加载中...
共找到 26,108 条相关资讯
The S&P 500's resilience near 7,000 is driven by hedged positioning, CTA flows, liquidity tailwinds, and continued AI trade momentum. Despite supportive flows, I expect significant downside in the next two to three months due to geopolitical risks, persistent inflation, and adverse seasonality.
Comprehensive cross-platform coverage of the U.S. market close on Bloomberg Television, Bloomberg Radio, and YouTube with Romaine Bostick, Katie Greifeld, Carol Massar and Tim Stenovec. -------- More on Bloomberg Television and Markets Like this video?
The S&P breached 7,000 points for the first time in history, in a rally that erased stark losses incurred at start of war
Operator: Hello, and good morning, everyone. Welcome to today's presentation. My name is Julia Perron, a virtual event moderator here at Renmark Financial Communications. On behalf of our team, we'd like to thank everyone for joining us today for TRX Gold Corporation Second Quarter 2026 results. TRX Gold is trading on the Toronto Stock Exchange under the ticker symbol, TRX, and on the NYSE American under the ticker symbol, TRX. Presenting today is Stephen Mullowney, Chief Executive Officer; Michael Leonard, Chief Financial Officer; Khalaf Rashid, Senior Vice President, Tanzania; and Richard Boffey, Chief Operating Officer. [Operator Instructions] With that being said, I will now hand it over to Stephen. Stephen Mullowney: Yes. Thank you, Julia, and thanks, everyone, for joining this morning. I know it's quite early, and our results were released this morning. A great quarter. Lots of growth, as we mentioned last week in our update on our plant expansion. And today, we're going to go through our presentation, give you an overview of the company again as well as our growth profile, and it's going to focus a lot on growing the valuation metrics underlying the company and how we're going to do that over the next 12 to 18 months. On the line today, we have Richard is joining us from Australia. He might pop in and out here. Then we have Mike and Khalaf with myself as well. So first and foremost, obviously, I got to say the disclaimer. You can go to our website to get this. We will be talking about forward-looking statements. So just a normal securities publicly listed disclaimer and forward-looking statements. As I mentioned, Richard is joining me as well as Mike and Khalaf. So TRX Gold, we are in Tanzania. We trade in NYSE American under -- and TSX under symbol TRX. Shares outstanding as of today is roughly 326 million with a market cap of over USD 0.5 billion. Very healthy cash position now at $26 million with limited borrowings. We're underpinned by 1.5 million ounces of gold at the Buckreef Gold Project as of our last PEA in 2025. We'll be updating that given where the gold prices are last resource profile was done at $1,900 gold. We'll be doing it around $3,000 gold. So thus, the cutoff grade will go down. More than likely resources will rise, although at a lower grade given the way the mine plans work. Under that PEA that was released last year, again, which is getting updated, very healthy net present values at $4,000 gold, very healthy cash cost of around $1,000 an ounce to $1,200 an ounce, which would be one of the lowest in the industry. As we continue to execute and expand, the LTM numbers or last 12-month numbers are becoming quite healthy. We've done 25,000 ounces in the last 12 months, and that's growing around $95 million of revenue and $50 million of adjusted EBITDA. Last quarter alone had $20 million of adjusted EBITDA at a very healthy margin. Mike will get into that in a few minutes. Obviously, that times that by 4, the run rate EBITDA is quite healthy to execute on our expansion plans. As I mentioned, we're going to focus today's presentation on a couple of areas. And the major area is what underpins the valuation of mining companies. Obviously, cash flow and EBITDA is extremely important and the growth of cash flow and EBITDA. One of the things that investors do look at is net asset value as well. That gives the longevity of the project of the asset. The last 2025 PEA had an 18-year mine life average of 62,000 ounces. We plan to be higher than that. And of course, obviously, you want to increase the production profile that comes through over time as well as your NAV. And in order to do that, you want to replenish your resource base. So exploration is very, very important. So as we released last week, we are going to expand. The new expansion plans is for around a 3,500 tonne per day SAG/Ball Mill combination as well as operating the existing plant in conjunction with that. So a combined operation of a new circuit that's 3,500 tonnes roughly as well as the existing 2,000 tonne per day plant. So you can go additive on that. The actual amounts that will be throughput will be determined based on our mine plan that gets updated and what is possible from a mine plan perspective. That is in process. As part of that mine plan update, we will update the PEA, which will then update the valuation metrics around net asset value and give the market another sense of where production can go over time, what the CapEx plans are. We do expect the open pit to be longer now than the last PEA, which is around 3 years. That will mean either we go early into underground or we defer underground and that related CapEx. We released the CapEx numbers for the expanded plant for the open pit last week, and that will be funded from cash flow from operations, as well as we're going to get into -- we've done a geophysics survey. We're now completing that up in this month for targets, as you would have seen in our management discussion and analysis. There are 10 very good targets. Some of them overlap with our current discoveries like Stamford Bridge and Anfield, but we certainly are very, very, what I'll say, excited for the potential of what else is on the Buckreef Gold Project. So now I'm going to hand it over to Mike, who's going to go through our 2026 Q2 results, which were quite good. And Richard will supplement Mike as well. Michael Leonard: Well, thank you, Stephen. Can I have you just advance the slide to Slide #6, please? Terrific. So thank you, everybody, for joining us here today. We were very excited to put our Q2 results out into the market this morning. It was a record quarter for the company. We saw increases in virtually all financial and operational metrics versus last quarter as well as the prior year comparative period. Gold production of just under 7,500 ounces was a quarterly production record for the company. That was coupled with a record average realized gold price of $4,655 an ounce. And those record numbers led to quarterly record financial metrics, including revenue of over $34 million for the quarter, gross profit of over $21 million or a 62% gross profit margin. We had adjusted net income of almost $12 million and adjusted EBITDA of over $20 million for the quarter. And on an annualized basis, that's over $80 million of EBITDA annualized. So I'm very excited about those metrics and the record numbers that we put into the market today. These quarterly records really demonstrate the company's ability to both increase production while maintaining a low-cost operation and really has demonstrated that we can provide leverage to these record gold prices that we're currently seeing in the market and a gold price that looks like it's back on the rise. During the quarter, we also strengthened our working capital position. We talked a little bit about this last year in the middle of what was a strip campaign that provided access to the high-grade ore blocks that we're benefiting from now. But the increased working capital position that we saw this quarter was through increased production, the record operating cash flow that we put out into the market, improved liquidity as well as increased investment in our ROM pad and crushed ore stockpile. The ROM pad alone has over 20,000 ounces of gold on the stockpile. And at today's gold prices, the fair value of that stockpile alone is over $100 million, while ensuring that we have steady, consistent, steady mill feed to fill our 2,000 tonne a day mill. Our cash position is over $26 million as at Q2. Accounts payable balances are current within [ 30 ] to 45 days. And our working capital ratio is now a very robust 2.4x or $32 million positive. And you couple that with access to credit lines of over $12 million, we're very, very well positioned to execute on our expansion plans that Stephen touched on earlier. In terms of guidance, we remain on track to achieve our full year production guidance of between 25,000 and 30,000 ounces as well as our cash cost guidance of $1,400 to $1,600 an ounce. Our year-to-date cash cost of $1,507 per ounce is expected to improve in the second half of the year as mining cost is expected to benefit from a higher proportion of our owner-managed fleet assisting in supplementing mining and tailings storage facility construction, and that comes at a substantially lower cost than our current contractor rate as well as processing cost per tonne. That's expected to improve and benefit from some of the upgrades that we're currently making to the existing processing plant, including things like the addition of the thickener, the Aachen reactor that's up and running, the ADR plant, which is in progress as well as additional oxygenation, which should reduce things like reagents and consumable input costs. Full year CapEx continues to be towards the upper end of the $15 million to $20 million guidance range as we work through those upgrades to the process plant that I just touched on as well as construction of a life of mine tailings storage facility. Now subject to gold prices and cash flow in the second half of the year, we may expedite expenditures related to the larger plant expansion that Stephen just touched on, really to kick start that procurement process. But we'll update the market accordingly at that time when we make some of those decisions about the plant that we look to bring online. And finally, we do continue to expect exploration to be in the range of $3 million to $5 million. During Q2, you might have seen that we did commission our first drill rig on the property, and we're using that with the goal of upgrading the mineral resource at the Eastern Porphyry as well as coupling that with the results of the induced polarization survey that Stephen touched on to identify additional areas of prospectivity and to help us prioritize drilling over the second half of the year. So stay tuned on that. With that, Stephen, I think that's what I had for the Q2 results. So I'll pass it back to you to take us through the rest of the presentation. Stephen Mullowney: Yes. Thanks for that, Mike. And one of the things I don't know if Richard is still on the line is he's popping in and out. But with regards to the processing cost, there's been a -- we now understand the metallurgy much better. And particularly around oxygenation, we're using hydrogen peroxide right now for oxygenation. That's increased recovery rates significantly. But when we get the oxygen plant up and running, then that's not as needed as much. So the processing costs will come down. So it's been a balance between, yes, we've had more reagents, but we've also had a lot more gold production and recovery rates as a result. And that will come down significantly. Richard, are you online? No, I think he's dropped off. Okay. That's fine. So let's get into the next slide, which is rapid EBITDA growth. So now we're starting to put a track record here of continued growth. We are now going to do another expansion as we just mentioned. Procurement is well underway at Ball Mill and SAG mill for the new line. Obviously, there's other components that we are going to be in the market procuring for that line as well. But as you can see, and as Mike has said, the fiscal 2026 guidance, we have reconfirmed for this year. Currently, we've done 14,000 ounces year-to-date. We are on track for our guidance of 25,000 to 30,000 ounces. As we released in our MD&A, we expect the second half to be higher than the first half. And so we're quite comfortable with that. The mill expansion, when it comes online, as I mentioned before, it will be larger than what we assumed in the PEA. The PEA at 62,000 ounces per year. Obviously, the amounts will go up from there, but it's not quite linear given the fact that you do change your mine plan and you do get a different grade profile going through the mill. What that exactly looks like, we are in process with that, but it -- certainly, it's going to look better than what we had in our last 2025 PEA. Richard, you're joining in and out. You got anything to add with regards to our procurement process on our SAG and Ball Mill. I've mentioned that, that's well underway and time periods for this expansion as we released in our MD&A of Q2 next year. Richard Boffey: The [indiscernible] for the SAG and the Ball Mill and they are the longest lead items. So the range of lead times amongst the 7 suppliers is 28 weeks to 50 weeks. So I'm expecting we'll be looking at something between 30 to 40 weeks, which probably gives us between delivery and then construction probably 12 to 13 period from commissioning the SAG and [indiscernible] fine grind should also be [indiscernible]. Stephen Mullowney: Okay. Thank you, Richard. You're coming in and out given your location, Richard is traveling today in Australia. So we're well underway of getting to this growth profile that we mentioned here in fiscal 2027 and beyond. Guideline will be in the new PEA that will come out in the near future. So with regards to how the financial metrics are going to look as a result of that, the financial metrics for the year-to-date, we're showing $60 million of revenue with a very healthy adjusted EBITDA of $33 million. As Mike mentioned, last quarter was $20 million in and of itself, times that by 4, and that's quite healthy $80 million. Some of the numbers in the PEA, and we'll get into this in a second, that was in 2025. As I mentioned, our goal is to exceed these numbers. had revenue in averaging around $250 million at $4,000 gold and average EBITDA of $176 million, which is -- which does in the fourth or fifth year, really peak well over $200 million. So we have a rapid financial profile ahead of us as we get through and put this plant into construction and then into operation. We've done all of this from the original capital raise of net around $20 million. As it was mentioned in the press release a couple of weeks ago, the warrants have been exercised, and now we have a completely clean capital structure and a well-capitalized balance sheet as a result. We've made over $80 million of investment to date since joining after doing that original $20 million capital raise from cash flow from operations. Mike, anything to add here while we keep G&A under check. Michael Leonard: No, I think that was well said, Stephen. Again, prudent capital management continues to be a focus of ours and expect to be able to fund the upcoming plant expansion out of that robust cash flow that you just spoke to. So stay tuned. Stephen Mullowney: So with regards to the EBITDA growth and NAV expansion, obviously, we put plans into the market and baselines in our studies. These are some of the results of last year's study, which is getting updated. It was done at 3,000 tonnes per day. As I mentioned, the plant will be larger than that now at 3,500 tonnes for the SAG and Ball Mill itself as well as the existing plant, which is around 2,000 tonnes a day. So you can get additive with that. EBITDA and cash flow is quite robust. Growth CapEx is manageable in that environment given the current gold prices and our current production profile. And then we would have a very low-cost operation, driving great pretax NAVs and after-tax net asset values. So to give you a sense of the cash flow profile in the last study. And as I mentioned, there's -- with differences in grade profile throughout the deposit. This assumes a 3-year open pit, years 1 to 4 in the study with underground thereafter. Richard and his team are going through that now. Richard, do you want to give an overview of what you're kind of -- it's not perfect yet, but what your expectations are for the way the mine plan is going to come out here open pit versus underground. Richard Boffey: Sure, Stephen. Well, the work we've done so far has seen the open pit drop by between 100 and 130 meters from its -- the PEA design. That will, therefore, delay and defer the underground mining of the main zone underneath the pit by at least [indiscernible]. It does give us the opportunity to develop underground on Stamford Bridge. And this is one of our first exploration targets to Stamford Bridge resources. So the gold price increase, we're obviously adding quite a few more ounces to our reserves, albeit at a slightly lower head grade, which we obviously intend to compensate with much significantly higher through, we think within a few weeks, we'll have a pretty solid mine plan that we can then feed in knowing that we've got this significant capacity at the plant to try and optimize and maximize throughput through that with what we've got. Stephen Mullowney: Yes. And so that's in progress. Obviously, you need to wrap that all into a report. So we're not going to release to the market in a couple of weeks what that mine plan looks like because it needs to be incorporated into a more comprehensive report, which we'll report to the market thereafter. So thank you for that, Richard. So in summary, as Richard mentioned, I know his communication this morning is a little bit choppy is -- with the increase in gold price, the resource profile and cutoff grade will come down a little bit, but that brings a lot more ounces into the mine plan and a lot more resources into the profile to be mined. Part of it is going deeper from an underground perspective and wider. There will be some footwall and hanging wall amounts coming in there. And then that will go through a much larger expanded mill than was anticipated in the PEA. So with regards to next area is the increase in resource base over time. As Mike mentioned, we do have a drill rig on site. We are in a very prospective area in Tanzania with some very large companies. On this page, we have Barrick and AngloGold Ashanti with some of the largest mines. Perseus is currently undergoing a $0.5 billion project at Nyanzaga down the street from us. And there's a lot of gold in this region. We're hopeful that in our exploration programs to find more Buckreef, but there may be also the opportunity to pick up other lands around in this area that may be highly prospective as well. So with regards to what we've done, what we've done thus far this year is really step back and take a focus on geophysics and figure out where we should be really drilling. We did discover Stamford Bridge and Anfield in the last 3 years or so. And we want to make sure that we got all areas covered on our property in order to maximize the returns. So what we've done is a geophysics study in 810 line-kilometer magnetic survey, which is then going to be followed up by a 40 line-kilometer gradient array resistivity and induced polarization survey. And what I've done here is we have the geophysics survey in the chart on our special mining license as well as the dots of the 10 to 11 really, really good targets that we will be looking at advancing quite quickly over the next year or so. A lot of them do overlap with Stamford Bridge and Anfield, not surprising because that's where we discovered. But this is well underway of advancing this, and this has never been done on our property before. Richard, you got anything else to add to that? Richard Boffey: Nothing excessive. We've advanced quite well already. The grading array portion of the GAIP is completed. So now we're doing the dipole to dipole surveys. And yes, we're pretty excited about some of the targets we're seeing, but we'll just have to wait for the full survey to be completed, and then we'll set our drill targets up and start drilling. Our first -- we've got one diamond drill on site already. We've also got an RC drill rig. We're receiving a second diamond drill sometime in May. So -- and then probably a second RC drill rig around June or July. So yes, we're really gearing up. Stephen Mullowney: Yes, exactly. And this will be quite exciting. So the way we're going to be setting this up is everything that I talked about around mine