suppress everything and then you raise concerns and fears, the possibility that the general immunosuppression will now subject the patients to more infections, which is generally actually what we see. And remarkably, with Dupixent, you don't see these sorts of things. You don't see generalized increases in infections. We don't have black box warnings about infections. We're not generally suppressing the immune system. We're only suppressing part of the immune system which is largely vestigial and is largely ever inactivated and our modern world for reasons we have theories about but won't get into now, that drive allergic inflammation. So it's a very special approach And you don't have to worry about, for example, getting Kaposi sarcoma or things like that with treatment with Dupixent. Ryan Crowe: Thanks, George and Len. Let's move to the next question, please. Shannon. Operator: Our next question comes from the line of Salveen Richter with Goldman Sachs. Your line is now open. Salveen Richter: Just a here on the frontline metastatic melanoma data in the first half. Is there any way you could frame for us how to think about the bar on hazard ratio here and just any commentary about the PD L1 expression levels of these patients as we look to this first interim read. Thank you. George Yancopoulos: I think as we've discussed before, this study is largely powered to get an effect in terms of the primary endpoint, which is the PFS analogous to the current combination standard of care I hope Of course we hope that we might actually achieve better. We have two dose groups in the study and so forth. We're also powered that if we were to hit at that level, as the current standard of care, we would also hope to demonstrate a benefit in the study as appropriately powered to pick up an overall survival benefit. That is the minimum hopeful expectations and we might see better than that as well. And regarding TDL one status of the enrollment, we are not we are screening patients, but we are not, using it as an inclusion or an criteria. There's no floor or cap. On the proportion of patients with high expression or low expression. So this population we expect would represent a true first line. Advanced melanoma population. And we look forward to the results. Shannon, next question please. Operator: Our next question comes from the line of Tyler Van Buren with TD Cowen. Your line is now open. Tyler Van Buren: Hey, guys. Good morning. Thanks for the question and congratulations on the results. I wanted to ask about broader R and D strategy. In your presentation, you have the slide where you divide your pipeline among the six therapeutic areas. And INI has expanded significantly as of late as well as ophthalmology, which is not terribly surprising, and I would argue is necessary given the history of the company. So would you say that these two areas in addition to oncology, will remain a bigger focus. Than the three others, or are you committed to remaining relatively balanced across all six areas over the next few years? George Yancopoulos: Well, Tyler, thanks for bringing that up. you know, First of I do wanna point out that we are somewhat disappointed with the industry. In that, you know, we invent a great leading drug like EYLEA And then you get literally dozens and dozens of companies just trying to come up with a me too and take a little bit of that business. Or the same thing with DUPIXENT. They're just trying to come up and try to mimic DUPIXENT and maybe try to make a little incremental improvement. What our goal is to really do what I think this industry should be doing, which is taking advantage of the most innovative approaches to come up with new drugs, or new indications. And what we do is we take an agnostic approach that is generally guided by genetics, which has proven to be so successful in our history. This is perhaps one of the first, if not the first company that bet its entire future on the power of genetics versus mouse and now human genetics. So we make our choices. Based on the most powerful available, data and technology that can guide decision making which is large scale human genetics, which allows us to use AI in ways that other people can't. And that allows us to pick targets. So many of the targets that we've now described, for example, in ophthalmology, and in immunology and inflammation, but across other areas as well are driven by the same kind of genetic that allows us to know whether DUPIXENT will work in an indication or not. That is the genetic says that if you're missing that genetic pathway, you're likely gonna help the disease And if you have increases in that genetic pathway, you're going to get more of that disease. And that has proven very powerful for us to make decisions. That's how we find indications. We are therapeutic agnostic, but obviously we have capabilities broadly across all these areas. But we are very excited about these new programs because like our previous success, they are driven by human genetics telling us that these targets, if we can make and we believe we have the most powerful technologies to address these targets, whether it be antibodies, bispecifics, genetic methods, if we properly can target these genetically valid pathways we can create new opportunities new drugs for new indications not just also protecting our existing franchises, by making sure that we always have the best anti VEGF approach, and portfolio. We have the best, you know, anti allergy portfolio and so forth. But we wanna break Deepgram. We're doing it across all these therapeutic areas. We're very excited about. Ryan Crowe: Thanks, George. Next question, please, Shannon. Operator: Our next question comes from the line of David Risinger with Leerink Partners. Your line is now open. David Risinger: Yes. Thanks very much. So my question is for George. George, could you talk a little bit more about the souped up version of Dupixent that's in development, including the event path ahead. Thanks very much. George Yancopoulos: Yeah. Obviously, Dupixent is a very unusual antibody. I don't know if everybody remembers the history of it, but some of the biggest companies in the world try to make a molecule like Dupixent and failed in clinical trials. For example, Amgen using an inferior humanized mouse approach, tried to make a Dupixent that is targeting the same receptor as we did and the antibody completely failed in all their clinical trials. So Dupixent was a very special molecule. But what we continue to do is use our best technologies, our best antibody generating technology, starting with our you know, best in class human immune system in the mouse, generating millions and millions of versions over the last many, many years. And testing them and comparing them. And we think that we have one that might actually be in some ways, even better. Than DUPIXENT. It looks like it may be longer acting, and may have some other advantages as well. So we're going to be moving it forward in the clinic as we announced. And we'll be testing it, and we'll see whether indeed we have been able to come up with an even better doopy or a soupy doopy as we call. And just to remind everybody that that while not formally in the alliance with Sanofi, it is covered by the alliance, meaning that if it goes into full development, that we'll be doing this with. Ryan Crowe: Thank you. Next question, please, Shannon. Operator: Our next question comes from the line of Tazeen Ahmad with Bank of America. Your line is now open. Tazeen Ahmad: Hi, good morning. Thanks for taking my I wanted to spend a minute on geographic atrophy. You guys have a cohort, I believe, reading out in the second half of this year on your GA program. Think there was a lot of promise a few years back just given the number of patients with GA, but the two approved drugs have proven not to be able to get a ton of market share. So what do you think is differentiated in your program? Do you think that you'll need to show a visual acuity benefit or is it going to be in your mind, the just as good to to show slowing of vision loss given that you expect to have a better safety profile than both those drugs? Thanks. George Yancopoulos: Well, let let me just remind you that the first drug in the wet AMD space was Macugen, which was an aptamer. And if you compare the benefits that it provided compared to something like EYLEA. Yes, it had a benefit, but it was just barely slowing down. Wet AMD disease as opposed to what we were able to with EYLEA where we could actually reverse and improve vision even and maintain or or maintain the restored vision for years thereafter. So obviously the approaches that we have at our disposal, things like our antibodies and our s r have historically proven to be much more powerful at blocking pathways than technologies and approaches such as Aptamer, PEGylated aptamers and PEGylated peptides and so forth. So one possibility and opportunity, of course, is that by providing more profound blockade, one might actually see better benefit. Another, of course, important aspect of our program is we are trying both systemic blockade as well as local blockade. So one of the problems with the existing therapies and why they're not so widely used is they're largely preventative but they come with very dangerous side effects in that they can cause essentially problems that might result in immediate blindness. Like retinal vasculitis with occlusive vasculitis disease. So imagine you're taking something to prevent phlegm that can actually cause porn. So the systemic approach of course, it may have its own problems. There's always risk. So it may come with its own problems in terms of systemic infection, but it should be free from causing these local potential blinding risks in the eye. So you may end up either with better efficacy or the same efficacy but with a better safety profile in terms of avoiding these blinding risks. And also, in the case of right now the current treatments, most patients actually have bilateral disease. So you have to inject both eyes And many of them also suffer now, and in fact these drugs can actually in some cases cause wet AMD, progression wet AMD, they need injections in both eyes, and they also need injections with anti VEGF. So obviously, a systemic approach would avoid all these complications. You wouldn't have to give two sets of injections to both sets of eyes and so forth. So we're very excited because there's many, many opportunities here. And I also remind you that we are testing both the monotherapy in terms of cendistrin alone which works so spectacularly in myasthenia gravis as well as the combination of some dystrophin with the antibody, which works so so beautifully and was required to to optimally work in PNH. We don't know because we collectively, society, the medical, you know, system does not understand why in one case you need complete blockade, in the other case you need this sort of, you know, some dissonant type of an effect. We're exploring both. So there's many, many, many ways to provide improved benefit for these patients who really need an improved way of treating their disease. It could be something that really addresses the tremendous burden that's inflicted by bilateral disease, layered with anti VEGF requirements and so forth. It could be better efficacy. It could be better safety. And it could also be for example, a systemic approach that does not completely inhibit the complement system. So many, many, many ways to imagine delivering a better outcome for patients who really need it here especially if more of them will choose to undertake this preventative approach. Thank you, Joe. Just to just to add one point, which George always emphasizes. VEGF is made locally. And so you give a local drug to block a local problem. The c five is made systemically, not primarily in the liver. So it may require systemic blockade as opposed to individual. But we have all the tools to dissect what the best approach is. And final note on this. To Zeenweed. The primary endpoint of our initial pivotal study is growth rate in GA lesion area, but I would note that we do have a prospective secondary endpoint that will measure 15 letter loss of visual acuity. So we will have an endpoint that looks at visual acuity at year one and year two of this study, unlike incumbent therapies who who looked at this on a post hoc basis. Let's move to the next question, please. Operator: Our next question comes from the line of Geoffrey Meacham with Citi. Your line is now open. Geoffrey Meacham: Great. Thanks guys for the question. Just want to talk about '25 and go into '26, the sources of growth with regard to, you know, new patients, switches versus competition And then on the prefilled syringe related, would you characterize that as kind of a as kind of a tipping point? Are there ophthalmologists? Are there practices that are sort of waiting for that? I wanna get sense for how much of a gating factor that is to ultimate, demand. Thanks. Marion McCourt: Thank you, Jeff, for the question. And I'm going to start with the last portion on IVHD and the prefilled syringe potential approval that we talked about today. And as you know from the numbers that we shared, we're making good progress with EYLEA HD in the marketplace the recent label enhancements with Q4 weekly dosing and RVO, have been very well received. And of course, prefilled syringe as I mentioned, will be a convenience factor for offices. So some that find that to be incredibly important obviously will have a new opportunity to use EYLEA HD, but, obviously, we have a lot of users today. It'll only get better when we get and potentially have the prefilled syringe approval. Ryan Crowe: Okay. Let's move to the next question, please, Chad. Operator: Our next question comes from the line of Akash Tewari with Jefferies. Your line is now open. Akash Tewari: Hey. Thanks so much. On your PCSK9 gift card, combo, can you talk about the co formulation here? How are you able to deliver both drugs in a single auto injector versus something akin to an on body infusion? And what are the chances you partner this asset out to share the development cost Can you characterize any of those discussions so far? Thank you. George Yancopoulos: We don't comment on the status of discussions. We're always open minded to deals and enhance our shareholder value. But as you touched on it, that's the magic and that's the secret of our capabilities best in class formulations group that deliver unprecedented formulation capability with EYLEA and EYLEA HD, it's the same people doing the same things that have figured out how to magically be able to get into an auto injector, a very small injector that's used just for a GLP in the still more sort of volume, Both the antibody and a peptide. And so we're very excited because you know, Len's the one who who put it this way. Imagine inventing a GLP that in addition to doing what the leading GLP does, it also just lowers bad cholesterol, 50% to 60%. Wouldn't everybody want to take that? Because we understand that so many people who suffer from obesity also suffer from cardiovascular risk. And while losing weight helps your cardiovascular risk, it also is dramatically driven by the bad cholesterol which weight loss doesn't appreciably impact. So it's a very, very exciting opportunity We're very excited that our scientists were able figure out how to make this magic happen And we think it's going to offer patients a really differentiated way of not only having their desirable weight loss, but also dramatically improving their hyperlipidemia associated cardiovascular risk as well. So we're very, very excited to be able to offer this opportunity move forward with our clinical program to see if it's a reality. Ryan Crowe: Thank you. And we have time for two more questions, Shannon. Operator: Our next question comes from the line of Terence Flynn with Morgan Stanley. Your line is now open. Terence Flynn: Good morning. Thanks for taking the question. Bayer is going to be presenting some Phase three SS data for their oral Factor XI inhibitor, S Indoxin, next week. Just wondering anything you'll be focused on in that data set as it pertains to your Factor XI antibody program in terms of development, etcetera? Thank you. George Yancopoulos: Yeah. I mean, it is very hard to compare these small molecules with antibodies as we know historically, and it's the case here, small molecules suffer from both lack of specificity. We know they inhibit multiple proteases, including the target of interest here. And they also have off target effects as well. And so the hope here is by having an antibody which we think is very, very different than a small molecule, the specificity as well as the efficacy may allow you to have a very different profile where you will actually have better anticoagulation but also hopefully better safety. Less bleeding, which we think what it's all about. And so there will be some read through, there will be some usefulness to following that. On the other hand, we believe our antibody has a very substantially differentiated and potentially advantageous profile. And so the key thing is this, if RNAi antibodies really can deliver what we believe they can with dramatic decreases in the overall bleeding risk, then they should allow somebody to essentially get an occasional shot once after a procedure, let's say. Or once a month if that should be things like that. That that won't require these patients to be either having to worry about making sure they stay on their meds or monitoring them and so forth. So very different opportunity Of course, there's some read through. But we think our antibiotics could be very different. George, Shannon, let's go to the last question, please. Operator: Our last question comes from the line of Evan Seigerman with BMO Capital Markets. Your line is now open. Evan Seigerman: Love for you to talk a little bit about the confidence that gives you to move your GLP-one GIP into Phase III clinical trials globally just given how rapidly this market is evolving? Put it another way, what differentiated about this asset from currently available available standard of care and other advanced assets in development? Leonard Schleifer: So we I think if you go back and listen carefully to what George saying that the biggest advantage for from our perspective is the ability to combine this with our PCSK9 inhibitors. There are only two approved PCSK9 antibodies. And the ability to combine this antibody at the same dosing interval I think that's highly differentiated for the the fifty percent or more people who are obese and have high cholesterol. We know several hundred thousand people already take both a GLIC and a PCSK9 inhibitor. And that's without the convenience of having to put them together in a single shot and without really focusing any marketing on the obese goop. So I think, Evan, that's what the core of the differentiation could be. Obviously, we're considering putting it together with other assets. In our pipeline, other combinations we can't imagine directly competing but I do think we should have data that's competitive to the best in class. directly compete with that combination. But the commercial strategy is not to George, you wanna add something? George Yancopoulos: Yes. So remember, one of the reasons we have confidence is this has already been extensively studied in China. And it's designed to be, and the clinical data suggests, it is very tirzepatide like. In its efficacy and safety profile when compared in the same populations. And it is already in advanced phase three trials in China. That's why we think we have very much a tirzepatide like or a best in class type agent. But as one said, we don't necessarily want to just compete. Just for the weight loss. A lot of people are just so focused on the weight loss they're trying to say, oh, me get a little bit more weight loss, a little less nauseousness, a little less vomiting. They're all competing around the weight loss. They're all fighting in that space. We want to take this to a whole other place. Where we're adding a completely new benefit, a completely different benefit to the weight loss. So let everybody else fight for an extra 1% or 2% in weight loss. We're going to give you 50% to 60% LDL lowering with the associated expected cardiovascular benefit. That's highly differentiated. So we didn't get this to compete just by itself in the obesity space, though we think we have an agent here that is very similar to the best in class type of reagent. It's all about the combinations. And the first combination that we're rolling out we think, is this very, very exciting one. That, frankly, honestly, every obese patient should take. Regardless of their lipid status, because lower lipids is better. And that would be better It would frankly be better for the entire population. Why do we know? Because cardiovascular disease driven by hyperlipidemia is still the number one killer in America and people are not taking it. So it may be almost a Trojan horse. Imagine. They just they wanna lose their weight. And they're not even gonna realize that they're gonna be helping their hearts. They can decrease the overall rate of cardiovascular disease and death in this country. A Trojan horse to really make an impact for society. This is what we're trying to do. Everybody, frankly, in America should be on a PCSK9. This is a way to actually do it. And do it in a way that people will actually want to take. And we think we have a variety of other ways not to compete on the weight loss side, but to give another important benefit on top of the weight loss. Alright. Thank you, George. And thanks to everyone who dialed in today for your interest in Revenra. We apologize to those remaining in the Q&A queue. Did not have a chance to hear from today. As always, the IR team is available to answer any remaining questions that you may have. Once again, have a great day and a nice weekend. Operator: This concludes today's conference. Thank you for your participation. You may now disconnect.
Operator: Welcome to the Arjo Q4 Presentation for 2025. [Operator Instructions] Now I will hand the conference over to President and CEO, Andreas Elgaard; and CFO, Christofer Carlsson. Please go ahead. Andreas Elgaard: Thank you very much, everybody that have called into this Q4 year-end report 2025. My name is Andreas Elgaard, and with me today, I have Christofer Carlsson. And then I will start the meeting, and then I will hand over to Christofer, when we come into the financial figures, and we will do this together. So before we begin, I mean, I am -- I've started now in Arjo since 3-plus weeks back. So I'm still new at work, and I'm super excited to lead this first call and also to share a little bit with you guys what I'm experiencing as a new person discovering Arjo. And I thought also that maybe it's a good idea that there could be some newcomers to this call who are interested in getting to know Arjo a little bit. So just very, very briefly, we are experts in improving mobility in acute care and long-term care settings. And our products truly make a difference when people are at their most vulnerable. They provide safety, dignity and integrity to patients, and they also provide good working conditions for the caregivers. And of course, they deliver value to the clinics and to the institutions where they are in use. Arjo is founded in the South of Sweden, in Eslöv by Arne Johansson. That's also where the name comes from. It has a long tradition, leading up to where we are today, an SEK 11 billion company with almost 7,000 coworkers and with active sales in 100-plus countries. I think we can take the next slide. And you know when you're new, of course, you discover the company, and I discover Arjo through all the products and our business, but mainly I discover it through the lens of all of our people. And we have a very, I would say, a rich company in terms of diversity. We have many businesses. We are active across many countries, and we have many versions of Arjo out there. And it's really the people that represent these different versions. So a lot of diversity across Arjo. We are not always using that to our benefit to drive maybe best practice or learn from successes or failures, but there is one thing that we have in common across Arjo and was a big reason for why I wanted to join as well, and that's we are all connected and really, I would say, passionate about the purpose, and it is the purpose of doing good, to be there when patients are at their most vulnerable situations and provide products that truly help the care situation. I already said it, but integrity, dignity are super important when you are in this position and also to provide that in a safe way. So it is something that is truly a superpower in Arjo and something we will build on for the future. So let's talk about Q4. So first of all, I would say that we had stable demand throughout the quarter. And then towards the end of the quarter, we saw maybe not the development that we would have wished. We have been challenged by, of course, currency and tariffs, and we have also been challenged a little bit on price pressure in parts of our markets and in the mix where we are selling, where we have slightly higher growth in markets with lower margin versus markets with a little bit higher margin. But overall, healthy organic growth, very strong cash flow in the quarter. So we almost hit our yearly cash conversion targets, but really, really strong in the quarter. And of course, we had hoped for more when it comes to the gross margin and maybe some of our cost control. We can look a little bit into the full year. So when we zoom out and look at the full year, we see a growth figure that is within the range that we have promised. And we can see that we deliver this despite being challenged, I would say, mainly in U.K. where we all know that the market in the U.K. and the political situation, the struggles in the health care system in the U.K. is also something that hits Arjo and has been a red thread throughout the year. That is impacting our performance, I would say. And then the headwinds in terms of tariffs and currency together with price pressure in parts of our range, and then the mix is challenging our profitability and our margin. All in all, our EBITDA is -- we would have -- we expect a little bit more from the quarter. But if you look at the full year, given the adjustments that have been throughout the year, some of the write-offs, this is the level that we landed on. As I mentioned previously in the -- thanks to the strong performance in Q4, we managed to almost come up in line with our target of 80% cash conversion. We are just south of that. And then very important to highlight is that we propose to stick to the same level of dividend that we had last year. And we -- the Board is recommending to the AGM a dividend of SEK 0.95. Just very briefly on North America and Global Sales, the 2 segments that we have. You can see that the quarter in North America was slowed down a little bit. But looking at the full year, it was quite strong growth. And looking then at Global Sales, we had a reverse trend where we had a stronger finish and a full year that was more, I would say, stable. And important to notice is that some of the more emerging markets in what we call Rest of the World have high growth, and that's also areas where we have a slightly different profitability, gross profit level. And that hits the overall gross profit of approximately 1%, and then tariffs, currency, et cetera, by approximately another 1% when you look at us from the outside and compare with last year. And by that, I think it's time to hand over to Christofer. Christofer Carlsson: Thank you, Andreas. Yes, my name is Christofer Carlsson. I'm the CFO of Arjo. As Andreas mentioned, profitability was a challenge in the quarter. Our gross margin came in at 42.1% compared to last year's 44.7%. We continue to have headwinds from currency and U.S. tariffs, representing around 1 percentage point of the drop. In addition, 1 percentage point can be explained by the unfavorable geo and product mix due to higher sales in Global Sales with higher volumes of medical beds. On top of this, the delayed flu season in U.S. pressured our rental volumes, and we also saw impact from continued price pressure in the DVT business in the U.S. in the quarter. Meanwhile, we had a good momentum and margin development in the rental business in Continental Europe, especially in France, Germany and Italy in the quarter. However, the market condition in U.K. continued to be a challenge, and an 11 percentage point drop in U.K. sales consequently had a negative impact on the gross profit, and offsetting the positive effect from Continental Europe. All in all, a disappointing finish to the year from a gross margin perspective, where we did not have a seasonal uptick that we usually see due to a number of headwinds. Next slide, please. Adjusted EBIT in Q4 came in at SEK 249 million versus SEK 375 million. The main driver is the drop in gross profit and an OpEx increase of SEK 23 million. We had a negative effect from revaluation of accounts receivable and accounts payable of SEK 3 million in the quarter, booked under other operating expenses. And this was plus SEK 19 million in the same quarter last year, resulting in a delta of SEK 22 million year-over-year. Total FX impact on adjusted EBIT amounted to SEK 73 million in the quarter. The EBIT margin decreased to 8.9% versus 12.5% last year. On the OpEx side, the increase during the quarter is mainly driven by higher sales of capital sales in U.S., resulting in high GPO fees and sales commission. The organic OpEx increase was 1.9% in the quarter, which means that adjusted for the variable cost, we see a good traction from the cost efficiency initiatives implemented early in this year. Adjusted EBITDA for the quarter was SEK 526 million versus SEK 653 million in Q4 last year. The adjusted EBIT margin decreased with 3.2 percentage points versus last year. Restructuring costs came in at SEK 68 million in the quarter, where SEK 35 million is a write-down of capitalized IT costs related to an ongoing IT harmonization project. This initiative is expected to lead to annual savings of at least SEK 30 million from 2028 and onwards. Another SEK 33 million related to ongoing improvements in our Global Sales structure to improve the cost and situation for the future. Next slide, please. Operating cash flow continued to improve in the quarter amounting to SEK 600 million. This was SEK 121 million higher year-over-year, primarily due to inventory reduction and good receivable collection. The decrease in inventory is significant in the quarter, and it turns also to the full year number into a positive number. Our increased capital sales together with the supply chain inventory reduction program is now starting to show results. Working capital days decreased to 76, down from 82 in Q3, and it's good to see a continued positive trend here. The working capital improvement is also the driver for the improved operating cash flow of SEK 600 million in the quarter. Consequently, cash conversion in the quarter was almost 120% compared to 82% last year. For the full year, we came in at 79%, which is in line with our target of 80%, and an increase versus 2024. For reference, cash flow from investing activities was SEK 172 million compared to SEK 191 million in Q4 '24. The decrease is mainly due to SEK 23 million lower investment in tangible assets. This quarter includes SEK 90 million in investment in the Dutch entity, SlingCare, which was announced in the Q3 report. Please, next slide. The decrease in net debt in this quarter is mainly due to the improved operating cash flow. Our financial net came in at minus SEK 77 million, which include a noncash flow impact of SEK 35 million, negative revaluation of our holdings in Atlas, Infonomy and Veplas. Adjusted for this revaluation of our financial assets, the financial net was minus SEK 42 million and on par with last year. Our cash position remains strong. Net debt to adjusted EBITDA stayed flat versus Q3 this year and came in at 2.2. Our equity ratio stood at 49.8%, up from 49.5% in Q3, mainly due to the improved cash flow. With that, I will hand it back to you, Andreas. Andreas Elgaard: Thanks, Christofer. So let's look ahead. How will we define our future direction. And I would like to say that, I mean, there is always ongoing positive work in preparing for the future. During '25, we launched the Maxi Move 5 that many customers think is really a game changer. We have just recently also launched the new hygiene solution, Symbliss that has received a lot of positive acclaim so far. And we are going to continue to rejuvenate our offer and how we go to market going forward. But maybe just a few words on what it means to work on this. So we have a solid foundation to build on. We have a macro economics, I would say, or trends that are incredibly positive for us, which is people live longer, more people come out of poverty. The need for care is growing faster than the population is growing and the GDP is growing. So from a macro perspective, all things are positive. At the same time, we know also that many political systems and many health care systems are set under pressure because it is difficult to keep up with the growing need of care. So there are changes in how care is being administered and given to patients. All of these things will create a more dynamic market in the future, and it's very important for Arjo to set our point of view on that. Part of our foundation is also that we have a very passionate team dedicated and committed to the purpose of doing good for our patients and caregivers. So that said, there is also a lot of things that Arjo can do that is not about the macro, that is not about the patients, but that is about our own performance and there is significant opportunity across Arjo to share best practice and learn by that and implement going forward and use -- decide on the future in order to be able to take out maybe cost and drive efficiency. So we can look at the next slide. So how do we realize our potential? Part of that is to know where we're going and setting a strategy, setting a direction. And we intend to present this back to the market in the second half of this year. The work has already started, and we will bring together leaders from all parts of Arjo. We are going to workshop with them and decide on where we want to go for the future, how we will get there, what to prioritize, what we want to do, which markets to have focus on, which parts of our product portfolio to put emphasis on. And if needed, acquire additional capability, additional market position, or maybe additional portfolio offering. And those things are all easier when you have clarity in your strategic direction. And I think that for Arjo, the last time we set the strategy was back in end of 2019. So we are due to create that clarity for ourselves and for all our shareholders. The only outlook that we give right now is, of course, the usual one, about 3% to 5%, and we are really looking forward to presenting our future direction and with that also, update the financial targets in the second half of 2026. So that's what you can expect from us during this year. And by that, I think we are at the Q&A. Operator: [Operator Instructions] The next question comes from Sten Gustafsson from ABG Sundal Collier. Sten Gustafsson: A question on the quarter. You talked about a strong start, but then it slowed down. I was just wondering if you could clarify exactly what happened there, and also if that change in the market has continued into now, the beginning of 2026? Andreas Elgaard: Thank you for your question. I would say, no, that's not how to interpret it. I would say that we -- it's more how we see the result developing across the quarter. So we don't see any trend shifts that we bring with us. We more see that we expected more from the quarter. And I would say that you all know that when you close the books, there are some decisions that you need to take. And as you have seen, we have had a couple of write-offs and write-downs during the quarter that, of course, impacts the situation. So I would say that there is no -- nothing to interpret when it comes to bring forward into 2026. Would you like to add something to that, maybe? Christofer Carlsson: No. I mean it's always an uncertainty about the flu season, that is impossible to predict exactly, of course, how that will develop. And that can go in both directions. Sten Gustafsson: All right. And then specifically, the U.K., when do you expect that to improve? Or do you expect it to improve near term? Or is it too difficult to say today? Andreas Elgaard: Yes, I would say that, I mean, there are two things here. I mean one is, of course, what is going on in U.K. within NHS and the U.K. health care system. That's one part of it. And of course, we can try to contribute with as much value as we can and to be a good partner to our customers and NHS in particular. So that's one part. Then it's also about our own performance and what are we doing in this situation. And we have had a lot of actions throughout 2025 to improve our efficiency and productivity. So we have done several things throughout the year that we expect will have effect. If it's enough or not or what will happen in the bigger picture around NHS, that's another topic. And I think most of you guys that follow this sector, you know that U.K. is really troubled. The pressure on the health care system is very high, and there has been some fundamental challenges and still are going forward. At the same time, this is a top priority for all political parties. So we also believe that there is a lot of interest in solving this for the benefit of the people across U.K. Operator: The next question comes from Mattias Vadsten from SEB. Mattias Vadsten: First one is just a follow-up on the U.K. Did you say it was down 11% year-on-year in local currency in Q4? Christofer Carlsson: Yes, that's correct. In the quarter, it's down 11%. Mattias Vadsten: In local currency? Christofer Carlsson: Yes. So organic, delta is 11% down. Mattias Vadsten: Then you talked about the gross margin development. It's quite clear description. And you talked about the mix effect, both from a region perspective and product perspective. So I'm just asking, this mix effect that you saw in Q4, is that likely to sort of sustain here into the coming quarters? Or are you seeing anything to reverse that trend near term, so to speak? Andreas Elgaard: Okay. Maybe if I try to start, and then Christofer can correct my mistakes or add on flavor. No, I think it's -- I don't think that you can draw any major conclusions like that, that is now a sustained level. I think it's, as always, it's a product mix question. It's a market mix question. Then also parts of our business is project driven and tender driven. And depending on how these project or programs land, you get different mixes that will vary naturally between different quarters. So that's -- I mean, that's the natural flow. So we don't have that kind of super stable underlying trend. So that's one thing to bring with you. And then also, I mean, of course, we expect -- we said this earlier that we expected maybe a different pattern from the flu season in U.S. And when you look at statistics and data, if you just look at the high level, you can see that the flu season looks to be more severe when we dig down in the areas where we have strong representation, especially Western U.S., the hospitalization is not as high as last year. And also, in general, the flu seemed to not cause as much hospitalization as previous years. But it's very early and all data is not accessible. But we have seen that trend in our data. So I don't know if you want to add some flavor in terms of this mix or this trend moving forward, Christofer? Christofer Carlsson: No, as we said, medical beds has a strong development in this quarter, but that is also very much a business depending on tenders and bigger shipments, it's not a continuous business in that sense. So it could be a different mix in the next quarter for us. Andreas Elgaard: Yes. When you equip a hospital, you do that once, then it takes a number of years before you get the chance to come with a big order again. Mattias Vadsten: Okay. Then I had a question on the ERP systems that will be replaced by Global System. And you said you will find savings of, I think it was SEK 30 million 2028 onwards. I'm looking to understand what this will cost you. So yes, can you comment on the cost for this in 2026 and '27? And also how you aim to report it if it's sort of nonrecurring item or if it will be a drag on adjusted earnings metrics? Christofer Carlsson: The vast majority of the cost for this implementation is actually capitalized because it's -- we are having a system where we actually own the product. So it's not a cloud solution. Andreas Elgaard: And maybe to add some flavor. This has been ongoing for a couple of years in Arjo already. So we only have a few markets left to do this change. So it's not something that is new to us. It's something that have been ongoing for a couple of years. So we are -- yes, we had a couple of go-lives during '25 already. And yes. Christofer Carlsson: We went live with Australia and New Zealand this year. And that's, of course, kind of the key point where we actually -- with the successful implementation in Australia and New Zealand, we decided to also go ahead for the rest of the countries. Otherwise, with a less positive outcome in Australia, we would probably have put on a brake and reverse this project somehow. So this was kind of a key decision point for taking this costs as well. Mattias Vadsten: Okay. Is it possible to say how much it has costed you already or with this? Andreas Elgaard: No. We have not shared that. But I think -- I mean, the write-down is for the old system. This is important, too because we discontinue it before end of life. So it's not connected to the new. Operator: The next question comes from Kristofer Liljeberg from Carnegie. Kristofer Liljeberg-Svensson: I have three questions. I'll take them one by one. First, what do you say about the flu hospitalization? I agree it started slowly, but if looking at the public statistics, it seems it picked up a lot in the last weeks 3 weeks of the fourth quarter, but you didn't see that in your rental business then, correct? Andreas Elgaard: Like we said before, we have seen that the flu season has been stronger or I mean, more severe than last year, but it is also distributed differently across U.S. So in the states where we are strong, we have not had the same pattern of hospitalizations. And also, we have seen a pattern that fewer patients are being hospitalized or they quickly get out of hospital versus before. So we don't see a one-to-one pattern as before. Kristofer Liljeberg-Svensson: Okay. That makes sense. Then I wanted you to clarify then what still seems like a pretty poor visibility for sales in North America, the message after the third quarter was that you have delayed deliveries that was expected to pick up in Q4. So did you see this happen, i.e., was the disappointing sales for you in Q4, was all of that flu related, i.e., that capital equipment sales were according to plan? Christofer Carlsson: That majority is, of course, the flu season. But we also have seen a less improvement in Canada, which had a very strong comparison numbers. So they actually have a lower growth in the quarter versus U.S. And to some extent, I mean, it didn't pick up at the end. Normally, there are quite a lot of transactional sales, what you say that hospital calls the last week or last 2 weeks when they know that they have x dollar remaining of the budget and they just need to purchase something before the year end. And that volume did not repeat from last year's all-time record actually in Canada. Kristofer Liljeberg-Svensson: Do you know why that was the case? Christofer Carlsson: I think there are general budget constraints in the Canadian market. We do see some of the states being more and more restricted in the budgets. But that's the main reason, I think. Kristofer Liljeberg-Svensson: Okay. And then my final question, you talked about the mix effect that could, of course, vary a lot between quarters. But otherwise, is there anything you could do here short term to turn this negative margin trend? Andreas Elgaard: Yes. I mean from my point of view, being new now into the company, if I answer first, and then Christofer can add on. I would say that Arjo has a lot of potential to drive efficiency. I would say, both in cost and capital out. That's clear. So we are going to work on that to do our own homework, so to say. Then also, I think that we need to look into parts of our business where market conditions have maybe changed a little bit or market dynamics have changed a little bit. We also need to update our commercial models and make sure that we share best practice in a more rapid way so we can be quicker to react. So there are always things that you can do on your own. Sometimes there is a lag in that, of course, because you don't know what is changing before it's happened and then it takes some time to adjust. But there are always things that we can do on our own, and we intend to do that. And in the strategy work, there will be parts of things that we want to do for the future that is long term to build capability, build -- expand our offering or our market position, but we also need to fund that journey. And to large parts, we're going to do that through also, I would say, efficiency initiatives across the group. Kristofer Liljeberg-Svensson: I mean, if you start the strategy -- yes. But if you start the strategy work now, then you're going to present this in the second half of the year. It sounds that 2026 will be yet another lost year when it comes to margins for Arjo, or am I missing something here? Andreas Elgaard: Yes. I mean there are always parts that require direction and maybe long term and that you come together as an organization, and that will take some time. But there is plenty of also quick wins that you can activate around procurement, IT and your own efficiency. So there is not -- I am -- I've worked a lot with change in the past, and I'm a firm believer in that you have to transform yourself, you have to change, but you also have to perform while you do that. And you need to fund the journey of when you need to invest in capability or in products or in M&A. Somehow, you need to fund that journey and you do that by driving efficiency in both capital and cost out of the company. So I think that you cannot say that you need to wait another year, and I think we're going to have -- we will be very, very focused on these also short-term actions. Operator: The next question comes from Ludwig Germunder from Handelsbanken. Ludwig Germunder: Ludwig Germunder from Handelsbanken. I have two, please. The first one is a follow-up on the last one around the strategy work that you will initiate during the spring. I understand that you will do work in the meantime as well. But what should we expect regarding margins for the beginning of 2026? Andreas Elgaard: I mean, we usually don't give any forecasts, and we will continue not to do that. I mean the only outlook we give is what we believe how sales will develop on top line, the 3% to 5% interval. So beyond that, we will not share any outlook until we maybe have a reason to do that. So that's -- and as I said before, we expect to come back and explain our view on the future and also at that point, also potentially revise our financial targets. So we need to work this through before we communicate it. But we are going to be super focused on trying to drive efficiency before we present our future direction. Ludwig Germunder: Okay. Got it. And the second one is also kind of a follow-up on the discussion around the flu season. So I got you that the hospitalization levels are lower in the parts of the U.S. that you are most active. Could you say something about the sequential development or demand you're seeing from the flu season? Is it at the same levels so far in Q1 as you saw in Q4? Or has it moved in any direction from the Q4 levels? Andreas Elgaard: We're not reporting Q1 today. So we stay on Q4. So I think that what we said is what we have seen that the flu this year seem to end up in fewer hospitalizations. That's what we've seen in Q4. Operator: The next question comes from Erik Cassel from Danske Bank. Erik Cassel: First question on North America. If my modeling is decent, it looks like the rental business now is in organic decline over there. Could you potentially comment anything if that only has to do with the ICU rental part or if you're also seeing that for, say, the more long-term contracts as well? Christofer Carlsson: No, it's more on a short-term perspective and the flu season, I would say. Erik Cassel: All right. And then on DVT, that business has been under pressure for several years now, I think, I mean, Cardinal started cutting back in '21. So how much additional pressure can you face there now? And can you talk a bit about the sort of current levels of sales and profits to some extent that you're seeing and sort of we should expect that pressure to continue now throughout '26 as well, if there were any, say, pricing cuts now in Q4 that will sort of feed over into at least H1 of '26. Andreas Elgaard: I mean -- so we will not talk about '26. But what we can say is that, I mean, there's a fierce competition on, I would say, the consumables in DVT part of our business. And I think that -- and that Cardinal and others have -- I would say, they have pushed the prices down. We also believe that we've come -- we are either at the bottom or close to the bottom of how far down you can go. And then you can say also that triggers the need for us to counter by looking at our business model, if it is set up for this level or if we need to do any adjustments. But we don't expect the decline to continue in the same pace that it has in the last couple of years. Is that correct, Christofer? Christofer Carlsson: Yes. So the vast majority of our business is on the new price level. Erik Cassel: Okay. Good. And then in the U.K., are you seeing continued rental pressures for more and more contracts being lost? Or is this still an effect of those initial -- or was it 5 or 7 contracts that you lost earlier in '25 that, in a way, should be out of comps soon? And also in U.K., if I could do a follow-up to the follow-up. How much of the negative 11% organic growth that you saw in U.K. was from the rental part of the business versus the product side? Christofer Carlsson: So when it comes to the rental business in general in the U.K., I mean, we have not lost any new contracts in the quarter. So it's more an effect of the early ones that we communicated in 2025. And then I have to come back to you on the rental margins for the U.K. Andreas Elgaard: And how do we usually communicate them. So I think that if we don't communicate them, we will probably not come back. But if we do that, then we'll come back to you, just to be clear. Erik Cassel: Okay. I'll wait to see them. And then just a final question. There's been a hiring freeze now outside of sales for quite some time, I believe. So I'm just wondering, in terms of those pruning additional costs, et cetera, how much are you actually able to slim the organization from this point? It seems like this sort of pruning has been done for years now. So are you nearing a point where you can't really cut any more fast? Andreas Elgaard: I don't think I would express myself in that way about the organization, but we can see that we have, as any organization, we have room to improve, and we are going to focus on that. And part of that will, of course, be released to improve our profitability, and part of that might be part of also funding the journey of investing and creating a strong future Arjo. But I mean, Christofer can add some flavor, but I have now 3.5 weeks in the company. I've spent some time during my onboarding as well. But the only thing I can share is that I see opportunity across Arjo. It's a really mature business, but we also have some inefficiencies. We don't always use our best practice. We don't always share our failures or successes across the company. And there's a lot of commercial excellence in that. And if we can release that, that has a really positive effect. I have first-hand experience of doing that in other contexts. And then also, we need to take a good look in the mirror and put question marks to ourselves when it comes to our administrative costs because we are high, and we need to be able to do things more efficiently by leveraging our IT systems and by also delivering the administration that is necessary and not something beyond that. So there are clear opportunities for us to address, then it is too early to say when the effect will come and so on. But we will focus on this together as an organization. Operator: The next question comes from Ludvig Lundgren from Nordea. Ludvig Lundgren: Yes, I only have one. So you've highlighted quite a strong order intake in the last few quarters, in particular, in patient handling products in the U.S. So can you say anything about how this has developed here in Q4 and whether you're still way above 1 in book-to-bill? Christofer Carlsson: Yes. The order intake has come in a little bit weaker in the quarter. But from an order book perspective, we are almost at the same level as last year. But also please remind yourself that 80% of our transaction is in and out in the same period. So it's an indicator, but it's not the actual true of the sales in the coming quarters. Operator: [Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Andreas Elgaard: So by that, we close this call, the year-end report for 2025. I thank you for listening. I also thank you for bearing with me as being new. And I am really looking forward to coming back and presenting Q1 to you guys, and in the second half, presenting our future strategy. By that, we say thank you. Christofer Carlsson: Yes. Thank you all.