planning and growth profile and production is based on the Buckreef Main Zone. So that is all Buckreef Main. So over time, as we drill out the property and bring in more resources, that mine plan will consistently change. We're hopeful that we will find cheaper resources to mine both in Eastern Porphyry, Anfield, Stamford Bridge. And then as they get a higher level of confidence, then the mine plans will be consistently revised and brought into the resource profile and revised mine plans over time. This is a 3-, 5-, 7-, 10-year type journey as you find more and more gold resources. With regards to Stamford Bridge, we always like to talk about Stamford Bridge, and it's not because of Chelsea. Both Richard and Khalaf are Liverpool fans. So they prefer Anfield. But Stamford Bridge, as we mentioned before, and Richard has mentioned here, we will be looking at bringing that into the mine plan over time and drilling that out first. And the results, as we consistently talk about are great and the highest grade zones on our property that need to be brought into mine plans over time as we get a higher level of confidence. So with regards to valuation. So as I mentioned before, we're growing the underlying valuation metrics. We're moving up this curve because we're doing it and we have a growth profile. So in my former life, I used to do this a lot. And one thing that I did always notice is if you had a 2-year growth rate higher than other people, you got a higher [indiscernible]. And that correlation coefficient was always above 90%. So that is the way we've angled our growth plans here is to consistently grow, particularly with the plant expansion, and then we'll get a relative valuation. But also, what you got to remember is if EBITDA goes from $50 million to $100 million, you usually get the multiple of that expansion as well. So you get an uplift in your underlying re-rate or multiple amounts as well as an uplift in the actual denominator or what you're multiplying that by if your EBITDA grows, for instance. And the goal here is to do all this without issuing a lot more capital. And thus, your denominator of your enterprise value or your market cap divided by a number of shares. Obviously, if you keep the number of shares consistent, it's higher. And it's as simple as that, the same thing with a price to net asset value, whereas a number of shares as well. So as we revise our studies, the goal is to get a higher net asset value in our mine plans. We're pretty confident in that. And then if you go and put the drill bit in, you get more resources, you get a longer mine plan, you may be able to expand your plant again and get more and more growth. That's the goal here, and that's where we're really orientated towards. So with regards to how we've been trading, as we've discussed before, as we came through last year's strip campaign and started to really get better capitalized and the growth profile was more and more assured or the market at least got more assurance that the growth profile was there without dilution, then our stock price really started to take off. We are holding in there. With the war in Iran, there's been some pressure on the markets. We've been hanging in there, and we expect to hopefully start to rise again as we get through -- as the world gets through that into a more normal setting. We do have an extremely clean balance sheet now and capital structure. So the warrants, as I mentioned, have been exercised. Cash balance is quite healthy. We have all our supplementary liquidity lines in place, which is going to enable Richard to go and put in some orders in order to get that capital expenditure plan going. So key investment highlights. Growth, continued growth. The team that you see on the screen here have a lot of experience in this company and others and operational track record, and we're very disciplined in doing that. We have a robust study in front of us, which we're updating. We are very comfortable operating in Tanzania. And on the ground, we have both at corporate and on the ground, we have a very experienced management team. So now I'll open the floor up to questions. Operator: Thank you all for the presentation. We now start with the Q&A. Your first question for today comes from Jake Sekelsky from Alliance Global Partners. The question is, circling back to the potential third cutback of the open pit, is this something that could potentially take precedence over officially going underground? Or is this more of an in addition to type scenario? Stephen Mullowney: Richard, did you get that question? Richard Boffey: Just to be clear, it's definitely a deferral of the main zone underground, which was the majority of the underground mine plan and the PEA. It doesn't prohibit us from going underground elsewhere, but it certainly will defer it by at least 2 or 3 years and main zone by at least 5 years. So it's for most purposes is a deferral of underground. Operator: Thank you for that response, Richard. Your next question is, have there been any issues in regards to migration into the Tanzania area? If so, how do you foresee this affecting production, scaling, et cetera? Stephen Mullowney: Not quite sure that exact question, but we haven't seen -- I assume it's around artisanal mining. We haven't seen any changes in our artisanal mining activity in our areas. Obviously, artisanal mining is quite active for small-scale mining in and around our property, and it's closely monitored and we coexist quite well. Operator: Excellent. Thank you, Stephen. Moving on to your next question. Are there still plans to add 1,000 tonnes per day oxide plant? Stephen Mullowney: That would be a question that would go way, way back 4 or 5 years ago. There's a 2,000 tonne per day plant on site now that processes both oxides and sulfides. So that is a very -- that's a 4-year-old question. We're well past that. Operator: Understandable. Thank you. Your next question a viewer asks, considering record prices for gold, how do you think it would impact your bottom line and company financial health a possible gold price drop to anywhere around $4,200? Stephen Mullowney: Yes. So mining business is all about keeping your costs in check. As I mentioned, we are a low-cost operation. So obviously, like all miners, that's going to come off of your margin. But what you want to make sure of is you maintain your cost versus others. I would expect that the gold price, normally what ends up happening, and it's different given the current circumstances, which will pass over time with the war in Iran is when you see a gold price drop, you usually see an oil price drop, which is a drop in your operating cost. Now we haven't seen that in the last couple of weeks. But certainly, things will always revert back to the mean. Michael Leonard: And maybe just to supplement that, Julia, to reiterate my earlier comment, our cash costs are currently tracking around $1,500 an ounce. So at $4,200 an ounce gold, we're still running at 60% margin. Operator: Thank you for shedding light on that. Richard Boffey: Add one more factor into there and -- our mine planning has been iterated between -- we've taken from the PEA value of $1,900 an ounce. We've taken it all the way up to nearly $4,000 an ounce, and we've settled on a sort of a pit design modeling profile of around $3,000 to $3,300 an ounce. I think we're pretty -- we're putting ourselves in a strong position to withstand any drops in the gold price from a long-term planning perspective as well. Operator: Thank you all for your answers. Moving on to your next question, a viewer commented. I'm proud to be a long-time shareholder. What I'm hearing at this presentation is more good news. May I ask, with all the success, when can shareholders expect share in the wealth? Will dividends be paid this year? Stephen Mullowney: Lots of CapEx plans, so dividends will not be paid this year. As I mentioned, the underlying valuation metrics is what the focus is, particularly growing EBITDA, net asset value and resources. That does require capital to do that and shareholders should benefit from an increase in valuation if that plan is successful. Operator: Thank you, Stephen, for your response. Your next question a viewer asks, can you address the current split with the government and time lines for the possible change in percentages? Stephen Mullowney: So the current split is 55-45 with TRX holding 55%. We are -- we get our capital loan back first as well as any future capital contributions from corporate down into Buckreef would be subject to equity capital calls that would have the government or STAMICO have to contribute the same amounts in their proportions or else get diluted. With regards to time line around government negotiations, they continue. As I mentioned before, I continue to mention, it is fluid. Politics are involved and the time line is always uncertain, although we would like to have it yesterday. Operator: Thank you, Stephen. Moving on to your next question, a viewer asks, when are the upgrades of the processing plant to 3,500 tonnes per day expected to be completed? Has there been dilution of stock in the last 3 years? And if yes, by how many? Stephen Mullowney: So with regards to the processing plant, and I'll get Richard to add to this. The processing plant is envisioned 3,500 tonnes per day is a separate SAG/Ball Mill as well as Ball Mill combination that feeds into the broader circuit. What will operate alongside of that is the existing crushing and Ball Mill circuit that's currently in operation that has a nameplate of around 2,000 tonnes per day. So both of them will operate in conjunction with one another. With regards to time line, Richard went through the time lines for procurement. The goal is to have this done by the end of June of next year. So when I say Q2, I mean calendar as opposed to our fiscal year. Richard, anything else to add? Richard Boffey: Right, Stephen. I think we'll hopefully have our fully expanded plant fully operational in the end of Q2, start of Q3 2027. That's right. Stephen Mullowney: With regards to dilution in the last 3 years, the only capital raises that have been done are the warrant exercises, which was beyond the control of management, given they were put on line well over 5 years ago in order to recapitalize the business at that point in time, which only had $2 million in an expansion plan or a build to do at that particular point in time. And as I mentioned, we raised net $20 million, but warrants came along with that. Operator: Thank you for your answers. Moving on to your next question. When does the drilling season start and end? And when and how frequently can we expect drilling update? Stephen Mullowney: So drilling season isn't dependent in Tanzania. Obviously, it's harder in the wet season, but you can still drill. Easier in the dry season, the ground is not as soft, but you still drill. So it's not like Canada where you have a drilling season. You can drill all year around in Tanzania, although it's easier to certain seasons than other seasons. And with regards to exploration results, as we mentioned, the RC drill rig is on site now focused on Eastern Porphyry and defining that resource better. There is a diamond drill rig focused on some geotech work, which will then move into exploration type work as well as a diamond drill rig coming in next month, as Richard mentioned. I would expect to see some drill hole results, Richard say, later Q4, fiscal Q4 and later half -- back half of this calendar year. Richard Boffey: That will be the best outcome we see from results at the end of our fourth financial year quarter, but more than likely, it will probably be the fourth calendar quarter. That's right. Operator: Thank you for your responses. Moving on to your next question. Since dividends are not in the plan, which is smart at this point, can you address possible stock buybacks with a portion of the profits, which would enhance stock value? Stephen Mullowney: That is something that we will consider and have talked to advisers about. It's certainly something that's on our potential radar screen. Operator: Thank you, Stephen. Your next question is, what are the primary criteria that major gold miners would consider in principle in evaluating a potential acquisition of TRX Gold? Stephen Mullowney: Yes. So this question has been asked a lot, and my answer is fairly consistent. I think you need to have a decent resource profile and decent operations, which this enterprise has as we grow that resource profile and derisk it, particularly on the operations side. We know where we can get recovery rates now. We can mine this quite profitably. It will be putting a decent cash flow. So if you're looking at who would potentially acquire an enterprise such as us, I think people come up with Barrick and Anglo all the time because they're large. But there's a lot of -- I look at the slide here with Perseus on it, and there's -- they purchased Nyanzaga for their project. There's all kinds of mid-tier miners around the world. Operator: Thank you for your insight on that, Stephen. Your next question is, how does the prospect of restricted oil availability affect your production plans? What about spreading civil unrest? Stephen Mullowney: Yes. So with regards to oil, we haven't seen any impact in Tanzania at this point in time. Khalaf can chime in here, and he certainly is not lining up the gas station. The country has a good storage like other countries of fuels. It doesn't have an oil refinery in Tanzania, but it does import quite a bit from, I believe, Indian refineries, which are still getting their share of world oil. We do have -- in case you always have to look at worst-case scenarios, and potentially plan for them. So we do have plans in place if it did get to a squeeze position by making sure we have more storage on site. We also have a very healthy stockpile, so we could stop mining for a period of time if the proverbial s*** hit the fan. Operator: Thank you, Stephen. Your next question a viewer asks, how safe do you feel in your jurisdiction? Stephen Mullowney: Very safe, we drive around, go around on our own. I feel very safe in Tanzania, same with the management team. With regards to the prior question around civil unrest, we haven't seen any civil unrest since the election. Operator: Thank you for your comments on that. We're coming up to your last 3 questions for today. The next question is, could you provide some details on drilling progress on the Bridge and Anfield [indiscernible]? Stephen Mullowney: Yes. So as we mentioned before, the drill rigs are coming on site. There will be an increased focus in the second half of this year. And right now, we're focused on the Eastern Porphyry some geotech in order to advance our shorter-term plans. And then we'll get into a broader exploration on what I'll call medium- to longer-term plans. Operator: Thank you, Stephen. You touched on this, but I will still repeat the question. It is, is TRX Gold open to discussions with Barrick Gold or AngloGold Ashanti in Tanzania? What does the Buckreef Gold Project need to attract those companies into the underground development plan and away from the recent development at EcoGraf and Lake Victoria Gold? Stephen Mullowney: That's a different question. So as I mentioned before, anything that is a benefit for shareholders is anything that we'll look at. We're not going to hold back any shareholder value. We believe there's more shareholder value to be had at this point in time in growing the asset and the underlying valuation metrics and a lot of uplift potential as a result of that as well as renegotiation of the joint venture agreement into a framework agreement. There's a lot of value creation from that particular plan. If someone wanted to come and talk to us, obviously, if it's in the benefit of shareholders, it will be discussed. That is a normal company, shareholders get an opportunity to decide upon that. That's not ultimately our decision, that is shareholders' decision. I believe there's more value to be had growing this enterprise at this point in time. We are still relatively small with great growth plans in front of us. With regards to the other properties and focus on those, I'm not sure where that question comes from with regards to Lake Victoria Gold and EcoGraf. We're focused on what Buckreef Gold is doing and what TRX Gold is doing. Operator: Thank you, Stephen. We're actually coming up to your last 2 questions as one more just popped in. Your second to last question a viewer commented. Doesn't hydropower mitigate oil costs? Stephen Mullowney: Yes. So on site, as I mentioned, with regards to oil, our -- predominantly our biggest oil cost is on mining. There is some diesel gensets, but yes, the electricity National Power Grid is online. We have a good connection there. I believe we're up around, Richard, 95% on that line now, of power availability, somewhere in that range. Richard Boffey: It fluctuates, Stephen. So yes, between 88% and 95% of availability of the local power grid. Stephen Mullowney: So with regards to oil prices, we burn, Mike, I think we looked at this the other day, our cost on oil is around $0.5 million a month. Michael Leonard: $0.5 million a month. So a 10%, 20%, 30% increase in oil prices doesn't really have a material impact on our cost profile. Stephen Mullowney: There you go, those are the answers. Operator: Thank you all for your insights on that. And your last question for today is, what are the KPIs for the leading management team? How do you plan the development for the next 3 to 5 years? Martin Armstrong sees this as a rather turbulent time. Stephen Mullowney: Yes. So with regards to the KPIs, the KPIs that grow the business in line with the business plan. That's simple KPIs. I don't like to overcomplicate KPIs. KPIs are then driven down into our management at site around maintaining mining, maintaining recovery rates, processing rates, maintenance schedules, being on time on CapEx spend, those sort of things. Those are all KPIs at the local level. The local level is incented as well around RSUs, just like the management team is on RSUs and options. So that's the alignment there. And what was the second part of the question? Operator: Of course, I can repeat it. The second part of the question was, how do you plan the development for the next 3 to 5 years? Martin Armstrong sees this as a rather turbulent time. Stephen Mullowney: Look, I think if we look at the world, it's been turbulent for a while, which has become a little bit more turbulent with regards to activities in the Middle East. It seems to be coming off again a little bit. With regards to us, we've developed and operated this project under turbulent times. I started at this company in COVID. I would consider that a turbulent period as well. Different turbulence, but turbulent nonetheless. We could still go to site and travel freely. We couldn't do that during the COVID period. Logistics are much easier even in the current environment than it was under the COVID period. And the company was able to execute just fine. So in the next 3 to 5 years, I continually see this company and particularly at Buckreef having its head down and executing on the plans that have been in the PEA and what we've shown to be updated plans in a revised study in the next couple of months. Operator: Excellent. Thank you all for your responses. That concludes the Q&A session. But before we go, I'll turn it back to you, Stephen, for final remarks. Stephen Mullowney: Yes. Thanks, everyone, for joining again this morning. As I mentioned, the focus is on growth and growth in the underlying valuation metrics. We have a management team that has done this before, and we're doing it again. And we are very, very excited for what's coming at Buckreef. I hope to see a lot of increase in revenue, EBITDA and resources over time that lead into a much larger project at Buckreef and will benefit all shareholders and stakeholders in Tanzania as well. So as there is saying in Tanzania [Foreign Language]. Thank you very much. Operator: Excellent. Thank you, Stephen and the team for your presentation. Thank you, everyone, for joining us today for TRX Gold Corporation Second Quarter 2026 Results. TRX Gold is trading on the Toronto Stock Exchange under the ticker symbol TRX and on the NYSE American under the ticker symbol TRX. The playback will be available on our website 24 to 48 hours after this presentation under the VNDR Library tab. Stay tuned for the next quarterly call, and see you next time.
Operator: Good day, everyone, and welcome to the Vivos Full Year 2025 Earnings Conference Call. [Operator Instructions] This conference call is being recorded and a replay of today's call will be available on the Investor Relations section of Vivos' website and will remain posted there for the next 30 days. I will now hand the call over to Brad Amman, Chief Financial Officer for introductions and the reading of the safe harbor statement. Please go ahead. Bradford Amman: Thank you, operator. Hello, everyone, and welcome to our 2025 conference call. A copy of our earnings press release is available on the Investor Relations section of our website at www.vivos.com. With me on the call today is Kirk Huntsman, Vivos Chairman and Chief Executive Officer. Today, we will review the financial results for the full year 2025 as well as more recent developments and Vivos' plans for 2026 and beyond. Following these formal remarks, we will be happy to take questions. I would also like to remind everyone that today's call will contain forward-looking statements from our management made within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities and Exchange Act of 1934 as amended, concerning future events. Words such as aim, may, could, should, projects, expects, intends, plans, believes, anticipates, hopes, estimates, goal and variations of such words and similar expressions are intended to identify forward-looking statements. These statements involve significant known and unknown risks and are based upon a number of assumptions and estimates, which are inherently subject to significant risks, uncertainties, contingencies many of which are beyond the company's control. Actual results, including, without limitation, the results of Vivos' growth strategies, operational plans, including sales, marketing, distribution, medical sleep provider, acquisition and integration, research and development, regulatory initiatives, cost savings plans and plans to generate revenue as well as future potential results of operations or operating metrics such as the potential for Vivos to achieve future positive cash flows or profitability and other matters to be addressed by Vivos management in this conference call may differ materially and adversely from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, the risk factors described in other disclosures contained in Vivos' filings with the Securities and Exchange Commission, including the risk factors and other disclosures in our Form 10-K for the year ended December 31, 2025, which was filed with the SEC today our interim quarterly reports and other filings with the SEC, all of which are -- or will be accessible on the Investor Relations section of the Vivos website as well as the SEC's website. Except to the extent required by law, Vivos assumes no obligation to update statements as circumstances change. Finally, please be aware that the U.S. Food and Drug Administration has given certain specific Vivos appliances, 510(k) clearance to treat mild to severe OSA with the FDA clearance of certain Vivos products for severe OSA in November 2023 and moderate to severe OSA in children ages 6 to 17 years of age in September of 2024. Treatment of patients with severe OSA with these specific appliances is no longer needed to be performed off-label at the clinical discretion of the treating doctor and is now an integral part of the Vivos treatment protocol. Treatment of OSA of any severity or any other condition with any other of Vivos FDA-cleared devices remains at the clinical discretion of the treating doctor. For further information on our results for the years ended December 31, 2025 and 2024, please see our earnings release which was distributed earlier today and our annual report filed on Form 10-K, which is available on the SEC filings portion of the Investor Relations section of our website. With that, I'll turn to a discussion of our 2025 year-end results. In the fourth quarter of 2025, Vivos completed its second full quarter of activity following our June 10, 2025 acquisition of the Sleep Center of Nevada, demonstrating that our pivot of our sales, marketing and distribution model has taken hold. Overall, revenue was positively impacted by the sales strategy shift and focus towards sleep center affiliations. The full year 2025 revenue increase of $2.4 million or 16% was due primarily to an increase of approximately $4.8 million in sleep testing services and an increase of approximately $2.2 million of revenue generated from the treatment to patients launched at 2 of SCN's 7 sleep center locations. The increase in revenue during the year was partially offset by the decline in product revenue to our legacy VIP dentists of approximately $1.4 million in appliance and tooth positioner sales. Additionally, we had a decrease in service revenue of approximately $2 million in our VIP enrollment revenue and a decrease of $700,000 in sponsorship, conference and training related revenue. As we pivoted our business model to a medical provider focused business strategy and reduced our dependence on enrolling and training VIP dentists to sell our products, we fully expected revenue from these legacy programs to decline. For the year ended December 31, 2025, we sold 25,441 oral appliances and tooth positioners for a total of approximately $6.5 million, an 18% decrease in revenue from the year ended 2024, when we sold 16,182 oral appliance and tooth positioners for a total of $7.9 million. The revenue decrease is directly attributable to an increase in discounts offered during the same period with $1.6 million in discounts offered during the year ended December 31, 2025, when compared to approximately $200,000 of discounts offered during the year ended 2024. Coupled with an increase in tooth positioner sales, a lower price point product when compared to Vivos more advanced appliances. We will discuss this more in a bit, but now that we've gotten through the initial integration phase of SCN, including the achievement of critical insurance coverage for our more advanced OSA appliances, we are expecting more revenue from higher price point products in 2026 and beyond. Cost of sales increased by approximately $900,000 or 15% to $6.9 million for the full year ended 2025 compared to $6 million for the year ended 2024. This was primarily due to approximately $1.1 million in higher costs in diagnostic services related to new sleep center affiliations and an increase of $0.5 million related to additional staff associated with the sleep center affiliations in both Nevada and our Detroit affiliated center. Gross profit was $10.5 million for the full year ended December 31, 2025, compared with $9 million for the full year ended December 31, 2024, an increase of 17%. The 17% increase in gross profit during the full year 2025 compared to 2024 was attributable to an increase in revenue of approximately $2.4 million, offset by an increase in cost of sales of $900,000. Gross margin remained constant at 60% for the years ended December 31, 2025 and 2024. Operating expenses for the first -- for the full year ended December 31, 2025, were $30.4 million compared to $20.2 million for the full year ended 2024. This increase resulted primarily from an increase in general and administrative expenses related to our new model. General and administrative expenses increased $9.8 million to $27.7 million for the year ended 12/31, 2025 compared to approximately $17.9 million for 2024. This increase was primarily due to $6.7 million in costs associated with running SCN operations and related Vivos treatment centers. In addition, we incurred approximately $1.6 million related to professional fees, most of which were onetime expenses and $800,000 associated with salaries and wages in Vivos personnel as well as infrastructure costs of approximately $600,000 when compared to the year ended December 31, 2024. Sales and marketing expenses decreased by $300,000 to $1.4 million for 2025 compared to $1.7 million for 2024. This decrease was primarily driven by a $200,000 decrease in commissions as well as a $100,000 decrease in convention and trade show expenses. This is again attributable to our focus on bringing SCN online rather than our legacy business model. Depreciation and amortization expense was approximately $1.3 million for the year ended 2025 compared to $600,000 for the year ended 2024. Depreciation and amortization increased due to an increase in depreciable assets related to the SCN asset acquisition and additional depreciation on affiliations model assets. For the full year ended December 31, 2025, our net loss increased to $21.2 million, reflecting higher costs of our strategic transition during the year. Approximately $1.4 million of expenses were onetime out-of-pocket costs. In addition, resources were used in recruiting and training staff, rightsizing the team in anticipation of demand and procuring space and equipment requirements. Regarding cash flow, net cash used in operating activities amounted to approximately $15.3 million and $12.7 million for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, we had total liabilities of approximately $26.7 million compared with $7.3 million as of December 31, 2024, reflecting the debt we incurred to acquire and fund SCN. As of December 31, 2025, we had approximately $2 million in cash and cash equivalents. Subsequent to the end of fiscal year 2025, on January 16, 2026, we announced that we raised $4.6 million in gross proceeds from a warrant inducement transaction. On April 7, 2026, we announced the completion of a private placement with our existing private equity investor, New Seneca Partners raising gross proceeds of $2.25 million. These financings bolstered our post year-end stockholders' equity, which we need to continue to augment with additional equity financing in order to stay in compliance with NASDAQ's minimum stockholders' equity requirement. In summary, we're seeing significant increases in revenue reflecting the acquisition of SCN and related treatment revenue from providing patients with OSA treatment options, which is extremely encouraging. We are also seeing increased costs from hiring SCN personnel on the diagnostic side as well as additional hiring on the treatment side. We believe the strategic move to acquire SCN and other potential affiliate alliances and acquisitions set the stage for stronger performance in the coming quarters. For more detailed information, I refer to you to our earnings release and our full Form 10-K filed today. With that, I'll now hand over the call to our Chairman and CEO, Kirk Huntsman, to discuss the progress we have made to date on SCN, our Detroit affiliation and our business generally. Kirk? R. Huntsman: Thank you, Brad. Good afternoon, everyone, and thank you for joining us on today's conference call. After many years of actively searching for a business and distribution model, capable of more fully realizing the monetary and profit potential of our advanced proprietary technology, we are pleased to announce today that we are beginning to see the emergence of the very kind of improved financial results we always believe were possible. As we moved to acquire Sleep Centers of Nevada in June of 2025, we said we believed that our new business and distribution model could deliver impressive financial returns for the company as many more patients would be exposed to and select Vivos treatment. And whereas the company would, at the same time, have far superior economics as compared to our legacy VIP model. Today, we are pleased to report that our MSO DSO provider support model as implemented at SCN there in Las Vegas has proven to be everything we expected it to be. As a result of our emerging momentum and success in Las Vegas at SCN, many other revenue and profit opportunities are also emerging, which we believe will further grow and expand our top line revenue with strong margins and enhanced patient outcomes. Thus, 2025 was a pivotal year for Vivos, a year in which we proved our core thesis around patient demand and preference for our Vivos method over other more traditional treatment modalities such as CPAP or surgery, a year in which we experienced strong clinical support and endorsement from actual medical sleep specialists a year in which we took great strides forward with insurers towards providing more comprehensive coverage for our treatments and a year in which our pathway forward came boldly and clearly into focus. As Brad mentioned, in 2025, we grew full year revenue by 16%, something we regard as quite an achievement, considering that much of our financial gains from the SCN transaction were directly offset by revenue losses attributable to our strategic pivot away from our prior market selling through dentists. We also maintained gross margin despite significant ramp-up investments in our sleep testing and treatment services and the integration of the Sleep Center in Nevada. So while our 2025 operating loss includes material onetime upfront investments in this new model, we believe these actions, together with recently announced significant cost savings initiatives and strengthened capital structure have now positioned Vivos to drive higher top line growth, better contribution margins and a clear path forward towards our goal of cash flow positive operations by the end of this year. Of course, in June 2025, we completed the acquisition of SCN and have been ramping up our operations there in Las Vegas. Generally speaking, what we found there since closing the transaction in early June has been extremely encouraging. We note that the enthusiastic endorsement of Vivos treatments by medical specialists at SCN who have been patiently waiting many years for a viable alternative option to CPAP for their patients has been critical to our ultimate success in that market. Thus far, we have seen many more OSA patients from SCN who are interested and willing to accept Vivos treatment as alternatives to CPAP than we had forecast. So much so that we have expanded the physical facilities and also our staffing and number of clinical providers to handle the patient demand. No doubt, it has taken time, investment and hard work to integrate SCN into our operations, and more work remains to be done. But put simply, these important efforts are starting to pay off. Notably, we recently announced that SCN has received notices of in-network status with a number of commercial health insurance payers, along with participating status with Medicare. We believe this major development, along with the addition of several newly trained providers will positively impact patient access to our patented and proprietary OSA treatments and modalities and the resulting top line revenue and gross profitability from operations in that market. The insurance payers now covering our SCN operations collectively cover a substantial portion of the insured population in the greater Las Vegas metropolitan area, representing what we believe to be a significant addressable patient population for both OSA testing and treatment. Central to our efforts to build revenue and momentum across all markets has been our creation of what we call Sleep Optimization or SO teams. Each SO team consists of approximately 16 medical, dental and support staff who are all specially trained and equipped by Vivos. The primary focus of each SO team is to ensure that each and every patient is fully informed and educated about all treatment options and what might be best for their condition and situation, and then to assist them in getting into their treatment of choice, which most of the time involves treatment from Vivos products and services. Our operational growth plan is driven by our deployment of our SO teams, each consisting of one nurse practitioner or physician's assistant and 2 specialty trained dentists, employed by an independent medical or dental professional corporation, 6 dental assistants, 6 administrative support personnel and 1 treatment navigator. These SO teams can be dedicated to high-demand locations or spread across multiple locations as circumstances dictate. We currently have approximately 1.5 SO teams deployed across 2 SCN locations and expect to have additional partial or whole SO teams deployed during 2026. We anticipate an initial ramp of up to 60 days for SO teams to become fully functional and up to 6 months or longer before net revenue collections match revenue-generating activities such as OSA Diagnostic Services or OSA treatment case starts. Based on the current volume of OSA patient demand, we believe the current addressable market served by SCN could support several additional SO teams, especially if certain planned growth initiatives and patient referrals meet expectations. Such initiatives include, but are not limited to, the expansion of diagnostic and treatment services, the establishment and rollout of a pediatric OSA program and the collaboration with certain specialty medical groups who treat patients with comorbid OSA who lack the ability to test, evaluate and treat such patients within their existing practice environments. Keep in mind that there are well over 240,000 OSA patients that have been tested and seen by SCN providers since 2019. Based on our experience to date, we believe our limiting constraints for near-term revenue growth at SCN have been: one, insufficient physical space to see an optimal number of patients; two, an adequate number of providers and staff recruiting, training and onboarding; and three, customary issues with third-party payer credentialing. At the end of 2025, our operations at the 2 SCN locations we have onboarded were fully booked for appointments through April of 2026, and we were processing what we believe were less than 40% of patients attempting to get appointments for treatment. Our 2 greatest barriers to servicing more OSA patients at that time we're a lack of Vivos train providers and delays in obtaining full access to most major insurance carriers. As I mentioned, we have made good progress in both areas since then, although further work remains. We are working to fully meet current demand by adding SO 2 teams, further insurance participation access being granted and additional facility space is made ready. We view this as significant upside potential for Vivos. Our initial average case revenue and acceptance rate for Vivos treatment at SCN to date based on a limited number -- or limited period of operations at 2 of SCN's 7 locations suggests that each SO team could potentially generate collections well in excess of $500,000 per month, net of adjustments with contribution margins well above 50%. In addition to current Vivos diagnostic and treatment options, we expect to be able to offer SCN patients additional diagnostic and treatment services that could generate and will generate, we expect, additional revenue. Our operational experience in Las Vegas at SCN is proven to be invaluable in terms of providing numerous additional revenue and profit growth opportunities and also positioning us as the clear market leader with several competitive advantages. No other sleep testing or treatment center in Nevada or elsewhere in the United States offers patients the full range of treatment options, including the ability to rehabilitate and restore their airway health like we do nor does any other testing or treatment center offer patients the kinds of adjunctive treatments and services that we offer, such as CO2 laser treatments, myopia functional therapy and home EEG testing or alternative treatments for insomnia, excessive daytime drowsiness, chronic sinusitis or other sleep disorder related conditions. We believe our particular combination of such services represents a much needed evolution over the traditional CPAP-only type treatments that are currently the norm across the United States today. Each of those services enhance patient care and clinical outcomes while adding significantly to our overall revenue and profit potential. Perhaps most importantly, as news of our relationship with SCN has spread throughout the medical community, we have begun fielding inquiries from across the United States from rather large medical specialty groups such as cardiologists, neurologists, functional medicine doctors, primary care groups, hospitals and others. And while each group may have their own individual reasons for reaching out, they all tend to share 1 thing in common, a large majority of their patients have obstructive sleep apnea and their OSA is rendering whatever other health conditions they may have, such as diabetes, cardiovascular disease, hypertension, Alzheimer's, depression, et cetera, much, much worse. One prominent cardiologist recently said to me, "Kirk, obstructive sleep apnea is