Operator: Good day, and thank you for standing by. Welcome to the Brookfield Renewable Partners Fourth Quarter and Full Year 2025 Results. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your speaker today, Connor Teskey, Chief Executive Officer. Please go ahead. Connor Teskey: Thank you, operator. Good morning, everyone, and thank you for joining us for our fourth quarter 2025 conference call. Before we begin, we would like to remind you that a copy of our news release and investor supplement can be found on our website. We also want to remind you that we may make forward-looking statements on this call. These statements are subject to known and unknown risks, and our future results may differ materially. For more information, you are encouraged to review our regulatory filings available on SEDAR plus EDGAR and on our website. On today's call, we will provide a review of our 2025 performance, share our perspectives on the energy market today, and provide an update on the growth outlook for our business. We will then turn the call over to Patrick who will discuss our operating results and strong financial position as well as outline how our increasingly differentiated access to capital is providing a clear advantage for our franchise today. He will then conclude our remarks with an update on our growing asset recycling program. Following our comments, look forward to taking your questions. 2025 was another excellent year for our business. We delivered strong financial results, strengthened our balance sheet, and most importantly, further positioned the business to continue delivering strong growth and value creation for our unitholders going forward. This past year, we delivered $2.01 of FFO per unit. Up 10% year over year and in line with our long-term growth target. On the back of solid operating performance, expanded development activities, accretive acquisitions, and growing capital recycling. We deployed or committed a record $8.9 billion or $1.9 billion in growth net to BEP. Highlighted by the privatization of NayON, our carve-out of Geronimo Power in The United States, and our increased investment in Isahan one of our strongest performing businesses over the last decade. We were successful in advancing our various commercial priorities, signing contracts on over nine gigawatts of generation capacity. We also continue to scale our development activities bringing online over eight gigawatts of new capacity globally a record for our business. We delivered on our asset recycling targets, reaching agreements to sell assets generating $4.5 billion of proceeds or $1.3 billion net to BEP at returns above the high end of our targets. And we accomplished this all the while strengthening our balance sheet, ending the year with $4.6 billion in available liquidity. Stepping back and looking at the broader market today, it is now clear that power is a strategic priority around the world and is the bottleneck to growth for both governments and corporates. Investment in new generation capacity over the past several years was largely about replacing carbon-intensive generation a world of modest, or even flat electricity demand growth. Today, that backdrop has fundamentally shifted. Energy demand is rising at a pace not seen in decades, driven by the multi-decade trends of electrification and renewed industrial activity. This demand growth is being further amplified by AI and the unprecedented investment in energy consumption from some of the largest companies in the world. As a result, we are not only transitioning the grid, but adding substantial net new generation for the first time in decades. Said another way, have shifted from a period focused on energy transition to a period focused on energy addition. This shift is driving a move from incremental grid upgrades to large-scale expansion prioritizing fast to deploy renewables, scale baseload generation, and capacity to ensure reliability. Meeting this demand will require a mix of all the scale and efficient technologies over time. Solar and onshore wind will play a critical role given their speed to market and low cost. Hydro and nuclear are important for their base load and scale, natural gas for its flexibility, and battery solutions will be critical for ensuring the reliability of grids going forward. In this evolving environment, we have deliberately positioned our business at the epicenter of many of these technologies. Allowing us to capitalize on the rapidly expanding opportunity set given our operating and development capabilities, strong partnerships and significant access to capital. First, we are scaling our development of low-cost fast to market solar and onshore wind to meet the accelerating demand for power in the near term. Over the past year, we commissioned a record amount of new solar and onshore wind capacity and are on track to reach a run rate of delivering roughly 10 gigawatts of new capacity per year, by 2027 all while maintaining our disciplined approach to development. Second, against the backdrop of growing demand for reliable base load power, we are well positioned in the current market through our operating hydro assets and our ownership of Westinghouse. As power systems require more scale baseload generation, flexibility, and enhanced reliability. The value of hydro is being recognized more than ever before. This has been highlighted by the execution of three twenty-year power purchase agreements at strong pricing with hyperscalers, a first for our business. As well as the signing of the framework agreement with Google to deliver up to three gigawatts of hydro generation in The United States. With respect to nuclear, only slightly more than two years ago, we invested in Westinghouse. Gaining exposure to this critical technology for current and future electricity grids given its scale and baseload characteristics. Our investment was underpinned by Westinghouse's highly contracted infrastructure like cash flows from its fuel and maintenance business, its strong market share and its leading and proven technology for large-scale nuclear power reactors. The current energy demand environment has reinvigorated the nuclear sector with increasing recognition of the role nuclear can play to enable economic growth and provide energy security. Perhaps the most impactful development for the sector is the recently announced landmark agreement with the U. S. Government to deliver new nuclear reactors utilizing Westinghouse technology in The United States. This agreement delivers significant economic value to Westinghouse and BEP via the development of multiple reactors and then through the long-term provision of fuel and maintenance services over the eighty plus year life of those reactors. A commitment of this scale provides long-term demand helping unlock supply chain investment and positions Westinghouse to expand deployment well beyond this initial program. To both corporates and governments in The US and internationally. Since signing this agreement, all parties have been working to progress the sites to construction as quickly as possible largely focusing on-site selection, and the ordering of long lead time items. Against this backdrop, and the known development timeline for nuclear, the limited new hydro capacity available, and the growing backlog for natural gas plants we are seeing batteries play an increasingly important role in the near term. With their importance set to grow over time as additional low-cost renewables come online. Battery costs have declined by an astonishing 95% since 2010. Following a trajectory similar to solar panels a decade ago. And we see a growing opportunity to deploy this technology on a contracted basis at strong risk-adjusted return. Our recent acquisition of NaoN significantly expanded our operating footprint capabilities and development pipeline in battery technology. And we expect to quadruple our battery storage capacity over the next three years to over 10 gigawatts. This growth is highlighted by one of the largest stand-alone battery storage projects globally, totaling over one gigawatt which we are currently advancing through NaeoWen in partnership with a sovereign wealth fund. Taken together, rising energy demand across global markets is driving the need for rapid additions of renewable capacity large-scale baseload power, and battery storage. Backed by long-term partnerships with the world's largest corporate buyers of power and governments, we are delivering more generation than ever before. By being positioned in markets with accelerating demand, combined with our global scale, significant access to capital, and our operating and development capabilities across key technologies, we are best positioned to deliver comprehensive energy solutions across all markets at scale and are entering into a period of outsized earnings growth generating significant value for our unitholders over the long term. And with that, I'll pass it on to Patrick to discuss our operating results our diverse sources of scale capital our balance sheet as well as our recent capital recycling initiatives. Patrick Taylor: Thanks, Connor. And good morning to everyone on the call. As Connor noted at the outset of his remarks, 2025 was a strong year across almost every metric. With the business delivering 10% FFO per unit growth achieving our target while maintaining our best-in-class balance sheet and further positioning ourselves to generate significant growth and value going forward. In the fourth quarter, we delivered FFO of $346 million up 14% year over year. Or 51¢ per unit. On a full-year basis, delivered FFO of $1.334 billion or $2.1 per unit. Up 10% year on year. Results were driven by the strength of our contracted inflation-linked cash flows across our diversified global operating fleet. Growth from development activities, accretive acquisitions, and scaling capital recycling. Looking across our segments, our Hydroelectric segment delivered strong results this year, with FFO of $6.67 million up 19% from the prior year. Benefiting from solid generation across our Canadian and Colombian fleets higher revenues from commercial initiatives, and gains from the sale of a noncore hydro portfolio. All of which offset weaker hydrology in the in The US. Our wind and solar segments generated a combined $648 million of FFO supported by contributions from the acquisitions of Nayon, and Geronimo Power, as well as our investment in a portfolio of contracted offshore wind assets in The UK. This growth was offset by gains on sales recorded in last year's results. Which included the sale of Scieta, and the partial disposition of Shepherd's Flat. In our distributed energy storage and sustainable solutions segment, we generated record results of $614 million. Up almost 90% from the prior year. Driven by growth through development the acquisition of Nayeon, and strong performance at Westinghouse. On the back of continued momentum in the nuclear sector. In addition to the strong results, a continued focus of ours has and will always be to maintain balance sheet strength financial flexibility. This enables us to be opportunistic when it comes to deploying capital into growth and protecting us against downside risks. We ended 2025 with $4.6 billion of liquidity, And over the past year, we reaffirmed our BBB plus investment credit investment grade credit rating which we remain firmly committed to maintaining going forward. Our rating, significant liquidity, and strong financial position enable us to be very opportunistic with respect to our financing activities which further strengthens our balance sheet. In 2025, we executed over $37 billion in financings, a record for our franchise. These financings were highlighted by the completion of $2.2 billion in investment-grade financings. Primarily at our hydro assets. Where we are seeing strong lender demand for these assets and are leveraging the benefits of newly signed long-term contracts at strong pricing. In March past year, we issued CAD450 million of ten-year notes at what was our lowest spread in almost twenty years at the time. We then more recently topped this. Issuing $500 million Canadian of thirty-year notes this January at our lowest spread ever. Reflecting the strong demand for our credit and our ability to be nimble and take advantage of a favorable spread environment. In November this past year, we also executed a $650 million bought deal equity raise in concurrent private placement. We were successful deploying capital ahead of our targets in the twelve months prior to the equity raise, and this financing provides capital to invest even further in the expanding opportunity set in areas where we have a differentiated ability to deploy capital. Such as hydro, nuclear, and battery storage. Our strong balance sheet is further enhanced by the fact that we deploy our capital alongside a large pool of third-party funds, raised by Brookfield Asset Management. In 2025, Brookfield successfully completed fundraising of over $20 billion for its second vintage of its global transition fund. This capital will support large-scale investments alongside BEP that few others can make. Further enhancing our access to large, high-quality m and a opportunities that help us achieve strong, and consistent growth. In addition to our financing activities across the business, we are continuing to scale our capital recycling program which is increasingly providing significant liquidity to support our growth and crystallize value creation within our business. We continue to see robust demand from private investors for derisked infrastructure like cash flowing operating assets. At the same time, with our scaling development activities, we have a growing portfolio of assets and platforms we are selling on an annual basis. The size of our portfolio our flexibility to sell whole platforms standalone assets, or minority stakes. Is enabling us to be active in the market. Consistently selling at prices that deliver on our target returns. This past year, we generated record proceeds of $4.5 billion or $1.3 billion net to debt from asset recycling alone. This year, our asset rotation activities were highlighted by the sale of a major North American distributed energy platform. A 50% interest in a portfolio of noncore hydro assets in The U. S, the establishment of an asset rotation program at Nayeon. That was successful in executing the sale of $1 billion of enterprise value of assets in our first year of ownership alone. Looking ahead, we are focusing on continuing to scale our capital recycling program and generating proceeds from sales in a more recurring manner. In January, we agreed to sell a two-third stake in a large portfolio of recently built operating and solar asset wind and solar assets in North America. Generating proceeds of $860 million or $210 million net to BEP. And are actively progressing the sale of the remaining interest. In conjunction with this sale, we are also establishing a framework for the future sale of select assets that meet certain criteria to the same buyers. This framework, We also wanted to note that after the quarter end, we announced a fully discretionary $400 million at the market equity issuance program for our BEPC shares. We expect to use the proceeds to repurchase BEPC units on a one-for-one basis under our existing NCIB. The purpose of the program is to increase BEPC's float, and liquidity in a nondilutive manner. While also allowing us to capture value from the persistent premium at which those shares trade. Providing incremental cash to deploy into growth or buy back even more shares. Lastly, with our record results, in conjunction with our strong liquidity and robust outlook for our business, we are pleased to announce an over 5% increase to our annual distribution to $1.46.8 per unit. Since Brookfield Renewable was listed in 2011, we have now delivered fifteen consecutive years of annual distribution growth of at least 5%. Each year. In closing, we remain focused on delivering 12% to 15% long-term total returns for our investors. While remaining disciplined allocators of capital, leveraging our scale and operational capabilities enhance and derisk our business. On behalf of the board and management, we thank all of our unitholders and shareholders for their ongoing support. That concludes our formal remarks for today's call. Thank you for joining us this morning. And with that, I'll pass it back to our operator for questions. Operator: And wait for your name to be announced. To withdraw your question, please press 11 again. Our first question comes from Sean Steuart with TD Cowen. Sean Steuart: Thanks. Good morning, everyone. A couple of questions. To start with. Connor, 2026 would be the first year where you start to, to feed projects into the Microsoft framework agreement. Can you give us an update on progress there and the cadence of capacity into that deal through 2030? How is that advancing at this point? Connor Teskey: Good morning, Sean. I would make this comment more broadly on a wholesale basis beyond very simply our strong relationship with Microsoft. The demand we are seeing from, corporates and, in particular, the large high scalers. Is at an all-time high. And I recognize that we've been saying that for a number of years, but that demand just continues to accelerate and continues to grow. And we're seeing that in terms of the projects and the execution that we are doing with counterparties such as Microsoft on an ongoing basis. When we launched that program, we had a defined set of projects in our pipeline that we thought would fill the 10 and a half gigawatts. That was initially outlined. I would say since we announced that agreement in 2025, we are seeing counterparty such as Microsoft look for power in a broader spectrum of regions and markets, particularly across The United States. Even a broader, spectrum of technologies to meet their power demand. So we will see growth in 2026 and we expect to see that growth do nothing but accelerate from 2026 through the rest of the decade. Sean Steuart: Okay. Thanks for that perspective. And then Patrick, a question on the balance sheet. You guys were busy with financing initiatives in the fourth quarter, asset recycling. When I look at the ratio of available liquidity versus the scale of the secure development pipeline or versus the installed asset base. Those ratios have moderated a little bit the last one point years. I guess any commentary on broader comfort with the liquidity position I appreciate you're gonna be busy recycling assets. But are there ratios you're focused on to sort of sustain a comfort level with available liquidity relative to expanding growth opportunity set? Patrick Taylor: Yeah. Absolutely, Sean. And I would I would say we're very comfortable, first of all. And when we think about our available liquidity and the business obviously having grown over the last several years, we're very focused on sort of maintaining a minimum level and around that $4 billion mark. We're pretty fairly focused on it. It's not a hard line by any means, but we have been at or around that or above that, I should say, for the last several years at this point. It's a level given the scope of our business today that we feel quite comfortable being at. And to your point, as the development pipeline continues to grow, we're complementing that by scaling our capital recycling as well. So that allows us to be in and around that $4 billion mark and be very comfortable with our funding availability of our liquidity, I should say. Sean Steuart: Okay. But when you think about 4 billion, I mean, you've been there for a while now. Your organic growth pipeline is expanded really rapidly. You know, is that is is I would imagine there's sort of, like, a dynamic element to this is the velocity of capital deployment changes for you guys. You know, as the organic pipeline grows, is there other thoughts to that? Patrick Taylor: No. I think it's fair that as the organic pipeline continues to grow, there'll be an element where we'll we may look to increase that over time. But we're at a level right now where as we look out over the next several years, we're quite comfortable at these levels. And part of it is just because of that visibility we see on accelerating, recycling. Sean Steuart: Okay. Okay. That's all I have for now. Thanks very much. Operator: Our next question comes from Nelson Ng with RBC Capital Markets. Nelson Ng: Great. Thanks and good morning, everyone. So a quick question In terms of the eight gigawatts commission this year, I think about 2.5 were in North America. But obviously, there's a lot in The US. So when you look at developing projects in The US, are you still seeing any like, headwinds or bottlenecks from from the federal government from a permitting perspective for for onshore wind solar. Like, obviously, it's a different story for offshore wind, but but you're you're doing onshore. But are are you seeing any headwinds there? Connor Teskey: Hi, Nelson. Thank you for the question. Really put this in two buckets. What we would say is, when it comes to solar, which is the broadest component of our pipeline, solar and batteries in The US, we are seeing no slowdown. We are seeing an acceleration. And this is driven by solar is quick to deploy. It's cheap. It's the lowest cost form of production. And quite frankly, the corporate need the power as quick as possible. So on solar, we are seeing no change, if anything, in acceleration, and we're trying to pull projects forward as fast as possible. On wind, onshore wind, there has been some slowdown in permitting from the federal government, but projects are still getting done. And we've taken that into account into our development and execution process. That's reflected in the pipeline that we prep we present. I would say that wind is progressing slower than onshore solar in The U. S. Market, but both are still getting done. Nelson Ng: Got it. Thanks for the color. And then just switching topics a bit. So, obviously, we're hearing a lot a lot about the elevated power prices in The US. And the fact that you are signing more long-term hydro contracts but when I look at your realized power prices for The US hydro segment in the supplemental document. I think the realized hydro price has been flat year over year at about $83. I'm just wondering whether that's just due to the generation mix given that it was below average in the past year And should we be seeing an increase going forward? Connor Teskey: You should see an increase going forward. And there's a lot of different dynamics that flow through those numbers, but the overarching point to be made is the scarcity value of hydroelectric power is at an all-time high right now. And it perhaps gets glossed over in the breadth of our broader business But the three contracts, three twenty-year take or pay PPAs inflation linked with some of the largest corporates around the world from our perpetual hydro assets. We have never seen demand of that scale at the prices we have seen. In, I'd say, the last year, but in particular in the last six months. And as those contracts get layered in, some of those contracts don't start immediately. They start in a couple years when the existing contracts roll off. You will begin to see higher achieved contracted power prices across our hydro portfolio. Nelson Ng: Great. Thanks. And I'll try to squeeze in one more question. In terms of capital recycling, you guys mentioned that you have a I guess, a potential framework to to sell an additional 1 and a half billion to to some buyers. To some existing buyers. Like, so when when you look at recycling assets, are, like, how much of your customers are or how much of the buyers are essentially repeat customers? And should that streamline your asset recycling process going forward? Connor Teskey: Short answer, yes. But let me provide a little bit more color. Since we started to grow our development business, I would say in 2019 or 2020, our capital recycling activities have understandably grown on a similar trajectory but probably on a three-ish year laggard basis. The time it takes to to pull a project. Out of the ground. As a result, over the past two or three years, our asset recycling proceeds have become a very consistent recurring, predictable source of both funding and earnings for our business. And given the trajectory of our development activities and the visibility of our pipeline today, we would expect this activity to continue going forward with 2026 being no different. Then when it comes to the recent we will call them frameworks we've set up, in terms of asset recycling, similar to in the past how we have raised capital to facilitate a greater level of deployment growth. We think about this as raising capital to facilitate a greater amount of capital recycling in the business. And we're pretty excited about what we've designed and executed here because what these frameworks and we've executed one and we're pursuing others in different regions around the world that we would hope to execute in the near term, what we have done is we would say we have created almost a framework or a program to recycle newly built assets at scale quickly on a recurring basis. And the impact to our business is it significantly derisks our development platforms around the world and the business plans we're seeking to execute. And it significantly derisks our capital recycling and funding plans for our business for the next several years. I will go out on a limb and say, I think this is going to be a huge differentiator for our franchise. Yes. We've signed one, since the end of the year. Focused on North America, but we expect to sign others in the near term here. And these are very significant in terms of scale. And not only are they going to provide an accretive source of funding for our business, they significantly significantly derisk our development activities that continue to grow. Nelson Ng: Great news. Thanks for the color. I'll leave it there. Operator: Our next question comes from Robert Hope Scotiabank. Robert Hope: Good morning, everyone. So at the recent Investor Day, you spoke quite bullishly about the battery outlook, and I believe you commented that it could be seven gigs in a couple of years. And today, you're saying it could be 10 gigs. Is the accelerating development pipeline here or an increasingly bullish outlook here in part due to the fact that you're seeing larger opportunities. The one gigawatt battery project for the sovereign wealth fund, is this indicative of where you think development is going, larger projects to ensure reliability for the grid? Connor Teskey: Yes. And, hi, Rob. The short answer is yes. Make no mistake. Batteries are the fastest growing part of our platform today. And we expect that to continue. But what this is really driven by is the simple fact that battery costs continue to go down. Technology advances continue to be made. And, therefore, we are seeing batteries as a potential solution in more and more of our projects and in more and more of our markets. The other thing we would highlight is we do all think of at Brookfield Renewable, think about battery development probably a little bit different than generation development. Because it can be executed faster. Much of the equipment shows up prebuilt on-site, And because batteries and energy storage reduce grid congestion as opposed to add to it, there is significant incentive from grids to bring batteries online faster. Therefore, yes, we have accelerated or increased our outlook for batteries, but it's very simply just a reflection of what we're seeing across our business and what we're doing with our sovereign wealth fund partner, we would expect to do other similar projects, like that going forward. Robert Hope: I appreciate that. And then maybe turning over to the m and a environment. You've been very successful monetizing assets. But on the other side, acquiring assets, what does that environment look like in a rising price environment as well as the power addition environment. Connor Teskey: So perhaps I'll almost tie this back to Patrick's answer on funding a little bit. We've always been very opportunistic in terms of funding our business. And right now, we see scale capital as an increasing competitive advantage in today's market. And we see a very constructive market for deployment into growth. This is why we took the decision earlier this year to strengthen our already very strong capital and balance sheet position. Because we do believe we are at the start of a period of very attractive deployment into growth in m and a. And very simply a broader consolidation of our space where we think we can play a very significant role. Operator: Thank you. Next question comes from the line of Baltazidu National Bank of Canada. Baltej Sidhu: Thank you, and good morning, everyone. So Connor, just given that renewable infrastructure valuations remain compressed and you've noted the large largely US based development pipeline Where are you seeing the most attractive risk-adjusted opportunities today that operating app late stage development, or or new stage platforms? And do you think that mix will evolve, looking into 2026? Connor Teskey: The opportunities we are seeing, are pretty broad-based around the world, but perhaps to focus on a few themes that we we are seeing right now. I would perhaps highlight three where we're seeing the greatest volume of opportunities that we we view as Absolutely, yes, public companies. That would be number one in the current environment. The second point we would highlight would be carve-outs. From broader utilities or energy businesses because there are such significant capital needs across the industry, Market participants are needing to choose where they will allocate their capital budgets. And to put it bluntly, some market participants can't fund 100% of the opportunities they have at their disposal, and therefore, they may look to sell divisions, that they don't expect to fund all the growth opportunities in, and that could be an opportunity with us given our robust capital position. The last point we would make is we are seeing a unique dynamic in the developer market. Where we are seeing a bifurcation between what we would call high-quality developers and, maybe less high-quality developers. High-quality developers price at an absolute premium, in today's environment given the growth trajectory of electricity demand and the value of projects that can be pulled out of the ground. However, developers that maybe don't have scale capabilities to navigate the current environment, but do have large pipelines of projects we we are seeing more attractive pricing at end of the market and and would expect to be active there in order to add projects to our pipeline that we can then contract with the demand we're seeing from our customers. Baltej Sidhu: Just one more for me. Just on the CSV of hydro that you had had alluded to and speaking towards the Google HSA, which could see you potentially acquiring additional hydro to facilitate the entirety of the three gigawatts. What are you seeing in the market, and and how are you thinking about it just looking forward in that part? Connor Teskey: Sure. What we would say when it when it comes to hydros is it very much, depends on location. As mentioned, we've seen really strong demand for our hydros and premium valuations both in contracts and in assets in markets in The US like PGM and MISO. And our activities in 2025 reflect that. However, what I would say is what we are seeing is the offtakers of these hydro assets increasingly looking now beyond those two markets, which have really been their focus I would say, for the last two years. Therefore, when we look to potentially acquire assets, we're probably looking for assets in these markets that have been viewed as noncore in the past where we can acquire assets, execute operational improvement programs, and re them under our framework agreements. But the biggest point I would say is K. I'm I'm curious. Couple of things is is is applying mostly greenfield development that you picked up a couple meg actually, quite a number of megawatts from from Neon. Or are there opportunities to also do M and A? And then I'm also secondly curious the revenue model will storage for for you specifically, is that you expect to be mostly contract, or is there a fair element of of merchant arbitrage in in there? Good morning, Ben. Great question. So in terms of batteries, we we view ourselves to be in quite a fortunate position because we do have a very large organic development pipeline. A lot of that did come through the acquisition of Nao N. Candidly, Nayoen was the largest acquisition in the history of Brookfield Renewable. We recognize that perhaps a lot of people knew Nayeon as a leading global renewable power developer. We obviously saw that and the value of that. But we thought what was underappreciated in their business is the fact that they're the leading global energy storage developer as well. And what you've seen in our first year of ownership is us really accelerating the growth in the business, but particularly on the energy storage side. We are also looking at m and a opportunities in the battery space, but we've positioned ourselves that we can be, quite discerning and balance the returns we're seeing in m and a versus the returns we're seeing in organic development. To your question about contracting, we're very excited about the evolution of what we've seen in the energy storage space where only perhaps two, maybe three years ago, a lot of the revenue models were arbitrage or or merchant related. Increasingly, what we are seeing is long-term tolling or almost take or pay capacity contracts on newly built battery assets. And very simply, as an example of the large project that Nayeon is pursuing. That would be on a 100% contracted basis for the entire life of those assets. So a development and revenue profile very much in line with or potentially even stronger than what we do all day every day on the wind and solar side. Baltej Sidhu: Okay. Understood. Thanks for that. And then can I also ask him offshore wind side? Do you comments, you you didn't like it for a while, maybe seven, ten years. You got maybe more open to it. They did a deal for that. Where does Brookfield stand today then on offshore wind? Understandably, it would be very market specific. But we are seeing some markets We won't bury the lead here. Europe, in particular, in increasingly more constructive from an offshore wind perspective. And we are evaluating opportunities in the space there. That being said, as with everything, we will compare the investment profile and the risk return we see in those opportunities versus what we see elsewhere in the portfolio and only pursue them if we think we're being appropriately compensated. Baltej Sidhu: Okay. If I may it's a follow-up on on that. There's been maybe a trend of offshore wind assets in Europe as they reach end of contract life, they become more merchant like? Is that something that maybe Brookfield could opportunistic take advantage of? Connor Teskey: Certainly. And in particular, if we could bring our contracting to bear, such that we could acquire those assets based on a merchant profile that bring our power marketing capabilities to quickly derisk them, through a new long-term contract, yes, that's absolutely something we would look at. We would be clear that we've seen a couple of those opportunities, but it's not the largest opportunity set in the world today. Baltej Sidhu: Okay. Understood. Okay. Thanks, Connor. Operator: Our next question comes from Anthony Crowdell with Mizuho. Anthony Crowdell: Good morning, Connor. Just a quick one. A follow-up maybe on the previous question or two questions on PJM. Just several weeks ago, the Trump administration created that backstop auction. Is a very light on details. I'm just curious if you think that plays maybe or pushes hyperscalers to focus more on Brookfield Renewable's development side where you bring a new generation in or the company could be opportunistic with some repricing, some existing generation? Connor Teskey: Good morning. So the activity in the announcement around PJM, We Very Much See This As Simply A Reflection Of The Demand For Energy. And Quite Frankly, How Tight The System Has Become In Particular, In Markets With The Highest Levels Of Energy Demand Growth. We've Been Saying For Years That The Supply Demand Imbalance Has Been Growing Materially. And This Inevitable Evolution Leads To The Immediate Need For Large Scale Capacity To Be Added To Grids Around The World And In Different Markets In The United States. So from our perspective, one of the most constructive outcomes of this discussion is that it should create a dialogue to facilitate an acceleration of new capacity coming online over the long term. That's obviously incredible for the market, and it's incredible The growing and incremental demand. We view this as a step towards addressing the underlying supply demand imbalance for our business and sorry, addressing the underlying supply demand imbalance in that market. We view that as very positive for our business. Anthony Crowdell: Great. Thanks for taking my question. Operator: That concludes today's question and answer session. Like to turn the call back to Connor Teskey for closing remarks. Connor Teskey: Great. Well, thank you, everyone, for joining our Q4 conference call. We appreciate your continued support and interest in Brookfield Renewable, and we look forward to providing an update, after Q1. You, and have a great day. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Ann-Sofi Jönsson: Welcome to the presentation of our fourth quarter results. I'm Ann-Sofi Jönsson, Head of Investor Relations and Sustainability Reporting here at the Electrolux Group. With me today, I have our CEO, Yannick Fierling; and our CFO, Therese Friberg. We will go through the presentation. And after that, we will open up for a Q&A session, both for those on the conference call as well as for you on the webcast. [Operator Instructions]. With that, I hand over to you, Yannick. Yannick Fierling: Thank you very much, Ann-Sofi, and good day to all of you. Very glad to be with you for the Q4 report. I will start, if you allow me, with some highlights about 2025. We are happy to report that the organic sales has been at the level of SEK 131 billion, which represents an organic sales growth of 3.9%, very close to the 4% we have been communicating about in the capital market update, I mean, midterm. The improvement in the operating income was at the level of SEK 3.7 billion, which represents 2.8% on net sales, which is again an improvement of 0.8 points versus last year. This SEK 3.7 billion were supported by a high cost reduction level of about SEK 4 billion, driven mainly by procurement and value engineering. We had one of the strongest quarter ever in Electrolux in the fourth quarter in terms of cash flow, delivering SEK 5.2 billion, bringing the entire year at the level of SEK 2 billion, which is taking our financial position in terms of leverage at the level of 3.0. With that, I would like to go into the fourth quarter. I'm sorry, the slide is not changing. Technical issue, which was working, of course, nicely, this morning. It's always like that. Okay, very good. Now it's working. Apologies for this technical issue. Very good. Let me deep dive into the fourth quarter here. First, we're glad to report out that, I mean, we have been gaining market share once again in Europe, Asia Pacific, Middle East and Africa and Brazil. We have been delivering a flat market share in North America, very high level of price pressure in the 3 regions. The operating income has been positively impacted by cost reduction at the level of SEK 1.2 billion. But we have been delivering on efficiency in engineering, in procurement and on the conversion side of the equation. On the headwind side of the equation, unfortunately, we had to face a high level of cost due to U.S. tariffs and the currency with dollar depreciation. Let's move now to Europe, Asia Pacific and Middle East and Africa. First, as I said, I mean, we are happy to say that once again, we have been growing market share with Electrolux and AEG. We have been gaining more market share with Electrolux and AEG than we have been losing by ramping down with Zanussi. Very high level of pressure in this region as well. I mean we have been going into Black Friday. We have more and more pressure from the Asian competitors, but we have been managing to grow organically by 3.6% in the quarter, which is pretty remarkable, especially when you think that the market has been going down by 1%. We had a positive mix effect, helped by significant volume increase here. And the region has been benefiting by a high level of cost efficiency as well. We have been introducing major innovations in Europe here, and we thought it was wise to fuel this innovation with a higher level of marketing spending. The negative news is certainly on the volume side of the equation. Can we change to the next slide, please? I mean, the negative news is, of course, about the market level. The market has been losing, once again, 1%. We have been down 1% in Western Europe, and we have been up 2% in Eastern Europe. With Western Europe representing more than 80% of the volume overall, the market has been once again down. We are now at the level of 2016. We're 10% below the fourth quarter of 2019. It is a 10 years low in terms of volume. And the market remains subdued. Of course, we have positive signals from interest rate and the construction side of the equation, but it will take time to have these positive signals materializing in additional volume for home appliances. Moving to North America. Now I mean, the quarter has been very challenging. Of course, we knew Black Friday was highly promotional. But certainly, I mean, we did not expect the level of competitive pressure we have seen in the market. And I think entering into the promotional season here, we had no choice but to reduce the price increases we had implemented throughout the year 2025. And that's explaining why we are delivering a negative EBIT in the fourth quarter. So a very high level of price pressure in North America, which has been forcing us to step down for the price increase we had implemented throughout the year. The good news is that after the promotional pressure here, prices have been bouncing back to last year level. But still significant negative external factors are driving our results down. And these factors are simply the U.S. tariff as well as the depreciation of the U.S. dollar. Tariffs are what they are, 15% to 20% for imported goods out of Southeast Asia, 55% to 60% out of China. So if the industry is reacting rationally here, and we will see price increase in the coming weeks, in the coming months, we should be benefiting from that being a North American producer. The market has been pretty resilient when you look at this picture here. The market has been going up in the fourth quarter by 1%, mainly driven by laundry. But still consumer sentiment is pretty low and price increase could have an impact moving forward on the demand. Moving now to Latin America, and I'm glad to say that, I mean, we had another strong quarter in Latin America, gaining value market share in Brazil. The entire region in terms of volume has been growing. We saw Brazil slightly slowing down in terms of increase, but still a good quarter in the region. We had a very strong Black Friday, which is a promotional pressure, but the team has been doing pretty well. And we were helped finally at the end of the quarter by a heat wave, which has been present in the region. Our position remains very strong in the region. I just want to underline one point, which is explaining part of the 11.5% in terms of EBIT. We were helped and supported by a onetime high level of supplier rebates at the end of the quarter in this region. This rebate has not been material for the group, but certainly has been relevant for LatAm. Let me show you a short video on how we have been communicating during Black Friday in the region. [Presentation] Yannick Fierling: So very strong results in LatAm during Black Friday. We're also glad to report that, I mean, we have been reaching SEK 4 billion in terms of cost reduction. And just as a reminder, SEK 4 billion was on the upper level of the fork we have been communicating about in the last months. We have been reaching this SEK 4 billion through value engineering, better sourcing and higher efficiency in our factories. So we have a very strong process in place internally to deliver these type of results. With that, I have the pleasure to hand it out to Therese, hoping that the pointer will be working, Therese, in your fingers. Therese Friberg: Thank you, Yannick. And then looking at the sales and the EBIT bridge. We had a 2% growth in the quarter, which was driven by volume growth and also positive mix in Europe, Middle East and Asia Pacific. And we also had a positive volume growth in Latin America. Unfortunately, if we look at then organic contribution to earnings, it was slightly negative. And this is a result of that the positive volume was then offset by negative pricing pressure, especially in Europe, Middle East -- in Europe, Asia Pacific, Middle East and Africa. And as Yannick mentioned, we also had to back off from the previously introduced price increases in North America in the quarter. This volume growth and positive mix was supported by increased investments in innovation and marketing. And we also had a quite strong quarter in the fourth quarter in terms of cost efficiency. And we can also mention here that group common cost was below the last year level, and this is a result of cost containment during the year, but also due to part of a timing effect where the cost in group common cost last year was at a high level in the quarter. When looking at external factors, we had another quarter with significant headwinds. Of course, the introduced tariffs in U.S. continues to be at a high level and a high impact in the fourth quarter. But also, we had a negative currency impact, both from a devaluation -- both from a strengthening of the Swedish krona, which is then contributing to a negative translation effect for the group, but also for North America, where the weakening of the U.S. dollar versus many or several of the important production currencies like the Mexican peso and the Thai baht and the Chinese renminbi is then giving a negative result on the group. And the negative effect in acquisitions and divestments is related to the divestment we did last year of the water heater business in South Africa in the fourth quarter. And then taking a look at the full year, we had a sales growth of 3.9%, where we had volume growth in all our business areas, and we also had a positive mix for the group. This also contributed to a positive organic contribution to earnings despite that during the year, we did see a price pressure, mainly in the European market that also was negative for the full year. We were boosting and supporting the volume growth and our strong product portfolio by increases in investments and marketing in the year. And as Yannick mentioned, we managed to hit the SEK 4 billion in cost efficiency. We had for the full year, heavy headwinds in external factors. Of course, the tariffs we have talked about a lot. And on top of the negative currency that we saw in the fourth quarter, also for the full year, we have negative currency mainly in the Latin American markets in Argentina and Brazil and also in the Australian dollar. And then looking at cash flow. As Yannick mentioned, we had a strong end to the year. So we had SEK 5.2 billion operating cash flow in the quarter, which took the full year then to SEK 2 billion, which was almost in line with the last year cash flow. The strong operating cash flow in the quarter was driven by positive working capital and mainly by a large reduction in inventory. As you know, our seasonality is like this that we always have a positive contribution from reduced inventory in the fourth quarter. But also as we have talked about during the year, we came from a position where we, specifically in certain categories and in certain business areas, were at a high level going into the fourth quarter. And specifically then mentioning air conditioners in Brazil, where we, at the end of the year, had the heat wave in Brazil, which also helped us to reduce inventory further. We're also keeping high containment of CapEx, and this has also been helping and CapEx is below the last year level. And then looking at the balance sheet and liquidity, we have a solid liquidity and a well-balanced maturity profile. In the fourth quarter, we were amortizing a long-term borrowing of around SEK 2 billion, and we also draw down on the previously announced loan with EIB of USD 230 million. If we look into 2026, we have a maturity upcoming in October of SEK 5.5 billion. And as at the end of December, we have a liquidity, including revolving credit facilities of SEK 32.7 billion. We have no financial covenants, and our target is to maintain a solid investment-grade rating and our leverage improved during the quarter and the year. So we ended the net debt to EBITDA by the end of the year at 3x. And with that, I hand back over to Yannick. Yannick Fierling: Thank you very much, Therese. See, it worked fine in your hands. So let's hope it will be like that as well for me. So moving now to sustainability. And as you all know, I mean, sustainability is in our DNA, and we are very proud to be one of the sustainability leaders in the industry. We do have very ambitious targets moving forward. We are planning to reduce, between 2021 and 2030, Scope 1 and 2 by 85%, Scope 3 by 42%. We're planning to have 35% of recycled material in our product. And in terms of incident rate, we have a very ambitious target to be at 0.3, which is best-in-class in the industry here. We made tremendous progress in 2025. And we're proud to say today that, I mean, we have been reaching, out of the 85% already in 2025, year-to-date, 45%, 33% for Scope 3, and we have 23% today of recycled material in our products. In terms of incident rate, we have been reaching the target of 0.33. Let me just come back. I mean, it's a little bit more than 1 year that I'm in this position today, and we have been defining very clearly these 5 strategic pillars when I started. First, it was about improving North America. And yes, we had a difficult quarter in Q4 in North America. However, let's take into consideration that we have been growing organically in this market by more than 6% in 2025. We have been gaining shop floor spaces. We have been entering into channels like the contract channels in a very significant manner. We have been ramping up Springfield in Q1 to cruising altitude today. Yes, this market is extremely difficult because of tariff, but producing in North America the vast majority of our products, we are well placed moving forward. In terms of profitable growth, we have been declaring the target of growing by about 4% mid- to long term during the capital market update. We have been growing in 2025 by 3.9% after a strong growth as well in 2024. So we are restarting to grow in Electrolux after having lost quite a lot of scale in the past years. We have been strengthening our market position. We have been launching a lot of great innovations in 2025. I would just mention some of them. I mean, we have been presenting the pizza features. I mean, we have been launching this feature in North America very successfully, in Europe. We had new kitchen lines in Europe as well under AEG and Electrolux. We have been launching our new dishwasher in 2025 as well. Lots of innovation here, innovations we have been fueling once again with marketing spending. Cost reduction, we're proud to say that, I mean, we have been reaching the SEK 4 billion. It was a challenging target we put in front of ourselves here. We communicated a fork between SEK 3.5 billion and SEK 4 billion in the last months. We have been reaching the upper spectrum here. But more importantly, we have a very solid [indiscernible] in place in the company to keep on delivering cost saving moving forward. Last but not least, it is about culture, it is about leadership. And I always said, my objective is to combine 120 years of history of Electrolux with all the changes we see in the market right now in order to drive more speed and agility. And that's the perfect bridge to the next slide. We have 4 very clearly defined strategical drivers, which are, first, our bread and butter customer preferences. The second one is about life value creation, sitting next to our customers along the consumer journey from the purchase to the disposal of the appliances. It is about cost leadership and certainly about cash. But all of that will only be possible if we have the key enablers on the right-hand side. And one of them is about culture. And that's why we're happy to announce today a second wave of organizational changes. And the aim of these organizational changes is to get us closer to the end consumers, in order to be able to listen to them and innovate more and more and bring progress in their homes. This new wave of organizational changes will clarify a role, reducing duplication of responsibilities moving forward. We will be faster, we will be more agile, having end-to-end clear accountability in the organization. I'm moving now to the market and business outlook. During the fourth quarter, market demand in Europe decreased with geopolitical and macroeconomic uncertainty weighing on consumer sentiment. Consumers continued postponing discretionary purchases, and demand for building kitchen products remained subdued. In a longer perspective, it is important to remember that the European market is on a 10-year low. Again, we have been losing 1% in the fourth quarter 2025. Looking at 2026, we expect market demand to be neutral. There are signs of recovery as a consequence of a low inflation and interest rates. However, market demand is expected to remain subdued due to continued geopolitical uncertainty. Now moving to North America. In North America, market demand remains resilient in the fourth quarter with a plus 1%. The industry market price adjustments did not reflect the implemented U.S. tariff structure, and competitive pressure and promotional activity remained high, and we decreased prices in the quarter. In 2026, we expect market demand to be neutral to neutral negative. Geoeconomic uncertainty is foreseen to remain in North America, and under the current tariff structure, general market pricing should adjust to reflect associated tariff costs. This may adversely impact consumer demand and market growth. Consumer demand is estimated to have increased in Latin America in the fourth quarter. Competitive pressure increased in the region, most notably in Argentina, where the strong growth was driven mainly by imported goods. Consumer demand grew in Brazil, although at a slower pace than in the fourth quarter 2024, mainly due to inflationary pressure and high interest rates affecting consumer spending. Brazil will have elections in 2026, which might elevate uncertainties, and we expect market demand to be neutral with a stabilizing consumer demand following growth in 2024 and in 2025. Let me turn to the business outlook 2026. Volume, price and mix is expected to be positive in 2026, driven by volume growth and growth in the focus categories. This is expected to be partly offset by a negative price development. We anticipate that the high degree of demand will continue to be driven by replacement purchases. We expect investments in innovation and marketing to increase in 2026, again, to fuel our new products. New product launches provide us with a great platform to continue driving growth in our focus categories. Our focus on cost savings and improved efficiency throughout the group is critical for our competitiveness, and we anticipate, again, SEK 3.5 billion to SEK 4 billion earning contributions from cost efficiency in 2026. External factors are expected to be significantly negative for the year, driven mainly by increased tariff costs. The impact from currency and raw material is expected to be relatively neutral. The full year capital expenditure is expected to increase to approximately SEK 4 billion. With that, I close, and I hand that to you, Ann-Sofi. Ann-Sofi Jönsson: Thank you. So we will open up for Q&A, and we will start by opening up for questions on the telephone conference. Operator: [Operator Instructions] We will now take our first question from the line of Fredrik Ivarsson from ABG Sundal Collier. Fredrik Ivarsson: First, on North America, if you could help us out a little bit with the bridge in Q4 as the losses increased by almost SEK 200 million in the quarter. I presume tariffs and FX played a significant role, as you alluded to. But if you could help us out with that, that would be helpful. And also, if you have any view on the inventory situation in the U.S. market today with some focus on the nondomestic players. Yannick Fierling: I can start with that, Fredrik. Thanks for your question. I think the main impact, as we said previously here is the fact that we have been reducing our prices. In all fairness, as we said, we were able to compensate for the vast majority of the tariff impact in Q2 and Q3. That was due to the competitive pressure we have been observing in Q4, unfortunately, not possible. And we had during the quarter, we had to take the difficult decision to reduce our prices. That's the first aspect. The second one, as you said, is certainly tariff, tariff and the devaluation of the U.S. dollar, which has been weighing pretty significantly in the negative external factors we had to face in the fourth quarter. So that's it. I mean, as I said previously, I mean, prices have been bouncing back pretty quickly post Black Friday in North America to last year level. Our last year level is not enough to compensate for tariff. Now I mean, it's very important to just repeat and remind everybody about the basics. Imported duty goods out of Southeast Asia are taxed today between 15% and 20%. Out of China, it's between 55% and 60%. We have competitors which are massively importing out of these regions here. So if the industry is reacting rationally, what we should be seeing, what we should be expecting in the coming quarters is certainly a price increase. Now to your last question about inventory. I mean, we have been mentioning it very clearly as well in the last report. I mean, we expect the last goods to be arrived without the full tariff impact to have arrived in North America beginning of October. I think it is wise to see or think that most of these goods have been consumed during the promotional season on Black Friday. So I think most probably what will be remaining today in the North American market are goods which are fully impacted by the tariff level I mentioned previously. Therese Friberg: And maybe we can just add that the vast majority of the headwinds we had for the group in external factors is related to North America. So let's say, that's the magnitude of the headwinds we saw that we were then again not able to offset with price increases. But the underlying performance then from the business was positive. Fredrik Ivarsson: Yes. That's very clear. I think I lost you a little bit in the end, but that's a super clear answer. And then second one on LatAm, quick, if you could just talk about that onetime high level of supplier rebates in the quarter. How much did that sort of add to the margin, which was obviously very high? Yannick Fierling: First of all, we are very proud about the earnings we do have in LatAm. I think, again, I mean, LatAm is delivering very strong results in 2025. And believe me, it is thanks to our strategy, and it's not a short-term strategy, a long-term strategy we have been putting in place in the region here in terms of product leadership, I mean, go-to-market. So that's the first point, and we should be underlining that. Certainly, we are stressing the fact that, I mean, we had a one-time supplier rebate at the end of the quarter. I mean, this supplier rebate is not material for the group. It is relevant for the region, and that's why we have been mentioning it, but I want to underline that it's not material for the group. Fredrik Ivarsson: Okay. And then just one last housekeeping before I jump back into the queue. If you have any guidance on the group costs for '26 since they were fairly low last year. I guess you mentioned a timing impact there, Therese. But if you could help us out with some expectations for '26, that would be helpful. Therese Friberg: Yes, I would say for the full year, I could say that it is a little bit on the low side. Of course, we will try to really keep a very high cost containment in the group common cost. But also for the full year, I would say it is a little bit on the low side, as an indication. Fredrik Ivarsson: You mean 2025 was on the low side? Therese Friberg: Yes, exactly, yes. Fredrik Ivarsson: High in '26. Okay, good. Operator: We will now take our next question from the line of Johan Eliason from SB1 Markets. Johan Eliason: Also sort of relating to the pricing component. You also mentioned pricing negative in Europe and rest of Asia. I guess, it's mainly Europe. Is that sort of -- you talked about the trade down, but I think it sounded like you have a lot of new products coming in, in AEG and the Electrolux brand. Is it so that you also sort of discounted out some of the older products still remaining, and then the pricing should somehow then be a little bit of a temporary issue? Or is that wrong of me to think like that? Yannick Fierling: Johan, thanks for the question. It's an important question here. First of all, I mean, mix and volume have been positive in Europe in the fourth quarter. And I think I don't know how familiar you are with the concept of price index, but price index being basically at 100 would be the average of the prices here. What is very important for us, and we have been fighting for that, is to keep the price index we had throughout the year for both Electrolux and AEG. So we absolutely have been very directive on keeping the brand positioning in the regions. And actually, our price index has been even going slightly up. So the decision we took now a couple of years ago to exit the entry price point and really focus on the core plus and premium segment has been the right decision. And we are occupying today and growing into these 2 segments, which are core plus and premium segments. Where the big price war is going on even in a more fierce manner is certainly in the entry price point segments, where we have more new entrants putting pressure on the price level. And that's taking a little bit down the entire European market. I think what is very important for us is, again, to leverage our brand, to leverage the strength of our brand, leverage the innovation we are putting here in the market and actually occupy and grow where we belong, which are the core plus and premium segment in the market. Johan Eliason: Good. Then just on your pricing outlook again. You say price/mix and volume to be positive in '26 and then you focus on volume and the mix, sounding like prices could be negative for full year on a group level. Then your comments on U.S. prices have to adapt to the tariff level leaves me with the thinking that pricing should then be negative in sort of Europe, Asia and Brazil. Apart from Europe, where we discussed the tough in the entry level, what about Brazil? It seems like you were more comfortable with the Q4 development than Whirlpool were in their outlook statement. Yannick Fierling: No, I think you're absolutely right, first of all, to divide this question per region, because the answer will be slightly different region by region. First, I think if you look at Europe and Asia, we're absolutely expecting the price pressure to continue moving forward. I mean, we will have more and more pressure, as I said, especially on the low-end segment and entry price point segment, and we need to defend basically the value on the core plus and premium segment. In Latin America as well, you're absolutely right. I mean, to mention Brazil and Latin America, we have price pressures in Latin America as well with new entrants coming out of Asia as well in Latin America and as well in Brazil. However, once again, I mean, our position is pretty clear. We are playing in Latin America as well in core plus and premium. And the new entrants are mainly playing in the low-end segments. And that's why we are gaining and we keep on gaining value market share in this region. And in all fairness, I mean, the biggest battle getting played is in the entry price points here. So we're redefining our go-to-market, we're redefining our innovation in Latin America, the strength of our brand. The brand is very strong in Latin America, and we're executing here. The last one is, of course, North America here. North America would very much depend if the industry would be reacting rationally now to the tariff structure. As we said many, many times, but I think it's worth repeating, the current tariff structure is benefiting the local producers, and we are only 3 major local producers in North America under the condition, of course, that, I mean, prices would be moving up. Otherwise, you just need to absorb the tariff structure in the negative external factors. So I think it will be very interesting to observe moving forward what the price evolution would be in North America. I would just finish by one point, which is extremely critical here is that, I mean, we certainly are expecting higher pressure moving forward on prices. And it's making cost reduction and cost efficiency even more important moving forward. And that's why we are putting as well so much emphasis on getting more efficient, preserving, of course, the quality of our products, preserving consumer preference for our products here, but getting more efficient as a company such that we can mitigate the price pressure we'll be encountering in the 3 markets. Operator: We will now take our next question from the line of Uma Samlin from Bank of America. Uma Samlin: My question is on the raw material front. I mean, given a lot of the raw mat that you use, steel, for example, the prices increased quite a lot over the past few months. I was wondering that how do you think about that going forward? It seems like you think it will be neutral when it comes to raw material impact in 2026 in your slides. Just wondering how does that work? And how should we think about that? That's my first question. Yannick Fierling: Absolutely. What we said, just to be very precise, is that, I mean, the impact from currency and raw material is expected to be relatively neutral. But let me put a little bit of flavor on that. As you know very well, we are hedging. We're hedging our plastic material, and we're hedging even on a longer time period, I mean, steel. So I think we have been hedging part of plastic, and we have been hedging part of steel. What we see right now, of course, is a potential increase in steel in North America because of tariff. So that's what we're expecting here. So I think we see pressure on the steel side of the equation on North America. However, if you balance, I mean, currency together with raw material, we see that to be relatively neutral moving forward. Therese, do you want to add anything on that? No? Very good. Uma Samlin: Okay. And just a follow-up on North America. I was wondering like what are the dynamics you're currently seeing in Q1 post the Black Friday period? I mean, obviously, I guess you understand that a lot of the inventory has been perhaps still there for the Black Friday promotion period. But after that, I guess, previously, you've said that you expect pricing to normalize, stabilize going forward, because it wouldn't make sense for especially the Asian competitors not to compensate for the tariffs. So just wondering, what are you seeing today on the market? Are you seeing similar dynamics so far in January as in Q4? Or are you seeing any improvement there? Yannick Fierling: I think -- of course, I mean, we will not be discussing in detail about Q1. What I can tell you is that, as I said, I mean, prices have been bouncing back in December to last year level post Black Friday, and they have been bouncing back quicker, I would say, compared to 2024 post Black Friday. I think I'm stating the obvious to all of you here, but I mean, there has been quite a lot of discussions around tariff as well with the Supreme Court. And I think this discussion probably has been inducing doubts on how sustainable tariff would be moving forward or if there will be changes. So I think now it's pretty clear that, I mean, the decision will not be -- has not been happening in the first weeks. So again, with the level of tariff we're having out of Southeast Asia and China, rationally, I mean, we should see movements at least in the market. Therese Friberg: Sequentially, we have seen prices then improving post Black Friday, but we're not really seeing price increases to offset the current tariff structure. Ann-Sofi Jönsson: We have a few questions from the web as well. And here is one that is a little bit repetitive to what we have been speaking about. But are 2026 savings enough to offset external headwinds? And any color on where external headwinds will have the main impact? Yannick Fierling: I think, again, it's very difficult to say. I mean, we don't know exactly how currency will be moving on. Very difficult to predict here on the matter. What we say is that, I mean, we're setting again very ambitious targets in terms of cost reduction, which is between SEK 3.5 billion and SEK 4 billion in 2026 here. And I think it will be of prime importance to deliver on this target to face any type of headwinds we will see in terms of price pressure, tariff and others moving forward. But again, as Therese said, I mean, tariff, we were not able to compensate, at least in Q4, the full tariff impact through our pricing strategy. Therese Friberg: And on external factors, of course, as we've talked about, we expect currency and raw material, with the current levels and the, let's say, current hedging, to be essentially flat right now. And then, of course, we have significant headwinds still year-over-year in tariffs. And then we are still having some inflation. So we're still having, of course, some high inflation countries that will also be a negative impact a little bit then, yes, broader across the regions. Ann-Sofi Jönsson: Now we go back to the conference call again. Operator: We will now take our next phone question from the line of Akash Gupta from JPMorgan. Akash Gupta: I have a couple of questions as well. The first one is on external factors. I think you said you're expecting significant, but I was wondering if you can help us quantify a bit. So if you look at, in second half last year, on average, you had SEK 700 million-ish external factor with SEK 1.5 billion in second half primarily coming from tariffs. So is it fair to say that when we look at 2026, probably we should expect similar SEK 1.5 billion external headwind in first half before it might go down a bit in second half, because you have the same base as year before. And therefore, overall external factors based on how it looks today could be somewhere below SEK 2 billion. Would that be a good estimate? Therese Friberg: Yes, of course, we are not that specific, but your overall rationale seems like a reasonable logic. Yannick Fierling: I would just remind everybody that in the fourth quarter, at least, I mean, the external factors were split between tariff and currency and the depreciation of the dollar. Akash Gupta: And my second question is on your cost efficiency. Again, the number you guided for 2026 coming in ahead of what people were expecting. But maybe can you tell us about where is it coming from, which geographies, which product lines? And will there be any cost to get this cost efficiency that might lead to some one-off below the line? And also, when we look at the phasing of this cost efficiency, I mean, can you give an indication? Last year, we had a very big Q4. How should we think about the spread between first half, second half this year? Yannick Fierling: Thanks a lot for the question. I think it's an important question. I mean, as mentioned previously, we have been putting in place -- end of 2023, actually, we started to put in place a cost excellence program in the company, which is a very well-structured program, a cross-functional program heavily focused on engineering for design changes, procurement in terms of sourcing and of course, conversion in our factory. I mean, we took some time to ramp up in 2024. And in 2025, I mean, this program has been delivering to the level we have been describing here on the SEK 4 billion. It is, again, very much process oriented. The program is the same across product categories. So I think there is no significant differences in terms of product categories here. And it is as well, I mean, very well distributed across the different regions. So no major differences from product line to product line or from region to region. I think the important matter is really the systematic approach we have to address cost reduction and efficiency. And I think, of course, we'll be leveraging that moving forward. Operator: We will now take our next question from the line of Timothy Lee from Barclays. Timothy Lee: So the first question, I would like to follow up a little bit on the Latin America, the supply rebate. What's the nature of this given it is onetime, why it is not recurring? And if you think about the margin going forward, what level of margin should we expect for the Latin American market if we are not considering this supplier rebate to continue? Yannick Fierling: I want to repeat what I said previously. First of all, I mean, it's not exceptional. I mean, we have year-end rebates on the supplier side of the equation. And Michelle, our procurement lead, with the entire team, I mean, globally and in Latin America, have been doing an outstanding job in 2025 here, which have been driving to a one-timer significant rebate at year-end. But I want to repeat, I mean, and I think it's very important in terms of verbiages. I mean, this one-timer is not material for the group. It's only relevant for LatAm, and that's why I think it was very fair to mention it. On the other hand, I mean, if you look at, I mean, the 3 first quarters, and the last quarter is always the strongest one in the year from a seasonality perspective, we have been delivering very well in Latin America for the 3 first quarters. And I think we had a great Black Friday, again, based on an outstanding work from the team, especially in Brazil, but as well in Latin America, which have been driving to these results. That's what I would be saying. For sure, I think it was worth mentioning this one-timer. I mean that's very fair here. But I mean, that should not be undermining really good ongoing results for Latin America. Therese Friberg: And while we wanted to mention it, it's not a one-timer, if you look at it in the full year perspective. It is a one-timer in the sense that the full effect is happening in the fourth quarter. So that is what is then boosting a bit additionally, let's say, the results, specifically in the fourth quarter for Latin America. Timothy Lee: It's fair to say that -- obviously, we have the seasonal factor, we have the seasonal stronger quarter in the fourth quarter, but this year is definitely much stronger. So can I assume, if we are not seeing this higher rebates than normal, it is probably the margin in the quarter is somewhat similar to what we had in the past quarters or in the previous year in terms of seasonality? Yannick Fierling: Again, I want to repeat. I mean, there is always a seasonal effect. I mean, in our industry here, fourth quarter being the strongest quarter here. I mean, we cannot go much more into detail here regarding that, but I think the explanation we gave is the one. It is a strong quarter in Latin America. I mean, these are onetime rebates not undermining the performance level in Latin America right now. And again, it is something which is not material for the group, but relevant for Latin America. Therese Friberg: And what we want to say is that Latin America has not reached a completely different profitability level. So I guess your conclusion of that, it is continuing to perform at a high underlying level, boosted by additional seasonality in the fourth quarter and by this additional supplier rebate. Timothy Lee: Okay. Understood. And my second question is on Europe. I think you also mentioned there was some positive effect on earnings due to the phasing of the innovation and marketing expenses between quarters. Can you elaborate a bit more on that? Does that mean there was some marketing expenses, which probably deferred from Q4 to, let's say, Q1? Therese Friberg: No, not related to Q1, I would say. But it's more the phasing as well during the year where, specifically for Europe, we have had some additional marketing earlier in the year compared to last year. So it's only a phasing, I would say, within the year of 2025. Timothy Lee: Understood. And my final question would be on your cash flow statement. I think there was a provision that you released in Q4 of SEK 476 million. Can you explain what's the item for this release? Therese Friberg: No, that we don't recognize a large provision that was released. The main impact that we mentioned is the reduction of inventory of SEK 3 billion in working capital. Yannick Fierling: Yes. And that's what we said. I mean, there was a very significant effort in the fourth quarter to reduce our inventory in the 3 regions, and that's what we have been delivering. Ann-Sofi Jönsson: Okay. Thank you. And we have more questions from the web. So the next question is, the leverage improved in the fourth quarter, but still the net debt remained rather high. So could you -- or do you have concerns about the net debt level? Could you elaborate around that? Yannick Fierling: Yes. Listen, I mean, we have been delivering SEK 3.7 billion in EBIT in 2025 here, 2.8%, which is 0.8% better than last year. We have been getting our leverage to 3.0. But I mean, it's a fact, I mean, our debt level is pretty high. And I would say that like any other companies in the same situation, we are constantly evaluating the capital structure we do have today in order to deliver the strategy, the profit and the growth we have in front of us. Ann-Sofi Jönsson: Okay. Great. Now we turn over to the telephone conference. Operator: We will now take our next question from James Moore from Rothschild & Co Redburn. James Moore: It's James from Rothschild. I've got a few. I'll go one at a time, if I could. Just on cost efficiency, great to see the SEK 3.5 billion, SEK 4 billion again in '26. And I know you're doing an ongoing best cost country procurement sourcing action, and you're trying to be more sustainable in the ability of savings to get every year. I'm just wondering, is this level for '26 indicative of the sustainable potential in the outer years of, say, 2027 to 2030? Or is the run rate this year still elevated? Is there any sort of way you can quantify what your new procurement savings machine looks like in the outer years? Yannick Fierling: I think, first of all, thank you very much for pointing that out. And good day to you. I mean, because, yes, best cost country sourcing is absolutely something we are focusing on in the procurement organization. Big focus in 2025 with the arrival of Michelle. Michelle is located in Asia today. And I think we have been focusing throughout the year to understand what best cost country sourcing was for the different regions, because as you can understand, maybe, I mean, China is not a best cost country sourcing region any longer for North America, at least for all the components we do have today. So we have been really doing, I think, a good job on the procurement side of the equation to expand the supply base. We have to be fast as well in releasing these components here without endangering the quality we do have. And that has been a source of the saving you see right now. But I mean, whatever we have been implementing in 2025, of course, will remain in our products in 2026 moving forward. And we have this clear process in taking additional actions in procurement in order to investigate what are the other components we may be going and source from better suppliers. James Moore: But you can't say whether the rate in '26 is elevated versus the outer years? Yannick Fierling: I think -- and again, in all fairness, I mean, we -- I don't want to -- I'm never somebody who is pleased to start with. So it's difficult to be fully satisfied about that. But in all fairness, I mean, the delivery we had in 2025 was a strong delivery. And that's why I think we were able -- I mean, procurement has been a major contributor in delivering part of the cost savings here. So I'm expecting them not to slow down in 2026. James Moore: Okay. And just on price, I hear everything you say net negative U.S. -- sorry, Europe, Asia more than offsetting positive U.S. I would have hoped for a sort of like a mid-single-digit price hike all in net after promotion in '25. And obviously, it depends on the behavior of rational or not rational agents. But is it fair to assume that you're assuming materially less than 5% behind your comment? And I'm trying to gauge your degree of conservatism. Do you think that it is possible to achieve that in the situation that the Chinese and Korean manufacturers hike their prices? And talking of that, tied to that, have you seen the Chinese or Korean manufacturers hike their prices in the first month of the year? I can't see any channel indications that they have yet. Yannick Fierling: First of all, I mean, I think we should not be forgetting about what has been achieved in the first quarters of 2025 in terms of price increase. And I need to recognize my North American team for the agility they have been showing, because the picture has been changing several times, I mean, throughout the months in 2025. And we have been taking and grabbing any opportunity we had to increase prices, and we have been leading price increase in Q2, Q3, and we have been compensating the vast majority of the tariff impact in Q2, Q3. I mean, this situation was simply not sustainable any longer in Q4, especially in the light of the promotional period we had. And we had to face reality, especially looking at, I mean, potential volume impact that we had to step down on prices. And let me tell you that promotional level in 2025 was at least at the same level as in 2024, which is pretty incredible when you think about the tariff level imported finished goods are facing today, 15% to 20%, 55% to 60%. So I cannot -- I mean, as Therese said, we have not seen -- we have seen basically prices bouncing back in December quicker than last year. But in all fairness, I mean, we have not seen tariff being reflected in the price level in North America. Now the big question is -- I mean, we are benefiting from producing in North America. The big question is, is this situation sustainable with 15% to 20%, 55% to 60% tariff for people and for competitors which are sourcing most of their products today for the North American market. James Moore: Great. I've got a couple of more technical ones, if I could. Just in terms of your external factors, I think, Therese, you mentioned the majority of the SEK 739 million group impact was in North America. There's obviously some dollar impact and there might be some stuff in Asia and Europe. But would it be fair to say roughly SEK 0.5 billion was the impact of pure tariff in the quarter? And would it be possible to say whether your FY '26 tariff assumption is closer to SEK 1 billion or SEK 2 billion, to gauge the tariff? Therese Friberg: Yes, we don't give that specifics. But yes, I would say a relevant portion of the external factors was related to currency in the fourth quarter and the rest was tariffs. So there was a significant impact of tariffs. Yannick Fierling: The majority was tariffs. Therese Friberg: Yes. And this is, of course, the level that we are expecting to continue for the first half. And then to your point, it will then -- for the second half with the current tariff structure still being in place, it will sort of even out from a year-over-year perspective. James Moore: Okay. So we comp out easier in the second half? Could you remind us, was the third quarter a similar magnitude to the fourth? Or was that sort of like half? Therese Friberg: It was similar, I would say. James Moore: Okay. So it's really a first half outstanding impact that we have yet to address? Therese Friberg: When it comes to the tariff impact, yes, the majority in the first half. James Moore: That's great. And just the final one, just going back to that other point. Has there been any indication of Asians rising price in the U.S. market in the last 30 days? Therese Friberg: No, not apart from what we mentioned, that sequentially, the heavy promotions from Black Friday has been, of course, lifted, so to say. So sequentially, we have seen pricing coming up, but we're not really seeing price increases to offset the tariff structure that is in place on top of that. Ann-Sofi Jönsson: Thank you very much. We are now running out of time. I know we have more questions. We will make sure that we will get back to you from the IR team. And I would like to thank everyone who has listened in, but I would also like to hand over to Yannick for a few closing words before we end this session. Yannick Fierling: Again, we have been making progress in 2025, and we have been delivering according to the strategic drivers we defined early on. I mean, we're very much looking to do the same in 2026 and delivering basically in the coming quarters. Thank you very much for attending today. Therese Friberg: Thank you very much.