cardiovascular disease. We now know that and it is rocking our cardio interventions and killing our patients prematurely if they don't get the help they need to identify and treat it." These groups all say basically the same thing, that they are not sleep specialists and thus are ill prepared to treat their patients sleep and breathing disorders. They need someone else to handle it for them and Vivos is very well positioned to do just that. We are currently exploring partnering and affiliation opportunities with several medical specialty groups in various parts of the United States. Each of these groups report treating between 20,000 and 40,000 patients per month within their specialty and tell us that they believe 85% to 90% of those patients also have obstructive sleep apnea, with most of them undiagnosed and untreated. Creating these affiliations and optimizing them will come with financing and other challenges such as we've dealt with at SCN, but the prospect of replicating our new model around the country has us excited. One significant benefit of our affiliation model as opposed to our acquisition model, is that it is much more capital efficient than a pure acquisition model. Typical capital outlays for an affiliation are under $1 million a piece, while similar sized acquisitions may require 10 to 15x as much capital. Moreover, affiliations typically preserve about 75% to 80% of the economics for the company. Typically, in each affiliation, we will seek to collaborate with local medical groups to enhance the diagnosis and treatment of their patients with OSA through a regulatorily compliant services and support model suited to each circumstance, but largely patterned after our Sleep and Airway Medicine Center, what we call SAMC model in Nevada with SCN. We believe the SAMC model not only meets the clinical and medical requirements of both patients and providers, but also present significant revenue-generating opportunities for Vivos. For reference, our current revenue per case in Nevada averages just under $5,000 with contribution margins above 50%. We expect those figures to improve further as we continue to roll out additional diagnostic and treatment modalities, some of which are already underway. I would also like to take the opportunity to point out some significant progress being made by our research and development team led by Dr. Bahar Esmaili at our Highlands Ranch Clinic in Colorado. Her team's efforts there are showing what we believe are unprecedented and consistently positive clinical outcomes for patients with sleep and breathing disorders, many of whom are seriously ill and desperate for help and who have typically flown in from all around the world to receive treatment there in Colorado. We firmly believe that through the efforts of Dr. Esmaili's team in Colorado significant diagnostic and clinical breakthroughs are being made, such that later this year and throughout 2027, we expect to begin publishing key case studies and clinical results. In December, we announced the grand opening of our latest SAMC Center near Detroit in Auburn Hills, Michigan. Our opening in Auburn Hills signals the continuation of Vivos' national expansion strategy to leverage commercial affiliations with high-volume sleep clinics and physician on sleep and other medical practices to bring Vivos' proprietary line of FDA-cleared diagnostic and therapeutic products and services to tens of millions suffering from OSA and related health conditions, as I just referenced. We believe our new affiliation model will be very attractive to both medical specialty groups and more than accredited sleep center operators and owners around the country who may not want to be acquired but may instead be looking to grow their business and referral networks by offering a highly differentiated treatment package to OSA patients. We have several growth initiatives planned for 2026 and beyond, which have the potential to further increase our growth in current -- in our current and new markets. Such initiatives include the expansion of diagnostic and treatment services, the establishment and rollout of a pediatric OSA program, and the collaboration with certain specialty medical groups who treat patients with comorbid OSA, but who lack the ability to test, evaluate and treat such patients within their existing practice environments. Importantly, we have designed our model to be readily expanded and adapted to other locations throughout the United States. Our M&A team continues to field calls and inquiries from both acquisition and affiliation prospects around the country. As previously mentioned, we are currently in negotiation with several potential affiliation candidates in various key markets. Given our experience with SCN, we believe these opportunities should be similarly accretive. In summary, we believe our initial results with SCN are a strong indication of the potential upside for Vivos. As we roll forward, we expect to continue to modify and refine our model to make it even more efficient with the potential for even higher revenue and better gross margins. Furthermore, we fully expect that this model, including the potential for both acquisitions and affiliations is highly replicable and scalable across multiple markets. As it expands, we expect that we'll continue to be highly accretive to top line revenue growth as well as create the potential for cash flow positive operations and bottom line profitability. We believe that this methodical effort patiently executed over time has put Vivos in a much better position to realize the full potential of our technological advantage in industry-leading products and services. Most importantly, perhaps, we believe this new model will now begin to help improve the lives and health of many more patients, who have up until now not had access to the kind of life-changing treatment that we provide. For all of us here at Vivos, that mission of improving lives and providing fresh hope to the tens of millions of Americans who suffer from breathing to sleep disorders is what drives us each and every day. Now that we found a business model to match the superiority of our technology, those aspirations are becoming a reality, and it feels great. That concludes our prepared remarks. Now we'll be happy to take questions. Operator? Operator: [Operator Instructions] Your first question is from Scott Henry from AGP. Scott Henry: A lot of moving parts with the new business model. Just an observation followed by questions. Obviously, you did about $6.8 million in Q3 which dropped to $3.8 million in Q4, if I back out the 3 quarters, assuming that's accurate. Two questions. One, what happened in Q4 to make it lower than Q3? And two, we're already in April, what are your thoughts on Q1? Do you expect it to look more like the third quarter or the fourth quarter? R. Huntsman: Okay. Great question, Scott. So listen, our new model is highly dependent upon total doctor days. We have to have providers who show up and are available to treat patients. And when providers are absent or provider -- or we have insufficient numbers of providers then our production necessarily declines. And that's exactly what we experienced in Q4. We had some challenges with some of our existing -- at the time, our existing provider group, most specifically are dentists. So we had -- some dentists have -- they had family problems, some of them had health issues, some of them had travel constraints, and we just had an unexpected and unforeseeable set of circumstances that whereby we lost a lot of -- we lost a few providers that we didn't expect to lose. And we set about immediately trying to recruit and train, but that doesn't happen overnight. And so throughout the fourth quarter, we struggled with that issue. We remedied it. We recruited an excessive number of -- what we believe an excessive number of providers. So we have some redundancy now. And as we move into Q1 and especially as we go further into Q2 here, we feel very, very good. Some of those providers to replace the ones that we lost were -- they came on throughout the quarter in Q1. So the full impact of having replaced these doctors and replaced the doctor base will start to be seen towards the end of Q1 and then into Q2. But that's a great question. And I think it highlights some new dynamics of our model, which are, we have to have sufficient dentists in network with payers and having them producing every single day. When a dentist doesn't show up for a day, it can be it can be $15,000, $20,000, $30,000 or more of lost production -- lost productivity. So if you have just a few days a week of doctors who you've lost doctor days with, it can make a significant impact on your monthly revenues pretty quick, and that's what happened in Q4. Scott Henry: Okay. So it sounds like we should see some improvement in Q1, but the bulk of it probably in Q2. R. Huntsman: Yes. And there's a couple of reasons for that. It's doctor days, as I mentioned. And it's also, as we got towards the end of Q1, Scott, you'll see that in February -- or I'm sorry, in March, we announced that we had in-network access. We've been granted in-network access with a number of of payers. Well that in-network access just started to fold into the revenue productivity stream in the latter part of Q1. So yes, for all of those reasons, you'll see it start to fold into Q1, but most of the impact is going to be in Q2 forward. But it's a significant change. Both of those things combined are significant. Scott Henry: Okay. And then you mentioned possibly being cash flow positive exiting 2026. What kind of quarterly revenue run rate would you need to achieve that goal? Approximately. R. Huntsman: Brad, do you want to take that? Bradford Amman: Yes. I mean this analysis involves a revenue increase as well as reducing -- as you heard in our last press release, we trimmed some legacy VIP costs. So it's not just revenue, but there's costs associated as well. We were -- yes, $17 million for 2025, roughly on a run rate basis, we need to be close to double that by 2027 to hit that number going forward on a net income positive basis. Scott Henry: Okay. All right. Great. Just final question on the balance sheet. I see that $8.3 million in current portion of long-term debt. Do you have to deal with that in the next 12 months? Or what's the status of that situation now that it's classified as short term or current? Bradford Amman: Yes. I mean when -- throughout the year when we're reporting that in our quarterly filings, that was long term, the maturity date on that is in 2026. So we've reclassified all of that in -- as short-term debt on our balance sheet. Scott Henry: Okay. And I guess you would anticipate rolling that over at some point? Bradford Amman: Rolling it over or paying it off. I mean, so far, we have been compliant with the debt covenants on those pieces of debt. So we'd either raise capital to pay it off or you'll roll it over into additional debt and extend those terms. Operator: [Operator Instructions] Your next question is from Robert Sassoon from Water Tower Research. Robert Sassoon: I've got a few questions actually. One, if we look at the leverage performance, can you speak to the year-on-year growth you saw in diagnostic and treatment revenue generated under the new model? R. Huntsman: So I'm not sure exactly what the question is. Can you just clarify that? Bradford Amman: On the growth in sleep testing services and treatment centers, is that is -- Robert, is that kind of what... Robert Sassoon: Yes, that's correct. Yes. That's correct. Bradford Amman: I mean we had about $4.8 million in sleep testing service revenue over 2024. So we had about $6 million sleep testing service revenue in 2025. That increase of $4.8 million is entirely due to SCN, on the diagnostic side. On the treatment center side, in 2025, those diagnostics, people testing positive for OSA are what allowed us to recognize $2.2 million in treatment revenue. So in total, between those 2 buckets, the diagnostic of $6 million and the $2.2 million of treatment revenue is an increase of over $8 million of revenue, and that revenue is really where we think the growth is going to be. If you look at the full year, the total revenue was $2.4 million increase. That $2.4 million increase was offset had some VIP revenue decreased by $2 million and some of the other legacy items decreased accordingly. So the fact that we had an increase of $7 million to $8 million in new model revenue, that was offset by VIP revenue, which we totally expected. But going forward, that VIP revenue starts to roll off. So we won't see those big decreases in legacy revenue as we move into 2020 -- throughout 2026 and beyond. Robert Sassoon: Okay. Got it. So you mentioned your strategies to expand your alliance model. So what key lessons have you learned from the integration of SCN and how that -- will that shape your -- that particular expansion in alliance? R. Huntsman: That's a great question. I would say we've learned how to work with medical doctors in a collaborative manner. We've learned how to coordinate treatment and care of patients across the various specialties. We've learned how to navigate the insurance payer community and how to also set up the entities that we need to be regulatorily compliant. So we have to navigate a number of different fronts to make these things come about. But once we get the structure in place for each situation and once we -- stuff them with sufficient providers and then put those providers under contract in-network with these payers, we have a significant -- I think, a significant advantage over anybody else coming into the market because this is a, as I think somebody else said, there are a lot of moving parts and there's a lot of structure that has to go into place, and it's not for somebody that doesn't understand it. So yes. So we have it down. We haven't figured out. We have it -- also we're in the process of contracting with a national firm that has insurance contracts across the country in each state, and all of those things accelerate by contracting with them, we will accelerate our in-network participation and the time to revenue generation is cut dramatically down. So those are lessons that I would say we've learned and we're applying them as we go. Robert Sassoon: Yes. You -- I have a couple of other questions. What is -- you recently announced a partnership with SoundHealth, are you seeing any traction from that yet? Or is it still early days? R. Huntsman: Yes. We're -- it's still fairly early. But in Las Vegas, we're having trouble keeping those -- their units in stock. I think patient demand for that is good. I don't think that even if that continues on that, that will be a material aspect of our earnings or profits or whatnot. But the patient demand there has been -- has exceeded expectations and patients are loving the treatment, and we're seeking to expand that relationship. Robert Sassoon: Okay. So final question for me. Can you discuss your long-term growth prospects and explain why you're particularly excited about the opportunities ahead? R. Huntsman: Well, look, we spent -- it seems like a long time wandering in the desert of trying to figure out what kind of business model we could deploy that would do justice to our breakthrough technology. And we really came to the conclusion back a couple of years ago that furthering our efforts down the path of the dental community was just not going to ever get it done. And so as we pivoted, we basically told the world that well, we've got a different way to do this, and we think this is going to work. And so we put forward that prospect. We went out on a limb. We sort of bet the farm here on what our experience was going to be out there at SCN. And -- I mean, to our great pleasure what's happened out there at SCN so far has been really, really good. And again, I know that it doesn't show up fully in the numbers. But the core underlying thesis that we had going into that acquisition in June of last year, our core underlying thesis that we could, in fact, generate great patient demand by intercepting the patients at the time that they are being diagnosed and deciding upon their treatment modality that at that juncture in the patient journey, that was the ideal juncture in which to introduce Vivos as an alternative to CPAP. And we bet that patients would rather fix their OSA in 9 to 12 months and prefer that option over going into a CPAP where they have to wear that thing for the rest of their life, every night. So we made that bet, that bet is paying off. We see further, as I mentioned in my remarks, the amount and number of clinical contacts that we've had with specialty groups around the country, hospitals, cardiology groups, neurologists, all these groups coming to us saying, we need what you guys are doing. We hear that you have something different than CPAP. Our patients don't like CPAP. They don't want CPAP. When can you come see us. And that kind of demand is something we're excited about. The cost to affiliate and set up SO teams in various markets is a fraction of what it costs for us to acquire these companies like we did with SCN. And so because of all those things, we are really, really excited about what the future holds. I mean, we used to talk about whether our -- whether patients were getting better, whether we were having clinical success, we're so far beyond that right now. We know beyond any shadow doubt that we have the best technology there is on the market today to treat and resolve obstructive sleep apnea. There's no question about it. Now the issue is how can we get that in front of as many people as possible. Robert Sassoon: Right. And do you think you're going to get over those sort of barriers that you mentioned earlier in terms of recruiting the right people, the right -- expanding the SOTs to be able to implement that? R. Huntsman: Yes, I do. In fact, we've demonstrated that here in the first quarter. We've constituted the full measure of a team and a half out there in Las Vegas. We have additional doctors and providers, nurse practitioners and others ready to go for other opportunities that we're exploring right now. So we are -- I don't think that's going to be a limiting constraint in the future. I readily admit that it took us a little bit by surprise in Q4. We just didn't expect some of the attrition that we had in our provider pool. But now we know to have redundancy, to have the kind of team that is perhaps a little more robust than what we had planned for. But at the same time, the redundancy will pay dividends when we have providers who leave unexpectedly or have personal issues or whatever. So we're learning as we go, but I think we're in great shape to do that. There's no difficult -- we have no challenges recruiting doctors or recruiting nurse practitioners or recruiting staff members. Yes, we -- that's always what we're going to be doing, and it's going to be an ongoing effort as we roll forward. But there is no shortage of dentists or nurse practitioners or staff members available to work in our model. We just had to be out in front of that, and we got caught a little by surprise in Q4. Robert Sassoon: Anyway, it sounds like it's a pretty encouraging picture looking ahead. Operator: Our next question is from Yi Chen from H.C. Wainwright. R. Huntsman: Yi, are you there? Operator: Yi Chen, your line is open. R. Huntsman: All right. Operator, let's go ahead and close off. I don't think he's there. Operator: Thank you. There are no further questions at this time. Please proceed with the closing remarks. R. Huntsman: On behalf of Vivos, I would just like to express our gratitude and thanks for all of the investors and analysts and investment bankers and whatnot that have supported us over the course of time. I think it's been a little bit of a longer journey than any of us had hoped for. But we -- I think it's pretty clear from this report, we are more optimistic about the prospects for this company today than we probably have ever been. And the cooperation of providers, of the medical sleep community, of specialists, of payers, of all the different constituencies, which make this all possible is just so gratifying, and we are very pleased about all that. And I just want to express on behalf of all of us here at Vivos, a profound gratitude for everyone who's hanging there with us all these years. And I just know that the brighter days are ahead, and we're excited about this. And we think the future here at Vivos is very bright. So thank you very much, everyone, and have a great night and appreciate your participation today. Thank you. Operator: Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may now disconnect your lines.