Operator: Welcome to the Arjo Q4 Presentation for 2025. [Operator Instructions] Now I will hand the conference over to President and CEO, Andreas Elgaard; and CFO, Christofer Carlsson. Please go ahead. Andreas Elgaard: Thank you very much, everybody that have called into this Q4 year-end report 2025. My name is Andreas Elgaard, and with me today, I have Christofer Carlsson. And then I will start the meeting, and then I will hand over to Christofer, when we come into the financial figures, and we will do this together. So before we begin, I mean, I am -- I've started now in Arjo since 3-plus weeks back. So I'm still new at work, and I'm super excited to lead this first call and also to share a little bit with you guys what I'm experiencing as a new person discovering Arjo. And I thought also that maybe it's a good idea that there could be some newcomers to this call who are interested in getting to know Arjo a little bit. So just very, very briefly, we are experts in improving mobility in acute care and long-term care settings. And our products truly make a difference when people are at their most vulnerable. They provide safety, dignity and integrity to patients, and they also provide good working conditions for the caregivers. And of course, they deliver value to the clinics and to the institutions where they are in use. Arjo is founded in the South of Sweden, in Eslöv by Arne Johansson. That's also where the name comes from. It has a long tradition, leading up to where we are today, an SEK 11 billion company with almost 7,000 coworkers and with active sales in 100-plus countries. I think we can take the next slide. And you know when you're new, of course, you discover the company, and I discover Arjo through all the products and our business, but mainly I discover it through the lens of all of our people. And we have a very, I would say, a rich company in terms of diversity. We have many businesses. We are active across many countries, and we have many versions of Arjo out there. And it's really the people that represent these different versions. So a lot of diversity across Arjo. We are not always using that to our benefit to drive maybe best practice or learn from successes or failures, but there is one thing that we have in common across Arjo and was a big reason for why I wanted to join as well, and that's we are all connected and really, I would say, passionate about the purpose, and it is the purpose of doing good, to be there when patients are at their most vulnerable situations and provide products that truly help the care situation. I already said it, but integrity, dignity are super important when you are in this position and also to provide that in a safe way. So it is something that is truly a superpower in Arjo and something we will build on for the future. So let's talk about Q4. So first of all, I would say that we had stable demand throughout the quarter. And then towards the end of the quarter, we saw maybe not the development that we would have wished. We have been challenged by, of course, currency and tariffs, and we have also been challenged a little bit on price pressure in parts of our markets and in the mix where we are selling, where we have slightly higher growth in markets with lower margin versus markets with a little bit higher margin. But overall, healthy organic growth, very strong cash flow in the quarter. So we almost hit our yearly cash conversion targets, but really, really strong in the quarter. And of course, we had hoped for more when it comes to the gross margin and maybe some of our cost control. We can look a little bit into the full year. So when we zoom out and look at the full year, we see a growth figure that is within the range that we have promised. And we can see that we deliver this despite being challenged, I would say, mainly in U.K. where we all know that the market in the U.K. and the political situation, the struggles in the health care system in the U.K. is also something that hits Arjo and has been a red thread throughout the year. That is impacting our performance, I would say. And then the headwinds in terms of tariffs and currency together with price pressure in parts of our range, and then the mix is challenging our profitability and our margin. All in all, our EBITDA is -- we would have -- we expect a little bit more from the quarter. But if you look at the full year, given the adjustments that have been throughout the year, some of the write-offs, this is the level that we landed on. As I mentioned previously in the -- thanks to the strong performance in Q4, we managed to almost come up in line with our target of 80% cash conversion. We are just south of that. And then very important to highlight is that we propose to stick to the same level of dividend that we had last year. And we -- the Board is recommending to the AGM a dividend of SEK 0.95. Just very briefly on North America and Global Sales, the 2 segments that we have. You can see that the quarter in North America was slowed down a little bit. But looking at the full year, it was quite strong growth. And looking then at Global Sales, we had a reverse trend where we had a stronger finish and a full year that was more, I would say, stable. And important to notice is that some of the more emerging markets in what we call Rest of the World have high growth, and that's also areas where we have a slightly different profitability, gross profit level. And that hits the overall gross profit of approximately 1%, and then tariffs, currency, et cetera, by approximately another 1% when you look at us from the outside and compare with last year. And by that, I think it's time to hand over to Christofer. Christofer Carlsson: Thank you, Andreas. Yes, my name is Christofer Carlsson. I'm the CFO of Arjo. As Andreas mentioned, profitability was a challenge in the quarter. Our gross margin came in at 42.1% compared to last year's 44.7%. We continue to have headwinds from currency and U.S. tariffs, representing around 1 percentage point of the drop. In addition, 1 percentage point can be explained by the unfavorable geo and product mix due to higher sales in Global Sales with higher volumes of medical beds. On top of this, the delayed flu season in U.S. pressured our rental volumes, and we also saw impact from continued price pressure in the DVT business in the U.S. in the quarter. Meanwhile, we had a good momentum and margin development in the rental business in Continental Europe, especially in France, Germany and Italy in the quarter. However, the market condition in U.K. continued to be a challenge, and an 11 percentage point drop in U.K. sales consequently had a negative impact on the gross profit, and offsetting the positive effect from Continental Europe. All in all, a disappointing finish to the year from a gross margin perspective, where we did not have a seasonal uptick that we usually see due to a number of headwinds. Next slide, please. Adjusted EBIT in Q4 came in at SEK 249 million versus SEK 375 million. The main driver is the drop in gross profit and an OpEx increase of SEK 23 million. We had a negative effect from revaluation of accounts receivable and accounts payable of SEK 3 million in the quarter, booked under other operating expenses. And this was plus SEK 19 million in the same quarter last year, resulting in a delta of SEK 22 million year-over-year. Total FX impact on adjusted EBIT amounted to SEK 73 million in the quarter. The EBIT margin decreased to 8.9% versus 12.5% last year. On the OpEx side, the increase during the quarter is mainly driven by higher sales of capital sales in U.S., resulting in high GPO fees and sales commission. The organic OpEx increase was 1.9% in the quarter, which means that adjusted for the variable cost, we see a good traction from the cost efficiency initiatives implemented early in this year. Adjusted EBITDA for the quarter was SEK 526 million versus SEK 653 million in Q4 last year. The adjusted EBIT margin decreased with 3.2 percentage points versus last year. Restructuring costs came in at SEK 68 million in the quarter, where SEK 35 million is a write-down of capitalized IT costs related to an ongoing IT harmonization project. This initiative is expected to lead to annual savings of at least SEK 30 million from 2028 and onwards. Another SEK 33 million related to ongoing improvements in our Global Sales structure to improve the cost and situation for the future. Next slide, please. Operating cash flow continued to improve in the quarter amounting to SEK 600 million. This was SEK 121 million higher year-over-year, primarily due to inventory reduction and good receivable collection. The decrease in inventory is significant in the quarter, and it turns also to the full year number into a positive number. Our increased capital sales together with the supply chain inventory reduction program is now starting to show results. Working capital days decreased to 76, down from 82 in Q3, and it's good to see a continued positive trend here. The working capital improvement is also the driver for the improved operating cash flow of SEK 600 million in the quarter. Consequently, cash conversion in the quarter was almost 120% compared to 82% last year. For the full year, we came in at 79%, which is in line with our target of 80%, and an increase versus 2024. For reference, cash flow from investing activities was SEK 172 million compared to SEK 191 million in Q4 '24. The decrease is mainly due to SEK 23 million lower investment in tangible assets. This quarter includes SEK 90 million in investment in the Dutch entity, SlingCare, which was announced in the Q3 report. Please, next slide. The decrease in net debt in this quarter is mainly due to the improved operating cash flow. Our financial net came in at minus SEK 77 million, which include a noncash flow impact of SEK 35 million, negative revaluation of our holdings in Atlas, Infonomy and Veplas. Adjusted for this revaluation of our financial assets, the financial net was minus SEK 42 million and on par with last year. Our cash position remains strong. Net debt to adjusted EBITDA stayed flat versus Q3 this year and came in at 2.2. Our equity ratio stood at 49.8%, up from 49.5% in Q3, mainly due to the improved cash flow. With that, I will hand it back to you, Andreas. Andreas Elgaard: Thanks, Christofer. So let's look ahead. How will we define our future direction. And I would like to say that, I mean, there is always ongoing positive work in preparing for the future. During '25, we launched the Maxi Move 5 that many customers think is really a game changer. We have just recently also launched the new hygiene solution, Symbliss that has received a lot of positive acclaim so far. And we are going to continue to rejuvenate our offer and how we go to market going forward. But maybe just a few words on what it means to work on this. So we have a solid foundation to build on. We have a macro economics, I would say, or trends that are incredibly positive for us, which is people live longer, more people come out of poverty. The need for care is growing faster than the population is growing and the GDP is growing. So from a macro perspective, all things are positive. At the same time, we know also that many political systems and many health care systems are set under pressure because it is difficult to keep up with the growing need of care. So there are changes in how care is being administered and given to patients. All of these things will create a more dynamic market in the future, and it's very important for Arjo to set our point of view on that. Part of our foundation is also that we have a very passionate team dedicated and committed to the purpose of doing good for our patients and caregivers. So that said, there is also a lot of things that Arjo can do that is not about the macro, that is not about the patients, but that is about our own performance and there is significant opportunity across Arjo to share best practice and learn by that and implement going forward and use -- decide on the future in order to be able to take out maybe cost and drive efficiency. So we can look at the next slide. So how do we realize our potential? Part of that is to know where we're going and setting a strategy, setting a direction. And we intend to present this back to the market in the second half of this year. The work has already started, and we will bring together leaders from all parts of Arjo. We are going to workshop with them and decide on where we want to go for the future, how we will get there, what to prioritize, what we want to do, which markets to have focus on, which parts of our product portfolio to put emphasis on. And if needed, acquire additional capability, additional market position, or maybe additional portfolio offering. And those things are all easier when you have clarity in your strategic direction. And I think that for Arjo, the last time we set the strategy was back in end of 2019. So we are due to create that clarity for ourselves and for all our shareholders. The only outlook that we give right now is, of course, the usual one, about 3% to 5%, and we are really looking forward to presenting our future direction and with that also, update the financial targets in the second half of 2026. So that's what you can expect from us during this year. And by that, I think we are at the Q&A. Operator: [Operator Instructions] The next question comes from Sten Gustafsson from ABG Sundal Collier. Sten Gustafsson: A question on the quarter. You talked about a strong start, but then it slowed down. I was just wondering if you could clarify exactly what happened there, and also if that change in the market has continued into now, the beginning of 2026? Andreas Elgaard: Thank you for your question. I would say, no, that's not how to interpret it. I would say that we -- it's more how we see the result developing across the quarter. So we don't see any trend shifts that we bring with us. We more see that we expected more from the quarter. And I would say that you all know that when you close the books, there are some decisions that you need to take. And as you have seen, we have had a couple of write-offs and write-downs during the quarter that, of course, impacts the situation. So I would say that there is no -- nothing to interpret when it comes to bring forward into 2026. Would you like to add something to that, maybe? Christofer Carlsson: No. I mean it's always an uncertainty about the flu season, that is impossible to predict exactly, of course, how that will develop. And that can go in both directions. Sten Gustafsson: All right. And then specifically, the U.K., when do you expect that to improve? Or do you expect it to improve near term? Or is it too difficult to say today? Andreas Elgaard: Yes, I would say that, I mean, there are two things here. I mean one is, of course, what is going on in U.K. within NHS and the U.K. health care system. That's one part of it. And of course, we can try to contribute with as much value as we can and to be a good partner to our customers and NHS in particular. So that's one part. Then it's also about our own performance and what are we doing in this situation. And we have had a lot of actions throughout 2025 to improve our efficiency and productivity. So we have done several things throughout the year that we expect will have effect. If it's enough or not or what will happen in the bigger picture around NHS, that's another topic. And I think most of you guys that follow this sector, you know that U.K. is really troubled. The pressure on the health care system is very high, and there has been some fundamental challenges and still are going forward. At the same time, this is a top priority for all political parties. So we also believe that there is a lot of interest in solving this for the benefit of the people across U.K. Operator: The next question comes from Mattias Vadsten from SEB. Mattias Vadsten: First one is just a follow-up on the U.K. Did you say it was down 11% year-on-year in local currency in Q4? Christofer Carlsson: Yes, that's correct. In the quarter, it's down 11%. Mattias Vadsten: In local currency? Christofer Carlsson: Yes. So organic, delta is 11% down. Mattias Vadsten: Then you talked about the gross margin development. It's quite clear description. And you talked about the mix effect, both from a region perspective and product perspective. So I'm just asking, this mix effect that you saw in Q4, is that likely to sort of sustain here into the coming quarters? Or are you seeing anything to reverse that trend near term, so to speak? Andreas Elgaard: Okay. Maybe if I try to start, and then Christofer can correct my mistakes or add on flavor. No, I think it's -- I don't think that you can draw any major conclusions like that, that is now a sustained level. I think it's, as always, it's a product mix question. It's a market mix question. Then also parts of our business is project driven and tender driven. And depending on how these project or programs land, you get different mixes that will vary naturally between different quarters. So that's -- I mean, that's the natural flow. So we don't have that kind of super stable underlying trend. So that's one thing to bring with you. And then also, I mean, of course, we expect -- we said this earlier that we expected maybe a different pattern from the flu season in U.S. And when you look at statistics and data, if you just look at the high level, you can see that the flu season looks to be more severe when we dig down in the areas where we have strong representation, especially Western U.S., the hospitalization is not as high as last year. And also, in general, the flu seemed to not cause as much hospitalization as previous years. But it's very early and all data is not accessible. But we have seen that trend in our data. So I don't know if you want to add some flavor in terms of this mix or this trend moving forward, Christofer? Christofer Carlsson: No, as we said, medical beds has a strong development in this quarter, but that is also very much a business depending on tenders and bigger shipments, it's not a continuous business in that sense. So it could be a different mix in the next quarter for us. Andreas Elgaard: Yes. When you equip a hospital, you do that once, then it takes a number of years before you get the chance to come with a big order again. Mattias Vadsten: Okay. Then I had a question on the ERP systems that will be replaced by Global System. And you said you will find savings of, I think it was SEK 30 million 2028 onwards. I'm looking to understand what this will cost you. So yes, can you comment on the cost for this in 2026 and '27? And also how you aim to report it if it's sort of nonrecurring item or if it will be a drag on adjusted earnings metrics? Christofer Carlsson: The vast majority of the cost for this implementation is actually capitalized because it's -- we are having a system where we actually own the product. So it's not a cloud solution. Andreas Elgaard: And maybe to add some flavor. This has been ongoing for a couple of years in Arjo already. So we only have a few markets left to do this change. So it's not something that is new to us. It's something that have been ongoing for a couple of years. So we are -- yes, we had a couple of go-lives during '25 already. And yes. Christofer Carlsson: We went live with Australia and New Zealand this year. And that's, of course, kind of the key point where we actually -- with the successful implementation in Australia and New Zealand, we decided to also go ahead for the rest of the countries. Otherwise, with a less positive outcome in Australia, we would probably have put on a brake and reverse this project somehow. So this was kind of a key decision point for taking this costs as well. Mattias Vadsten: Okay. Is it possible to say how much it has costed you already or with this? Andreas Elgaard: No. We have not shared that. But I think -- I mean, the write-down is for the old system. This is important, too because we discontinue it before end of life. So it's not connected to the new. Operator: The next question comes from Kristofer Liljeberg from Carnegie. Kristofer Liljeberg-Svensson: I have three questions. I'll take them one by one. First, what do you say about the flu hospitalization? I agree it started slowly, but if looking at the public statistics, it seems it picked up a lot in the last weeks 3 weeks of the fourth quarter, but you didn't see that in your rental business then, correct? Andreas Elgaard: Like we said before, we have seen that the flu season has been stronger or I mean, more severe than last year, but it is also distributed differently across U.S. So in the states where we are strong, we have not had the same pattern of hospitalizations. And also, we have seen a pattern that fewer patients are being hospitalized or they quickly get out of hospital versus before. So we don't see a one-to-one pattern as before. Kristofer Liljeberg-Svensson: Okay. That makes sense. Then I wanted you to clarify then what still seems like a pretty poor visibility for sales in North America, the message after the third quarter was that you have delayed deliveries that was expected to pick up in Q4. So did you see this happen, i.e., was the disappointing sales for you in Q4, was all of that flu related, i.e., that capital equipment sales were according to plan? Christofer Carlsson: That majority is, of course, the flu season. But we also have seen a less improvement in Canada, which had a very strong comparison numbers. So they actually have a lower growth in the quarter versus U.S. And to some extent, I mean, it didn't pick up at the end. Normally, there are quite a lot of transactional sales, what you say that hospital calls the last week or last 2 weeks when they know that they have x dollar remaining of the budget and they just need to purchase something before the year end. And that volume did not repeat from last year's all-time record actually in Canada. Kristofer Liljeberg-Svensson: Do you know why that was the case? Christofer Carlsson: I think there are general budget constraints in the Canadian market. We do see some of the states being more and more restricted in the budgets. But that's the main reason, I think. Kristofer Liljeberg-Svensson: Okay. And then my final question, you talked about the mix effect that could, of course, vary a lot between quarters. But otherwise, is there anything you could do here short term to turn this negative margin trend? Andreas Elgaard: Yes. I mean from my point of view, being new now into the company, if I answer first, and then Christofer can add on. I would say that Arjo has a lot of potential to drive efficiency. I would say, both in cost and capital out. That's clear. So we are going to work on that to do our own homework, so to say. Then also, I think that we need to look into parts of our business where market conditions have maybe changed a little bit or market dynamics have changed a little bit. We also need to update our commercial models and make sure that we share best practice in a more rapid way so we can be quicker to react. So there are always things that you can do on your own. Sometimes there is a lag in that, of course, because you don't know what is changing before it's happened and then it takes some time to adjust. But there are always things that we can do on our own, and we intend to do that. And in the strategy work, there will be parts of things that we want to do for the future that is long term to build capability, build -- expand our offering or our market position, but we also need to fund that journey. And to large parts, we're going to do that through also, I would say, efficiency initiatives across the group. Kristofer Liljeberg-Svensson: I mean, if you start the strategy -- yes. But if you start the strategy work now, then you're going to present this in the second half of the year. It sounds that 2026 will be yet another lost year when it comes to margins for Arjo, or am I missing something here? Andreas Elgaard: Yes. I mean there are always parts that require direction and maybe long term and that you come together as an organization, and that will take some time. But there is plenty of also quick wins that you can activate around procurement, IT and your own efficiency. So there is not -- I am -- I've worked a lot with change in the past, and I'm a firm believer in that you have to transform yourself, you have to change, but you also have to perform while you do that. And you need to fund the journey of when you need to invest in capability or in products or in M&A. Somehow, you need to fund that journey and you do that by driving efficiency in both capital and cost out of the company. So I think that you cannot say that you need to wait another year, and I think we're going to have -- we will be very, very focused on these also short-term actions. Operator: The next question comes from Ludwig Germunder from Handelsbanken. Ludwig Germunder: Ludwig Germunder from Handelsbanken. I have two, please. The first one is a follow-up on the last one around the strategy work that you will initiate during the spring. I understand that you will do work in the meantime as well. But what should we expect regarding margins for the beginning of 2026? Andreas Elgaard: I mean, we usually don't give any forecasts, and we will continue not to do that. I mean the only outlook we give is what we believe how sales will develop on top line, the 3% to 5% interval. So beyond that, we will not share any outlook until we maybe have a reason to do that. So that's -- and as I said before, we expect to come back and explain our view on the future and also at that point, also potentially revise our financial targets. So we need to work this through before we communicate it. But we are going to be super focused on trying to drive efficiency before we present our future direction. Ludwig Germunder: Okay. Got it. And the second one is also kind of a follow-up on the discussion around the flu season. So I got you that the hospitalization levels are lower in the parts of the U.S. that you are most active. Could you say something about the sequential development or demand you're seeing from the flu season? Is it at the same levels so far in Q1 as you saw in Q4? Or has it moved in any direction from the Q4 levels? Andreas Elgaard: We're not reporting Q1 today. So we stay on Q4. So I think that what we said is what we have seen that the flu this year seem to end up in fewer hospitalizations. That's what we've seen in Q4. Operator: The next question comes from Erik Cassel from Danske Bank. Erik Cassel: First question on North America. If my modeling is decent, it looks like the rental business now is in organic decline over there. Could you potentially comment anything if that only has to do with the ICU rental part or if you're also seeing that for, say, the more long-term contracts as well? Christofer Carlsson: No, it's more on a short-term perspective and the flu season, I would say. Erik Cassel: All right. And then on DVT, that business has been under pressure for several years now, I think, I mean, Cardinal started cutting back in '21. So how much additional pressure can you face there now? And can you talk a bit about the sort of current levels of sales and profits to some extent that you're seeing and sort of we should expect that pressure to continue now throughout '26 as well, if there were any, say, pricing cuts now in Q4 that will sort of feed over into at least H1 of '26. Andreas Elgaard: I mean -- so we will not talk about '26. But what we can say is that, I mean, there's a fierce competition on, I would say, the consumables in DVT part of our business. And I think that -- and that Cardinal and others have -- I would say, they have pushed the prices down. We also believe that we've come -- we are either at the bottom or close to the bottom of how far down you can go. And then you can say also that triggers the need for us to counter by looking at our business model, if it is set up for this level or if we need to do any adjustments. But we don't expect the decline to continue in the same pace that it has in the last couple of years. Is that correct, Christofer? Christofer Carlsson: Yes. So the vast majority of our business is on the new price level. Erik Cassel: Okay. Good. And then in the U.K., are you seeing continued rental pressures for more and more contracts being lost? Or is this still an effect of those initial -- or was it 5 or 7 contracts that you lost earlier in '25 that, in a way, should be out of comps soon? And also in U.K., if I could do a follow-up to the follow-up. How much of the negative 11% organic growth that you saw in U.K. was from the rental part of the business versus the product side? Christofer Carlsson: So when it comes to the rental business in general in the U.K., I mean, we have not lost any new contracts in the quarter. So it's more an effect of the early ones that we communicated in 2025. And then I have to come back to you on the rental margins for the U.K. Andreas Elgaard: And how do we usually communicate them. So I think that if we don't communicate them, we will probably not come back. But if we do that, then we'll come back to you, just to be clear. Erik Cassel: Okay. I'll wait to see them. And then just a final question. There's been a hiring freeze now outside of sales for quite some time, I believe. So I'm just wondering, in terms of those pruning additional costs, et cetera, how much are you actually able to slim the organization from this point? It seems like this sort of pruning has been done for years now. So are you nearing a point where you can't really cut any more fast? Andreas Elgaard: I don't think I would express myself in that way about the organization, but we can see that we have, as any organization, we have room to improve, and we are going to focus on that. And part of that will, of course, be released to improve our profitability, and part of that might be part of also funding the journey of investing and creating a strong future Arjo. But I mean, Christofer can add some flavor, but I have now 3.5 weeks in the company. I've spent some time during my onboarding as well. But the only thing I can share is that I see opportunity across Arjo. It's a really mature business, but we also have some inefficiencies. We don't always use our best practice. We don't always share our failures or successes across the company. And there's a lot of commercial excellence in that. And if we can release that, that has a really positive effect. I have first-hand experience of doing that in other contexts. And then also, we need to take a good look in the mirror and put question marks to ourselves when it comes to our administrative costs because we are high, and we need to be able to do things more efficiently by leveraging our IT systems and by also delivering the administration that is necessary and not something beyond that. So there are clear opportunities for us to address, then it is too early to say when the effect will come and so on. But we will focus on this together as an organization. Operator: The next question comes from Ludvig Lundgren from Nordea. Ludvig Lundgren: Yes, I only have one. So you've highlighted quite a strong order intake in the last few quarters, in particular, in patient handling products in the U.S. So can you say anything about how this has developed here in Q4 and whether you're still way above 1 in book-to-bill? Christofer Carlsson: Yes. The order intake has come in a little bit weaker in the quarter. But from an order book perspective, we are almost at the same level as last year. But also please remind yourself that 80% of our transaction is in and out in the same period. So it's an indicator, but it's not the actual true of the sales in the coming quarters. Operator: [Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Andreas Elgaard: So by that, we close this call, the year-end report for 2025. I thank you for listening. I also thank you for bearing with me as being new. And I am really looking forward to coming back and presenting Q1 to you guys, and in the second half, presenting our future strategy. By that, we say thank you. Christofer Carlsson: Yes. Thank you all.
Operator: Good morning, ladies and gentlemen, and welcome to the Hilltop Holdings Fourth Quarter 2025 Earnings Conference Call and Webcast. We will conduct a question and answer session. If at any time during this call is being recorded on Friday, January 30, 2026. And I would now like to turn the conference over to Mr. Matthew Dunn. Please go ahead. Matthew Dunn: Thank you. Before we get started, please note that certain statements during today's presentation that are not statements of historical fact, including statements concerning such items as our outlook, business strategy, future plans, financial condition, credit risks and trends in credit, allowance for credit losses, liquidity and sources of funding, funding costs, dividends, stock repurchases, subsequent events, and impacts of interest rate changes, as well as such other items referenced in the preface of our presentation, are forward-looking statements. These statements are based on management's current expectations concerning future events that, by their nature, are subject to risks and uncertainties. Our actual results, capital, liquidity, and financial condition may differ materially from these statements due to a variety of factors, including the precautionary statements referenced in the preface of our presentation and those included in our most recent annual and quarterly reports filed with the SEC. Please note that certain information presented is preliminary based upon data available at this time. Except to the extent required by law, we expressly disclaim any obligation to update earlier statements as a result of new information. Additionally, this presentation includes certain non-GAAP measures, including tangible common equity and tangible book value per share. A reconciliation of these measures to the nearest GAAP measure may be found in the appendix to this presentation, which is posted on our website at ir.hilltop.com. I will now turn the presentation over to Jeremy Ford. Jeremy Ford: Thank you, Matt, and good morning. Before we review the results for the fourth quarter, I would like to spend time discussing the full year 2025. From a macro perspective, we saw a continued decline in short-term interest rates as the FOMC cut their target rate three times, totaling 75 basis points. The yield curve realized a further steepening through the year as long-term interest rates, namely the ten-year treasury note, remained range-bound between 4-4.5%. Hilltop Holdings Inc., akin to many of our banking peers, has benefited from the increased slope of the yield curve by realizing an increase in net interest income and net interest margin. Specifically, at PlainsCapital Bank, proactive management of deposit costs has helped to increase NIM by 12 basis points when compared to the prior year. At PrimeLending, the combination of further expense optimization and a tightening in the spread between the going on mortgage rates and the ten-year treasury note helped to shrink operating losses for the year 2025. However, material headwinds of challenging affordability, low new home inventory, and increased ownership expenses continued to weigh on industry volumes and margins. Hilltop Securities, through strong execution in our core competencies, was able to produce a 13.5% pretax margin on net revenue of $501 million. Finally, Hilltop Holdings Inc. returned $229 million to stockholders through the repurchase of shares and common dividends while delivering $166 million of net income, which represents a 46% increase over the prior year. I would like to thank our colleagues throughout Hilltop Holdings Inc. for their hard work and dedication in 2025. Moving to the fourth quarter, Hilltop Holdings Inc. reported net income of approximately $42 million or $0.69 per diluted share. Return on average assets for the period was 1.1%, and return on average equity was 7.6%. Summarizing our lines of businesses, PlainsCapital Bank realized a further expansion in net interest margin while continuing to see strong signs of core loan growth from a robust pipeline. PrimeLending continued to optimize the expense base of the franchise while realizing a healthy seasonally adjusted origination volume of $2.4 billion. And Hilltop Securities saw continued positive results from the wealth management, public finance, and structured finance lines of business. Within the quarter, PlainsCapital Bank generated $43.5 million in pretax income and a 1.05% return on average assets. Net interest margin saw continued expansion to 329 basis points, largely due to the previously mentioned active management of deposit costs. While competition continues to increase within our markets, the bank has successfully increased lender headcount and continues to show a healthy loan pipeline. These metrics signal the great brand reputation at PlainsCapital Bank, where we are known for providing excellent service and value to our banking customers. Total core deposits within our markets showed further increases, allowing the bank to return an additional $225 million of sweep deposits to our broker-dealer. That balance stands now at $100 million, which is down 82% relative to year-end 2024. Results in the quarter included a $7.9 million provision expense. This was largely due to the stress of, excuse me, this is largely driven by two stressed auto note credits that we have discussed in prior quarters. William Furr is going to provide further commentary on credit in his prepared remarks. Overall, the bank continues to show tailwinds from strong loan growth, healthy core funding trends, and a positive interest rate environment that supports our expanded net interest margin. Moving to PrimeLending, where the company reported a pretax loss of $5 million during the fourth quarter. We realized a seasonally healthy start to the winter months from an origination volume perspective as a decline in going on mortgage rates spurred on a modest rebound relative to the very subdued second and third quarters of this year. However, profitability remains challenged as headwinds within the broader mortgage industry continue to weigh on total volumes and margins. As is typical, we expect for the first quarter of the year to be a seasonally slow home buying environment, which should impact PrimeLending's origination volume. During this prolonged mortgage cycle, we have executed on several operational cost reductions at PrimeLending to optimize the business and create a more efficient platform. We will continue to pursue increased levels of efficiency while investing in ways to organically grow production headcount and total origination volumes in order to expand our operating leverage. During the quarter, Hilltop Securities generated pretax income of $26 million on net revenues of $138 million for a pretax margin of 18%. Speaking to the business lines at Hilltop Securities, public finance services rounded out a very strong year by producing a 20% year-over-year increase in net revenues as they capitalized on increased industry issuance volumes. Structured finance net revenues increased by $2 million versus 2024. A decline in trading revenues was offset by a material increase in lock volumes on a year-over-year basis. Through wealth management, net revenues increased by 16% to $53 million when compared to 2024. The continued healthy results in 2025 are due in part to the growth from our advisory fees on higher managed balances and improved transaction revenues. Further, strength in revenues generated by sweep deposits continues to bolster our results. Finally, fixed income services showed a modest increase in net revenues versus the prior year as both sales and trading revenues improved year-over-year. Overall, Hilltop Securities delivered another strong quarter to round a favorable year for the firm. We continue to focus on executing on our strategic initiatives as we aim to be a full solution provider to our clients. Moving to page four, Hilltop Holdings Inc. maintains solid capital levels with a common equity tier one capital ratio of 19.7%. Additionally, our tangible book value per share increased over the prior quarter by $0.60 to $31.83. During the period, we returned $11 million to stockholders through dividends and repurchased $61 million in shares. Thank you. I'll now turn the presentation over to William Furr to discuss our financials in more detail. William Furr: Thank you, Jeremy. I'll start on page five. As Jeremy discussed, for 2025, Hilltop Holdings Inc. reported consolidated income attributable to common stockholders of $41.6 million, equating to $0.69 per diluted share. The fourth quarter results include a $7.8 million provision for credit loss, which reflects the combined impacts of net charge-offs during the period and a modest deterioration in the economic condition outlook. Even with higher provision expense versus the prior year, we are pleased with solid growth in net interest income, which grew 7% versus the prior year, and noninterest income, which grew 11% versus the prior year, both of which contributed to a 26% improvement in Hilltop Holdings Inc.'s diluted EPS. Turning to page six, for the full year of 2025, Hilltop Holdings Inc. reported consolidated income attributable to common stockholders of $165.6 million, equating to $2.64 per diluted share, representing growth of 46% versus the prior year's results, respectively. During the year, total revenues, including both net interest income and noninterest income, increased by 8% to approximately $1.3 billion, while expenses grew by 2%, resulting in positive operating leverage of 6% for the year-end 2025. Moving to page seven, Hilltop Holdings Inc.'s allowance for credit losses decreased during the quarter by $3.6 million to $91.5 million. During the quarter, Hilltop Holdings Inc. recorded net charge-offs of $11.5 million. Included in these net charge-offs were write-downs of $9.5 million related to two large auto note credits that have been referenced on prior calls. During the fourth quarter, the expected cash flows from the two loan portfolios that support these credits declined substantially from prior period estimates. As a result, management decided to mark these assets to the updated fair value, thereby recognizing the charge-offs versus building and carrying an outsized allowance against these loans. Of the net charge-off amount for these auto credits, approximately $5.7 million had been previously reserved. In addition, the allowance for credit losses increased modestly for portfolio migration and some deterioration in the macroeconomic outlook. At year-end, the allowance for credit losses of $91.5 million built an ACL to total loans, HFI ratio, of 1.1%. As we've seen over time, ACL can be volatile as it's impacted by economic assumptions, as well as changes in the mix and makeup of the credit portfolio. We continue to believe that future changes in the allowance for credit losses will be driven by net loan growth, portfolio credit migration trends, and changes in the macroeconomic outlook over time. Turning to page eight, net interest income in the fourth quarter equated to $112.5 million, which included $1 million of purchase accounting accretion, remaining relatively stable with the prior quarter and increasing by $7 million versus the prior year. Net interest margin increased versus 2024 by 30 basis points to 302 basis points. Improvement in NIM and net interest income continues to be driven by the solid work our bank team is doing on managing deposit costs and growing lower-cost deposits within the bank. Through this portion of the cycle, we've maintained a 68% interest-bearing deposit beta, which has substantially improved versus our previous ALM model results of 50% to 55%. While the team continues to focus on creating value for our clients while managing our overall net interest income, we do expect that the interest-bearing deposit beta will fall towards 60% to 65% if the Federal Reserve reduces rates an additional two to three times during this portion of the rate cycle. Moving to page nine, fourth quarter average total deposits were approximately $10.7 billion, declining versus 2024 by $233 million. The decline in average deposits was driven by management's decision to return on average $397 million of HTS sweep deposits back to Hilltop Securities to be deployed into their FDIC-insured sweep deposit program. On an ending balance basis, deposits increased by approximately $200 million from 2025, net of the return of sweep deposits of $225 million. The growth in customer deposits was driven by expanded commercial relationships, coupled with positive seasonal deposit trends from our public sector clients at the bank. As a result of our ongoing pricing efforts, average interest-bearing deposit cost declined to 269 basis points, a decrease of 21 basis points versus the third quarter 2025 levels, which supports a decline in total deposit cost of 2%, which were down 44 basis points from the prior year period. Currently, we expect that interest-bearing deposit costs will move somewhat lower over the coming quarters and then stabilize until we see any additional movement by the Federal Reserve on short-term rates. Moving to page 10, total noninterest income for 2025 equated to $217 million. Fourth quarter mortgage-related income and fees increased by $2.5 million versus the fourth quarter 2024, driven by improvement in both lock and originated volumes versus the same period in the prior year. While signs of improvement in our mortgage business are emerging, some of the significant macro challenges persist, whereby the combination of higher interest rates, home price inflation, insurance, and elevated tax costs continue to pressure volumes and margins. Versus the same period at $1.9 billion, refinance volumes increased by $168 million or 49% versus the prior year period. Prior year, purchase mortgage volumes were relatively stable. During 2025, gain on sale margins improved by 19 basis points. Throughout 2025, our customers' desire to buy down their mortgage rate has also diminished. During the fourth quarter, public finance, wealth management, and structured finance business lines within Hilltop Securities all generated higher fee income versus the prior year period. Public finance benefited from higher market debt offerings across our customer base, and wealth benefited from the performance in the equity markets coupled with continued efforts to grow our producer and client base. Structured finance results reflect higher lock volumes from first-time homebuyers across the state housing agencies we support. Other noninterest income grew $4.6 million versus the prior year period, largely driven by valuation adjustments and return on certain investments within our merchant banking investment portfolio. As we've noted in the past, it is important to recognize that both the fixed income services and structured finance businesses at Hilltop Securities can be volatile from period to period as they're impacted by interest rates, overall market liquidity, and production trends. Turning to page 11, noninterest expenses increased from the same period in the prior year by $6 million to $269 million. Driving the increase in noninterest expense were higher variable compensation expenses, principally within the mortgage and securities businesses. In addition, compensation expenses were elevated during 2025 by $2.4 million of severance-related costs, as well as an increase in overall healthcare costs. Looking forward, we expect expenses other than variable compensation to remain relatively stable between $180 and $190 million per quarter as our ongoing focused efforts related to streamlining our operations and improving productivity continue to support lower headcount and improved throughput across our franchise, helping to offset the ongoing inflationary pressures that persist in the market. Moving to page 12, fourth quarter average HFI loans equated to $8.2 billion and grew by 1.8% versus the prior quarter. On a period-ending basis, HFI loans increased versus 2024 by $361 million, driven by growth in commercial real estate lending. While the economy in Texas remains resilient, we do expect the competition for funded loans will remain very intense. As we look forward to 2026, we are expecting that full-year average bank loan growth of 4% to 6%, excluding the impact of loans retained from PrimeLending and mortgage warehouse lending. Moving to page 13, as is shown in the chart on the bottom left of the page, net charge-offs for the fourth quarter related to $11.5 million. As noted earlier, the most significant charge-offs in the period related to the two auto note finance credits that we've discussed on prior calls, which accounted for $9.5 million of net charge-offs during the quarter. We previously reserved $5.7 million for these credits, and as a result, the full $9.5 million did not impact provision expense in the period. For the full year of 2025, net charge-offs equated to $16.9 million or 21 basis points of full-year average HFI loans. We're disappointed by the charge-offs related to the auto credits. We believe the credit quality remains stable across the portfolio and do not currently see any large systemic areas of concern. As is shown on the graph, the bottom right of the page, the allowance for credit loss coverage at the bank ended the fourth quarter at 1.15%, including mortgage warehouse lending. Moving to page 14, as we moved into 2026, there continues to be a lot of uncertainty in the market regarding interest rates, inflation, and the overall health of the economy. That said, we provided our current outlook metrics for the coming year. As we've noted in the past, we're pleased with the work that our team has delivered to position our company for long-term success. Our outlook for 2026 reflects our current assessment of the economy and the markets where we participate. Further, as the market changes and we adjust our business to respond, we'll provide updates to our outlook on our future quarterly calls. Operator, that concludes our prepared comments. We'll turn the call back to you for the Q&A section of the call. Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. You will hear a prompt that your hand has been raised. And should you wish to cancel your request, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. And your first question comes from the line of Matt Olney from Stephens. Please go ahead. Matt Olney: Hey, thanks. Good morning, guys. Jeremy Ford: Good morning. Matt Olney: I'll start on the broker-dealer. It looks like those broker-dealer fees were good in the quarter, and guidance calls for those to be relatively stable in 2026. Hoping you could speak to a few of the business lines and expectations for 2026. And then, I guess, kind of part two of that, that pretax margin, I think it's been 13.5% over the last two years. Is that a good baseline to assume for 2026? Thanks. Jeremy Ford: So, thanks for the question. You know, I think as we look into 2026, we feel very good about the franchise that is Hilltop Securities and the four primary business lines there. We go through them. Public finance had really saw record originations, both in the industry as well as here. And we expect that to remain reasonably strong going into the year 2026, notwithstanding kind of market changes. But our current view is that public finance, that business is set up to do well. And the investments we've made there continue to bear fruit. We continue to work diligently on fixed income services. We've noted over the last couple of quarters, and maybe years, that's been a challenging business. It seems to be moderating and producing solid results. Again, relative to the investments we've made and expectations. So fixed income services, we're optimistic about. Wealth management, as we noted, has benefited from both the overall improved equity market conditions and the continuation of that this year. But we expect that business, given, again, investments we've made in people, our ability to attract and retain customers, as well as some of the technology investments we've made there, to continue to improve over time, but it is market dependent based on how the overall markets perform. And in structured finances, as we've always said, is directly correlated to first-time homebuyers across the housing agencies we support. We believe there's going to continue to be a robust market for that going forward. But as we've noted in the past, we have seen certain states that have provided support, and, you know, that's certainly been helpful for overall origination volume, and we'll see if they continue to provide that support in the future. And I would just add, I'm really pleased with Hilltop Securities, the year they had this year and last, and the great management team, great businesses. And our public finance business, we're celebrating our eightieth anniversary this year. For it. So that just, I think it's a good indication of what a dominant public finance business we've had for a long time. Matt Olney: And your question on pretax margin, it has been consistently 13.5% for the last couple of years. We've historically guided that's going to be low double digits to low teens, so 10 to 13%, 14%. So we feel like this is an appropriate range. What we've seen and certainly look forward to having a solid year in '26. Matt Olney: Okay. Appreciate the color there. And then I guess the guidance, I believe, also assumes three Fed cuts during '26. I assume that impacts both NII and the broker-dealer fees. Just big picture, any color on the sensitivity of that if we were to get just, you know, on the low end of that one cut or even two cuts? Help us appreciate kind of what that would look like for NII and then the broker fee income. Jeremy Ford: Yeah. I think broker fee income is going to be a little more difficult because there are clearly puts and takes there as it relates to, you know, certain things would improve if rates move lower, certain things will, you know, sweep income, for example, could be pressured. But that would be, you know, I'd say single-digit millions of dollars from an NII perspective, you know, we've noted there was an objective of ours to reduce overall asset sensitivity. We continued to do that. As you can see in the deck, we've got kind of modeled asset sensitivity on an instantaneous parallel basis of just over 4%. And so every 25 basis points, in that environment on an annual basis, is about four and a $5 million of NII. Matt Olney: Okay. That's great. I'll step back. Thank you. Jeremy Ford: Thank you. Operator: And your next question comes from the line of Michael Rose from Raymond James. Please go ahead. Michael Rose: Hey, good morning, guys. Thanks for taking my questions. Just wanted to discuss capital. Obviously, nice to see the dividend increase. But I think the buyback authorization was down from last year and maybe a little bit less than at least what I was looking for. Can you just kind of discuss capital priorities? And clearly, we've seen a lot of M&A in and around your markets. I know you guys are kind of always in the hunt for deals. Just wanted to see if there's kind of any update from your perspective. I know you're a little bit hindered by the currency at this point. But has the opportunity set improved from here? Jeremy Ford: Yeah. Thanks, Michael. No. I think, you know, we're really pleased with the capital we deployed and the way we're able to do it in 2025. I think it's a strong message that we've increased our dividend by 11%. And so that should be well received. And, you know, our share repurchase authorization of $125 million, I think, is about pretty standard for what we authorize. It's the beginning of the year. And then it'll just be something that we monitor throughout the year as far as the deployment of that. So that's kind of on the capital priorities. On the M&A, I mean, clearly, it's been an extremely active year in Texas, and a lot of deals being announced. You know, I guess the forefront, yes, we are and continue to evaluate acquisition opportunities. At the same time, you know, we're also trying to make sure that we continue to focus on our own organic growth and, you know, try to take advantage of some of the dislocation that this may cause. Michael Rose: Perfect. Maybe just to ask the flip side of the question. On the M&A conversation. I mean, there's not a lot of properties left in the state of size. You guys are clearly one of them. I know there's decent insider ownership here, but, you know, we just love to know, kind of discuss the potential possibility to maybe partner with a larger institution. You know, have you had any, you know, kind of informal or formal, you're probably not going to answer this, but any reach out from any larger banks at this point? Jeremy Ford: No. For what we can disclose or discuss, you know, obviously, we're going to remain open to that and do what's in the best interest of the shareholders. You know, I think that our business model is different than, you know, a lot of the other more pure play banks, which is, you know, limited in the universe of people or bigger banks that would be attracted to it. Michael Rose: Okay. Helpful. Maybe one just final one for me. Just the NII guide. I think it implies some further core margin compression. Well, if you can just maybe, at least for the first quarter, just kind of talk about the expectation. I understand Matt's question as well, but it would seem like there'd be a little bit more core margin pressure as we move into the first couple of quarters of the year. Jeremy Ford: Well, I think what we've seen is pretty solid action and activity on our deposit cost side. So we feel like that's sustainable at this point. Again, we don't obviously don't control what the Fed does, so we'll play along as they make their updates and changes. We are and have seen, as noted on an ending balance basis, seen solid loan growth across the bank. So all those things we think are constructive. View that as reasonably constructive for the first quarter from our perspective. Michael Rose: Helpful. Appreciate it. Thanks, guys. Jeremy Ford: Thank you. Operator: And your next question comes from the line of Wood Lay from KBW. Please go ahead. Wood Lay: Hey, good morning, guys. Jeremy Ford: Morning. Wood Lay: Maybe turning on loan growth. It's a nice quarter on that front. Could you just talk about the loan pipeline entering 2026? Maybe also talk about just the loan pricing competition that you're seeing in your markets. Jeremy Ford: Sure. Yeah. Our loan pipeline going into '26 is about $2.6 billion, which is on the high side for us. It built up higher, and then we had a lot of pull-through. But we're feeling really good about the organic loan growth that we're experiencing in our markets and just the expanding client reach that we've had. So I feel really good about the loan portfolio building. You know, on the pricing side, clearly, with rates coming down, we're, you know, our, I think, going on yield came down about 35 basis points in the quarter. So we are seeing that, you know, just with the rate environment. Wood Lay: Yep. That makes sense. And then maybe just last for me, shifting over to mortgage. I appreciate the origination volume expectation provided in the outlook. But just any thoughts on gain on sale margins over the coming year? Jeremy Ford: Yeah. I, where we, as we look forward, you know, I think we expect total revenue between both gain on sale margin and mortgage origination fees really to be stable. If you look in our chart, you kind of add those two bars together, you'll see they've been very stable. The mix changes as rates change and customers' preferences to buy down their rate or otherwise changes. But overall revenue around that 350 to 360 basis point range is kind of our expectation into the future. That's obviously down from what you would see in a more robust market. But again, our view has been and continues to be going to see a steady improvement in the overall mortgage market, not a hockey stick change. As a result, we'd expect kind of aggregate revenues, gross revenues to be stable. Wood Lay: Alright. Thank you. Jeremy Ford: Thank you. Operator: That ends our question and answer session. Operator: Ladies and gentlemen, this concludes today's call. Thank you for participating. You may all disconnect.
Ann-Sofi Jönsson: Welcome to the presentation of our fourth quarter results. I'm Ann-Sofi Jönsson, Head of Investor Relations and Sustainability Reporting here at the Electrolux Group. With me today, I have our CEO, Yannick Fierling; and our CFO, Therese Friberg. We will go through the presentation. And after that, we will open up for a Q&A session, both for those on the conference call as well as for you on the webcast. [Operator Instructions]. With that, I hand over to you, Yannick. Yannick Fierling: Thank you very much, Ann-Sofi, and good day to all of you. Very glad to be with you for the Q4 report. I will start, if you allow me, with some highlights about 2025. We are happy to report that the organic sales has been at the level of SEK 131 billion, which represents an organic sales growth of 3.9%, very close to the 4% we have been communicating about in the capital market update, I mean, midterm. The improvement in the operating income was at the level of SEK 3.7 billion, which represents 2.8% on net sales, which is again an improvement of 0.8 points versus last year. This SEK 3.7 billion were supported by a high cost reduction level of about SEK 4 billion, driven mainly by procurement and value engineering. We had one of the strongest quarter ever in Electrolux in the fourth quarter in terms of cash flow, delivering SEK 5.2 billion, bringing the entire year at the level of SEK 2 billion, which is taking our financial position in terms of leverage at the level of 3.0. With that, I would like to go into the fourth quarter. I'm sorry, the slide is not changing. Technical issue, which was working, of course, nicely, this morning. It's always like that. Okay, very good. Now it's working. Apologies for this technical issue. Very good. Let me deep dive into the fourth quarter here. First, we're glad to report out that, I mean, we have been gaining market share once again in Europe, Asia Pacific, Middle East and Africa and Brazil. We have been delivering a flat market share in North America, very high level of price pressure in the 3 regions. The operating income has been positively impacted by cost reduction at the level of SEK 1.2 billion. But we have been delivering on efficiency in engineering, in procurement and on the conversion side of the equation. On the headwind side of the equation, unfortunately, we had to face a high level of cost due to U.S. tariffs and the currency with dollar depreciation. Let's move now to Europe, Asia Pacific and Middle East and Africa. First, as I said, I mean, we are happy to say that once again, we have been growing market share with Electrolux and AEG. We have been gaining more market share with Electrolux and AEG than we have been losing by ramping down with Zanussi. Very high level of pressure in this region as well. I mean we have been going into Black Friday. We have more and more pressure from the Asian competitors, but we have been managing to grow organically by 3.6% in the quarter, which is pretty remarkable, especially when you think that the market has been going down by 1%. We had a positive mix effect, helped by significant volume increase here. And the region has been benefiting by a high level of cost efficiency as well. We have been introducing major innovations in Europe here, and we thought it was wise to fuel this innovation with a higher level of marketing spending. The negative news is certainly on the volume side of the equation. Can we change to the next slide, please? I mean, the negative news is, of course, about the market level. The market has been losing, once again, 1%. We have been down 1% in Western Europe, and we have been up 2% in Eastern Europe. With Western Europe representing more than 80% of the volume overall, the market has been once again down. We are now at the level of 2016. We're 10% below the fourth quarter of 2019. It is a 10 years low in terms of volume. And the market remains subdued. Of course, we have positive signals from interest rate and the construction side of the equation, but it will take time to have these positive signals materializing in additional volume for home appliances. Moving to North America. Now I mean, the quarter has been very challenging. Of course, we knew Black Friday was highly promotional. But certainly, I mean, we did not expect the level of competitive pressure we have seen in the market. And I think entering into the promotional season here, we had no choice but to reduce the price increases we had implemented throughout the year 2025. And that's explaining why we are delivering a negative EBIT in the fourth quarter. So a very high level of price pressure in North America, which has been forcing us to step down for the price increase we had implemented throughout the year. The good news is that after the promotional pressure here, prices have been bouncing back to last year level. But still significant negative external factors are driving our results down. And these factors are simply the U.S. tariff as well as the depreciation of the U.S. dollar. Tariffs are what they are, 15% to 20% for imported goods out of Southeast Asia, 55% to 60% out of China. So if the industry is reacting rationally here, and we will see price increase in the coming weeks, in the coming months, we should be benefiting from that being a North American producer. The market has been pretty resilient when you look at this picture here. The market has been going up in the fourth quarter by 1%, mainly driven by laundry. But still consumer sentiment is pretty low and price increase could have an impact moving forward on the demand. Moving now to Latin America, and I'm glad to say that, I mean, we had another strong quarter in Latin America, gaining value market share in Brazil. The entire region in terms of volume has been growing. We saw Brazil slightly slowing down in terms of increase, but still a good quarter in the region. We had a very strong Black Friday, which is a promotional pressure, but the team has been doing pretty well. And we were helped finally at the end of the quarter by a heat wave, which has been present in the region. Our position remains very strong in the region. I just want to underline one point, which is explaining part of the 11.5% in terms of EBIT. We were helped and supported by a onetime high level of supplier rebates at the end of the quarter in this region. This rebate has not been material for the group, but certainly has been relevant for LatAm. Let me show you a short video on how we have been communicating during Black Friday in the region. [Presentation] Yannick Fierling: So very strong results in LatAm during Black Friday. We're also glad to report that, I mean, we have been reaching SEK 4 billion in terms of cost reduction. And just as a reminder, SEK 4 billion was on the upper level of the fork we have been communicating about in the last months. We have been reaching this SEK 4 billion through value engineering, better sourcing and higher efficiency in our factories. So we have a very strong process in place internally to deliver these type of results. With that, I have the pleasure to hand it out to Therese, hoping that the pointer will be working, Therese, in your fingers. Therese Friberg: Thank you, Yannick. And then looking at the sales and the EBIT bridge. We had a 2% growth in the quarter, which was driven by volume growth and also positive mix in Europe, Middle East and Asia Pacific. And we also had a positive volume growth in Latin America. Unfortunately, if we look at then organic contribution to earnings, it was slightly negative. And this is a result of that the positive volume was then offset by negative pricing pressure, especially in Europe, Middle East -- in Europe, Asia Pacific, Middle East and Africa. And as Yannick mentioned, we also had to back off from the previously introduced price increases in North America in the quarter. This volume growth and positive mix was supported by increased investments in innovation and marketing. And we also had a quite strong quarter in the fourth quarter in terms of cost efficiency. And we can also mention here that group common cost was below the last year level, and this is a result of cost containment during the year, but also due to part of a timing effect where the cost in group common cost last year was at a high level in the quarter. When looking at external factors, we had another quarter with significant headwinds. Of course, the introduced tariffs in U.S. continues to be at a high level and a high impact in the fourth quarter. But also, we had a negative currency impact, both from a devaluation -- both from a strengthening of the Swedish krona, which is then contributing to a negative translation effect for the group, but also for North America, where the weakening of the U.S. dollar versus many or several of the important production currencies like the Mexican peso and the Thai baht and the Chinese renminbi is then giving a negative result on the group. And the negative effect in acquisitions and divestments is related to the divestment we did last year of the water heater business in South Africa in the fourth quarter. And then taking a look at the full year, we had a sales growth of 3.9%, where we had volume growth in all our business areas, and we also had a positive mix for the group. This also contributed to a positive organic contribution to earnings despite that during the year, we did see a price pressure, mainly in the European market that also was negative for the full year. We were boosting and supporting the volume growth and our strong product portfolio by increases in investments and marketing in the year. And as Yannick mentioned, we managed to hit the SEK 4 billion in cost efficiency. We had for the full year, heavy headwinds in external factors. Of course, the tariffs we have talked about a lot. And on top of the negative currency that we saw in the fourth quarter, also for the full year, we have negative currency mainly in the Latin American markets in Argentina and Brazil and also in the Australian dollar. And then looking at cash flow. As Yannick mentioned, we had a strong end to the year. So we had SEK 5.2 billion operating cash flow in the quarter, which took the full year then to SEK 2 billion, which was almost in line with the last year cash flow. The strong operating cash flow in the quarter was driven by positive working capital and mainly by a large reduction in inventory. As you know, our seasonality is like this that we always have a positive contribution from reduced inventory in the fourth quarter. But also as we have talked about during the year, we came from a position where we, specifically in certain categories and in certain business areas, were at a high level going into the fourth quarter. And specifically then mentioning air conditioners in Brazil, where we, at the end of the year, had the heat wave in Brazil, which also helped us to reduce inventory further. We're also keeping high containment of CapEx, and this has also been helping and CapEx is below the last year level. And then looking at the balance sheet and liquidity, we have a solid liquidity and a well-balanced maturity profile. In the fourth quarter, we were amortizing a long-term borrowing of around SEK 2 billion, and we also draw down on the previously announced loan with EIB of USD 230 million. If we look into 2026, we have a maturity upcoming in October of SEK 5.5 billion. And as at the end of December, we have a liquidity, including revolving credit facilities of SEK 32.7 billion. We have no financial covenants, and our target is to maintain a solid investment-grade rating and our leverage improved during the quarter and the year. So we ended the net debt to EBITDA by the end of the year at 3x. And with that, I hand back over to Yannick. Yannick Fierling: Thank you very much, Therese. See, it worked fine in your hands. So let's hope it will be like that as well for me. So moving now to sustainability. And as you all know, I mean, sustainability is in our DNA, and we are very proud to be one of the sustainability leaders in the industry. We do have very ambitious targets moving forward. We are planning to reduce, between 2021 and 2030, Scope 1 and 2 by 85%, Scope 3 by 42%. We're planning to have 35% of recycled material in our product. And in terms of incident rate, we have a very ambitious target to be at 0.3, which is best-in-class in the industry here. We made tremendous progress in 2025. And we're proud to say today that, I mean, we have been reaching, out of the 85% already in 2025, year-to-date, 45%, 33% for Scope 3, and we have 23% today of recycled material in our products. In terms of incident rate, we have been reaching the target of 0.33. Let me just come back. I mean, it's a little bit more than 1 year that I'm in this position today, and we have been defining very clearly these 5 strategic pillars when I started. First, it was about improving North America. And yes, we had a difficult quarter in Q4 in North America. However, let's take into consideration that we have been growing organically in this market by more than 6% in 2025. We have been gaining shop floor spaces. We have been entering into channels like the contract channels in a very significant manner. We have been ramping up Springfield in Q1 to cruising altitude today. Yes, this market is extremely difficult because of tariff, but producing in North America the vast majority of our products, we are well placed moving forward. In terms of profitable growth, we have been declaring the target of growing by about 4% mid- to long term during the capital market update. We have been growing in 2025 by 3.9% after a strong growth as well in 2024. So we are restarting to grow in Electrolux after having lost quite a lot of scale in the past years. We have been strengthening our market position. We have been launching a lot of great innovations in 2025. I would just mention some of them. I mean, we have been presenting the pizza features. I mean, we have been launching this feature in North America very successfully, in Europe. We had new kitchen lines in Europe as well under AEG and Electrolux. We have been launching our new dishwasher in 2025 as well. Lots of innovation here, innovations we have been fueling once again with marketing spending. Cost reduction, we're proud to say that, I mean, we have been reaching the SEK 4 billion. It was a challenging target we put in front of ourselves here. We communicated a fork between SEK 3.5 billion and SEK 4 billion in the last months. We have been reaching the upper spectrum here. But more importantly, we have a very solid [indiscernible] in place in the company to keep on delivering cost saving moving forward. Last but not least, it is about culture, it is about leadership. And I always said, my objective is to combine 120 years of history of Electrolux with all the changes we see in the market right now in order to drive more speed and agility. And that's the perfect bridge to the next slide. We have 4 very clearly defined strategical drivers, which are, first, our bread and butter customer preferences. The second one is about life value creation, sitting next to our customers along the consumer journey from the purchase to the disposal of the appliances. It is about cost leadership and certainly about cash. But all of that will only be possible if we have the key enablers on the right-hand side. And one of them is about culture. And that's why we're happy to announce today a second wave of organizational changes. And the aim of these organizational changes is to get us closer to the end consumers, in order to be able to listen to them and innovate more and more and bring progress in their homes. This new wave of organizational changes will clarify a role, reducing duplication of responsibilities moving forward. We will be faster, we will be more agile, having end-to-end clear accountability in the organization. I'm moving now to the market and business outlook. During the fourth quarter, market demand in Europe decreased with geopolitical and macroeconomic uncertainty weighing on consumer sentiment. Consumers continued postponing discretionary purchases, and demand for building kitchen products remained subdued. In a longer perspective, it is important to remember that the European market is on a 10-year low. Again, we have been losing 1% in the fourth quarter 2025. Looking at 2026, we expect market demand to be neutral. There are signs of recovery as a consequence of a low inflation and interest rates. However, market demand is expected to remain subdued due to continued geopolitical uncertainty. Now moving to North America. In North America, market demand remains resilient in the fourth quarter with a plus 1%. The industry market price adjustments did not reflect the implemented U.S. tariff structure, and competitive pressure and promotional activity remained high, and we decreased prices in the quarter. In 2026, we expect market demand to be neutral to neutral negative. Geoeconomic uncertainty is foreseen to remain in North America, and under the current tariff structure, general market pricing should adjust to reflect associated tariff costs. This may adversely impact consumer demand and market growth. Consumer demand is estimated to have increased in Latin America in the fourth quarter. Competitive pressure increased in the region, most notably in Argentina, where the strong growth was driven mainly by imported goods. Consumer demand grew in Brazil, although at a slower pace than in the fourth quarter 2024, mainly due to inflationary pressure and high interest rates affecting consumer spending. Brazil will have elections in 2026, which might elevate uncertainties, and we expect market demand to be neutral with a stabilizing consumer demand following growth in 2024 and in 2025. Let me turn to the business outlook 2026. Volume, price and mix is expected to be positive in 2026, driven by volume growth and growth in the focus categories. This is expected to be partly offset by a negative price development. We anticipate that the high degree of demand will continue to be driven by replacement purchases. We expect investments in innovation and marketing to increase in 2026, again, to fuel our new products. New product launches provide us with a great platform to continue driving growth in our focus categories. Our focus on cost savings and improved efficiency throughout the group is critical for our competitiveness, and we anticipate, again, SEK 3.5 billion to SEK 4 billion earning contributions from cost efficiency in 2026. External factors are expected to be significantly negative for the year, driven mainly by increased tariff costs. The impact from currency and raw material is expected to be relatively neutral. The full year capital expenditure is expected to increase to approximately SEK 4 billion. With that, I close, and I hand that to you, Ann-Sofi. Ann-Sofi Jönsson: Thank you. So we will open up for Q&A, and we will start by opening up for questions on the telephone conference. Operator: [Operator Instructions] We will now take our first question from the line of Fredrik Ivarsson from ABG Sundal Collier. Fredrik Ivarsson: First, on North America, if you could help us out a little bit with the bridge in Q4 as the losses increased by almost SEK 200 million in the quarter. I presume tariffs and FX played a significant role, as you alluded to. But if you could help us out with that, that would be helpful. And also, if you have any view on the inventory situation in the U.S. market today with some focus on the nondomestic players. Yannick Fierling: I can start with that, Fredrik. Thanks for your question. I think the main impact, as we said previously here is the fact that we have been reducing our prices. In all fairness, as we said, we were able to compensate for the vast majority of the tariff impact in Q2 and Q3. That was due to the competitive pressure we have been observing in Q4, unfortunately, not possible. And we had during the quarter, we had to take the difficult decision to reduce our prices. That's the first aspect. The second one, as you said, is certainly tariff, tariff and the devaluation of the U.S. dollar, which has been weighing pretty significantly in the negative external factors we had to face in the fourth quarter. So that's it. I mean, as I said previously, I mean, prices have been bouncing back pretty quickly post Black Friday in North America to last year level. Our last year level is not enough to compensate for tariff. Now I mean, it's very important to just repeat and remind everybody about the basics. Imported duty goods out of Southeast Asia are taxed today between 15% and 20%. Out of China, it's between 55% and 60%. We have competitors which are massively importing out of these regions here. So if the industry is reacting rationally, what we should be seeing, what we should be expecting in the coming quarters is certainly a price increase. Now to your last question about inventory. I mean, we have been mentioning it very clearly as well in the last report. I mean, we expect the last goods to be arrived without the full tariff impact to have arrived in North America beginning of October. I think it is wise to see or think that most of these goods have been consumed during the promotional season on Black Friday. So I think most probably what will be remaining today in the North American market are goods which are fully impacted by the tariff level I mentioned previously. Therese Friberg: And maybe we can just add that the vast majority of the headwinds we had for the group in external factors is related to North America. So let's say, that's the magnitude of the headwinds we saw that we were then again not able to offset with price increases. But the underlying performance then from the business was positive. Fredrik Ivarsson: Yes. That's very clear. I think I lost you a little bit in the end, but that's a super clear answer. And then second one on LatAm, quick, if you could just talk about that onetime high level of supplier rebates in the quarter. How much did that sort of add to the margin, which was obviously very high? Yannick Fierling: First of all, we are very proud about the earnings we do have in LatAm. I think, again, I mean, LatAm is delivering very strong results in 2025. And believe me, it is thanks to our strategy, and it's not a short-term strategy, a long-term strategy we have been putting in place in the region here in terms of product leadership, I mean, go-to-market. So that's the first point, and we should be underlining that. Certainly, we are stressing the fact that, I mean, we had a one-time supplier rebate at the end of the quarter. I mean, this supplier rebate is not material for the group. It is relevant for the region, and that's why we have been mentioning it, but I want to underline that it's not material for the group. Fredrik Ivarsson: Okay. And then just one last housekeeping before I jump back into the queue. If you have any guidance on the group costs for '26 since they were fairly low last year. I guess you mentioned a timing impact there, Therese. But if you could help us out with some expectations for '26, that would be helpful. Therese Friberg: Yes, I would say for the full year, I could say that it is a little bit on the low side. Of course, we will try to really keep a very high cost containment in the group common cost. But also for the full year, I would say it is a little bit on the low side, as an indication. Fredrik Ivarsson: You mean 2025 was on the low side? Therese Friberg: Yes, exactly, yes. Fredrik Ivarsson: High in '26. Okay, good. Operator: We will now take our next question from the line of Johan Eliason from SB1 Markets. Johan Eliason: Also sort of relating to the pricing component. You also mentioned pricing negative in Europe and rest of Asia. I guess, it's mainly Europe. Is that sort of -- you talked about the trade down, but I think it sounded like you have a lot of new products coming in, in AEG and the Electrolux brand. Is it so that you also sort of discounted out some of the older products still remaining, and then the pricing should somehow then be a little bit of a temporary issue? Or is that wrong of me to think like that? Yannick Fierling: Johan, thanks for the question. It's an important question here. First of all, I mean, mix and volume have been positive in Europe in the fourth quarter. And I think I don't know how familiar you are with the concept of price index, but price index being basically at 100 would be the average of the prices here. What is very important for us, and we have been fighting for that, is to keep the price index we had throughout the year for both Electrolux and AEG. So we absolutely have been very directive on keeping the brand positioning in the regions. And actually, our price index has been even going slightly up. So the decision we took now a couple of years ago to exit the entry price point and really focus on the core plus and premium segment has been the right decision. And we are occupying today and growing into these 2 segments, which are core plus and premium segments. Where the big price war is going on even in a more fierce manner is certainly in the entry price point segments, where we have more new entrants putting pressure on the price level. And that's taking a little bit down the entire European market. I think what is very important for us is, again, to leverage our brand, to leverage the strength of our brand, leverage the innovation we are putting here in the market and actually occupy and grow where we belong, which are the core plus and premium segment in the market. Johan Eliason: Good. Then just on your pricing outlook again. You say price/mix and volume to be positive in '26 and then you focus on volume and the mix, sounding like prices could be negative for full year on a group level. Then your comments on U.S. prices have to adapt to the tariff level leaves me with the thinking that pricing should then be negative in sort of Europe, Asia and Brazil. Apart from Europe, where we discussed the tough in the entry level, what about Brazil? It seems like you were more comfortable with the Q4 development than Whirlpool were in their outlook statement. Yannick Fierling: No, I think you're absolutely right, first of all, to divide this question per region, because the answer will be slightly different region by region. First, I think if you look at Europe and Asia, we're absolutely expecting the price pressure to continue moving forward. I mean, we will have more and more pressure, as I said, especially on the low-end segment and entry price point segment, and we need to defend basically the value on the core plus and premium segment. In Latin America as well, you're absolutely right. I mean, to mention Brazil and Latin America, we have price pressures in Latin America as well with new entrants coming out of Asia as well in Latin America and as well in Brazil. However, once again, I mean, our position is pretty clear. We are playing in Latin America as well in core plus and premium. And the new entrants are mainly playing in the low-end segments. And that's why we are gaining and we keep on gaining value market share in this region. And in all fairness, I mean, the biggest battle getting played is in the entry price points here. So we're redefining our go-to-market, we're redefining our innovation in Latin America, the strength of our brand. The brand is very strong in Latin America, and we're executing here. The last one is, of course, North America here. North America would very much depend if the industry would be reacting rationally now to the tariff structure. As we said many, many times, but I think it's worth repeating, the current tariff structure is benefiting the local producers, and we are only 3 major local producers in North America under the condition, of course, that, I mean, prices would be moving up. Otherwise, you just need to absorb the tariff structure in the negative external factors. So I think it will be very interesting to observe moving forward what the price evolution would be in North America. I would just finish by one point, which is extremely critical here is that, I mean, we certainly are expecting higher pressure moving forward on prices. And it's making cost reduction and cost efficiency even more important moving forward. And that's why we are putting as well so much emphasis on getting more efficient, preserving, of course, the quality of our products, preserving consumer preference for our products here, but getting more efficient as a company such that we can mitigate the price pressure we'll be encountering in the 3 markets. Operator: We will now take our next question from the line of Uma Samlin from Bank of America. Uma Samlin: My question is on the raw material front. I mean, given a lot of the raw mat that you use, steel, for example, the prices increased quite a lot over the past few months. I was wondering that how do you think about that going forward? It seems like you think it will be neutral when it comes to raw material impact in 2026 in your slides. Just wondering how does that work? And how should we think about that? That's my first question. Yannick Fierling: Absolutely. What we said, just to be very precise, is that, I mean, the impact from currency and raw material is expected to be relatively neutral. But let me put a little bit of flavor on that. As you know very well, we are hedging. We're hedging our plastic material, and we're hedging even on a longer time period, I mean, steel. So I think we have been hedging part of plastic, and we have been hedging part of steel. What we see right now, of course, is a potential increase in steel in North America because of tariff. So that's what we're expecting here. So I think we see pressure on the steel side of the equation on North America. However, if you balance, I mean, currency together with raw material, we see that to be relatively neutral moving forward. Therese, do you want to add anything on that? No? Very good. Uma Samlin: Okay. And just a follow-up on North America. I was wondering like what are the dynamics you're currently seeing in Q1 post the Black Friday period? I mean, obviously, I guess you understand that a lot of the inventory has been perhaps still there for the Black Friday promotion period. But after that, I guess, previously, you've said that you expect pricing to normalize, stabilize going forward, because it wouldn't make sense for especially the Asian competitors not to compensate for the tariffs. So just wondering, what are you seeing today on the market? Are you seeing similar dynamics so far in January as in Q4? Or are you seeing any improvement there? Yannick Fierling: I think -- of course, I mean, we will not be discussing in detail about Q1. What I can tell you is that, as I said, I mean, prices have been bouncing back in December to last year level post Black Friday, and they have been bouncing back quicker, I would say, compared to 2024 post Black Friday. I think I'm stating the obvious to all of you here, but I mean, there has been quite a lot of discussions around tariff as well with the Supreme Court. And I think this discussion probably has been inducing doubts on how sustainable tariff would be moving forward or if there will be changes. So I think now it's pretty clear that, I mean, the decision will not be -- has not been happening in the first weeks. So again, with the level of tariff we're having out of Southeast Asia and China, rationally, I mean, we should see movements at least in the market. Therese Friberg: Sequentially, we have seen prices then improving post Black Friday, but we're not really seeing price increases to offset the current tariff structure. Ann-Sofi Jönsson: We have a few questions from the web as well. And here is one that is a little bit repetitive to what we have been speaking about. But are 2026 savings enough to offset external headwinds? And any color on where external headwinds will have the main impact? Yannick Fierling: I think, again, it's very difficult to say. I mean, we don't know exactly how currency will be moving on. Very difficult to predict here on the matter. What we say is that, I mean, we're setting again very ambitious targets in terms of cost reduction, which is between SEK 3.5 billion and SEK 4 billion in 2026 here. And I think it will be of prime importance to deliver on this target to face any type of headwinds we will see in terms of price pressure, tariff and others moving forward. But again, as Therese said, I mean, tariff, we were not able to compensate, at least in Q4, the full tariff impact through our pricing strategy. Therese Friberg: And on external factors, of course, as we've talked about, we expect currency and raw material, with the current levels and the, let's say, current hedging, to be essentially flat right now. And then, of course, we have significant headwinds still year-over-year in tariffs. And then we are still having some inflation. So we're still having, of course, some high inflation countries that will also be a negative impact a little bit then, yes, broader across the regions. Ann-Sofi Jönsson: Now we go back to the conference call again. Operator: We will now take our next phone question from the line of Akash Gupta from JPMorgan. Akash Gupta: I have a couple of questions as well. The first one is on external factors. I think you said you're expecting significant, but I was wondering if you can help us quantify a bit. So if you look at, in second half last year, on average, you had SEK 700 million-ish external factor with SEK 1.5 billion in second half primarily coming from tariffs. So is it fair to say that when we look at 2026, probably we should expect similar SEK 1.5 billion external headwind in first half before it might go down a bit in second half, because you have the same base as year before. And therefore, overall external factors based on how it looks today could be somewhere below SEK 2 billion. Would that be a good estimate? Therese Friberg: Yes, of course, we are not that specific, but your overall rationale seems like a reasonable logic. Yannick Fierling: I would just remind everybody that in the fourth quarter, at least, I mean, the external factors were split between tariff and currency and the depreciation of the dollar. Akash Gupta: And my second question is on your cost efficiency. Again, the number you guided for 2026 coming in ahead of what people were expecting. But maybe can you tell us about where is it coming from, which geographies, which product lines? And will there be any cost to get this cost efficiency that might lead to some one-off below the line? And also, when we look at the phasing of this cost efficiency, I mean, can you give an indication? Last year, we had a very big Q4. How should we think about the spread between first half, second half this year? Yannick Fierling: Thanks a lot for the question. I think it's an important question. I mean, as mentioned previously, we have been putting in place -- end of 2023, actually, we started to put in place a cost excellence program in the company, which is a very well-structured program, a cross-functional program heavily focused on engineering for design changes, procurement in terms of sourcing and of course, conversion in our factory. I mean, we took some time to ramp up in 2024. And in 2025, I mean, this program has been delivering to the level we have been describing here on the SEK 4 billion. It is, again, very much process oriented. The program is the same across product categories. So I think there is no significant differences in terms of product categories here. And it is as well, I mean, very well distributed across the different regions. So no major differences from product line to product line or from region to region. I think the important matter is really the systematic approach we have to address cost reduction and efficiency. And I think, of course, we'll be leveraging that moving forward. Operator: We will now take our next question from the line of Timothy Lee from Barclays. Timothy Lee: So the first question, I would like to follow up a little bit on the Latin America, the supply rebate. What's the nature of this given it is onetime, why it is not recurring? And if you think about the margin going forward, what level of margin should we expect for the Latin American market if we are not considering this supplier rebate to continue? Yannick Fierling: I want to repeat what I said previously. First of all, I mean, it's not exceptional. I mean, we have year-end rebates on the supplier side of the equation. And Michelle, our procurement lead, with the entire team, I mean, globally and in Latin America, have been doing an outstanding job in 2025 here, which have been driving to a one-timer significant rebate at year-end. But I want to repeat, I mean, and I think it's very important in terms of verbiages. I mean, this one-timer is not material for the group. It's only relevant for LatAm, and that's why I think it was very fair to mention it. On the other hand, I mean, if you look at, I mean, the 3 first quarters, and the last quarter is always the strongest one in the year from a seasonality perspective, we have been delivering very well in Latin America for the 3 first quarters. And I think we had a great Black Friday, again, based on an outstanding work from the team, especially in Brazil, but as well in Latin America, which have been driving to these results. That's what I would be saying. For sure, I think it was worth mentioning this one-timer. I mean that's very fair here. But I mean, that should not be undermining really good ongoing results for Latin America. Therese Friberg: And while we wanted to mention it, it's not a one-timer, if you look at it in the full year perspective. It is a one-timer in the sense that the full effect is happening in the fourth quarter. So that is what is then boosting a bit additionally, let's say, the results, specifically in the fourth quarter for Latin America. Timothy Lee: It's fair to say that -- obviously, we have the seasonal factor, we have the seasonal stronger quarter in the fourth quarter, but this year is definitely much stronger. So can I assume, if we are not seeing this higher rebates than normal, it is probably the margin in the quarter is somewhat similar to what we had in the past quarters or in the previous year in terms of seasonality? Yannick Fierling: Again, I want to repeat. I mean, there is always a seasonal effect. I mean, in our industry here, fourth quarter being the strongest quarter here. I mean, we cannot go much more into detail here regarding that, but I think the explanation we gave is the one. It is a strong quarter in Latin America. I mean, these are onetime rebates not undermining the performance level in Latin America right now. And again, it is something which is not material for the group, but relevant for Latin America. Therese Friberg: And what we want to say is that Latin America has not reached a completely different profitability level. So I guess your conclusion of that, it is continuing to perform at a high underlying level, boosted by additional seasonality in the fourth quarter and by this additional supplier rebate. Timothy Lee: Okay. Understood. And my second question is on Europe. I think you also mentioned there was some positive effect on earnings due to the phasing of the innovation and marketing expenses between quarters. Can you elaborate a bit more on that? Does that mean there was some marketing expenses, which probably deferred from Q4 to, let's say, Q1? Therese Friberg: No, not related to Q1, I would say. But it's more the phasing as well during the year where, specifically for Europe, we have had some additional marketing earlier in the year compared to last year. So it's only a phasing, I would say, within the year of 2025. Timothy Lee: Understood. And my final question would be on your cash flow statement. I think there was a provision that you released in Q4 of SEK 476 million. Can you explain what's the item for this release? Therese Friberg: No, that we don't recognize a large provision that was released. The main impact that we mentioned is the reduction of inventory of SEK 3 billion in working capital. Yannick Fierling: Yes. And that's what we said. I mean, there was a very significant effort in the fourth quarter to reduce our inventory in the 3 regions, and that's what we have been delivering. Ann-Sofi Jönsson: Okay. Thank you. And we have more questions from the web. So the next question is, the leverage improved in the fourth quarter, but still the net debt remained rather high. So could you -- or do you have concerns about the net debt level? Could you elaborate around that? Yannick Fierling: Yes. Listen, I mean, we have been delivering SEK 3.7 billion in EBIT in 2025 here, 2.8%, which is 0.8% better than last year. We have been getting our leverage to 3.0. But I mean, it's a fact, I mean, our debt level is pretty high. And I would say that like any other companies in the same situation, we are constantly evaluating the capital structure we do have today in order to deliver the strategy, the profit and the growth we have in front of us. Ann-Sofi Jönsson: Okay. Great. Now we turn over to the telephone conference. Operator: We will now take our next question from James Moore from Rothschild & Co Redburn. James Moore: It's James from Rothschild. I've got a few. I'll go one at a time, if I could. Just on cost efficiency, great to see the SEK 3.5 billion, SEK 4 billion again in '26. And I know you're doing an ongoing best cost country procurement sourcing action, and you're trying to be more sustainable in the ability of savings to get every year. I'm just wondering, is this level for '26 indicative of the sustainable potential in the outer years of, say, 2027 to 2030? Or is the run rate this year still elevated? Is there any sort of way you can quantify what your new procurement savings machine looks like in the outer years? Yannick Fierling: I think, first of all, thank you very much for pointing that out. And good day to you. I mean, because, yes, best cost country sourcing is absolutely something we are focusing on in the procurement organization. Big focus in 2025 with the arrival of Michelle. Michelle is located in Asia today. And I think we have been focusing throughout the year to understand what best cost country sourcing was for the different regions, because as you can understand, maybe, I mean, China is not a best cost country sourcing region any longer for North America, at least for all the components we do have today. So we have been really doing, I think, a good job on the procurement side of the equation to expand the supply base. We have to be fast as well in releasing these components here without endangering the quality we do have. And that has been a source of the saving you see right now. But I mean, whatever we have been implementing in 2025, of course, will remain in our products in 2026 moving forward. And we have this clear process in taking additional actions in procurement in order to investigate what are the other components we may be going and source from better suppliers. James Moore: But you can't say whether the rate in '26 is elevated versus the outer years? Yannick Fierling: I think -- and again, in all fairness, I mean, we -- I don't want to -- I'm never somebody who is pleased to start with. So it's difficult to be fully satisfied about that. But in all fairness, I mean, the delivery we had in 2025 was a strong delivery. And that's why I think we were able -- I mean, procurement has been a major contributor in delivering part of the cost savings here. So I'm expecting them not to slow down in 2026. James Moore: Okay. And just on price, I hear everything you say net negative U.S. -- sorry, Europe, Asia more than offsetting positive U.S. I would have hoped for a sort of like a mid-single-digit price hike all in net after promotion in '25. And obviously, it depends on the behavior of rational or not rational agents. But is it fair to assume that you're assuming materially less than 5% behind your comment? And I'm trying to gauge your degree of conservatism. Do you think that it is possible to achieve that in the situation that the Chinese and Korean manufacturers hike their prices? And talking of that, tied to that, have you seen the Chinese or Korean manufacturers hike their prices in the first month of the year? I can't see any channel indications that they have yet. Yannick Fierling: First of all, I mean, I think we should not be forgetting about what has been achieved in the first quarters of 2025 in terms of price increase. And I need to recognize my North American team for the agility they have been showing, because the picture has been changing several times, I mean, throughout the months in 2025. And we have been taking and grabbing any opportunity we had to increase prices, and we have been leading price increase in Q2, Q3, and we have been compensating the vast majority of the tariff impact in Q2, Q3. I mean, this situation was simply not sustainable any longer in Q4, especially in the light of the promotional period we had. And we had to face reality, especially looking at, I mean, potential volume impact that we had to step down on prices. And let me tell you that promotional level in 2025 was at least at the same level as in 2024, which is pretty incredible when you think about the tariff level imported finished goods are facing today, 15% to 20%, 55% to 60%. So I cannot -- I mean, as Therese said, we have not seen -- we have seen basically prices bouncing back in December quicker than last year. But in all fairness, I mean, we have not seen tariff being reflected in the price level in North America. Now the big question is -- I mean, we are benefiting from producing in North America. The big question is, is this situation sustainable with 15% to 20%, 55% to 60% tariff for people and for competitors which are sourcing most of their products today for the North American market. James Moore: Great. I've got a couple of more technical ones, if I could. Just in terms of your external factors, I think, Therese, you mentioned the majority of the SEK 739 million group impact was in North America. There's obviously some dollar impact and there might be some stuff in Asia and Europe. But would it be fair to say roughly SEK 0.5 billion was the impact of pure tariff in the quarter? And would it be possible to say whether your FY '26 tariff assumption is closer to SEK 1 billion or SEK 2 billion, to gauge the tariff? Therese Friberg: Yes, we don't give that specifics. But yes, I would say a relevant portion of the external factors was related to currency in the fourth quarter and the rest was tariffs. So there was a significant impact of tariffs. Yannick Fierling: The majority was tariffs. Therese Friberg: Yes. And this is, of course, the level that we are expecting to continue for the first half. And then to your point, it will then -- for the second half with the current tariff structure still being in place, it will sort of even out from a year-over-year perspective. James Moore: Okay. So we comp out easier in the second half? Could you remind us, was the third quarter a similar magnitude to the fourth? Or was that sort of like half? Therese Friberg: It was similar, I would say. James Moore: Okay. So it's really a first half outstanding impact that we have yet to address? Therese Friberg: When it comes to the tariff impact, yes, the majority in the first half. James Moore: That's great. And just the final one, just going back to that other point. Has there been any indication of Asians rising price in the U.S. market in the last 30 days? Therese Friberg: No, not apart from what we mentioned, that sequentially, the heavy promotions from Black Friday has been, of course, lifted, so to say. So sequentially, we have seen pricing coming up, but we're not really seeing price increases to offset the tariff structure that is in place on top of that. Ann-Sofi Jönsson: Thank you very much. We are now running out of time. I know we have more questions. We will make sure that we will get back to you from the IR team. And I would like to thank everyone who has listened in, but I would also like to hand over to Yannick for a few closing words before we end this session. Yannick Fierling: Again, we have been making progress in 2025, and we have been delivering according to the strategic drivers we defined early on. I mean, we're very much looking to do the same in 2026 and delivering basically in the coming quarters. Thank you very much for attending today. Therese Friberg: Thank you very much.