Operator: Hello, and good morning, everyone. Welcome to today's presentation. My name is Julia Perron, a virtual event moderator here at Renmark Financial Communications. On behalf of our team, we'd like to thank everyone for joining us today for TRX Gold Corporation Second Quarter 2026 results. TRX Gold is trading on the Toronto Stock Exchange under the ticker symbol, TRX, and on the NYSE American under the ticker symbol, TRX. Presenting today is Stephen Mullowney, Chief Executive Officer; Michael Leonard, Chief Financial Officer; Khalaf Rashid, Senior Vice President, Tanzania; and Richard Boffey, Chief Operating Officer. [Operator Instructions] With that being said, I will now hand it over to Stephen. Stephen Mullowney: Yes. Thank you, Julia, and thanks, everyone, for joining this morning. I know it's quite early, and our results were released this morning. A great quarter. Lots of growth, as we mentioned last week in our update on our plant expansion. And today, we're going to go through our presentation, give you an overview of the company again as well as our growth profile, and it's going to focus a lot on growing the valuation metrics underlying the company and how we're going to do that over the next 12 to 18 months. On the line today, we have Richard is joining us from Australia. He might pop in and out here. Then we have Mike and Khalaf with myself as well. So first and foremost, obviously, I got to say the disclaimer. You can go to our website to get this. We will be talking about forward-looking statements. So just a normal securities publicly listed disclaimer and forward-looking statements. As I mentioned, Richard is joining me as well as Mike and Khalaf. So TRX Gold, we are in Tanzania. We trade in NYSE American under -- and TSX under symbol TRX. Shares outstanding as of today is roughly 326 million with a market cap of over USD 0.5 billion. Very healthy cash position now at $26 million with limited borrowings. We're underpinned by 1.5 million ounces of gold at the Buckreef Gold Project as of our last PEA in 2025. We'll be updating that given where the gold prices are last resource profile was done at $1,900 gold. We'll be doing it around $3,000 gold. So thus, the cutoff grade will go down. More than likely resources will rise, although at a lower grade given the way the mine plans work. Under that PEA that was released last year, again, which is getting updated, very healthy net present values at $4,000 gold, very healthy cash cost of around $1,000 an ounce to $1,200 an ounce, which would be one of the lowest in the industry. As we continue to execute and expand, the LTM numbers or last 12-month numbers are becoming quite healthy. We've done 25,000 ounces in the last 12 months, and that's growing around $95 million of revenue and $50 million of adjusted EBITDA. Last quarter alone had $20 million of adjusted EBITDA at a very healthy margin. Mike will get into that in a few minutes. Obviously, that times that by 4, the run rate EBITDA is quite healthy to execute on our expansion plans. As I mentioned, we're going to focus today's presentation on a couple of areas. And the major area is what underpins the valuation of mining companies. Obviously, cash flow and EBITDA is extremely important and the growth of cash flow and EBITDA. One of the things that investors do look at is net asset value as well. That gives the longevity of the project of the asset. The last 2025 PEA had an 18-year mine life average of 62,000 ounces. We plan to be higher than that. And of course, obviously, you want to increase the production profile that comes through over time as well as your NAV. And in order to do that, you want to replenish your resource base. So exploration is very, very important. So as we released last week, we are going to expand. The new expansion plans is for around a 3,500 tonne per day SAG/Ball Mill combination as well as operating the existing plant in conjunction with that. So a combined operation of a new circuit that's 3,500 tonnes roughly as well as the existing 2,000 tonne per day plant. So you can go additive on that. The actual amounts that will be throughput will be determined based on our mine plan that gets updated and what is possible from a mine plan perspective. That is in process. As part of that mine plan update, we will update the PEA, which will then update the valuation metrics around net asset value and give the market another sense of where production can go over time, what the CapEx plans are. We do expect the open pit to be longer now than the last PEA, which is around 3 years. That will mean either we go early into underground or we defer underground and that related CapEx. We released the CapEx numbers for the expanded plant for the open pit last week, and that will be funded from cash flow from operations, as well as we're going to get into -- we've done a geophysics survey. We're now completing that up in this month for targets, as you would have seen in our management discussion and analysis. There are 10 very good targets. Some of them overlap with our current discoveries like Stamford Bridge and Anfield, but we certainly are very, very, what I'll say, excited for the potential of what else is on the Buckreef Gold Project. So now I'm going to hand it over to Mike, who's going to go through our 2026 Q2 results, which were quite good. And Richard will supplement Mike as well. Michael Leonard: Well, thank you, Stephen. Can I have you just advance the slide to Slide #6, please? Terrific. So thank you, everybody, for joining us here today. We were very excited to put our Q2 results out into the market this morning. It was a record quarter for the company. We saw increases in virtually all financial and operational metrics versus last quarter as well as the prior year comparative period. Gold production of just under 7,500 ounces was a quarterly production record for the company. That was coupled with a record average realized gold price of $4,655 an ounce. And those record numbers led to quarterly record financial metrics, including revenue of over $34 million for the quarter, gross profit of over $21 million or a 62% gross profit margin. We had adjusted net income of almost $12 million and adjusted EBITDA of over $20 million for the quarter. And on an annualized basis, that's over $80 million of EBITDA annualized. So I'm very excited about those metrics and the record numbers that we put into the market today. These quarterly records really demonstrate the company's ability to both increase production while maintaining a low-cost operation and really has demonstrated that we can provide leverage to these record gold prices that we're currently seeing in the market and a gold price that looks like it's back on the rise. During the quarter, we also strengthened our working capital position. We talked a little bit about this last year in the middle of what was a strip campaign that provided access to the high-grade ore blocks that we're benefiting from now. But the increased working capital position that we saw this quarter was through increased production, the record operating cash flow that we put out into the market, improved liquidity as well as increased investment in our ROM pad and crushed ore stockpile. The ROM pad alone has over 20,000 ounces of gold on the stockpile. And at today's gold prices, the fair value of that stockpile alone is over $100 million, while ensuring that we have steady, consistent, steady mill feed to fill our 2,000 tonne a day mill. Our cash position is over $26 million as at Q2. Accounts payable balances are current within [ 30 ] to 45 days. And our working capital ratio is now a very robust 2.4x or $32 million positive. And you couple that with access to credit lines of over $12 million, we're very, very well positioned to execute on our expansion plans that Stephen touched on earlier. In terms of guidance, we remain on track to achieve our full year production guidance of between 25,000 and 30,000 ounces as well as our cash cost guidance of $1,400 to $1,600 an ounce. Our year-to-date cash cost of $1,507 per ounce is expected to improve in the second half of the year as mining cost is expected to benefit from a higher proportion of our owner-managed fleet assisting in supplementing mining and tailings storage facility construction, and that comes at a substantially lower cost than our current contractor rate as well as processing cost per tonne. That's expected to improve and benefit from some of the upgrades that we're currently making to the existing processing plant, including things like the addition of the thickener, the Aachen reactor that's up and running, the ADR plant, which is in progress as well as additional oxygenation, which should reduce things like reagents and consumable input costs. Full year CapEx continues to be towards the upper end of the $15 million to $20 million guidance range as we work through those upgrades to the process plant that I just touched on as well as construction of a life of mine tailings storage facility. Now subject to gold prices and cash flow in the second half of the year, we may expedite expenditures related to the larger plant expansion that Stephen just touched on, really to kick start that procurement process. But we'll update the market accordingly at that time when we make some of those decisions about the plant that we look to bring online. And finally, we do continue to expect exploration to be in the range of $3 million to $5 million. During Q2, you might have seen that we did commission our first drill rig on the property, and we're using that with the goal of upgrading the mineral resource at the Eastern Porphyry as well as coupling that with the results of the induced polarization survey that Stephen touched on to identify additional areas of prospectivity and to help us prioritize drilling over the second half of the year. So stay tuned on that. With that, Stephen, I think that's what I had for the Q2 results. So I'll pass it back to you to take us through the rest of the presentation. Stephen Mullowney: Yes. Thanks for that, Mike. And one of the things I don't know if Richard is still on the line is he's popping in and out. But with regards to the processing cost, there's been a -- we now understand the metallurgy much better. And particularly around oxygenation, we're using hydrogen peroxide right now for oxygenation. That's increased recovery rates significantly. But when we get the oxygen plant up and running, then that's not as needed as much. So the processing costs will come down. So it's been a balance between, yes, we've had more reagents, but we've also had a lot more gold production and recovery rates as a result. And that will come down significantly. Richard, are you online? No, I think he's dropped off. Okay. That's fine. So let's get into the next slide, which is rapid EBITDA growth. So now we're starting to put a track record here of continued growth. We are now going to do another expansion as we just mentioned. Procurement is well underway at Ball Mill and SAG mill for the new line. Obviously, there's other components that we are going to be in the market procuring for that line as well. But as you can see, and as Mike has said, the fiscal 2026 guidance, we have reconfirmed for this year. Currently, we've done 14,000 ounces year-to-date. We are on track for our guidance of 25,000 to 30,000 ounces. As we released in our MD&A, we expect the second half to be higher than the first half. And so we're quite comfortable with that. The mill expansion, when it comes online, as I mentioned before, it will be larger than what we assumed in the PEA. The PEA at 62,000 ounces per year. Obviously, the amounts will go up from there, but it's not quite linear given the fact that you do change your mine plan and you do get a different grade profile going through the mill. What that exactly looks like, we are in process with that, but it -- certainly, it's going to look better than what we had in our last 2025 PEA. Richard, you're joining in and out. You got anything to add with regards to our procurement process on our SAG and Ball Mill. I've mentioned that, that's well underway and time periods for this expansion as we released in our MD&A of Q2 next year. Richard Boffey: The [indiscernible] for the SAG and the Ball Mill and they are the longest lead items. So the range of lead times amongst the 7 suppliers is 28 weeks to 50 weeks. So I'm expecting we'll be looking at something between 30 to 40 weeks, which probably gives us between delivery and then construction probably 12 to 13 period from commissioning the SAG and [indiscernible] fine grind should also be [indiscernible]. Stephen Mullowney: Okay. Thank you, Richard. You're coming in and out given your location, Richard is traveling today in Australia. So we're well underway of getting to this growth profile that we mentioned here in fiscal 2027 and beyond. Guideline will be in the new PEA that will come out in the near future. So with regards to how the financial metrics are going to look as a result of that, the financial metrics for the year-to-date, we're showing $60 million of revenue with a very healthy adjusted EBITDA of $33 million. As Mike mentioned, last quarter was $20 million in and of itself, times that by 4, and that's quite healthy $80 million. Some of the numbers in the PEA, and we'll get into this in a second, that was in 2025. As I mentioned, our goal is to exceed these numbers. had revenue in averaging around $250 million at $4,000 gold and average EBITDA of $176 million, which is -- which does in the fourth or fifth year, really peak well over $200 million. So we have a rapid financial profile ahead of us as we get through and put this plant into construction and then into operation. We've done all of this from the original capital raise of net around $20 million. As it was mentioned in the press release a couple of weeks ago, the warrants have been exercised, and now we have a completely clean capital structure and a well-capitalized balance sheet as a result. We've made over $80 million of investment to date since joining after doing that original $20 million capital raise from cash flow from operations. Mike, anything to add here while we keep G&A under check. Michael Leonard: No, I think that was well said, Stephen. Again, prudent capital management continues to be a focus of ours and expect to be able to fund the upcoming plant expansion out of that robust cash flow that you just spoke to. So stay tuned. Stephen Mullowney: So with regards to the EBITDA growth and NAV expansion, obviously, we put plans into the market and baselines in our studies. These are some of the results of last year's study, which is getting updated. It was done at 3,000 tonnes per day. As I mentioned, the plant will be larger than that now at 3,500 tonnes for the SAG and Ball Mill itself as well as the existing plant, which is around 2,000 tonnes a day. So you can get additive with that. EBITDA and cash flow is quite robust. Growth CapEx is manageable in that environment given the current gold prices and our current production profile. And then we would have a very low-cost operation, driving great pretax NAVs and after-tax net asset values. So to give you a sense of the cash flow profile in the last study. And as I mentioned, there's -- with differences in grade profile throughout the deposit. This assumes a 3-year open pit, years 1 to 4 in the study with underground thereafter. Richard and his team are going through that now. Richard, do you want to give an overview of what you're kind of -- it's not perfect yet, but what your expectations are for the way the mine plan is going to come out here open pit versus underground. Richard Boffey: Sure, Stephen. Well, the work we've done so far has seen the open pit drop by between 100 and 130 meters from its -- the PEA design. That will, therefore, delay and defer the underground mining of the main zone underneath the pit by at least [indiscernible]. It does give us the opportunity to develop underground on Stamford Bridge. And this is one of our first exploration targets to Stamford Bridge resources. So the gold price increase, we're obviously adding quite a few more ounces to our reserves, albeit at a slightly lower head grade, which we obviously intend to compensate with much significantly higher through, we think within a few weeks, we'll have a pretty solid mine plan that we can then feed in knowing that we've got this significant capacity at the plant to try and optimize and maximize throughput through that with what we've got. Stephen Mullowney: Yes. And so that's in progress. Obviously, you need to wrap that all into a report. So we're not going to release to the market in a couple of weeks what that mine plan looks like because it needs to be incorporated into a more comprehensive report, which we'll report to the market thereafter. So thank you for that, Richard. So in summary, as Richard mentioned, I know his communication this morning is a little bit choppy is -- with the increase in gold price, the resource profile and cutoff grade will come down a little bit, but that brings a lot more ounces into the mine plan and a lot more resources into the profile to be mined. Part of it is going deeper from an underground perspective and wider. There will be some footwall and hanging wall amounts coming in there. And then that will go through a much larger expanded mill than was anticipated in the PEA. So with regards to next area is the increase in resource base over time. As Mike mentioned, we do have a drill rig on site. We are in a very prospective area in Tanzania with some very large companies. On this page, we have Barrick and AngloGold Ashanti with some of the largest mines. Perseus is currently undergoing a $0.5 billion project at Nyanzaga down the street from us. And there's a lot of gold in this region. We're hopeful that in our exploration programs to find more Buckreef, but there may be also the opportunity to pick up other lands around in this area that may be highly prospective as well. So with regards to what we've done, what we've done thus far this year is really step back and take a focus on geophysics and figure out where we should be really drilling. We did discover Stamford Bridge and Anfield in the last 3 years or so. And we want to make sure that we got all areas covered on our property in order to maximize the returns. So what we've done is a geophysics study in 810 line-kilometer magnetic survey, which is then going to be followed up by a 40 line-kilometer gradient array resistivity and induced polarization survey. And what I've done here is we have the geophysics survey in the chart on our special mining license as well as the dots of the 10 to 11 really, really good targets that we will be looking at advancing quite quickly over the next year or so. A lot of them do overlap with Stamford Bridge and Anfield, not surprising because that's where we discovered. But this is well underway of advancing this, and this has never been done on our property before. Richard, you got anything else to add to that? Richard Boffey: Nothing excessive. We've advanced quite well already. The grading array portion of the GAIP is completed. So now we're doing the dipole to dipole surveys. And yes, we're pretty excited about some of the targets we're seeing, but we'll just have to wait for the full survey to be completed, and then we'll set our drill targets up and start drilling. Our first -- we've got one diamond drill on site already. We've also got an RC drill rig. We're receiving a second diamond drill sometime in May. So -- and then probably a second RC drill rig around June or July. So yes, we're really gearing up. Stephen Mullowney: Yes, exactly. And this will be quite exciting. So the way we're going to be setting this up is everything that I talked about around mine planning and growth profile and production is based on the Buckreef Main Zone. So that is all Buckreef Main. So over time, as we drill out the property and bring in more resources, that mine plan will consistently change. We're hopeful that we will find cheaper resources to mine both in Eastern Porphyry, Anfield, Stamford Bridge. And then as they get