Operator: My name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fourth Quarter 2025 The Hartford Financial Services Group, Inc. Financial Results Webcast. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. To ask a question, simply press star 1 on your telephone keypad. To withdraw your question, press star 1 again. It is now my pleasure to turn the call over to Kate Jorens, Senior Vice President, Treasurer, and Head of Relations. You may begin. Good morning. Kate Jorens: And thank you for joining us today for The Hartford Financial Services Group, Inc.'s fourth quarter and full year 2025 earnings call and webcast. Yesterday, we reported results and posted all earnings-related material on our website. Before we begin, please note that our presentation includes forward-looking statements which are not guarantees of future performance and may differ materially from actual results. We do not assume any obligation to update these statements. Investors should consider the risks and uncertainties detailed in our recent SEC filings, news release, and financial supplement, which are available on the Investor Relations section of thehartford.com. Our commentary includes non-GAAP financial measures, with explanations and GAAP reconciliations available in our recent SEC filings, news release, and financial supplement. Now I'd like to introduce our speakers: Christopher Swift, Chairman and Chief Executive Officer, and Beth Costello, Chief Financial Officer. After their remarks, we will take your questions, assisted by several members of our management team. And now I'll turn the call over to Chris. Good morning, and thank you for joining us today. The Hartford Financial Services Group, Inc. reported outstanding fourth quarter and full year 2025 earnings. Christopher Swift: As we look back on results, the enterprise performed at a high level. The effectiveness of our strategy and investments in innovation are strengthening our competitive position and ability to generate superior returns for shareholders. Among the year's highlights, Business Insurance delivered robust top-line growth of 8% with excellent underlying margins. In personal insurance, 2025 was a pivotal year as auto achieved targeted profitability, and home continued to produce outstanding results. Employee benefits reported an impressive core earnings margin of 8.2%, led by strong life and disability results. And the investment portfolio continues to generate solid performance. All these items contributed to outstanding core earnings of $3.8 billion with core earnings ROE of 19.4% in 2025. I want to thank our employees. Their commitment to excellence makes these achievements possible. We are united behind a customer-centric mindset and a commitment to working together to deliver exceptional results. We have a distinctive culture shaped by strong ethics and collaboration that drives decisions and turns innovation into impact. It is what makes The Hartford Financial Services Group, Inc., The Hartford Financial Services Group, Inc. Before we review business results, I want to briefly highlight our continued progress on technology and innovation. Over the past decade, we have modernized core platforms, strengthened data and analytics, and advanced digital tools across the enterprise. As we've discussed previously, this includes building out our data science capabilities, migrating applications and datasets to the cloud, and exiting data centers. With the foundational work across platforms, data, and cloud largely complete, we have moved to the next phase of our innovation agenda, reimagining our processes and workflows with an AI-first mindset. It is a multiyear journey, and we have allocated investment spend to accelerate our progress. The team is executing well, and we are already seeing early positive results. In claims, where AI is accelerating medical record summarization, in underwriting, where it is providing more consistent data-rich insights with greater precision, and in operations, where the deployment of Amazon's call center technology is enhancing customer interactions with multimodal capabilities. More recently, generative AI has expanded the way we think about value creation across our business, especially within claims, underwriting, and operations. Our approach remains focused on practical, high-impact applications that augment human talent and drive improved experience for customers, employees, and distribution partners. All this positions The Hartford Financial Services Group, Inc. to be well situated as the insurance industry continues to evolve. Let's turn to 2025 results. In business insurance, written premium growth was strong across all three units, driven by strong new business, stable retention, and pricing increases in most lines. The underlying margin of 88.5 for 2025 was excellent and reflected disciplined underwriting in a dynamic environment. The company's approach to operating as one unified team, known as One Hartford, enables us to collaborate across business insurance to meet a wide range of customer needs. This strategic alignment, combined with consistent execution, continues to resonate with agents and brokers. We are advancing underwriting capabilities to drive faster, better, and more consistent underwriting decisions while delivering superior agent, broker, and customer experiences. Moving into each business insurance unit, small business continues to be the industry leader with written premium of $6 billion and an underlying combined ratio of 88.9 in 2025. I am pleased to share that for the seventh consecutive year, Kinova Group has ranked The Hartford Financial Services Group, Inc. as the number one carrier for small business digital capabilities. Kinova reported that The Hartford Financial Services Group, Inc. holds a double-digit lead in all categories. This recognition reflects exceptional functionality, ease of use, and support for agents and customers. Building on another year of outstanding results and advancement of AI-driven capabilities, I am highly confident that we will capture additional market share while maintaining strong profitability in small business. Turning to middle and large, growth was excellent with solid underlying margins. The team remains focused on disciplined underwriting and selecting opportunities that deliver attractive risk-adjusted returns. Investments in middle and large are replicating our industry-leading small business capabilities. Whether you describe that as AI, automation, speed, accuracy, or leveraging rich data assets, these investments are enabling a more efficient underwriting process while delivering seamless agent, broker, and customer experiences. Global Specialty had an excellent year maintaining underlying margins in the low to mid-eighties. Our competitive position and breadth of products drove excellent growth, including in wholesale, international, and global REIT. We remain excited about the unique ability to combine Global Specialty's deep product expertise with the advanced technology and broad distribution of the small business platform. This allows agents and customers to quote and bind comprehensive products in a single unified experience, a key differentiator in the market. Moving to pricing, business insurance renewal written pricing excluding workers' compensation was 6.1% for the quarter. While property pricing continued to moderate this quarter, the line remains highly profitable and an attractive area for growth for the organization. Casualty, including commercial auto and general liability, remain firm and above loss trend supported by rate increases in proactive underwriting actions focused on segmentation, limits management, and geographic optimization. Excess and umbrella pricing increased further into the double digits. Commercial auto remained stable in the low double digits, and general liability primary lines remained in the high single-digit range. As we enter 2026, our priority is to sustain industry-leading ROEs through disciplined underwriting and risk selection. That approach, supported by the focus on the SME segment, enables us to execute through the next phase of the cycle. Turning to personal insurance, 2025 was a pivotal year with premium growth and strong underwriting profit. In addition to restoring targeted margins in auto, homeowners delivered strong underlying margins and policy count growth. Personal insurance continues to benefit from advanced underwriting capabilities in the modern platform of Prevail. Beginning in the third quarter, these next-generation capabilities were extended to the retail channel. Prevail agency is now live in 10 states with approximately 30 state launches planned by early 2027. We are excited by the momentum in the agency channel as we leverage the exceptional retail distribution relationships held across The Hartford Financial Services Group, Inc. Our position as a bundled provider resonates and is supporting account growth. In 2026, we expect to grow policy counts for both auto and home in the agency channel. Within the direct channel, given market competitiveness, policy count growth will remain challenged. The long-term objective is to expand market share while sustaining targeted profitability. Shifting to employee benefits, the outstanding core earnings margin in 2025 reflected focused execution, a resilient economy, favorable group life mortality trends, and continued strong disability performance. Our employee benefit strategy is supported by continued investments in technology and digital solutions to simplify the administration process and enhance the benefits experience for our customers. At the same time, expanding presence in the under 500 live segments remains a key strategic priority. This includes expanding product offerings, such as dental and vision, to small and mid-sized employers. So far in 2026, quote activity in known sales are trending meaningfully above prior year. We are confident that investments in technology and customer-facing tools position the business to extend its market leadership. In closing, across the enterprise, innovation and execution drove another year of profitable growth and leave us well prepared for the opportunities ahead. In business insurance, our diversified portfolio with a significant concentration in the SME market, along with excellent underlying margins and long-term distribution relationships, will enable us to differentiate and capture additional market share. In personal insurance, having achieved profitability levels, we are now targeting expansion across the direct and agency channels. Employee benefits continue to be a highly attractive and accretive business delivering strong core earnings margins, and we expect to sustain our industry-leading position. Investment income remains strong, supported by a diversified and durable portfolio. And our businesses continue to generate excess capital, which will be deployed to drive long-term shareholder value. Taken together, these advantages reinforce our competitive standing and ability to generate superior returns for our shareholders. Now I'd like to turn the call over to Beth to provide more detailed commentary on the quarter. Beth Costello: Thank you, Chris. Core earnings for the quarter were $1.1 billion or $4.6 per diluted share with full-year core earnings ROE of 19.4%. In business insurance, core earnings were $915 million, with written premium growth of 7% and an underlying combined of 88.1. Small business continues to deliver excellent results with written premium growth of 9% and an underlying combined ratio of 87.3. Renewal written pricing for the quarter was 4.3% all in or 7.7% excluding workers' compensation. This is down from the third quarter, primarily due to pricing within the property components of the packaged product and E and S. Those lines continue to be highly profitable, and we expect that as we move into 2026, property pricing and our packaged product will stabilize. The liability component of the package was in the high single digits and is expected to stay firm. Middle and large business had another strong quarter with written premium growth of 5% and an underlying combined ratio of 89.4. Renewal written pricing for the quarter was 4.5% all in or 6.2% excluding workers' compensation. Global Specialty's fourth quarter was solid with written premium growth of 5% and an underlying combined ratio of 87.6. Renewal written pricing for the quarter was 3.9% and remained flat to the third quarter. The business insurance expense ratio of 31 increased one point from the prior year quarter as the impact of earned premium leverage was more than offset by increases in technology costs and higher incentive compensation due to overall financial performance. In personal insurance, core earnings were $214 million with an underlying combined ratio of 84.3. The underlying combined ratio improved 5.9 points in the quarter primarily due to improvement in the underlying loss and loss adjustment expense ratio in auto and homeowners. Auto underlying results improved by 4.1 points and remain in line with expectations reflecting typical seasonality as the year progresses. The personal insurance fourth quarter expense ratio of 26.2 improved from 26.5 in fourth quarter 2024 as the impact of earned premium leverage offset increases in technology costs and higher incentive compensation. Written premium and personal insurance declined 2% though agency premium grew 15% over the prior year. We achieved written pricing increases of 10.4% in auto and 11.9% in homeowners. Total P and C net favorable prior year development excluding A and E was $106 million. Of the increase, $122 million was for asbestos and $43 million for environmental. The increase in asbestos reserves was primarily due to higher than expected frequency, an increase in claim settlement rates, and higher settlement values for a subset of accounts. The increase in environmental reserves was mainly due to higher environmental site cleanup and monitoring costs and higher legal expenses. With respect to catastrophes, PNC cats were a benefit of $1 million in the quarter and include $54 million of favorable prior quarter development, primarily from tornado, wind, and hail events across several regions. For the year, CATs came in under budget at 4.2. We continue to actively manage our catastrophe exposure through disciplined underwriting and aggregation control supported by a robust reinsurance program with both per occurrence and aggregate protection. At 01/01/2026, our per occurrence catastrophe cover was renewed with favorable terms and conditions delivering a reduction in cost on a risk-adjusted basis. In addition, we renewed our aggregate treaty at $200 million excess of $750 million, achieving a decrease in cost on a risk-adjusted basis. We continued our strategy of combining traditional with our catastrophe bond platform Foundation Re, and on January 1, a new catastrophe bond increasing the total per occurrence program for peak perils to $1.9 billion. This strategic addition enhances our capital strength, provides multiyear stability, and complements our traditional reinsurance place supporting growth in property underwriting. Moving to employee benefits. Core earnings of $138 million and a core earnings margin of 7.6% reflect excellent group life and strong disability performance. The group life loss ratio of 76.9 improved three points, reflecting lower mortality and term life products. The group disability loss ratio of 70.5 increased 3.6 points from the prior year driven by increases in the short-term and long-term disability loss trends. Partially offset by improvement in paid family and medical leave products. In short-term disability, we are seeing increased incidents, particularly among higher average wage earners. In long-term disability, incidence remains lower than longer-term expectations but has been increasing from the very levels experienced in recent years and claim recoveries remain strong but less favorable than in the prior year quarter. The employee benefits expense ratio of 27.5 increased 0.8 points compared with fourth quarter 2024, driven by higher staffing costs, including increased incentive compensation and benefits, as well as higher technology costs. Turning to investments. Our diversified portfolio continues to produce strong results. Net investment income of $832 million increased $118 million or 17% from fourth quarter 2024 driven by increased limited partnership yields, a higher level of invested assets, and reinvesting at higher interest rates, partially offset by a lower yield on variable rate securities. The total annualized portfolio yield, excluding limited partnerships, was 4.6% before tax consistent with the third quarter. Fourth quarter annualized LP returns were 11.4% before tax, up significantly from third quarter reflecting solid performance from our private equity portfolio and the improving M and A environment. Looking ahead to 2026, we expect net investment income to increase supported by higher invested assets from continued growth and improved LP returns. Turning to capital. As of December 31, holding company resources totaled $1.5 billion. For 2026, we expect net dividends from the operating companies of approximately $2.9 billion, a 16% increase over 2025. During the quarter, we repurchased approximately 3 million shares under our share repurchase program for $400 million. Given our strong capital generation, beginning with the first quarter, we expect to increase quarterly share repurchases to $450 million subject to market conditions and capacity remaining under our share repurchase authorization which as of year-end was $1.55 billion through 12/31/2026. To wrap up, 2025 business performance was outstanding. And we are well positioned to continue delivering industry-leading returns and enhancing value for all stakeholders. I will now turn the call back to Kate. Kate Jorens: Thank you, Beth. We will now take your questions. Operator, please repeat the instructions for asking a question. In order to ask a question, simply press 1 on your telephone keypad. We do respectfully request that you limit questions to one and one follow-up. Again, to ask a question, that is Our first question comes from the line of Andrew Kligerman with TD Cowen. Please go ahead. Good morning. The first question is around pricing in business insurance. Andrew Kligerman: The 6% ex workers' comp increase in rates is terrific, and I see you've gotten more in small business. So the question is, how long do you think you can sustain favorable renewal premium changes in small business? Is this something that you think would be resilient for a number of years? Or, you know, kind of it gets infected by the same pressures that you're seeing in large. And then Beth made a comment about property package pricing stabilizing. Would love a little more color on that. Christopher Swift: Andrew, let me start, and I'll ask Moe to add his color. I think the context of your question should be framed in terms of we have built a wonderful smooth-running machine that is differentiated in the marketplace. I mentioned the Kunnova accolades that we get for our digital capabilities. We have, obviously, a workers' comp, a world-class product. We have ENS capabilities that'll be embedded in our workflow. So I think the opportunity for us is really sky's the limit. I see this business continuing to grow at really healthy levels. You saw the performance this year. Because I think I know we have differentiated ourselves. We got long-standing agent and broker relationships. And I think the broad market is willing to do business with fewer carriers that meet all their needs. So I think this is a structural strategic shift in some of those activities that we're gonna be clear beneficiaries of. Maybe, Andrew, just to build on Chris's point on them from a pricing perspective, we've talked a lot about the starting point really matters. And we got a very sophisticated filing strategy. We watch competitor filings closely. We did feel some decelerating property to Beth's comments both E and S and in the package policy. We expect that to in the package portion to flatten out here relatively shortly. We're watching the ENS space closely. But the GL portion of the BOP is still accelerating. So an important piece of it. And then when we look at just, again, to full circle, all of the products in the small business space are meeting target margins and highly profitable. So we really feel good about the starting point. Andrew Kligerman: And just know, more from a long-term perspective, though, do you think that the small business area is resilient enough to kind of continue to sustain rate increases? Or do you think that the competitive pressures will ultimately come after that segment of the business? Christopher Swift: Well, I think the important thing, Andrew, is, you don't shock a small business customer. Right? So if you have sort of steady bites at the apple as one of our competitors would say in the personal lines area, I think small businesses can manage it from a budget side. But if you fall behind in your rate plans and your rate filings and you need 30 points of rate, that shock to a small business customer would not be helpful and I think we're keeping up with trend very, very well, Moe. I don't know if you would Yeah. There's an agency angle. I think in a small business space, our brokers and agents can't afford to touch the small business very much. So they want to put it in a home that's predictable, consistent, and that's what we're finding is we are that predictable consistent home right now. And, in fact, by putting business with us, we're proving to agents and brokers they can save a penny or two on every dollar they put with us relative to competitors. Andrew Kligerman: Got it. And then just lastly, on Prevail. So you mentioned you're in 10 states now and likely to be in 30 by 2027. I know Prevail is kind of a small component right now of your overall premium. Do you envision that being, you know, as big as the AARP direct to consumer the not too distant future? Or will it be very gradual and over a long period of time? Christopher Swift: Yeah. I would say, you know, Andrew, just to remind everyone is that, I mean, Prevail, the product and the platform is used in new business in the direct channel, and now in the agency channel. And you referred to it. We're in 10 agency states right now. We're on track to be in 30 by, you know, early 2027. So, I mean, the Prevail platform is the chassis. For all new business going forward in all its modern segmentation, its digital capabilities, six-month auto policies. And I think we've said this before. We on the back book, we're not converting it to Prevail. We're gonna let the back book run off over time. It's highly profitable. We don't want to create disruption. So all new business activities both direct and agency, are focused with Prevail. Then the back book will run off over time. Melinda, would you add any color? Melinda Thompson: Thank you, Chris. I think I would just reiterate agency prevail does present a meaningful growth opportunity, and our reputation with agents is exceptional as an enterprise. And it's ensuring us the opportunity to compete more broadly with our agency partners, we do see upside with our agency partners to grow the book. Today, it's you can see in the premiums about 20% of the total. It would take time to grow it to be the size of AARP's. Book, but we do feel optimistic about the opportunity. Andrew Kligerman: Thank you. Operator: Next question comes from the line of Elyse Greenspan with Wells Fargo. Please go ahead. Elyse Greenspan: Hi. Thanks. Good morning. My first question is on capital. Beth, you upped, you know, the buyback pace by $50 million a quarter. Right? So that's $200 million for the full year. Yet, like, the dividends out of PNC, right, are going up by $500 million. So is it just to have extra whole co flexibility? Or when you finish the authorization, maybe then the PACE could go higher. I'm just trying to understand why you wouldn't just, you know, up the buyback by the full, you know, $500 million that's going up to parent. Beth Costello: Yeah. So a couple of things. First, the overall dividend increase between years is about $400 million, $2.5 million last year to $2.9 billion this year. I'll also remind you that we did just increase our dividend back in October and that obviously factors in as well. And I think as you would expect, you know, we're thoughtful when we think about increasing our share buyback levels with a goal of being consistent. So I think it's a pretty balanced approach to what we're seeing in the, you know, overall increase in capital coming to the holding company. Elyse Greenspan: Thanks. And then my second question is on business insurance. Just you know, given overall, you know, pricing as well as, you know, loss trend, I would, you know, assume you might see, you know, some, you know, deterioration within the Get a sense of just you know, how you see, you know, BI underlying margins transpiring in twenty six. Christopher Swift: Yeah. I think what I would share with you, Elyse, is that we're gonna refrain from any specific numbers or ranges. And then maybe just talk qualitatively with you and give you a couple of data points that will help you make those judgments. But as Moe said, our starting position I think, is very strong. You know, we had an 88.5 underlying combined ratio, you know, this year. Up slightly from the prior year. I think we're still growth and innovative mind as I said in my commentary. But we're also a disciplined underwriting company, and we just don't want to chase growth for growth's sake. It needs to, obviously, contribute to the overall enterprise. So know, we've instructed our underwriters to try to hold on to margins to the extent possible. You know, be disciplined, and, you know, try to grow if it makes sense. And then, if it doesn't, you know, we'll accept, you know, the outcome of a slower top line. But I think relative to the top line this year, I still see and very optimistic about our ability to grow at or above rate you know, from a market perspective given everything we've invested in over a longer period of time. And then I would say, you know, it's obvious, you know, property is will continue to soften. Workers' comp is sort of in the same position of, you know, sort of slightly a slight, you know, headwind. Think where we're most disciplined and most firm with is anything that has liability associated association with it. Whether it be commercial, whether it be GL, And then I would just give you a last data point I think our six one renewal written, you know, pricing x comp is, you know, within a couple tenths of lost cost trends. So I think we're keeping up with trend decently. We might be, again, just a little short in the two to three tenths, you know, range. And we'll have to see how, you know, the market plays out in, you know, 2026, but we want to be disciplined, you know, but we also have built, you know, great long-term relationships with our agency partners and brokers that they want to do more business with us just given our capabilities and our customer centricity. So that's what I would say. I don't know. Moe, if you would add anything else. Morris Tooker: No. I mean, I think there's a little bit of a nuance when we get down below into the three business units within business insurance. I think small business again, we've talked a lot about the tailwind we have, the capabilities we've built support we have from the agency base. So we're very confident about our ability to grow in the margins to maintain there. Think in global and middle, it's a little bit more dependent on the market Again, I think that's where we're really gonna go to margin drive the decisions. I think our underwriters 2025 did a superb job making those choices, holding margins and getting reasonable growth. I think the growth in middle and global will be much more dependent on market conditions, and we're watching that very closely. Operator: Thank you. Your next question is from the line of Brian Meredith with UBS. Please go ahead. Brian Meredith: Yes. Thanks. Good morning, everybody. One, I want to dig into the expense ratio a little bit. It's remained relatively stable the last couple of years, and I know you've been making a lot of investments in technology and data and analytics, you know, really to enhance your businesses. I'm just curious, as I look forward, heading into a soft market, your expense ratio is a couple of 100 basis points higher than your big peers. When are we gonna start seeing some of that technology stuff manifest itself and maybe a better expense ratio that could be helpful in a softening market? Christopher Swift: Brian, thanks for joining in the question. You know, I would say you know, when I think about, you know, sort of expense ratio, I still feel like we're in a good place. And I'll say it for, you know, two different reasons. You know, one, I think we are gonna continue to capture more market share. So our growth rate will continue to be benefited or the expense ratio will be benefited by, I think, our higher growth rate. So we'll, you know, earn into that And we have high conviction in the, you know, sort of technology and the AI era that we face that we want to lead there and create something unique, differentiated, and durable, you know, for the future. And so those two things sort of drive, our calculus. But when I would put it all together, you know, I would say in the business insurance, I mean, I could see it getting below, you know, 30% over the next two years, or by the end of '27. I think our personal insurance expense ratio can get to, you know, below twenty five. And, again, that same, you know, time period. And we're making continued investments in our group benefit chassis, particularly on the 500 and lives down. So we're investing capabilities there. We've taken a lot of data sets and applications in employee benefits to the cloud. So know, I could see them getting into the 25, you know, point range and in two years. So again, we're gonna live into what we believe we still need to build and create to differentiate the compete over a longer period of time while managing, I think, an expense ratio that is competitive. It allows us to do the preceding investments that I just said. Brian Meredith: Great. Really helpful. Thanks, Chris. And a follow-up question here on group benefits, particularly on disability here. Thinking about the massive layoffs that we're hearing about, some of these large corporations driven by, you know, AI and stuff, What impact do you think that could potentially have as this unemployment picture looks a little bit more challenging here going forward on group disability loss ratios as we look forward in the next couple of years? Christopher Swift: Yeah. I'm going let Mike add his commentary. But I would say right now, we see the headlines, but when you really look at the data, unemployment is still decent, you know, and it's actually projected to come down. So more jobs, you know, could be created. Know, we got a big national book that is comprised of all different types of industries. Industries like health care that are growing rapidly, You know, it's workforce and technology. We have a good presence there. So Asked. And we'll do that going forward if things were to change. Again, we also are renewing this year, we're renewing about 40% of our book of business. So as we take a look at the experience and what we think prospectively, what could change in the future, we'll reflect that in our pricing. But, again, I've got real confidence in the team, and I think we're gonna manage through any cycle should it present itself. Brian Meredith: Great. Thank you. Operator: Our next question comes from the line of Gregory Peters with Raymond James. Please go ahead. Gregory Peters: Morning, everyone. I think I'm I'd like to focus my first question just going back to the benefits business. The margins are quite strong for your company. And I'm just curious about how you think about the margin outlook considering some of the pressures you talked about, especially the short and long-term disability loss trends that you highlighted during your comments? Christopher Swift: Craig, you know, I would say we remain very bullish on this business. Been a consistent performer. As I said in my opening comments, it's got strong ROEs. If you look at it on a tangible basis, it's probably 16% tangible ROEs. It's been steady, you know, predictable. I think the opportunity we've had is maybe to grow and capture more market share. I think we've improved some of the things that we needed to, particularly our capabilities in the 500 in lives, you know, below market. You know, with a build-out of a capability there that just really coming online one one twenty six. I alluded to in my commentary I'll give you a little more insights of what we call it as known sales right now through January, which is a big, you know, national account, you know, renewal basis. Yeah. But our known sales are up meaningfully. And if I look at, you know, the numbers, I think they're up almost, you know, 45, 50% compared to last year. So that tells me people still want to do business with us. They still like our products, our capabilities, particularly bundling more, you know, supplemental products into it. To with our core products. So really confident that the team is gonna be able to grow. Thoughtfully with good margins. So that's what I would put altogether, Mike, and I don't know if you would add anything else. Michael Fish: Chris, I think you covered that well. I guess I would just add maybe one thing on top of that. You know, as I said earlier in terms of how we think about pricing and underwriting and the discipline that we've managed through. And again, we'll continue to do that going forward. You know, sales were certainly soft in '25. So coming into 2026, as Chris said, feel really good about how the pipeline is looking right now, and I'd say that's a couple of things, in that one. We've talked about the investments we've made in the business, and so those investments are coming through our customers, really appreciating the new capabilities we're bringing to market. So that's giving us really an added hook in terms of getting those customers online. And second, there are three new state programs for paid family leave that are going into effect this year. And so we'll benefit with some meaningful premium, as those states go live in twenty six. Gregory Peters: Great. Thanks for that detail. I guess the other question I'm going to ask is know, I recognize it's just an investment for you, but it's producing good results for your company. And I'm talking about the Hartford Funds. Do you have any updated perspective on how that business outlook for that business this year and how you're viewing your investments? And just any comments on the performance of that business? Because continuing to generate nice returns for your company? Christopher Swift: Yeah. I think you hit it perfectly. I don't even need to respond. I was just gonna say exactly what you said, Greg. Yeah. I mean, it's a good investment. You know, it's grown nicely. You know, it's got after a period of sluggish, you know, growth. I think we're getting back to the ability to have positive net flows. Markets are robust. We still got great sub-advisors, world-class sub-advisors with Wellington and Schroders. So yeah, Beth, I you know, it's a good business. It gives you a healthy dividend. Strong ROEs in the 40%. It's just a lot to like. Gregory Peters: Got it. Okay. Thanks. Operator: Our next question comes from the line of David Motemaden with Evercore ISI. Please go ahead. David Motemaden: Hey. Thanks. Good morning. I just wanted to you know, ask a question on BI. So the mix to property there has been a great story. I think you guys are calling out $3.3 billion for 2025. Sounds like you guys hit that So that's been a good story with the mix shift there being able to offset the workers' comp pricing pressure over the last few years. I guess, how are you thinking about that ability to sort of shift your mix in 2026, just given you know, a softening property environment? Christopher Swift: Yeah, I would say, David, maybe just slight nuance. You know, workers' comp is still highly profitable for us both on an accident year basis a calendar year basis. So I mean, it is contributing meaningfully to our ROEs. That said, I'd like what we did with property this year. Add any color. Yeah. Just we'd say that we're watching and I said this last call too, but they were watching the ENS and the shared and layered space. That's the only place we're really concerned about the rate levels and we're watching that closely. And I think we said it before, but 60% of the BI property book is in the middle and spa space, which we feel like we can compete to recycle. We've built think, market-leading tools, and we're pretty confident about our ability to grow in the small and middle space, and we'll just have to see what happens in the E and S and the shared layer. David Motemaden: Got it. Thanks. And then, just a follow-up. So I know, just looking at the 4.3% all in price I know that includes both pure rate and exposure that acts like rate. So I'm wondering if you could just talk about the moving pieces there. How much of that was exposure that acts like rate how much was pure rate, And then, I guess, just as we think about you know, employment, which is solid, like, I guess, employment growth is slowing a little bit. Just how does that impact your outlook for that exposure piece in 2026? Great. Thanks for the question. 4.3% is all in. I think we quoted in my commentary ex comp that 6.1%. And I would say the exposure, the exit rate compared to that six one is one point eight. Or roughly 70, you know, thirty. Generally, that's been pretty consistent. It could bounce around maybe just a little bit, you know, from quarter to quarter. But again, I'm still optimistic David, on just where, you know, the economic forecasts are, conditions, You know, I think, you know, internally, you know, we talk about maybe a 2.75% to 3%, you know, growth rate employment you know, maybe, actually even, you know, coming down. Or unemployment, you know, coming down. So, yeah, I think '26, I think we feel is still a wonderful year, great year being the PNC business, the employee benefits, you know, business. So, yeah, we're optimistic, you know, we could, you know, manage to different outcomes, you know, depending on what happens with tariffs, depending on what happens with you know, weather or inflation, you know, broadly defined. So that's what I would say. David Motemaden: Great. Thank you. Operator: Your next question comes from the line of Yaron Kinar with Mizuho. Please go ahead. Yaron Kinar: Thank you. Good morning. My first question circles back to the potential impact of AI on the workforce. And here's one possible counterpoint that I've heard is that maybe we actually see some increase in start-up activity in small businesses emerging to support AI capabilities. And I realized I had maybe asking you to plot a crystal ball here, but would that counterpoint kind of resonate with you? Do you think that with larger weighting to the small account space, Hartford could actually be a net winner here. Christopher Swift: Yeah. I believe so. You know, I think we have the brand, the capabilities, the reputation, sort of a tech-forward mindset, obviously, a significant presence in Silicon Valley. So know, tech is an important part of our book today. It's an important part of, you know, middle. It's an important part of employee benefits. So I think the real question you might be asking is just what is the pace? Of new business, you know, formation and development. Is another probably discussion. You know, we should have at a different time. But yeah. I think we can take advantage of tech broadly defined in our SME orientation today. Yaron Kinar: Thank you. And then my follow-up wanna get your initial thoughts on Winter Storm Fern and the potential impact to the industry and then The Hartford Financial Services Group, Inc. specifically. Christopher Swift: I would say, Vasco, I'll give you more details, but a relatively minor event at this point. Beth Costello: Yeah. I mean, obviously, it's very early. And as we, you know, compare what we're seeing for claim activity to some other recent storms over the last several years, the activity is less I know, obviously, we'll continue to watch it. I mean, you know, one thing to keep in mind is when we think about what really impacts claim activity, it's not so much the snow. It's the ice and power outages. So know, that's obviously what we're watching. But as Chris said, overall, feel that it's a, you know, very manageable event for us. Yaron Kinar: So not really comparable to Yuri back in 2021? Beth Costello: Not from what we're seeing to date in the claims activity that we've had. Yaron Kinar: Thank you. Operator: Your next question comes from the line of Michael Zaremski with BMO Capital Markets. Please go ahead. Michael Zaremski: The favorable non-cat property experience. Just curious, like, directionally if you'd be willing to kind of size up, you know, more than a less than a point maybe this quarter and for the full year? Christopher Swift: Yeah. Would say, yeah, for the full year, because quarter, you know, it could be a little bouncy, but we were probably one point ahead of expectations, Beth. But know if she would add any color. Beth Costello: Yeah. I would say that that's, you know, probably in line. I mean, from the prior year, maybe a little less than that in a year-over-year compare because we saw favorable non-cat property in '24 as well. But, obviously, been very pleased with, you know, how the property book has been performing overall. Michael Zaremski: That's helpful. And my follow-up, just kind of getting going along with the technology theme. This morning and, you know, for many quarters now. Kinda curious seeing you Hartford has clearly been on the front foot of adoption. And we can see it in your growth. So just curious, bigger picture, stepping back, do you think technology, like the AI revolution, you know, you said the AI-first mindset. Will this cause technology to be a much bigger differentiator than the past? And if yes, you know, could it cause, you know, M&A or just more differentiation, over time? Or, you know, is it too soon to tell? Thanks. Christopher Swift: Yes and yes. And really what I mean is think it is a game changer. And I think scale matters then to invest overall a multi-year period of time to sort of reinvent your workflows and your customer experiences and have that digital-first meant It's easy to say, but I can tell you, two years into sort of our journey here and there's been a lot of learnings. On a change management, you know, that needs to occur. And yeah, if I think you could see maybe the analogy I would give you, Mike, is you know, the life insurance industry really didn't go through an M&A consolidation, but the top 20 yeah, really control 80%, 90% of the flows. Could see something similar in the PNC business. The benefits business are already there with the top 10, but I definitely can see a have and a have not, you know, type of opportunity. Moe, what would you add? Morris Tooker: I just said, Mike, where we compete in the business insurance space on the small and middle end, and that speed, ease, accuracy we talk a lot about, we think this is game changer and actually going to set the bar in a different place as we think about serving agents and brokers in space. Michael Zaremski: Thank you. Operator: Our next question comes from the line of Robert Cox with Goldman Sachs. Please go ahead. Robert Cox: Hey, good morning. Yeah. I just wanted to ask about the ENS binding growth this quarter and how that fits into plans for next year. Do you still think that taking share in finding can help you out? Continue to have strong growth in small commercial? Christopher Swift: Rob, yeah, thanks for joining us in the question. Yeah. ENS binding and small is a strong business for us with great growth. I would tell you sort of fourth quarter over fourth quarter growth plus 30%. I think for the year, you get closer to 35% You know, that could be a 300 plus million dollar business premium, you know, in 2026 for us. Margins are strong. Yeah. Pricing softening, but as Moe said in his commentary, the starting point matters. Right? So just because pricing are is softening, you know, the ROEs are still strong of what we hold ourselves accountable to. But, Moe, what would you add? Morris Tooker: I just said that the flow to us, submission flow, remains really strong in the ENS finding space. And we don't see that changing. And I think the reason why the flow continues to be so good is we are bringing all the tools from a retail agency experience into the wholesale space. We're finding that it is changing the experience, and we're helping our wholesale brokers make a bit more money on each transaction relative to our peers. Robert Cox: Thanks for the color. And I just wanted to follow-up on casualty. You know, it seems like there's been a little bit of a divergence in views amongst carriers. Some are highlighting greater stability and trend in recent quarters, but then some are talking about, you know, increasing trend and taking charges. So I don't know if you have a views any views on what could be driving the difference in opinion. And, you know, within that, is there any chance we could get some, you know, broadly reemerging casualty caution in 2026 similar to what happened in 2024? Or is there just too much capital chasing risk at that point? Christopher Swift: Yeah. I'm not gonna comment upon others what they say or what they think or how they operate. I could tell you Rob, is that for us, this is the highest focus of execution we have. You know, we know trends are elevated We don't see them, you know, retreating. Know, so that elevation, you know, will require discipline with rate in the primary side, the umbrella side, the excess side. Particularly the, you know, the commercial auto side. So it's probably the biggest main event, you know, that we have here that we watch Moe, from month to month, but that's what I would say. anything? Morris Tooker: Yeah. I just I think this is a place where we think the market's holding up pretty well. It feels stable. I know there's a little bit of movement here and there, but whether it's the GL, the umbrella, the excess, or the auto space, we feel like the market's fairly disciplined, and we don't expect that to change in 2026. Robert Cox: Okay. Thank you. Operator: We have time for one final question. Our final question comes from the line of Katie Sakis with Autonomous Research. Please go ahead. Katie Sakis: Hi. Thanks. Good morning. Thanks for squeezing me in here. I just wanted to shift to the other side of the house with personal lines. Yeah. I think you guys have previously talked about sort of rightsizing profitability there and really getting that book to a point where you're comfortable with the margins. Thinking about, you know, how competitive the broader marketplace has become over the last several quarters, how are you guys thinking about growth efforts going into 2026 and you know, how that might translate to your margin profile on both the personal auto and homeowners business. Christopher Swift: Katie, thank you for the question joining us. I would say we are growth-focused. I mean, we've pivoted to growth probably in third quarter, fourth quarter last year. Everyone else has too. So everyone, I think, has their margins has have been restored as ours. Ours probably took a little longer just given we had twelve-month policies. But I would say, you know, homes performed well for the last five years. But we needed to improve our auto capability. I think you saw, you know, roughly an 11% or 10.5% price increase this quarter. I think for '26, you probably see that sort of harmonize or average out into the six, 7% range. So I think, you know, consumers will feel less need, you know, for rate, which should help new business growth and ultimately, you know, retention. But growth is the focus. But just because it's the focus, doesn't mean it's gonna happen. But as I said in my prepared remarks, and I'll ask Melinda to add her commentary, I think we see good growth opportunities in agency. You know, where in the direct channel, it just might be a little tougher. But, Belinda, what would you add? Melinda Thompson: Yeah. I think, you know, you hit on it the drivers of growth certainly. We're retention and new business are required to, to change the trajectory there. And as auto rate continues to moderate, we do expect less downward pressure on our retention. We've also implemented a number of initiatives to stimulate new business inclusive of marketing, rate, non-rate levers. It is a competitive environment, though. The other thing I would maybe add is we are growing today in age We are growing at home on a year-over-year basis. We are oriented on it, but are doing so, you know, judiciously and appropriately so smart growth, bundled growth, willing to spend a little bit more to get it, but also manage within our expense overall. Katie Sakis: Certainly. And I can appreciate the strategic approach here. I guess, you know, delving a little bit further into the retention discussion. Think we've started to see that improve in auto in late 2025. Do you guys think you've seen the bottom of retention in the homeowners business? With improvement possible in 2026? Melinda Thompson: Yeah. Again, as, you know, as we think about the bundled dynamic, I think that auto and home are definitely linked but we do feel good about the upward trajectory on retention overall. Katie Sakis: Thank you. Operator: I will now hand the call back over to Kate for closing remarks. Kate Jorens: Thanks for joining us today. As always, feel free to follow-up with any additional questions, and have a great day.
Operator: Good day, and thank you for standing by. Welcome to the Brookfield Renewable Partners Fourth Quarter and Full Year 2025 Results. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your speaker today, Connor Teskey, Chief Executive Officer. Please go ahead. Connor Teskey: Thank you, operator. Good morning, everyone, and thank you for joining us for our fourth quarter 2025 conference call. Before we begin, we would like to remind you that a copy of our news release and investor supplement can be found on our website. We also want to remind you that we may make forward-looking statements on this call. These statements are subject to known and unknown risks, and our future results may differ materially. For more information, you are encouraged to review our regulatory filings available on SEDAR plus EDGAR and on our website. On today's call, we will provide a review of our 2025 performance, share our perspectives on the energy market today, and provide an update on the growth outlook for our business. We will then turn the call over to Patrick who will discuss our operating results and strong financial position as well as outline how our increasingly differentiated access to capital is providing a clear advantage for our franchise today. He will then conclude our remarks with an update on our growing asset recycling program. Following our comments, look forward to taking your questions. 2025 was another excellent year for our business. We delivered strong financial results, strengthened our balance sheet and most importantly, further positioned the business to continue delivering strong growth and value creation for our unitholders going forward. This past year, we delivered $2.01 of FFO per unit. Up 10% year over year and in line with our long-term growth target. On the back of solid operating performance, expanded development activities, accretive acquisitions, and growing capital recycling. We deployed or committed a record $8.9 billion or $1.9 billion in growth net to BEP. Highlighted by the privatization of NioN, our carve-out of Geronimo Power in The United States, and our increased investment in Isahan one of our strongest performing businesses over the last decade. We were successful in advancing our various commercial priorities, signing contracts on over nine gigawatts of generation capacity. We also continue to scale our development activities bringing online over eight gigawatts of new capacity globally a record for our business. We delivered on our asset recycling targets, reaching agreements to sell assets generating $4.5 billion of pro proceeds. Or $1.3 billion net to BEP, at returns above the high end of our targets. And we accomplished this all while strengthening our balance sheet, ending the year with $4.6 billion in available liquidity. Stepping back and looking at the broader market today, it is now clear that power is a strategic priority around the world and is the bottleneck to growth for both governments and corporates. Investment in new generation capacity over the past several years was largely about replacing carbon-intensive generation in a world of modest, or even flat electricity demand growth. Today, that backdrop has fundamentally shifted. Energy demand is rising at a pace not seen in decades, driven by the multi-decade trends of electrification and renewed industrial activity. This demand growth is being further amplified by AI, and the unprecedented investment in energy consumption from some of the largest companies in the world. As a result, we are not only transitioning the grid, but adding substantial net new generation for the first time in decades. Said another way, we have shifted from a period focused on energy transition to a period focused on energy addition. This shift is driving a move from incremental grid upgrades to large-scale expansion prioritizing fast to deploy renewables, scale baseload generation, and capacity to ensure reliability. Meeting this demand will require a mix of all the scale and efficient technologies. Over time. Solar and onshore wind will play a critical role given their speed to market and low cost. Hydro and nuclear are important for their baseload and scale, natural gas for its flexibility, and battery solutions will be critical for ensuring the reliability of grids going forward. In this evolving environment, we have deliberately positioned our business at the epicenter of many of these technologies. Allowing us to capitalize on the rapidly expanding opportunity set given our operating and development capabilities, strong partnerships and significant access to capital. First, we are scaling our development of low-cost fast to market solar and onshore wind to meet the accelerating demand for power in the near term. Over the past year, we commissioned a record amount of new solar and onshore wind capacity and are on track to reach a run rate of delivering roughly 10 gigawatts of new capacity per year. By 2027 all while maintaining our disciplined approach to development. Second, against the backdrop of growing demand for reliable base load power, we are well positioned in the current market through our operating hydro assets our ownership of Westinghouse. As power systems require more scale baseload generation, flexibility, and enhanced reliability. The value of hydro is being recognized more than ever before. This has been highlighted by the execution of three twenty-year power purchase agreements at strong pricing with hyperscalers. A first for our business. As well as the signing of the framework agreement with Google to deliver up to three gigawatts of hydro generation in The United States. With respect to nuclear, only slightly more than two years ago, we invested in Westinghouse. Gaining exposure to this critical technology for current and future electricity grids given its scale and baseload characteristics. Our investment was underpinned by Westinghouse's highly contracted infrastructure like cash flows from its fuel and maintenance business, its strong market share, and its leading and proven technology for large-scale nuclear power reactors. The current energy demand environment has reinvigorated the nuclear sector with increasing recognition of the role nuclear can play to enable economic growth and provide energy security. Perhaps the most impactful development for the sector is the recently announced landmark agreement with the US government to deliver new nuclear reactors utilizing Westinghouse technology in The United States. This agreement delivers significant economic value to Westinghouse and BEP via the development of multiple reactors, and then through the long-term provision of fuel and maintenance services over the eighty-plus year life of those reactors. A commitment of this scale provides long-term demand helping unlock supply chain investment, and positions Westinghouse to expand deployment well beyond this initial program. To both corporates and governments in The US and internationally. Since signing this agreement, all parties have been working to progress the sites to construction as quickly as possible largely focusing on-site selection, and the ordering of long lead time items. Against this backdrop, and the known development timeline for nuclear, the limited new hydro capacity available, and the growing backlog for natural gas plants we are seeing batteries play an increasingly important role in the near term. With their importance set to grow over time as additional low-cost renewables come online. Battery costs have declined by an astonishing 95% since 2010. Following a trajectory similar to solar panels a decade ago. And we see a growing opportunity to deploy this technology on a contracted basis at strong risk-adjusted return. Our recent acquisition of NaoN significantly expanded our operating footprint capabilities, and development pipeline in battery technology. And we expect to quadruple our battery storage capacity over the next three years to over 10 gigawatts. This growth is highlighted by one of the largest stand-alone battery storage projects globally, totaling over one gigawatt which we are currently advancing through NaoN in partnership with a sovereign wealth fund. Taken together, rising energy demand across global markets is driving the need for rapid additions of renewable capacity large-scale baseload power, and battery storage. Backed by long-term partnerships with the world's largest corporate buyers of power and governments, we are delivering more generation than ever before. By being positioned in markets with accelerating demand, combined with our global scale, significant access to capital, and our operating and development capabilities across key technologies, we are best positioned to deliver comprehensive energy solutions across all markets at scale and are entering into a period of outsized earnings growth generating significant value for our unitholders over the long term. And with that, I'll pass it on to Patrick to discuss our operating results our diverse sources of scale capital our balance sheet as well as our recent capital recycling initiatives. Patrick Taylor: Thanks, Connor. And good morning to everyone on the call. As Connor noted at the outset of his remarks, 2025 was a strong year across almost every metric. With the business delivering 10% FFO per unit growth. Achieving our target while maintaining our best-in-class balance sheet and further positioning ourselves to generate significant growth and value going forward. In the fourth quarter, we delivered FFO of $346 million up 14% year over year. Or 51¢ per unit. On a full-year basis, delivered FFO of $1.334 billion or $2.01 per unit. Up 10% year on year. Results were driven by the strength of our contracted inflation-linked cash flows across our diversified global operating fleet. Growth from development activities, accretive acquisitions, and scaling capital recycling. Looking across our segments, our hydroelectric segment delivered strong results this year. With FFO of $607 million up 19% from the prior year. Benefiting from solid generation across our Canadian and Colombian fleets higher revenues from commercial initiatives, and gains from the sale of a noncore hydro portfolio. All of which offset weaker hydrology in the in The US. Our wind and solar segments generated a combined $648 million of FFO supported by contributions from the acquisitions of Nayeon, and Geronimo Power, as well as our investment in a portfolio of contracted offshore wind assets in The UK. This growth was offset by gains on sales recorded in last year's results. Which included the sale of Scieta, and the partial disposition of Shepherd's Flat. In our distributed energy storage and sustainable solutions segments, we generated record results of $614 million. Up almost 90% from the prior year. Driven by growth through development the acquisition of Nail and and strong performance at Westinghouse. On the back of continued momentum in the nuclear sector. In addition to the strong results, a continued focus of ours has and will always be to maintain balance sheet strength, financial flexibility. This enables us to be opportunistic when it comes to deploying capital into growth and protecting us against downside risks. We ended 2025 with $4.6 billion of liquidity, And over the past year, we reaffirmed our BBB plus investment credit investment grade credit rating which we remain firmly committed to maintaining going forward. Our rating, significant liquidity, and strong financial position enable us to be very opportunistic with respect to our financing activities. Which further strengthens our balance sheet. In 2025, we executed over $37 billion in financings. A record for our franchise. These financings were highlighted by the completion of $2.2 billion in investment-grade financings. Primarily at our hydro assets. Where we are seeing strong lender demand for these assets and are leveraging the benefits of newly signed long-term contracts at strong pricing. In March past year, we issued CAD450 million of ten-year notes at what was our lowest spread in almost twenty years at the time. We then more recently topped this. Issuing $500 million Canadian of thirty-year notes this January at our lowest spread ever. Reflecting the strong demand for our credit and our ability to be nimble and take advantage of a favorable spread environment. In November this past year, we also executed a 650 million bought deal equity raise in concurrent private placement. We were successful deploying capital ahead of our targets in the twelve months prior to the equity raise, and this financing provides capital to invest even further in the expanding opportunity set in areas where we have a differentiated ability to deploy capital. Such as hydro, nuclear, and battery storage. Our strong balance sheet is further enhanced by the fact that we deploy our capital alongside a large pool of third-party funds raised by Brookfield Asset Management. In 2025, Brookfield successfully completed fundraising of over $20 billion for its second vintage of its global transition fund. This capital will support large-scale investments alongside BEP that few others can make. Further enhancing our access to large, high-quality M&A opportunities that help us achieve strong, and consistent growth. In addition to our financing activities across the business, we are continuing to scale our capital recycling program which is increasingly providing significant liquidity to support our growth and crystallize value creation within our business. We continue to see robust demand from private investors for derisked infrastructure like cash flowing operating assets. At the same time, with our scaling development activities, we have a growing portfolio of assets and platforms that we are selling on an annual basis. The size of our portfolio our flexibility to sell whole platforms standalone assets or minority stakes. Is enabling us to be active in the market. Consistently selling at prices that deliver on our target returns. This past year, we generated record proceeds of $4.5 billion or $1.3 billion net to BEP from asset recycling alone. This year, our asset rotation activities were highlighted by the sale of a North American distributed energy platform. A 50% interest in a portfolio of noncore hydro assets in The U. S, and the establishment of an asset rotation program at Nayeon. That was successful in executing the sale of $1 billion of enterprise value of assets in our first year of ownership alone. Looking ahead, we are focusing on continuing to scale our capital recycling program and generating proceeds from sales in a more recurring manner. In January, we agreed to sell a two-third stake in a large portfolio of recently built operating and solar asset wind and solar assets in North America. Meet certain criteria to the same buyers. This framework Our progress. Throughout the year. We also wanted to note that after the quarter end, we announced a fully discretionary $400 million at the market equity issuance program for our BEPC shares. We expect to use the proceeds to repurchase BEP LP units on a one-for-one basis under our existing NCIB. The purpose of the program is to increase BEPC's float and liquidity in a nondilutive manner. While also allowing us to capture value from the persistent premium at which those shares trade. Providing incremental cash to deploy into growth, or buy back even more shares. Lastly, with our record results, in conjunction with our strong liquidity and robust outlook for our business, we are pleased to announce an over 5% increase to our annual distribution to $1.468 per unit. Since Brookfield Renewable was listed in 2011, we have now delivered fifteen consecutive years of annual distribution growth of at least 5%. Each year. In closing, we remain focused on delivering 12% to 15% long-term total returns for our investors. While remaining disciplined allocators of capital, leveraging our scale and operational capabilities to enhance and derisk our business. On behalf of the board and management, we thank all of our unitholders and shareholders for their ongoing support. That concludes our formal remarks for today's call. Thank you for joining us this morning. And with that, I'll pass it back to our operator for questions. Operator: Star one one on your telephone. And wait for your name to be announced. To withdraw your question, please press star one one again. Our first question comes from Sean Steuart with TD Cowen. Sean Steuart: Thanks. Good morning, everyone. A couple of questions. To start with. Connor, 2026 would be the first year where you start to, to feed projects into the Microsoft framework agreement. Can you give us an update on progress there and the expected cadence of of capacity into that deal through 2030? How is that advancing at this point? Connor Teskey: Good morning, Sean. I would make this comment more broadly on a wholesale basis beyond very simply our strong relationship with Microsoft. The demand we are seeing from corporates and, in particular, the large hyperscalers is at an all-time high. And I recognize that we've been saying that for a number of years, but that demand just continues to accelerate and continues to grow. And we're seeing that in terms of the projects and the execution that we are doing with counterparties such as Microsoft on an ongoing basis. When we launched that program, we had a defined set of projects in our pipeline that we thought would fill the 10 and a half gigawatts. That was initially outlined. I would say since we announced that agreement in 2025, we are seeing counter parties such as Microsoft look for power in a broader spectrum of regions and markets, particularly across The United States. And even a broader spectrum of technologies to meet their power demand. So we will see growth in 2026 and we expect to see that growth do nothing but accelerate from 2026 through the rest of the decade. Sean Steuart: Okay. Thanks for that perspective. And then Patrick, a question on the balance sheet. You guys were busy with financing initiatives in the fourth quarter, asset recycling. When I look at the ratio of available liquidity versus the scale of the secure development pipeline or versus the installed asset base. Those ratios have moderated a little bit the last 1.5 I I guess any commentary on broader comfort with the the the liquidity position. I appreciate you're gonna be busy recycling assets. Are there ratios you're focused on to sort of sustain a comfort level with available liquidity relative to expanding growth opportunity set? Patrick Taylor: Yeah. Absolutely, Sean. And and I would I would say we're very comfortable. First of all. And and when we think about our available liquidity and and the business obviously having grown over the last several years, we're very focused on sort of maintaining a minimum level in and around that $4 billion mark. We're pretty fairly focused on it. It's not a hard line by any means, but we have been at or around that or above that, I should say, for the last several years at this point. It's a level given the scope of our business today that we feel quite comfortable being at. And to your point, as the development pipeline continues to grow, we're complementing that by scaling our capital recycling as well. So that allows us to be in and around that $4 billion mark and be very comfortable with our funding availability of of our liquidity, I should say. Sean Steuart: Okay. But when you think about 4 billion, I mean, you've you've been there for a while now. You're Your organic growth pipeline expanded really rapidly. You know, is that is is I would imagine there's sort of, like, a dynamic element to this the velocity of capital deployment changes for you guys. You know, as as the organic pipeline grows, is there other thoughts to that? Patrick Taylor: No. I I I think it's fair that as the organic pipeline continues to grow, there'll be an element where we'll we may look to increase that over time. But we're at a level right now where as we look out over the next several years, we're we're quite comfortable at these levels. And part of it is just because of that visibility we see on on accelerating, recycling. Sean Steuart: Okay. Okay. That's all I have for now. Thanks very much. Our next question comes from Nelson Ng with RBC Capital Markets. Nelson Ng: Great. Thanks and good morning everyone. So quick question In terms of the eight gigawatts commission this year, I think about two and a half. Were in North America. But obviously, there's a lot in The US. So when you look at developing projects in The US, are you still seeing any like, headwinds or bottlenecks from from the federal government from a permitting perspective for for onshore wind solar. Like, obviously, it's a different story for offshore wind, but but you're you're doing onshore. But are are you seeing any headwinds there? Connor Teskey: Hi, Nelson. Thank you for the question. Really put this in two buckets. What we would say is, when it comes to solar, which is the the broadest component of our pipeline, solar and batteries in The US, we are seeing no slowdown. We are seeing an acceleration. And this is driven by solar is quick to deploy. It's cheap. It's the lowest cost form of production. And quite frankly, the the corporate need the the power as quick as possible. So on solar, we are seeing no change, if anything, in acceleration. And we're trying to pull projects forward as as fast as possible. On wind, onshore wind, there has been some slowdown in permitting from the federal government, but projects are still getting done. And we've taken that into account into our development and execution process. That's reflected in in the pipeline that we prep we present. I would say that that wind is progressing slower than onshore solar in The U. S. Market, but both are still getting done. Nelson Ng: Got it. Thanks for the color. Then just switching topics a bit. So, obviously, we're hearing a lot a lot about the elevated power prices in The US. And the fact that you are signing more long-term hydro contracts But when I look at your realized power prices for The US hydro segment in the supplemental document. I I think the realized hydro price has been flat year over year at about $83. I'm just wondering whether that's just due to the generation mix given that it was below average in the past year And should we be seeing an increase going forward? Connor Teskey: You you should see an increase going forward. And there there's a lot of different dynamics that flow through those numbers, but the overarching point to be made is the scarcity value of hydroelectric power is at an all-time high right now. And it perhaps gets glossed over in the breadth of our broader business But the three contracts, three twenty-year take or pay PPAs inflation-linked with some of the largest corporates around the world from our perpetual hydro assets. We have never seen demand of that scale at the prices we have seen in, I'd say, the last year, but in particular in the last six months. And as those contracts get layered in, some of those contracts don't start immediately. They start in a couple years when the existing contracts roll off. You will begin to see higher achieved contracted power prices across our hydro portfolio. Nelson Ng: Great. Thanks. And I'll try to squeeze in one more question. In terms of capital recycling, you guys mentioned that you have a I guess, a potential framework to to sell an additional 1 and a half billion to to some buyers to some existing buyers. Like, so when when you look at recycling assets, are, like, how much of your customers are or how much of the buyers are essentially repeat customers? And should that streamline your asset recycling process going forward? Connor Teskey: Short answer, yes. But let me provide a little bit more color. Since we started to grow our development business I would say in 2019 or 2020, our capital recycling activities have understandably grown on a similar trajectory but probably on a three-ish year laggard basis. The the time it takes to to pull a project out of the ground. As a result, over the past two or three years, our asset recycling proceeds have become a very consistent, recurring, predictable source of both funding and earnings for our business. And given the trajectory of our development activities and the visibility of our pipeline today, we would expect this activity to continue going forward with 2026 being no different. Then when it comes to the the recent we will call them frameworks we've set up, in terms of asset recycling, similar to in the past how we have raised capital to facilitate a greater level of deployment into growth. We think about this as raising capital to facilitate a greater amount of capital recycling in the business. And we're we're pretty excited about what we've designed and executed here because what these frameworks and we've executed one and we're pursuing others in different regions around the world that we would hope to execute in the near term. What we have done is we would say we have created almost a a framework or a program to recycle newly built assets at scale quickly on a recurring basis. And the impact to our business is it significantly derisks our development platforms around the world and the business plans we're seeking to execute. And it significantly derisk our capital recycling and funding plans for our business for the next several years. I I will go out on a limb and say, I think this is going to be a huge differentiator for our franchise. Yes. We've signed one, since the end of the year. Focused on North America, but we expect to sign others in the near term here. And these are are very significant in terms of scale. And not only are they going to provide an accretive source of funding for our business, they significantly derisk our development activities that continue to grow. Nelson Ng: Great news. Thanks for the color. I'll leave it there. Our next question comes from Robert Hope with Scotiabank. Robert Hope: Good morning, everyone. So at the recent Investor Day, you spoke quite bullishly about the battery outlook, and I believe you commented that it could be seven gigs in a couple of years. And today, you're saying it could be 10 gigs. Is the accelerating development pipeline here or an increasingly bullish outlook here in part due to the fact that you're seeing larger opportunities? The one gigawatt battery project for the sovereign wealth fund, is this indicative of where you think is going, larger projects to ensure reliability for the grid? Connor Teskey: Yes. And hi, Rob. The the short answer is yes. Make no mistake. Batteries are the fastest growing part of our platform today. And we expect that to continue. This dynamic continues Costs continue to go down. Technology advances continue to be made. And, therefore, we are seeing batteries as a potential solution in more and more of our projects and in more and more of our markets. The other thing we would highlight is we do all think of at Brookfield Renewable, think about battery development probably a little bit different than generation development. Because it can be executed faster. Much of the the equipment shows up prebuilt on-site. And because batteries and energy storage reduce grid, congestion as opposed to add to it, there is significant incentive from grids to bring batteries online faster. Therefore, yes, we have accelerated or increased our outlook for batteries, but it's very simply just a reflection of what we're seeing across our business and what we're doing with our sovereign wealth fund partner, we would expect to do other similar projects, like that going forward. Robert Hope: Alright. Appreciate that. And then maybe turning over to the M and A environment, You've been very successful monetizing assets. But on the other side, acquiring assets, what does that environment look like in a rising price environment as well as the power addition environment. Connor Teskey: So perhaps I'll I'll almost tie this back to Patrick's answer on funding a little bit. We We've always been very opportunistic in terms of funding our business. And right now, we see scale capital as an increasing competitive advantage in today's market. And we see a very constructive market for deployment into growth. This is why we took the decision earlier this year to strengthen our already very strong capital and balance sheet position. Because we do believe we are at the start of a period of very attractive deployment into growth in m and a. And very simply a broader consolidation of our space where we think we can play a very significant role. Thank you. Next question comes from the line of Baltej Sidhu National Bank of Canada. Baltej Sidhu: You, and, good morning, everyone. So, Connor, just given that renewable infrastructure evaluations remain compressed and and you've noted the large largely US based development pipeline Where are you seeing the most attractive risk adjusted opportunities today that operating assets late stage development, or or easy to teach platforms? And do you think that mix will evolve, looking into 2026? Connor Teskey: The the the opportunities we are seeing, are pretty broad based around the world, but perhaps to focus on a few themes that we we are seeing right now. I I would perhaps highlight three where we're seeing the greatest volume of opportunities that we we view as attractive. Absolutely, yes. Public companies. That would be number one. In the current environment. The second point we would highlight would be carve outs. From broader utilities or energy businesses. Because there are such significant capital needs across the the industry, market participants participants are needing to choose where they will allocate their capital budgets. And to put it bluntly, some market participants can't fund a 100% of the opportunities they have at their disposal, and therefore, they may look to sell divisions, that they don't expect to fund all the growth opportunities in, and that could be an opportunity with us given our robust capital position. The the the last point we would make is we are seeing a unique dynamic in the developer market. Where we are seeing a bifurcation between what we would call high quality developers and maybe less high quality developers. High quality developers price at an absolute premium, in today's environment given the growth trajectory of electric demand and the value of projects that can be pulled out of the ground. However, developers that maybe don't have scale capabilities, to navigate the current environment, but do have large pipelines of projects. We we are seeing more attractive pricing at at that end of the market and and would expect to be active there in order to add projects to our pipeline. That we can then contract the demand we're seeing from our customers. Baltej Sidhu: Just wanna work for me. On the case via title that you had had alluded to and speaking towards the Google HSA, which could see you potentially acquiring an hydro to facilitate the entirety of the three gigawatt. What are you seeing in the market, and and how are you thinking about it just looking forward in that regard? Connor Teskey: Sure. What we would say when it when it comes to hydros is it very much, depends on location. As mentioned, we've seen really strong demand for our hydros and and premium valuations both in contracts and in assets in markets in The US like PGM and MISO. And our activities in 2025 reflect that. However, what I would say is what we are seeing is the offtakers of these hydro assets, increasingly looking now beyond those two markets which have really been their focus, I would say, for the last two years. Therefore, when when we look, to potentially acquire assets, we're probably looking for assets in these markets that have been viewed as non noncore in the past where we can acquire assets execute operational improvement programs, and re Question. You mentioned the better storage opportunity. I'm curious couple of things is is is applying mostly greenfield development So you picked up a couple meg actually, quite a number of megawatts from from Neon. Or are there opportunities to to also do do M and A And then I'm also secondly curious the revenue model will storage for for you specifically, is that do you expect to be mostly contract, or is there a fair element of of merchant arbitrage? And there? Good morning, Ben. Great question. So in terms of batteries, we we view ourselves to be in quite a a a fortune position because we do have a very large organic development pipeline. A lot of that did come through the acquisition of Nailwind. Candidly, Nayawen was the largest acquisition in the history of Brookfield Renewable. We recognize that perhaps a lot of people knew Nayeon as a leading global renewable power developer. We we obviously saw that and the value of that. But we thought what was underappreciated in their business is the fact that they're the leading global energy storage developer as well. And what you've seen in our first year of ownership is us really accelerating the growth in the business, but particularly on the energy storage side. We are also looking at m and a opportunities in the battery space, but we've positioned ourselves that we can be, quite discerning and balance the the return we're seeing in m and a versus the returns we're seeing in, organic development. To your question about contracting, we're very excited about the evolution of what we've seen in the energy storage space where only perhaps two, maybe three years ago, a lot of the revenue models were arbitrage or or merchant related. Increasingly, what we are seeing is long-term tolling or almost take or pay capacity contracts on newly built battery assets. And very simply, as an example of the large project that Nayeon is is pursuing. That would be on a 100% contracted basis for the entire life of those assets. So a a development in revenue profile very much in line with or potentially even stronger than what we do all day every day on the wind and solar side. Baltej Sidhu: Okay. Understood. Thanks for that. And then can I also ask him offshore wind side? You previous comments, you you didn't like it for a while. Maybe seven, ten years, you got maybe more open to it. They did a deal for that. Where does Brookfield stand today then on offshore wind? Understandably, it would be very, market specific. But we are seeing some markets We we won't bury the lead here. Europe, in particular, increasingly more constructive from an offshore wind perspective. And we are evaluating opportunities in the space there. That being said, as with everything, we we will compare the investment profile and the risk return we see in those opportunities versus what we see elsewhere in the portfolio and only pursue them if we we think we're being appropriately compensated. Baltej Sidhu: Okay. If I may it's a follow-up on on that There there's been maybe a trend of offshore wind assets in any year as they reach end of contract life, they become more merchant like? Is that something that maybe Brookfield could opportunistic take advantage of? Certainly. And in particular, if we could bring our our contracting to bear, such that we could acquire those assets based on a merchant profile, but bring our power marketing capabilities to to quickly derisk them through a new long-term contract, yes, that's absolutely something we would look at. We would be clear that we've seen a couple of those opportunities, but it's it's not the largest opportunity set in the world today. Baltej Sidhu: Okay. Understood. Okay. Thanks, Connor. Our next question comes from Anthony Crowdell with Mizuho. Anthony Crowdell: Good morning, Connor. Just a quick one. A follow-up maybe on the previous question or two questions on PJM. Just several weeks ago, the Trump administration created that backstop auction. Which is a very light on details. I'm just curious if you think that plays maybe or pushes hyperscalers to focus more on Brookfield Renewable's development side where you bring a new generation in or the company could be opportunistic with some repricing, some existing generation? Connor Teskey: Good morning. So the the activity in the announcements around PJM, we very much see this as simply a reflection of the demand for energy and, quite frankly, how tight the the system has become in particular, in markets with the highest levels of energy demand growth. We we've been saying for years that the supply demand imbalance has been growing materially. And this inevitable evolution leads to the immediate need for for large-scale capacity to be added to to grids around the the world and in different markets in The United States. So from our perspective, one of the most constructive outcomes of this discussion is that it should create a dialogue to facilitate an acceleration of new capacity coming online over the long term. That's obviously incredible for the market, and it's incredible Growing in incremental demand. We view this as a step towards addressing the underlying supply demand imbalance for our business sorry, addressing the underlying supply demand imbalance in that market. Great. Well, you everyone for joining our Q4 conference call. We appreciate your continued support and interest in Brookfield Renewable, and we look forward to providing an update after Q1. You, and have a great day. Operator: This concludes today's conference call. You for participating. You may now disconnect.