a higher level of confidence, then the mine plans will be consistently revised and brought into the resource profile and revised mine plans over time. This is a 3-, 5-, 7-, 10-year type journey as you find more and more gold resources. With regards to Stamford Bridge, we always like to talk about Stamford Bridge, and it's not because of Chelsea. Both Richard and Khalaf are Liverpool fans. So they prefer Anfield. But Stamford Bridge, as we mentioned before, and Richard has mentioned here, we will be looking at bringing that into the mine plan over time and drilling that out first. And the results, as we consistently talk about are great and the highest grade zones on our property that need to be brought into mine plans over time as we get a higher level of confidence. So with regards to valuation. So as I mentioned before, we're growing the underlying valuation metrics. We're moving up this curve because we're doing it and we have a growth profile. So in my former life, I used to do this a lot. And one thing that I did always notice is if you had a 2-year growth rate higher than other people, you got a higher [indiscernible]. And that correlation coefficient was always above 90%. So that is the way we've angled our growth plans here is to consistently grow, particularly with the plant expansion, and then we'll get a relative valuation. But also, what you got to remember is if EBITDA goes from $50 million to $100 million, you usually get the multiple of that expansion as well. So you get an uplift in your underlying re-rate or multiple amounts as well as an uplift in the actual denominator or what you're multiplying that by if your EBITDA grows, for instance. And the goal here is to do all this without issuing a lot more capital. And thus, your denominator of your enterprise value or your market cap divided by a number of shares. Obviously, if you keep the number of shares consistent, it's higher. And it's as simple as that, the same thing with a price to net asset value, whereas a number of shares as well. So as we revise our studies, the goal is to get a higher net asset value in our mine plans. We're pretty confident in that. And then if you go and put the drill bit in, you get more resources, you get a longer mine plan, you may be able to expand your plant again and get more and more growth. That's the goal here, and that's where we're really orientated towards. So with regards to how we've been trading, as we've discussed before, as we came through last year's strip campaign and started to really get better capitalized and the growth profile was more and more assured or the market at least got more assurance that the growth profile was there without dilution, then our stock price really started to take off. We are holding in there. With the war in Iran, there's been some pressure on the markets. We've been hanging in there, and we expect to hopefully start to rise again as we get through -- as the world gets through that into a more normal setting. We do have an extremely clean balance sheet now and capital structure. So the warrants, as I mentioned, have been exercised. Cash balance is quite healthy. We have all our supplementary liquidity lines in place, which is going to enable Richard to go and put in some orders in order to get that capital expenditure plan going. So key investment highlights. Growth, continued growth. The team that you see on the screen here have a lot of experience in this company and others and operational track record, and we're very disciplined in doing that. We have a robust study in front of us, which we're updating. We are very comfortable operating in Tanzania. And on the ground, we have both at corporate and on the ground, we have a very experienced management team. So now I'll open the floor up to questions. Operator: Thank you all for the presentation. We now start with the Q&A. Your first question for today comes from Jake Sekelsky from Alliance Global Partners. The question is, circling back to the potential third cutback of the open pit, is this something that could potentially take precedence over officially going underground? Or is this more of an in addition to type scenario? Stephen Mullowney: Richard, did you get that question? Richard Boffey: Just to be clear, it's definitely a deferral of the main zone underground, which was the majority of the underground mine plan and the PEA. It doesn't prohibit us from going underground elsewhere, but it certainly will defer it by at least 2 or 3 years and main zone by at least 5 years. So it's for most purposes is a deferral of underground. Operator: Thank you for that response, Richard. Your next question is, have there been any issues in regards to migration into the Tanzania area? If so, how do you foresee this affecting production, scaling, et cetera? Stephen Mullowney: Not quite sure that exact question, but we haven't seen -- I assume it's around artisanal mining. We haven't seen any changes in our artisanal mining activity in our areas. Obviously, artisanal mining is quite active for small-scale mining in and around our property, and it's closely monitored and we coexist quite well. Operator: Excellent. Thank you, Stephen. Moving on to your next question. Are there still plans to add 1,000 tonnes per day oxide plant? Stephen Mullowney: That would be a question that would go way, way back 4 or 5 years ago. There's a 2,000 tonne per day plant on site now that processes both oxides and sulfides. So that is a very -- that's a 4-year-old question. We're well past that. Operator: Understandable. Thank you. Your next question a viewer asks, considering record prices for gold, how do you think it would impact your bottom line and company financial health a possible gold price drop to anywhere around $4,200? Stephen Mullowney: Yes. So mining business is all about keeping your costs in check. As I mentioned, we are a low-cost operation. So obviously, like all miners, that's going to come off of your margin. But what you want to make sure of is you maintain your cost versus others. I would expect that the gold price, normally what ends up happening, and it's different given the current circumstances, which will pass over time with the war in Iran is when you see a gold price drop, you usually see an oil price drop, which is a drop in your operating cost. Now we haven't seen that in the last couple of weeks. But certainly, things will always revert back to the mean. Michael Leonard: And maybe just to supplement that, Julia, to reiterate my earlier comment, our cash costs are currently tracking around $1,500 an ounce. So at $4,200 an ounce gold, we're still running at 60% margin. Operator: Thank you for shedding light on that. Richard Boffey: Add one more factor into there and -- our mine planning has been iterated between -- we've taken from the PEA value of $1,900 an ounce. We've taken it all the way up to nearly $4,000 an ounce, and we've settled on a sort of a pit design modeling profile of around $3,000 to $3,300 an ounce. I think we're pretty -- we're putting ourselves in a strong position to withstand any drops in the gold price from a long-term planning perspective as well. Operator: Thank you all for your answers. Moving on to your next question, a viewer commented. I'm proud to be a long-time shareholder. What I'm hearing at this presentation is more good news. May I ask, with all the success, when can shareholders expect share in the wealth? Will dividends be paid this year? Stephen Mullowney: Lots of CapEx plans, so dividends will not be paid this year. As I mentioned, the underlying valuation metrics is what the focus is, particularly growing EBITDA, net asset value and resources. That does require capital to do that and shareholders should benefit from an increase in valuation if that plan is successful. Operator: Thank you, Stephen, for your response. Your next question a viewer asks, can you address the current split with the government and time lines for the possible change in percentages? Stephen Mullowney: So the current split is 55-45 with TRX holding 55%. We are -- we get our capital loan back first as well as any future capital contributions from corporate down into Buckreef would be subject to equity capital calls that would have the government or STAMICO have to contribute the same amounts in their proportions or else get diluted. With regards to time line around government negotiations, they continue. As I mentioned before, I continue to mention, it is fluid. Politics are involved and the time line is always uncertain, although we would like to have it yesterday. Operator: Thank you, Stephen. Moving on to your next question, a viewer asks, when are the upgrades of the processing plant to 3,500 tonnes per day expected to be completed? Has there been dilution of stock in the last 3 years? And if yes, by how many? Stephen Mullowney: So with regards to the processing plant, and I'll get Richard to add to this. The processing plant is envisioned 3,500 tonnes per day is a separate SAG/Ball Mill as well as Ball Mill combination that feeds into the broader circuit. What will operate alongside of that is the existing crushing and Ball Mill circuit that's currently in operation that has a nameplate of around 2,000 tonnes per day. So both of them will operate in conjunction with one another. With regards to time line, Richard went through the time lines for procurement. The goal is to have this done by the end of June of next year. So when I say Q2, I mean calendar as opposed to our fiscal year. Richard, anything else to add? Richard Boffey: Right, Stephen. I think we'll hopefully have our fully expanded plant fully operational in the end of Q2, start of Q3 2027. That's right. Stephen Mullowney: With regards to dilution in the last 3 years, the only capital raises that have been done are the warrant exercises, which was beyond the control of management, given they were put on line well over 5 years ago in order to recapitalize the business at that point in time, which only had $2 million in an expansion plan or a build to do at that particular point in time. And as I mentioned, we raised net $20 million, but warrants came along with that. Operator: Thank you for your answers. Moving on to your next question. When does the drilling season start and end? And when and how frequently can we expect drilling update? Stephen Mullowney: So drilling season isn't dependent in Tanzania. Obviously, it's harder in the wet season, but you can still drill. Easier in the dry season, the ground is not as soft, but you still drill. So it's not like Canada where you have a drilling season. You can drill all year around in Tanzania, although it's easier to certain seasons than other seasons. And with regards to exploration results, as we mentioned, the RC drill rig is on site now focused on Eastern Porphyry and defining that resource better. There is a diamond drill rig focused on some geotech work, which will then move into exploration type work as well as a diamond drill rig coming in next month, as Richard mentioned. I would expect to see some drill hole results, Richard say, later Q4, fiscal Q4 and later half -- back half of this calendar year. Richard Boffey: That will be the best outcome we see from results at the end of our fourth financial year quarter, but more than likely, it will probably be the fourth calendar quarter. That's right. Operator: Thank you for your responses. Moving on to your next question. Since dividends are not in the plan, which is smart at this point, can you address possible stock buybacks with a portion of the profits, which would enhance stock value? Stephen Mullowney: That is something that we will consider and have talked to advisers about. It's certainly something that's on our potential radar screen. Operator: Thank you, Stephen. Your next question is, what are the primary criteria that major gold miners would consider in principle in evaluating a potential acquisition of TRX Gold? Stephen Mullowney: Yes. So this question has been asked a lot, and my answer is fairly consistent. I think you need to have a decent resource profile and decent operations, which this enterprise has as we grow that resource profile and derisk it, particularly on the operations side. We know where we can get recovery rates now. We can mine this quite profitably. It will be putting a decent cash flow. So if you're looking at who would potentially acquire an enterprise such as us, I think people come up with Barrick and Anglo all the time because they're large. But there's a lot of -- I look at the slide here with Perseus on it, and there's -- they purchased Nyanzaga for their project. There's all kinds of mid-tier miners around the world. Operator: Thank you for your insight on that, Stephen. Your next question is, how does the prospect of restricted oil availability affect your production plans? What about spreading civil unrest? Stephen Mullowney: Yes. So with regards to oil, we haven't seen any impact in Tanzania at this point in time. Khalaf can chime in here, and he certainly is not lining up the gas station. The country has a good storage like other countries of fuels. It doesn't have an oil refinery in Tanzania, but it does import quite a bit from, I believe, Indian refineries, which are still getting their share of world oil. We do have -- in case you always have to look at worst-case scenarios, and potentially plan for them. So we do have plans in place if it did get to a squeeze position by making sure we have more storage on site. We also have a very healthy stockpile, so we could stop mining for a period of time if the proverbial s*** hit the fan. Operator: Thank you, Stephen. Your next question a viewer asks, how safe do you feel in your jurisdiction? Stephen Mullowney: Very safe, we drive around, go around on our own. I feel very safe in Tanzania, same with the management team. With regards to the prior question around civil unrest, we haven't seen any civil unrest since the election. Operator: Thank you for your comments on that. We're coming up to your last 3 questions for today. The next question is, could you provide some details on drilling progress on the Bridge and Anfield [indiscernible]? Stephen Mullowney: Yes. So as we mentioned before, the drill rigs are coming on site. There will be an increased focus in the second half of this year. And right now, we're focused on the Eastern Porphyry some geotech in order to advance our shorter-term plans. And then we'll get into a broader exploration on what I'll call medium- to longer-term plans. Operator: Thank you, Stephen. You touched on this, but I will still repeat the question. It is, is TRX Gold open to discussions with Barrick Gold or AngloGold Ashanti in Tanzania? What does the Buckreef Gold Project need to attract those companies into the underground development plan and away from the recent development at EcoGraf and Lake Victoria Gold? Stephen Mullowney: That's a different question. So as I mentioned before, anything that is a benefit for shareholders is anything that we'll look at. We're not going to hold back any shareholder value. We believe there's more shareholder value to be had at this point in time in growing the asset and the underlying valuation metrics and a lot of uplift potential as a result of that as well as renegotiation of the joint venture agreement into a framework agreement. There's a lot of value creation from that particular plan. If someone wanted to come and talk to us, obviously, if it's in the benefit of shareholders, it will be discussed. That is a normal company, shareholders get an opportunity to decide upon that. That's not ultimately our decision, that is shareholders' decision. I believe there's more value to be had growing this enterprise at this point in time. We are still relatively small with great growth plans in front of us. With regards to the other properties and focus on those, I'm not sure where that question comes from with regards to Lake Victoria Gold and EcoGraf. We're focused on what Buckreef Gold is doing and what TRX Gold is doing. Operator: Thank you, Stephen. We're actually coming up to your last 2 questions as one more just popped in. Your second to last question a viewer commented. Doesn't hydropower mitigate oil costs? Stephen Mullowney: Yes. So on site, as I mentioned, with regards to oil, our -- predominantly our biggest oil cost is on mining. There is some diesel gensets, but yes, the electricity National Power Grid is online. We have a good connection there. I believe we're up around, Richard, 95% on that line now, of power availability, somewhere in that range. Richard Boffey: It fluctuates, Stephen. So yes, between 88% and 95% of availability of the local power grid. Stephen Mullowney: So with regards to oil prices, we burn, Mike, I think we looked at this the other day, our cost on oil is around $0.5 million a month. Michael Leonard: $0.5 million a month. So a 10%, 20%, 30% increase in oil prices doesn't really have a material impact on our cost profile. Stephen Mullowney: There you go, those are the answers. Operator: Thank you all for your insights on that. And your last question for today is, what are the KPIs for the leading management team? How do you plan the development for the next 3 to 5 years? Martin Armstrong sees this as a rather turbulent time. Stephen Mullowney: Yes. So with regards to the KPIs, the KPIs that grow the business in line with the business plan. That's simple KPIs. I don't like to overcomplicate KPIs. KPIs are then driven down into our management at site around maintaining mining, maintaining recovery rates, processing rates, maintenance schedules, being on time on CapEx spend, those sort of things. Those are all KPIs at the local level. The local level is incented as well around RSUs, just like the management team is on RSUs and options. So that's the alignment there. And what was the second part of the question? Operator: Of course, I can repeat it. The second part of the question was, how do you plan the development for the next 3 to 5 years? Martin Armstrong sees this as a rather turbulent time. Stephen Mullowney: Look, I think if we look at the world, it's been turbulent for a while, which has become a little bit more turbulent with regards to activities in the Middle East. It seems to be coming off again a little bit. With regards to us, we've developed and operated this project under turbulent times. I started at this company in COVID. I would consider that a turbulent period as well. Different turbulence, but turbulent nonetheless. We could still go to site and travel freely. We couldn't do that during the COVID period. Logistics are much easier even in the current environment than it was under the COVID period. And the company was able to execute just fine. So in the next 3 to 5 years, I continually see this company and particularly at Buckreef having its head down and executing on the plans that have been in the PEA and what we've shown to be updated plans in a revised study in the next couple of months. Operator: Excellent. Thank you all for your responses. That concludes the Q&A session. But before we go, I'll turn it back to you, Stephen, for final remarks. Stephen Mullowney: Yes. Thanks, everyone, for joining again this morning. As I mentioned, the focus is on growth and growth in the underlying valuation metrics. We have a management team that has done this before, and we're doing it again. And we are very, very excited for what's coming at Buckreef. I hope to see a lot of increase in revenue, EBITDA and resources over time that lead into a much larger project at Buckreef and will benefit all shareholders and stakeholders in Tanzania as well. So as there is saying in Tanzania [Foreign Language]. Thank you very much. Operator: Excellent. Thank you, Stephen and the team for your presentation. Thank you, everyone, for joining us today for TRX Gold Corporation Second Quarter 2026 Results. TRX Gold is trading on the Toronto Stock Exchange under the ticker symbol TRX and on the NYSE American under the ticker symbol TRX. The playback will be available on our website 24 to 48 hours after this presentation under the VNDR Library tab. Stay tuned for the next quarterly call, and see you next time.