Operator: Good morning, and welcome to the Olin Corporation's Fourth Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the questions. To ask a question, you may press star then 1 on your touch-tone phone. To withdraw the question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Steve Keenan, Olin's Director of Investor Relations. Please go ahead, Steve. Steve Keenan: Thank you, operator. Good morning, everyone. We appreciate you joining us today to review Olin's fourth quarter 2025 results. Please keep in mind that today's discussion together with the associated slides, as well as the question and answer session that follows, will include statements regarding estimates or expectations of future performance. Please note these are forward-looking statements and that Olin's actual results could differ materially from those projected. Some of the factors that could cause actual results to differ from our projections are described without limitations in the risk factors section of our most recent Form 10-K and in yesterday's fourth quarter earnings press release. A copy of today's transcript slides will be available on our website in the Investors section under Past Events. Our earnings press release and related financial data and information are available under Press Releases. With me this morning are Ken Lane, Olin's President and CEO, and Todd Slater, Olin's CFO. We'll start with some prepared remarks, and then we'll look forward to taking your questions. In order to give everyone an opportunity, we will limit participants to one question with no follow-ups. I'll now turn the call over to Olin's President and CEO, Ken Lane. Ken Lane: Thanks, Steve, and thank you to everyone for joining us today. Let's start with Slide three and review our fourth quarter highlights. As we previously announced, our fourth quarter came in significantly below our expectations. In December, we experienced operational issues related to an extended turnaround of our Freeport, Texas chlorinated organics assets and third-party raw material supply constraints, both of which impacted our core alkali assets. At the same time, we also experienced a sharp decline in chlorine pipeline demand in an already seasonally weaker quarter. During the quarter, we were able to preserve our ECU values by staying disciplined with our value-first commercial approach, and we also announced the long-term EDC supply agreement with BroadsChem, which provides a higher value to both parties by integrating the low-cost producer of EDC with the leader in PVC in Brazil. In addition, we've expanded our infrastructure footprint in Brazil, which enables us to grow our caustic sales there in 2026. In our epoxy business, we were able to contract for significant growth in our European business, which we'll begin to benefit from in 2026. This is a result of our commercial team's successful strategy to position Olin as the last integrated supplier of epoxy in Europe, providing reliable, secure supply to local customers in the face of continued headwinds from subsidized Asian producers. In our Winchester business, we took aggressive action to accelerate inventory reductions across our system and began efforts to rightsize our cost structure in response to lower commercial ammunition demand. Cash generation is a high priority for Olin, especially in the trough environment that we're in. I'm very proud of how our team has responded, and through actions that we took, we were able to generate $321 million of operating cash flow and hold net debt flat versus year-end 2024. Let's turn to Slide four for a closer look at our chlor alkali product and vinyls results. Macro conditions remain challenging. Merchant chlorine demand remains under pressure through this extended trough as subsidized Asian chlorine derivatives flood export markets. Since 2019, China exports of titanium dioxide, urethanes, epoxies, crop protection chemicals, and PVC have grown 300 to 600%, placing significant pressure on US chlorine derivative customers. As you would expect in a trough environment, we are already seeing chlor alkali capacity rationalization in Europe, Latin America, and the US, which should accelerate operating rates as demand recovers. Olin has done a great job of preserving our ECU values and remains committed to our value-first approach. We are well-positioned when markets recover from the trough. As we look ahead to the first quarter, we'll continue to face headwinds related to power and raw materials. As a result of winter storm Fern, we proactively shut down several of our Gulf Coast assets, which will increase our first quarter costs. In addition, we'll see higher turnaround costs as we begin our VCM turnaround at our Freeport, Texas site. This is the single largest turnaround that Olin executes and occurs every three years. Global caustic soda demand remains healthy, led by alumina, water treatment, and pulp and paper. Olin ended 2025 with very low inventories, and we're seeing good momentum on our caustic soda price increase. As seasonal demand returns this spring, already low inventories and planned industry turnarounds are expected to further tighten caustic supply. Our full-year 2026 chlor alkali outlook remains challenging. We expect global vinyls pricing will remain under pressure. Rising US natural gas power and feedstock costs will present a headwind in contrast to falling global oil prices serving to erode the US cost advantage. In the near term, Olin faces stranded costs of approximately $70 million resulting from Dow's recent closure of their Freeport propylene oxide plant. This cost burden will be offset by our beyond $250 structural cost reductions, which I'll discuss shortly. Now let's turn to slide five for a look at our epoxy results. Our fourth quarter epoxy results sequentially increased due to improved product mix, allelix, and aromatics margins, partially offset by higher turnaround and seasonally lower demand. As we look ahead to the first quarter, we do expect our epoxy business to return to profitability, although at a low level. This will be realized through actions we have taken by growing our participation in the European market, realizing lower costs at our Stade, Germany site, and lower turnaround costs. As we look out further, structural changes in our cost position, recent European epoxy chain plant closures, and continued growth in our formulated solutions portfolio will support a return to profitability for 2026 as well. Over the past three years, Olin's epoxy business has remained focused on cost reduction. In that time, we've reduced our global cash cost by about 19%. Our most recent action was this month's closure of our Guaruga, Brazil epoxy plants. This shutdown is expected to deliver $10 million of annual structural savings. Also, in 2025, we continue to deliver on our formulated solution sales growth. These solutions enable AI chips to better manage heat and conductivity, allow lightweight wind blades to exceed 500 feet in length, and serve as adhesives in some of the most challenging environments and applications. We will continue to benefit from that growth in 2026. Now please turn to Slide six for an update on our Winchester business. During the fourth quarter, Winchester took aggressive action to adjust its operating model to reflect lower commercial ammunition demand and significantly reduce inventory. As expected, we realized higher military and military project sales, which was offset by these lower commercial sales and higher metals and operating costs. Winchester's first quarter priority will be the implementation of our commercial ammunition price increase. Our new pricing is expected to offset the majority of 2025 cost escalation. As we begin 2026, commercial shipments will continue to be made to order and subject to our increased pricing. As we look back at 2025, we've seen a significant decline in demand for commercial ammunition back to pre-COVID levels. In response, our Winchester team has taken the necessary actions to align our production capacity with today's reduced demand. We've eliminated shifts, reduced headcount, and restricted overtime across all Winchester plants. At the same time, ammunition imports have slowed dramatically in the face of US tariffs as high as 50%. Last year, imported ammunition satisfied approximately 12% of US demand. In the most recent September import data, imports from Brazil, which typically is the largest importer, have disappeared completely. Domestic and international military sales continue to grow as NATO countries expand their defense budgets and the US increases its own defense spending. Our next-generation squad weapon project remains on schedule and will be the most modern and sophisticated small-caliber ammunition plant in the world. Winchester's 2026 outlook still faces significant cost headwinds from higher copper, brass, and propellant costs. Winchester 2026 tailwinds include expected sales growth across domestic military, international military, and military projects. Commercial volumes and pricing are also expected to improve during 2026. Retail sales have begun to show year-over-year improvement, albeit over a low baseline, and retailer inventories have come down significantly. Let's turn to slide seven for a high-level view of our BEYOND $250 structural cost savings program. Olin's Beyond $250 structural cost reduction program focuses on the identification and removal of inefficiencies. During our 2024 Investor Day, each Olin business made a cost savings commitment, and we are focused on delivering these savings as quickly and efficiently as possible while maintaining safe and reliable performance of our assets. In 2025, we delivered $44 million in structural cost savings, and we expect to add an incremental $100 to $120 million of annual Beyond $250 savings during 2026, spread across our three businesses. As I discussed last year, we've enlisted outside expertise to help review our organization and processes against industry best practices. We've begun to improve efficiency at our largest site in Freeport, Texas. By streamlining our work processes, we've already been able to achieve a meaningful reduction in staffing. Through this exercise, we've identified many key performance metrics and gaps to close. For example, our contractor time on tools was well below industry best practice, and our overall reliance on contractors was excessive. With our new organization, work processes, and performance tracking, we have a clear line of sight to deliver these additional cost savings in 2026. Our Freeport plant is the pilot for this improvement program, which we're now rolling out across our other global sites. At the same time, Winchester has been rightsizing their staffing and operations to reflect lower levels of commercial ammunition demand. Both of these efforts combined have resulted in a reduction of more than 300 employee and contractor positions during 2025. We expect to realize a similar level in 2026 as we implement the same efficiency measures at our other sites. In 2026, we'll begin to see the benefits of our new supply agreement at our Stade, Germany site. We expect to realize $40 to $50 million of savings related to that in our epoxy business through the year. As mentioned earlier, Dow's closure of its Freeport propylene oxide plant has created a $70 million stranded cost headwind for Olin. By optimizing our power supply, we've already managed to offset approximately $20 million of that stranded cost. Earlier this month, we announced the closure of our production plant in Brazil. We'll be able to more cost-effectively serve our customers there with supply from either Freeport or Stade, both of which are vertically integrated with better cost structures. As a result of this action, we expect to realize a $10 million annual benefit. With the progress we made in 2025 and visibility of savings in 2026, we're confident we can exceed the $250 million savings commitment we've made during our 2024 investor day. Now I'll turn the call over to Todd for a look at our financial highlights. Todd Slater: Thanks, Ken. Let's review our cash flow, liquidity, and financial foundation. Despite the challenges we encountered that impacted our adjusted EBITDA during the fourth quarter and throughout 2025, I'm pleased to report that we successfully achieved our 2025 cash flow and working capital objectives. In the fourth quarter, we generated approximately $321 million in operating cash flow, which enabled us to keep our year-end net debt at a level comparable to where it stood at the end of 2024. Throughout 2025, our team's proactive working capital reductions contributed $248 million in cash, excluding the timing of tax payments. As we closed out the year, our available liquidity stood at $1 billion. Preserving and enhancing liquidity continues to be a top priority for us, particularly as we navigate this extended period of lower demand in our businesses. We continually review all sources and uses of cash with the goal of cost-effectively maintaining adequate liquidity to support our business. Our debt profile remains managed. Early last year, our team executed a well-timed bond issuance and debt refinancing, which provided a leverage-neutral extension to 2033 of our nearest bond maturities as well as an extension of our senior bank credit agreement from 2027 to 2030. Importantly, we have no bonds maturing until mid-year 2029. Our debt structure consists of manageable tranches with staggered maturities in the years ahead. We remain firmly committed to managing our balance sheet in a way that maximizes our financial flexibility in the future. Now let me take a moment to discuss our outlook for expected sources and uses of cash in 2026. First, regarding cash taxes, we anticipate receiving refunds from prior years related to the clean hydrogen production tax credits under section 45B as part of the Inflation Reduction Act of 2022. Factoring in these refunds, we expect 2026 to essentially be a cash-free tax year, plus or minus $20 million. We are proactively managing our capital spending. As we further strengthen our financial resilience, any remaining excess cash flow after the preceding capital allocation priorities will be used to reduce our outstanding debt. As a reminder, due to our normal seasonality of working capital, we expect net debt to increase during 2026. We remain focused on minimizing our typical seasonal inventory build. Our teams remain dedicated to generating cash, maintaining strict cost discipline, and supporting our Beyond $250 cost savings. We are committed to maintaining a prudent capital structure with a strong balance sheet and robust cash flows. Ken, I'll hand the call back to you. Ken Lane: Thanks, Todd. Let's finish up with slide nine and our outlook for the fourth quarter. We expect to deliver first-quarter earnings lower than the fourth quarter of 2025. The main drivers behind that are continued seasonally weaker demand and higher costs in our CAPV business, as we previously discussed. We're seeing positive momentum with caustic pricing and expect to see more benefit from that as we move through the year. Epoxy results will be sequentially higher, driven by higher volumes and lower costs in Europe from the new Stade contract taking effect, partially offset by a less favorable product mix. Winchester results are expected to modestly improve from the fourth quarter with higher commercial ammunition volume and pricing to offset rising copper and brass costs as well as lower operating costs from our new operating model. While we're not satisfied with our results, everyone at Olin is focused on executing our value-first commercial approach, delivering our Beyond $250 cost reductions, and controlling what we can control to drive better business outcomes going forward. Across our businesses, our team is committed to maintaining leading positions, and I'm confident that we are well-positioned for the future. Operator, we're now ready to take questions. Operator: We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. Please limit yourself to one question. At this time, we will pause momentarily to assemble our roster. Our first question comes from Aleksey Yefremov from KeyBanc. Please go ahead. Aleksey Yefremov: Thanks. Good morning, everyone. You described a sharp decline in chlorine pipeline demand in Q4 as one of the biggest headwinds, and I'm curious if it remains a large headwind in the first quarter, and if so, when do you expect that chlorine demand to recover? Obviously, consultants are describing a more competitive merchant chlorine market. Is this part of the story here, or is this something idiosyncratic to your customers, and do you still have those customers and have the same market share or not? Ken Lane: Hi. Good morning, Aleksey. Thank you for your question. So, yeah, listen. We saw the decline that we were referring to for the chlorine pipeline demand. That really happened in December, late in December. As you can imagine, it's pretty easy to reduce that off-take when you're on a pipeline. So we saw that happen. We think it was primarily related to destocking. We were already seeing the seasonally lower demand. It just right at the end of the year, it went down even further. Now that was a contributor to the lower earnings, but also the costs were a larger contributor to the earnings decline that we had talked about for the quarter. You know, we are going to still see seasonally low demand in the first quarter of 2026. I don't expect to see what we saw in December happen again in the first quarter, but you know, we're not going to see a large bounce back in demand. You start to see a recovery until we get into the warmer weather months, water treatment demand, and that sort of thing, that won't happen before the second quarter. So we're still going to be very aggressive on maintaining our costs and making sure that we're being disciplined around our operating rates because that's what we can control. And the other thing that I want to mention is just related to caustic. There's no issue with demand on caustic. What we see happening on caustic is we don't have the volume to sell. The market is tighter than what people think, and we actually are going to see a little bit lower volumes in the first quarter on caustic. That's an availability issue, not a demand issue. Operator: Alright. Next question comes from David Begleiter with Deutsche Bank. Please go ahead. David Begleiter: Good morning, Ken. One of your competitors has announced some capacity closures in North America. Can you discuss how you think the impact of those closures will be felt and how beneficial it could be to Olin in 2026? Thank you. Ken Lane: Good morning, Dave. Thanks for joining us. So listen, like I had said in the prepared comments, we have been seeing rationalization of capacity occurring over the last twelve to eighteen months in pretty much all regions of the world. So it's not surprising when you're at the trough that you're seeing less cost-competitive assets being shut down. And our view has been that operating rates will improve, supply-demand balances will improve quicker than what you may be seeing in a lot of the because of that. That's what happens in every trough. And this is just another example of that. So again, while we're in a situation of this longer trough that's been exasperated by the additional capacity that's been added in Asia, you are starting to see those rationalizations occur. Demand has not come back. And when demand does recover, and it will one day, I know sitting here today, it may feel like it won't. But we're ready when it does. We're doing the right things to prepare our assets. We made a step change in our performance in 2025 in terms of safety, and that goes hand in hand with reliability. Those are very big focuses of our organization. And so what we've got to do is be really good at having the most cost-competitive assets, the most reliable, and the safest assets to be able to supply the markets that we serve. Operator: Our next question comes from Kevin McCarthy with Vertical Research. Please go ahead. Kevin McCarthy: Yes. Thank you, and good morning. Ken, can you comment on how military demand trended at Winchester in 2025, how much that might have been up versus the pressure that you discussed on the commercial side? And looking ahead, I think you made a comment that maybe commercial demand is starting to trend positively on a year-over-year basis. So what is your outlook in that regard for 2026, please? Ken Lane: Good morning, Kevin. Yeah. So listen. What we saw in 2025 was significant growth in revenue related to military, both domestic and international. Now a lot of that gets skewed by the project revenue that you see related to the next-generation squad weapon facility at Lake City. That project is going very well. I do expect, you know, we're even sitting here today, we're a little bit ahead of schedule. And so we feel really good about that project being on track to continue to realize growth related to that even in 2026. If you just think about the ammunition sales, yes, we did see growth even in the ammunition sales. The highest growth would have been in the international military space. That's growing off of a small base. So as a percentage of our total military sales, you know, it is a smaller percent of military sales, military than the domestic military. But we expect to see that continue to grow in 2026. All of that gets diluted by that project revenue, though, that you see coming through related to the Lake City project. We are seeing the fruits of some of the actions that we have taken in the second half of last year by being more disciplined in what we're producing and shifting our model to more of a make-to-order. You know, if we don't see the orders, we're not making the rounds. We've got to have visibility to that demand, and so that has helped us pull our inventories down. We've seen in the value chains, you know, at the retailers, their inventories have come down. And now we've got to start the process to be able to rebuild our margins. We've got to start passing through a lot of these cost increases that we saw in 2025 that are continuing into 2026. You know, brass and copper are real headwinds for us. And so that has got to get absorbed in the market. And so we're being, again, we're being very disciplined about the implementation of these price increases. And, you know, where we're not seeing that, then we're not going to be making the rounds. So we're going to continue with that. The green shoot that I'll comment on, though, is that we are seeing since December, and it has been continuing, you know, we are seeing weekly improvements in out-the-door sales at retailers. And so that is a very positive sign. I think that you are starting to see things get more balanced in that market. And with Chester being the leading brand, you know, we're going to be very disciplined because we're going to leverage that brand value. We're the leading brand in the industry, and we've got to make sure that we get the margins that reflect that. Operator: Our next question comes from Patrick Cunningham with Citi. Please go ahead. Patrick Cunningham: Just in terms, you know, last year, you started the PVC tolling arrangement. Now you have the Braskem ADC. Any updated thinking on additional downstream participation in chlorovinyls, whether it be expanded tolling arrangements or, you know, perhaps investing in your own PVC assets? Ken Lane: Good morning, Patrick. Listen. Vinyls, obviously, is a very important market for us. As you know, we've talked a lot about that. You know, we continue to participate in the PVC market at a low level of volume. But it is giving us the ability to see and learn a lot of things around the customers, around the product portfolio, and really educate ourselves on that decision. We haven't taken anything off of the table in terms of our options that we are considering and that we're looking at. We continue to make very good progress on looking at potential expansion into PVC, which would include joint ventures, some sort of a joint investment or partnership. You know, we're looking at technology providers and, you know, potential locations to be able to execute that. That all is underway, and that all is in flight, but we're not taking any option off the table, including continuing the relationship that we have today with our fence line customer at Freeport, Texas. So all of that is still in play. Long term, we are very optimistic around what we see in the PVC market. Yes, today, there's been too much capacity added. The demand has not come back, particularly in China. But that is going to get corrected over time. And so we're talking about a 2030, 2031 sort of timing for doing anything here. Today, there is not anything more definitive that we could say about that. Operator: Our next question comes from Hassan Ahmed with Olympic Global Advisors. Please go ahead. Hassan Ahmed: Morning, Ken and Todd. You know, just wanted to dig a bit deeper into the Q1 guidance you guys have given. Maybe you guys could sort of talk it through in terms of a sequential bridge. What I'm just trying to understand is that back in the day, you guys would talk about $1 a million BTU swing in nat gas prices being around $45 to $55 million worth of an annualized EBITDA swing. And this is, you know, obviously, before you guys down some capacity and the like. So would love to hear where that figure sits. And if, you know, Q1 had relatively normal nat gas prices, you know, what your guidance would have looked like and what your guidance would have looked like in the absence of maybe some of the weather-related capacity shutdowns you guys have done. And, you know, if I could also add on what that guidance would have looked like in a relatively normal sort of copper pricing environment? Ken Lane: Good morning, Hassan. Thank you for joining us. Listen. I know that some of that is what we've done in the past, but I would just tell you that I think when you start giving out those kinds of metrics, there tends to be too much with other data that they don't have. People lean on those too much, and they start trying to reconcile things. It ended up creating more questions and confusion than it's worth. So let me give you a little bit of a bridge on a year-over-year basis because that's probably a cleaner way to think about this than sequentially just because what we had in Q4 is not necessarily the same thing that we see in Q1. But if you think about it year over year, one of the biggest headwinds that we've got in our chlor alkali business is a significant increase in turnaround spend year over year. That's 40-ish million year over year. '24, '25 versus '26. The other thing is we are seeing significantly higher costs for power and natural gas. You can go look at that, and you can see what the numbers are, but both are going to be higher this year. Including now the impact of this winter storm Fern, we did proactively shut down some assets, but at the same time, we were still running some assets. So the power that we were consuming was at a higher price. But there are also costs associated with not running assets during that time when we were shutting those assets down. Now just to give you an idea, we're still completing the restart of those assets. So not everything is back online. But we should be by the weekend is my expectation. The other thing related to that winter storm Fern is our Oxford, Mississippi facility with Winchester is still down. You've probably seen some of the news coverage around Mississippi. They were sort of the direct hit of that ice storm. Employees are still not able to get to work. In some cases, you know, we're not seeing many people being able to get into that facility. So that's going to continue probably into next week, realistically. So, you know, those headwinds, obviously, we did not have year over year. Epoxy is going to be an improvement. Winchester is down. You know, net-net, those are probably about a wash. If you think about the '25 versus '26. So that's how I would, you know, kind of steer you on that without trying to give you numbers that you're going to screw yourself in the ground around because there are just going to be other variables that you're not going to be able to figure out. So hopefully, that helps. Operator: Our next question comes from Frank Mitsch with Fermium Research. Please go ahead. Frank Mitsch: Thank you, and good morning. I may have missed this in the past, but I wanted to ask about this $70 million stranded costs for the PO-related closure. You know, Dow announced this back in May 2023. And so, you know, obviously, you've known about it for a long time. And, you know, could plan for it, etcetera. That $70 million sounds like a very large number. Can you help explain that to us? To me in particular? Ken Lane: Yeah. Good morning, Frank. For your question. Listen. Yeah. We have known about this for a long time, and we've been planning it. And we talked about this at our investor day. You know, we knew that this was coming, but you don't take the costs out until you shut the asset. And so those assets are being closed and wound down as we speak. So as we go through the year, we're going to have to find ways to be able to offset that, and that was the basis for us creating Beyond $250. We've got to find ways to be able to take those costs out. The way that we were talking about this, I think, previously as well is that asset and the sales from that asset didn't generate any margin for us. It was a sort of a net-zero effect for us in terms of the P&L. That doesn't mean that there would not be stranded costs with that. We were aware of that. We've got to get after that. That is a very clear focus for us to be able to do that as we wind those assets down. But that is going to be something that happens over time. It doesn't happen like flipping a switch. Operator: Our next question comes from Josh Spector with UBS. Yeah. Hi. Good morning. Josh Spector: I just wanted to ask, if you look at the fourth quarter and first quarter in chlor alkali, and you just look at the things which are related with extended downtime, third-party outages, your own inventory actions, what was the impact in the fourth quarter? And what's your baked-in impact in the first quarter? Ken Lane: Good morning, Josh. Well, you know, like I said, there are a lot of things. There are a lot of variables that are going into that, including unplanned outages in our system. And present a little bit of a volume issue for us in the first quarter related to being able to meet the demand that we see, and that's why we're so confident in the momentum that we see around caustic pricing. But you're really, it's really difficult to give you any more details than that. I think there's a lot of misconception out there about the marketplace. And what we see in terms of supply and demand. Things are tighter than what people believe. And I think that's one of the things that we are going to continue to realize as we go through the first quarter and into the second quarter, we're going to start to see that movement in pricing that reflects the situation in the market. Operator: Our next question comes from Matthew DeYoe with Bank of America. Please go ahead. Matthew DeYoe: Morning. Like the prior kind of commentary for 2026 epoxies, I think we were expecting something around $80 million in cost savings, of which, you know, over half was supposed to come from just the Dow contract, Lapchada. Clearly, you're talking about modest profitability. Now this wouldn't be the first case. Productivity is lost to the cycle, but I'm just trying to clarify if that's what's happening here or if we should expect those savings to be more ratable in 2027. Yeah. I'll let you expand from there. Ken Lane: Good morning, Matt. Hey. Listen. So what we had said back at Day, that $80 million, remember that that was our cost-out target for 2028. You know? So that you're going to realize a very big chunk of that. You know, $40 to $50 million is going to be realized in 2026. So, you know, you are going to see, you know, epoxy last year, $50-ish million EBITDA negative. We're going to be positive this year. I mean, I do expect that that's going to be the result. And in 2026. So you're going to see a meaningful improvement in our earnings. Most of that are things that we're doing to help ourselves in cost reduction and efficiency improvements. Just to be clear, we're not seeing any significant improvement in the epoxy market. Demand is still subdued. Margins are still weak. You know, that environment has not changed. So all of this improvement that you're seeing is a result of what we've done. And so it's not getting lost anywhere. You're going to see that positive impact coming through in 2026. Operator: Our next question comes from Mike Sison with Wells Fargo. Please go ahead. Mike Sison: Hey, guys. Just curious when you think about improving EBITDA sequentially throughout the year, what do you think needs to happen? Obviously, would be great, but you have a lot of cost savings. Can you maybe just give us a feel of, you know, what could happen heading into 2Q, 3Q that could really maybe improve the EBITDA levels from where we're at now? Thank you. Ken Lane: Good morning, Mike. Well, listen. Like I have said, we are going to be really focused on everything that we can do to ensure that we're becoming a more efficient company, reducing our costs, in the face of a very difficult market that we're in today. I am more bullish on what we expect to see around caustic pricing. The cost reductions, you're going to start to see that come through here in the first quarter, particularly around the epoxy business. We've talked a lot about that. And then, frankly, we've got to execute on this turnaround in Freeport. You know, it's starting here in the first quarter, at the end of the quarter, and it's going to go into the second quarter. So that headwind is going to stay there in Q2 related to the VCM turnaround. So we have to execute that very well. And the team has done a great job preparing for that, planning for that. I've reviewed where they are in terms of being prepared, and, you know, we've got to make that a reality now. So execution, running the assets reliably and safely, and executing this turnaround, those are the things that we can control, and that's what we're going to be really focused on to deliver those cost reductions. And then as we see demand recover in Q2 and pricing improve in Q2, that's going to give us some momentum, but we're not going to quantify that at this point. Operator: Our next question comes from Matthew Blair with TPH. Please go ahead. Matthew Blair: Thank you, and good morning. Could we circle back to this mention of higher energy costs? I think it was on Slide nine. We normally think of Olin as fairly hedged on a quarter-over-quarter basis. So is this just a function of rolling to a new year, or has anything changed on your overall hedging strategy? Ken Lane: Good morning, Matthew. Todd, do you want to take that one? Todd Slater: Yeah. No. Great. Thanks for the question. Yes. You're right. We continue to be a hedger. One quarter out, we're very heavily hedged, generally on a rolling four-quarter basis. And so, you know, without the spike in natural gas that you saw associated with the winter storm and cold weather here in January, we would have expected, you know, based on our hedges, that natural gas and our power costs would have been higher. Candidly, that will be exacerbated by the unhedged component, you know, here in January. Associated with that. And for Todd, for 2026 for the full year, do you have any cash flow or free cash flow or working capital objectives? So listen, won't get specific on the broad chem arrangement. Again, that is one where it's a great partnership that we've created there. Like I said, we brought together us, Olin, as the low-cost producer of EDC, together with the PVC leader in Brazil, and this is going to create value for both of us. So, you know, it's going to allow us to get a higher value for our ADC versus, you know, selling it on the spot market and the export spot market. It's going to allow them to have a better cost position to be able to compete with their PVC in Brazil. The other component of this, though, is around caustic. So we do have a larger footprint now on infrastructure with caustic infrastructure in Brazil. So we've also inherited a lot of that infrastructure in terms of tanks and ports and access to be able to move caustic into the region. And so that's going to help us, probably even more so than the EDC side of this. You know? EDC prices have come down so much through the year. You know, if you just think about if you go back to the first quarter of last year and that bridge that we were building earlier, you know, vinyl's pricing has come down significantly from the first quarter of 2025. And so, you know, as prices recover, that's going to be more of a tailwind. But, you know, we're not projecting any significant improvement in vinyl pricing in the near term. So I would say let's not get over our skis on that at this point. It's probably more of a caustic story, and we will know, we'll see a meaningful increase in our caustic sales into Latin America in 2026. We're not going to quantify what that looks like, but that's going to be a growth market for us. Yeah. And Jeff, you know, talking about cash flow and working capital, as we move to 2026 compared to 2025, you know, we will see a real tailwind associated with cash taxes. I'd say roughly in 2025, we spent $167 million in cash taxes. And so we would expect 2026, I said, to be a relatively cash-free tax year, you know, plus or minus $20 million. So, you know, that's a nice tailwind as we move into 2026. However, you know, we did reduce working capital excluding taxes by, you know, $248 million. We would expect that you will see some normal seasonal build in working capital in 2026. But we will be very disciplined, as you've heard, around inventory and our seasonal inventory build. And we will be very focused on continuing that working capital discipline that you saw, you know, in 2025. And so, you know, that is going to be something that, you know, we think we can maintain the levels of inventory that we have achieved in 2025 and 2026. If not improve upon that. Operator: Our next question comes from Peter Osterland with Truist Securities. Please go ahead. Peter Osterland: Hey, good morning. Thanks for taking the question. I just wanted to follow up on the Winchester discussion. Just given the plans you've laid out on pricing and cost actions and acquisition synergies, how much visibility do you have for margin improvement in the business during 2020? I mean, I guess if you assume commercial demand and raw material prices don't meaningfully improve, can you drive segment margins higher for the full year 2026 just through self-help? Thank you. Ken Lane: Good morning, Peter. Thanks for the questions. There are a couple of ways I want to answer that question. One is we have taken costs out of Winchester, you know. So if you go back to December or the fourth quarter, we did take out shifts. We have reduced staffing levels to be able to reflect that lower demand that we had talked about. Demand has gone back to kind of the pre-COVID levels. So there's a big decline in the earnings of Winchester that is related to volume. The margin side of it is certainly related to a big part of that are cost increases. Yes. There were some concessions around pricing as retailers had high inventories, and there was promotional pricing that was done to move that inventory. So we've got to recover both of those things. The price increases that we have put out there in the first quarter for Winchester really just get us to recover those increased costs that we've seen. So, you know, unfortunately, I don't right now see that there's going to be a lot of improvements in the margin for Winchester. This is really going to be more about getting the costs passed through to hold the margins where they're at, which is not at a satisfactory level. So we, sorry. Candidly, we need more pricing to offset if copper stays at, I don't know, 06:10 this morning. There needs to be more. Right. There's got to be more coming just to hold margins where they are. So even with that kind of green shoot that we're seeing around some improvement in commercial demand, we have got to stay focused on getting prices up to get margins recovered. They're still significantly below where we expect them to be, and our commercial teams are extremely focused on doing that. Operator: Our next question comes from Arun Viswanathan with RBC. Please go ahead. Arun Viswanathan: Great. Thanks for taking my question. I hope you guys are well. I guess, understanding that visibility is somewhat limited, just wanted to understand, you know, kind of the earnings trajectory from here. So, obviously, Q4 and Q1 were impacted by some one-time impacts. You guys have rolled out some more aggressive cost management actions. But you're still seeing some significant headwinds there that you just discussed in Winchester. And epoxy is still in negative EBITDA territory. So if I look at Q1, it looks like that's going to be in the $60 million range or so. You know? And then, you know, obviously, you'll have seasonal uplift in Q2 and Q3, but then Q4 will also be back down. So, you know, I struggle to kind of get above maybe $4.50 or so on the year. Am I kind of being a little bit too punitive there, or what of one-time costs would you call out to, you know, kind of maybe increase from that base? Any kind of comments would be helpful. Thanks. Ken Lane: Good morning, Arun. Thank you for your question. So listen. I think there are obviously a lot of puts and takes. This is a very heavy year for us in terms of turnaround. This is probably the peak year that we've ever seen. You know, we had a high year last year. We've had a higher year this year, and then we'll see some relief in 2027. So, you know, turnarounds are a real headwind for us in 2026. As we go through the year, you know, yes, you will see the seasonal improvement in Q2, Q3, especially around water treatment as those markets come back. That is going to happen. We are going to see momentum around caustic pricing. We don't expect to see any improvement in vinyls. I mean, I've already said that. I think that's just one where we've got to stay focused on being disciplined. But I do want to go back to the cost comments and the question. We are not rolling out anything new or more aggressive on our cost reductions. What we are talking about in terms of our cost reductions, we were talking about at our Investor Day in 2024. We are delivering on what we had talked about back then. And what we see now is we actually have visibility. We believe by 2028, we can exceed that $250 million of savings that we had talked about. So this isn't something new. This is something that our organization is completely committed to. We have changed our performance metrics in terms of how we're rewarding our executives, our site leaders. So now our sites each have part of their stip, their short-term incentive, is driven off of their specific performance around safety, reliability, cost performance, and yields. We are driving that discipline through the organization and that accountability and that ownership. And what I love to see is the organization is responding to that and delivering that. That's not something that's new. That's something that we've been talking about for the last year. And what you're seeing is the fruits of that are going to be borne out here in 2026. Operator: Our next question comes from Vincent Andrews with Morgan Stanley. Please go ahead. Vincent Andrews: Thank you very much, but my questions have been answered, so I'll pass it along. Ken Lane: Thanks, Vincent. Operator: Our next question comes from John Roberts with Mizzou. Please go ahead. John Roberts: Thank you. So slide 16 shows that caustic soda prices declined sequentially in the December quarter. So I assume you ended the quarter lower than you began. And I think slide 15 says the price increases don't really start until the second quarter. So the March caustic price will be down sequentially. I just wanted to confirm that because you were talking earlier about rock-bottom inventories and tightness in the market, but it kind of doesn't seem to be consistent. Ken Lane: Hi. Good morning, John. So listen. Yeah. We've got, you know, some of that is mix in terms of what you're seeing. We are seeing caustic pricing moving higher in the quarter, and, you know, that's in our system. And that's all that I can really comment on. There is a lag that we see, you know, that you've got monthly pricing, you've got quarterly pricing, and some pricing that's on a lag. And so you're going to start to see that really pick up in the second quarter compared to what you saw in the fourth quarter. John Roberts: It was only down 3%. Ken Lane: Sorry, John. What was that? John Roberts: The ECU PCI encompasses both price and power cost. Right? So that's already in that 3% decline in the ECU PCI. So the difference between the 3% decline in the ECU PCI and the percent decline in EBITDA was all volume and the Dow stranded costs. Ken Lane: No. That's more reflective of mix that you see in that PCI. So, I mean, that's frankly, that's noise more than anything. John Roberts: So the ECU PCI doesn't encompass mix effect. It's a constant mix. Todd Slater: John, I think this is Todd. No. I think Ken said mix, you know, it is all chlorine derivatives. Not just the ECU comment. It is all chlorine derivatives, including all the epoxy chlorine derivatives as well as all the chlor alkali chlorine derivatives. And as well as caustic soda. So it is all-encompassing. And so you can see changes in mix. And as you heard in our commentary, we did have some more favorable mix in our epoxy business. Operator: This concludes our question and answer session. I would now like to turn the conference back over to Ken Lane for closing statements. Ken Lane: Thank you, Bailey, and thank you, everyone, for joining us today. We appreciate your interest in Olin, and we look forward to speaking to you at our first quarter 2026 earnings call. Thank you very much. Operator: Thank you for attending today's presentation. You may now disconnect.