Operator: Good day, and thank you for standing by. Welcome to the VEF Q1 2026 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, David Nangle, CEO. Please go ahead. David Nangle: Super. Thank you very much, operator, and good morning, good afternoon, everybody, and thanks for joining us in our First Quarter '26 Results Call and Presentation. As per usual, I have my colleague and CIO, Alexis Koumoudos, with me, and we'll spend the next 15, 20 minutes just running through all the events and key numbers and parts that made up the quarter for VEF as was. And all the details are online as well from a presentation point of view, and that will be available as well after this call. And the key events of the quarter, looking at Slide #2, and I think bigger picture, we're all very cognizant and aware of the geopolitical-driven volatility, the world that we're living in, the first order effect, the potential second order effects. We're not going to delve into all of that here because it's well documented by many people elsewhere, but we will give you a bit of a flavor of how life at VEF has been affected by that, while we marry in all the micro level delivery of the first quarter. I think the first point is the NAV itself. Obviously, we had a bit of a headwind in Q1. And naturally, when 30% of your portfolio is mark-to-model and you have a market sell-off. So the NAV was up 5.8% quarter-on-quarter in dollar terms, a bit less in SEK terms. Fundamentally, portfolio is doing very well. Currencies were in our favor, but multiples on some key names drove the NAV quarter-on-quarter down. And more specific and back to the micro level and performance, exits continue. And we had another secondary in Juspay in 1 quarter '26, and this is our Series D follow-on, $50 million at $1 billion-plus valuation, company we invested in $100 million a few years back from a total valuation point of view. But yet again, we use the opportunity to top slice our position there and taken nearly $15 million of gross proceeds, at a healthy IRR of 34% and still having a decent stake in the company. I think most important for us and our narrative to the market is that was an exit, not at NAV plus/minus. That was an exit above NAV. So continue to turn our NAV, our companies into dollars at the valuation that we say plus or minus. And coming back a bit macro level, I think from an exposure point of view, we're getting a lot of questions, obviously, from the geopolitics of the world and how we are or aren't affected, even though. I think everybody is affected in some way, shape or form. We are actually in a relatively good, and I'd say, relative macro position in terms of our exposure geographically with 80% of our portfolio plus/minus being Latin American exposure, which is a relatively safe haven part of the world. And Brazil alone is over 50%, maybe 60% with Creditas being our key asset. And we're obviously the commodity trade that Brazil is a bit of a safe haven status with high interest rates, commodities and just geographically well placed. We're seeing markets there rally, currency, index, et cetera. and we're indirect and direct benefits of that exposure. And I'll get into that in the presentation. And more micro level, back to Creditas, it's been a really good window in the last -- we've enjoyed the last 15 to 18 months of Creditas quarter-on-quarter-on-quarter, the fundamental story continues to improve in terms of accelerating growth and there's a new layers of positivity been coming into the story. Now it's more around AI-driven efficiency, you get nice operating jaws from a top line volume revenue growth and efficiency coming through. Healthy guidance looking forward. And those kind of catalysts that everybody likes to see around raising capital, nice valuations, getting a bank license. So it's a nice window. We're enjoying us. They are delivering, and that's most important for us as an investment company. And then finally, a more macro again, away from geopolitics, but more in the tech side and the AI adoption. We would kind of stayed away from overly talking about AI from a investment portfolio point of view. But I think the pace and progress of these models now has really become game changing. All of our companies are engaging. It's gone from theory to reality. We're enjoying seeing what they're starting to do, and some is already starting to feed through to the numbers like Creditas. And I guess we just wanted to put a marker down this quarter, and we'll be updating you as we go on this front because it's been a very exciting next wave of efficiency growth, costs, operating jaws that we can see coming through in our portfolio. Going into the presentation proper, just a few numbers. This has all been flagged earlier on in our release, but our NAV is at $408.6 million for the quarter, up 5.8% in U.S. dollar terms. As I said, the SEK and SEK per share is down less, because of the weakness in the local currency, and that's down minus 2.8% in the quarter. I'll skip over Slide 4, and I'll move directly to bringing Alexis into the call and for Slides 5 to 9, where he'll talk us through valuation moves in the quarter and a little bit more about the exits that I talked about in Juspay and beyond. Alexis, over to you. Alexis Koumoudos: Thanks, Dave, and hi, everyone. Yes. So as Dave mentioned, in the first quarter of '26, 70% of the portfolio is valued at latest transaction and 30% mark-to-model. Within the portfolio, as Dave mentioned as well, Juspay completed the $50 million Series D follow-on at a 16% dollar premium to the Series D of 2025, in which we took $14.6 million in secondary sold for cash, and we hold a 6.4% remaining stake priced here at the secondary price. You'll see that the net impact from the NAV of -- is the net impact of $10.8 million markup from the up round that happened and selling $14.6 million for cash, which reduces our NAV for Juspay in the mark value by $3.8 million in the quarter. The other thing to point out on this slide on Slide 5 is Solfacil rolled off a recent transaction to mark-to-model as it completed 12 months from the transaction. And Solfacil, Konfio and Nibo valuations under mark-to-model valuation methodology were impacted by the March sell-off in comps across tech, fintech and SaaS. And outside the impact of the comps, each of these businesses continue to deliver in line with or ahead of our business plan. So the markdowns were purely a symptom of market moves. Getting into this in a bit more depth on Slide 6. We show the breakdown of the dollar NAV evolution over the quarter. And you can see the biggest impact on the NAV in the quarter was really the sell-off in comps and there are multiple impact on the mark-to-model portion of the portfolio. This impacted our NAV to the tune of $14 million and it's reflected in the valuations of the companies and the mark-to-model methodology, names like Konfio, Solfacil, and Nibo. And the -- this was offset to some extent by the portfolio performance, which had a $10 million positive impact on the NAV. Under the latest transaction portion of the portfolio, you'll see like a negative $4 million move in this section of the portfolio. And that is purely the $10 million uplift in the Juspay valuation, offset by selling $14.6 million in Juspay. And the corporate cash increases $10 million, that is predominantly from the proceeds of the sale of Juspay offset in part by OpEx and coupon payments in the quarter. Overall, the FX impact was neutral in the quarter. And the net impact of all of these moves was, as Dave mentioned, the 5.8% contraction in NAV quarter-over-quarter. On Slide 7, we continue to -- we just want to reiterate that we continue to feel more and more confident in our -- in the quality of the portfolio and its ability to compound from here. We see our portfolio growing at 25% to 30% year-on-year from a profitable base with our large late-stage top 3 holdings driving much of this on a self-sustaining basis. And we're encouraged by the deal activity we're seeing across our geographies and feel proud of our companies and their ability to continue attracting fresh capital, which drives real value growth and creates liquidity options. And we're also proud to find opportunities to continue converting slices of our NAV to cash at or above the marks we hold them at whilst delivering benchmark returns like we did in the Juspay round. So moving to Slide 8. We just wanted to reflect a little bit and update everybody on what Juspay is as a business, our history with the company and where we stand after this transaction. So Juspay is the leading payment orchestrator in India with a dominant market share. Juspay powers some of the largest enterprises in India and now has a large payment infrastructure business, powering UPI apps and bank infrastructure. Juspay has also now launched an international business, and they have offices across Asia, Europe, the Middle East, U.S. and Brazil. And by the numbers, Juspay powers over $450 billion of annualized TPV, representing about 70 million average daily transactions, and it's growing its top line in over 50% year-on-year and the business quality is high with near 0 churn over 80% gross margins and it's been profitable for over a year now. Juspay was our first investment in India. And we made 2 -- we wrote 2 checks into the business, 1 of $13 million in early 2020 and $8.1 million in December 2021. And since our first investment, revenues have grown over 10x and the company has raised money in rounds led by Tier 1 investors, including SoftBank, Kedaara and WestBridge. And if we include the 2 realizations of $29.4 million, our invested capital has grown from $21.1 million to $94.9 million representing a 4.5x MOIC in USD terms. And the proceeds of our latest secondary sale, the Series D follow-on represents 6.6x MOIC and a 38% IRR in U.S. dollar terms. As we mentioned, we retain a Board seat at Juspay post this transaction and a 6.4% stake in the business. And Juspay really operates at the bleeding edge of tech by any standards, and we continue to be very excited about the potential of the business and the path that it's on. We believe they will be in a position to announce some more international success very soon. And we've become -- and it's become one of the strongest AI native companies across the fintech ecosystems that we've seen with a product road map to reflect that. We're excited to continue our journey with Vimal and Sheetal into the future. On Slide 9 we just wanted to update our summary of exits of the last 18 months in a slide. And so since November 2024, we've delivered 4 exits totaling $52 million. We continue to target opportunistically converting our NAV to cash at or above our marks to strengthen our balance sheet and improve optionality in an environment where we see plenty of opportunity. Overall, the $52 million in exits represented by the BlackBuck IPO in sale, the Gringo sale to Corpay and the 2 Juspay partial sales to Kedaara and WestBridge, were executed at an 8% premium to the pre-transaction NAV marks on these companies. A 1.4x aggregate MOIC and 11% gross IRR over a 3.5-year holding period. And if we include the retained stake in Juspay, the total value of these investments would represent a 2.5x MOIC and 24% gross IRR, including the unrealized gains at Juspay. And we continue to work towards more exits of a similar standard going forward. Dave, back to you. David Nangle: Thank you very much, Alexis. I mean, look, a few slides to wrap up, and then we'll open up to Q&A for anybody who wants. But leaning on from where Alexis talked about the exit there, most notably Juspay, the most recent one. A lot of this has been about strengthening our balance sheet from a period of 2 years ago where we had a debt position. We're long a portfolio of private EM assets, and we start making promises to the market about being focused on exits, delivering those exits close to NAV, then getting that capital in, strengthening our balance sheet, looking at our debt, start to pay that down as a priority, then looking at our equity and everything that extrapolates from there. And where we're at as of the end of Q1, approximately we're cash neutral in that we've got $25 million approximate of cash from the exit and the buildup over the last 12 to 15 months. And our debt outstanding at current FX is about $25 million. So our capital position is in a much more, let's call it, healthy position, but work to be done. We're still very much focused on strengthening the balance sheet. And I think capital allocation and ideology, what would I share with you today, I think what you saw last year was Capital Allocation Policy 101. As funds came in, we paid down half our debt. We showed the market we were serious about that. So deleveraging the balance sheet, strengthening our position. And then we nibbled at our shares and bought back a couple of percent at what are significantly low valuations, especially as we're realizing at NAV positions as we go. At this moment in time, we're out there talking to our investors, talking to the market, we're listening and we're logical as we go. So we've got a priority. We've got a bond falling due at year-end. We already pay that down or roll it, but that's in our focused vision. And then after that, you have the natural hurdle of your shares trading at a deep discount, and it will be very hard for the dollar to work beyond that in the near term with incremental capital coming in. At this point, it's all theoretical because we are in a capital position we are in. But as more capital comes in, we'll start to shape this out and give the market more color where we think. But the bonds, our own shares is definitely where our head space is. It's where our head space was last year, that's how we acted. So just by our actions as we go. Moving back to a macro level. I talked about this at the start, but I saw the slide of our exposure as an investment company. And geographically, we are exposed heavily to Latin America and then India with some small snippets elsewhere in the emerging world. We're very cognizant. We're not complacent of what's going on in the Middle East. We've seen this many times before. We know there are the first order immediate effects of these things as commodity prices spike and people look at the most obvious things. But then there's second and third order depending on the longevity and the depth of this situation as it feeds into global macro inflation, interest rates from a holistic point of view, but also on individual markets. I guess what we can say today being close to our countries and our company, the focus is that we're in a relatively good position, and it's all relative in the world that we live in. But Latin America is a strong point and Brazil specifically. It is a size commodity-producing country, both food and hard and soft commodities. It is benefiting, obviously, from the spike as well insulated from a lot of the issues given the geography. What we've seen is the Bovespa being one of the most impressive or best-performing markets year-to-date. Also the BRL, the local currency, I think as of today, it's about 10% versus U.S. dollar year-to-date. And I was just reading about BlackRock, Brazilian ETFs are seeing record inflows. So some of these are read across from what we are in exposure that we have, but some of them are actually fundamental as in the BRL. We are directly exposed by Creditas, Solfacil and Nibo and to the local currency. It's a nice tailwind for what we do. And we're not a macro fund, but we do take the macro benefits when they come. So we're well situated at this time. We're watchful of countries like India who are net importers of commodities. But through the prism of all our companies, we see no issues to share with you to date. We have some small exposure in the Middle East via Abhi, mainly a Pakistani company, a small growing part of the business with no issues today. And so I think geography, geopolitics, we feel well positioned. We are watchful, and we will continue to share as we go. And getting on to Creditas on a micro level, so we're talking back and forth between macro and micro because it's that kind of quarter. But what you're seeing at Creditas is, as I said at the start, we're liking the compounding nature quarter-on-quarter-on-quarter of both news flow and performance. I think the loan portfolio year-on-year growth, we started talking about this early last year, how it's starting to accelerate, but nothing is real until you see it. And you're seeing the acceleration of the loan book near 20% year-on-year as of Q4. I expect that to continue into Q1. That feeds into revenue growth. And probably as exciting, something that we didn't predict when we start talking about Creditas, return to growth status back at the start of 2025 was the efficiency drive and the second order benefits we're now seeing from AI and it is becoming an AI-first or native company when it comes to a lot of parts of its business, and that's really driving elements like the CAC falling, and we're seeing more growth versus cost, revenue growth should exceed cost. There's a lot of positive starting to feed in there, which we'll get into gradually over time. We share some metrics here around origination growth being 2x versus the percentage growth in OpEx, which is very nice to see. And just on AI, what I'd say here is we're kind of putting a flag down this quarter. We're starting to share on AI. Alexis talked about Juspay and its initiatives. I'm seeing it personally through Creditas really around the CAC, the customer acquisition cost, which was running at 20% of originations only a few years ago, it's now fallen below 10%, so record low levels. A lot of what they're doing is around collateral underwriting, their go-to-market customer service, fraud, you've seen the same in Konfio in Mexico. But where these things become real and where we can start sharing and get excited and get you excited is when they start to hit the numbers. So the CAC is one example that Creditas shares openly with the market. The operational efficiency, where we've got 2x growth in originations and only 25% of OpEx in the last 2 years. And finally, the headcount, which peaked at over 4,000 is now below 2,000 and moving. So there's a lot of nice trends here -- excuse me one second. Yes, a lot of nice underlying trends that we're seeing from the AI-driven efficiency drive. And this goes well beyond the top 3 companies in our portfolio. And then moving to the last slide, Slide 14. Just to wrap up, what would I say, very similar to what we've said in previous quarters with some tweaks. We like to be consistent and evolve our messaging, nothing too dramatic. But it always comes back to portfolio. We're very happy with our portfolio. It's a very focused portfolio. Cash flow profiles are very positive there, getting to that neutral position and then moving into positivity, growing again. We want growth in this environment. Efficiency drives are kicking in some names. We get nice jaws starting to evolve it early and raising fresh capital, as Alexis said, new marks for Juspay, for Creditas, best-in-class companies raise capital inside in these markets. And I think the exit is something that you're going to hear from us again and again and again, because we're very happy and proud of the fact that we're delivering them. They're hard. We're delivering them at the right price. And then you build that cash pile, you strengthen your balance sheet and then it's what you do with it. I think so far, our experience has been around focusing on debt and looking at our shares and looking forward. I don't see that being too much different. It's just a matter of which we prioritize and when with what cash balance that comes at us and watch this space, we will be communicating, but we get what we should be doing. We're listening to the market. It's obvious. And finally, pipeline, I think this is a long-term story at VEF that continues. We are well situated in the world of emerging market fintech, well connected. We're seeing a lot of good companies that we would like our and your capital in. There will be a time for that, and we're positioning ourselves for that always. And so I'll stop there and very happy to open up for questions from the floor. Operator: [Operator Instructions] We will now take the first question from the line of Linus Sigurdson from DNB Carnegie. Linus Sigurdson: I hope you're good. Starting with a question on Creditas. And anything you can say about the growth outlook. I mean, Sergio talks about accelerating to over 25% this year. And I think you wrote 25% to 30% plus in your presentation today. How much of, say, blue sky scenario is this? Or rather, how should investors think about the visibility on this number? What are the main moving parts on the revenue side? David Nangle: Yes. Linus, thanks for the question. And it was good, we have Sergio in Stockholm. It's good to have him out there meeting people like yourselves and telling the story. He does talk a range in fairness to them, 25% to 30%. I think 25% is a level he would think he can achieve and 30% is the level that he wants to aspire to in the current environment. I think you'd rather do multiple years of compounding at these levels, not speaking for him, but just getting the read from him as opposed to accelerating to 50% to 100% growth given what they did in the past and burning to get there. We'd rather do it on a cash-neutral basis and nice sustainable, because that obviously feeds into an IPO narrative where you've got compounding growth that seems logical and forecastable to the market as opposed to highs and lows in those trends. So I think that's the way he's thinking. And I think if you look at the year-on-year growth of the loan book into Q4, what, 19%, 20% and just keep on moving up quarter-on-quarter through the year, you can see 20% plus in Q1, I'd like to think we'll see and how that extrapolates. I think the caveat here, Linus, are everybody is going to caveat everything with global geopolitics and macro. And if that turns or changes, it could change everything everywhere. That's just one caveat that's natural. The other is around Brazil and interest rates staying high. We had our first 25 bps rate cut earlier this year. We're hoping for more, but I understand why the Central Bank of Brazil held a little bit higher for longer, given what's happening in the world and the risks to inflation. And then in Q4 in Brazil, we have elections, which are always interesting to say the least, the far left and far right going off against each other, which is the natural order of play. So it can get a bit noisy and nuanced in Q3 into Q4, things may slow down before they pick up again. So there's a few caveats here and there. But given everything we and he sees through the business, I think he's confident enough to go out with those numbers and he wouldn't say them unless he think he could achieve them. Linus Sigurdson: That's good color. And then, I just wanted to ask on with Creditas and Juspay now at latest transactions, I guess, Konfio will be key here in the next coming quarters and the sort of 2026 story. Could you just double-click a bit on operations and how you think about the outlook for this year in Konfio? David Nangle: Yes, that's fair. Like I think there's many ways of looking at the first part, what you said, there's many ways of looking at our -- what's important and what's key for this year. And obviously, for us, the performance of Creditas, Juspay, Konfio, and then Nibo is all key. But we're less likely to see a markup in Creditas or Juspay given that they just raised even though one never knows. So Konfio, I think, is where you're leaning on in that regard in terms of mark-to-model or a raising capital. But to answer your question specifically on Konfio, it is business-as-usual. They are also accelerating growth like Creditas. They didn't reach the 20% highs that Creditas got to from a near no growth at the start of last year. I think Konfio from memory, got 15%, 16% year-on-year growth. But they would be in a similar trajectory or aspirational category to Creditas in terms of growing the loan book in that 20% to 30% in 2026. And margins are healthy, and they are cash flow positive on the bottom line. So they're building a bit of cash. So it's nicely self-sustaining. We always allude to the bank license, which is an ongoing process. And we like the fact that they've been given out in Brazil or Mexico to many aspiring entities. We like the fact that Konfio is towards the top of the list, but it's very hard to put a mark on when it happens. But the underlying business is in rude health. And I'd say it's just tracking Creditas, but maybe 3, 6 months behind in terms of getting to that growth level. Operator: We will now take the next question from the line of Stefan Knutsson from Redeye. Stefan Knutsson: I hope you are well. Just a question on the balance sheet. I see now that at the recent transaction, you are close to have a neutral situation in the net debt maybe your 1 exit away from, yes, being able to be deploying capital again. But just hypothetically, if you were to do another exit, how would you prioritize the capital that you would gain? David Nangle: Yes. Stefan, it's -- yes, look, there's different ways that we can deploy capital right now and let's be honest, I'd like to get rid of the debt. And I think that's the most obvious thing we shouldn't be funding long-term, long-duration private assets and emerging markets with short duration sector. It serves as purpose, and we're very happy and proud of the Swedish market supporting us with the debt. But we're down to a manageable level that we'd rather pay off, and we don't want our need, I think we may to do that market again in the future. But -- so I would edge towards the prior prioritization of that. And given the small amount of debt that it is, it's very hard to pay down some, but not all. You got to roll it all or you pay it off. So I think it's a little bit binary. So we had a decent other exit probably that, but I don't give me 100% on that. And then you look at your own shares. It does hurt us. We are shareholders. We work very hard for this company. We see how our portfolio is doing. We report everything we see to the market. We get exits at NAV in the market is what it is. But the market isn't going to reward our shares with that delivery and those exits at NAV plus/minus, we'll just do it ourselves, buy back our shares all day. So it's very hard to look beyond your shares. So -- the easier to answer in a normal world where I had all the choices you do a bit of both. But given how that markets work, it's probably lean into your debt clearing it before you start to eat away at your shares. Stefan Knutsson: Perfect. And regarding exits, how are you thinking strategically on portfolio concentration, like we have seen you exit a few of your smaller holdings concentrating into the top holdings. Is that the way forward? Or are you also looking to maybe decrease the size of the exposure for Creditas that is over 50% now? David Nangle: Yes. There's a little bit of strategy here, and there's a little bit of the markets give you what they give you as you try and do a lot of things at the same time. But strategically, we are definitely trying to shrink and focus the portfolio. We don't have a small amount of winning names. That's good for us from the opportunity cost over time, and it's good for communicating to the market. Within that, I don't mind, I'm very comfortable with concentration. Once concentration is on quality, where I believe it is today, so that makes me sleep well at night. And we'll continue to try and clean up or exit position some smaller names for sure. And then on the top names, they're just constant work streams where we may have done 2 exits from Juspay in the last 12 months, but they could have easily been Konfio or Creditas or other names, had the market and the opportunity being there at the time. So these are work streams across a number of names that are leading us to a smaller number of holdings, a more concentrated quality portfolio and what excess capital that comes in being delivered to deleverage the balance sheet and buy back our shares at these beautiful levels. Operator: Thank you. There are no further questions at this time. I would now like to turn the conference back to David Nangle for closing remarks. David Nangle: Yes. Thanks, Andre, and thank you, everybody, as always, for joining us on this call. Very happy with what we're seeing at VEF irrespective of what is a very noisy and volatile world. We will continue to deliver and focus on all the right things, and we'll continue to listen to our investors and our partners as we go. And looking forward to talking to you again next quarter. Thank you. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the VEF Q1 2026 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, David Nangle, CEO. Please go ahead. David Nangle: Super. Thank you very much, operator, and good morning, good afternoon, everybody, and thanks for joining us in our First Quarter '26 Results Call and Presentation. As per usual, I have my colleague and CIO, Alexis Koumoudos, with me, and we'll spend the next 15, 20 minutes just running through all the events and key numbers and parts that made up the quarter for VEF as was. And all the details are online as well from a presentation point of view, and that will be available as well after this call. And the key events of the quarter, looking at Slide #2, and I think bigger picture, we're all very cognizant and aware of the geopolitical-driven volatility, the world that we're living in, the first order effect, the potential second order effects. We're not going to delve into all of that here because it's well documented by many people elsewhere, but we will give you a bit of a flavor of how life at VEF has been affected by that, while we marry in all the micro level delivery of the first quarter. I think the first point is the NAV itself. Obviously, we had a bit of a headwind in Q1. And naturally, when 30% of your portfolio is mark-to-model and you have a market sell-off. So the NAV was up 5.8% quarter-on-quarter in dollar terms, a bit less in SEK terms. Fundamentally, portfolio is doing very well. Currencies were in our favor, but multiples on some key names drove the NAV quarter-on-quarter down. And more specific and back to the micro level and performance, exits continue. And we had another secondary in Juspay in 1 quarter '26, and this is our Series D follow-on, $50 million at $1 billion-plus valuation, company we invested in $100 million a few years back from a total valuation point of view. But yet again, we use the opportunity to top slice our position there and taken nearly $15 million of gross proceeds, at a healthy IRR of 34% and still having a decent stake in the company. I think most important for us and our narrative to the market is that was an exit, not at NAV plus/minus. That was an exit above NAV. So continue to turn our NAV, our companies into dollars at the valuation that we say plus or minus. And coming back a bit macro level, I think from an exposure point of view, we're getting a lot of questions, obviously, from the geopolitics of the world and how we are or aren't affected, even though. I think everybody is affected in some way, shape or form. We are actually in a relatively good, and I'd say, relative macro position in terms of our exposure geographically with 80% of our portfolio plus/minus being Latin American exposure, which is a relatively safe haven part of the world. And Brazil alone is over 50%, maybe 60% with Creditas being our key asset. And we're obviously the commodity trade that Brazil is a bit of a safe haven status with high interest rates, commodities and just geographically well placed. We're seeing markets there rally, currency, index, et cetera. and we're indirect and direct benefits of that exposure. And I'll get into that in the presentation. And more micro level, back to Creditas, it's been a really good window in the last -- we've enjoyed the last 15 to 18 months of Creditas quarter-on-quarter-on-quarter, the fundamental story continues to improve in terms of accelerating growth and there's a new layers of positivity been coming into the story. Now it's more around AI-driven efficiency, you get nice operating jaws from a top line volume revenue growth and efficiency coming through. Healthy guidance looking forward. And those kind of catalysts that everybody likes to see around raising capital, nice valuations, getting a bank license. So it's a nice window. We're enjoying us. They are delivering, and that's most important for us as an investment company. And then finally, a more macro again, away from geopolitics, but more in the tech side and the AI adoption. We would kind of stayed away from overly talking about AI from a investment portfolio point of view. But I think the pace and progress of these models now has really become game changing. All of our companies are engaging. It's gone from theory to reality. We're enjoying seeing what they're starting to do, and some is already starting to feed through to the numbers like Creditas. And I guess we just wanted to put a marker down this quarter, and we'll be updating you as we go on this front because it's been a very exciting next wave of efficiency growth, costs, operating jaws that we can see coming through in our portfolio. Going into the presentation proper, just a few numbers. This has all been flagged earlier on in our release, but our NAV is at $408.6 million for the quarter, up 5.8% in U.S. dollar terms. As I said, the SEK and SEK per share is down less, because of the weakness in the local currency, and that's down minus 2.8% in the quarter. I'll skip over Slide 4, and I'll move directly to bringing Alexis into the call and for Slides 5 to 9, where he'll talk us through valuation moves in the quarter and a little bit more about the exits that I talked about in Juspay and beyond. Alexis, over to you. Alexis Koumoudos: Thanks, Dave, and hi, everyone. Yes. So as Dave mentioned, in the first quarter of '26, 70% of the portfolio is valued at latest transaction and 30% mark-to-model. Within the portfolio, as Dave mentioned as well, Juspay completed the $50 million Series D follow-on at a 16% dollar premium to the Series D of 2025, in which we took $14.6 million in secondary sold for cash, and we hold a 6.4% remaining stake priced here at the secondary price. You'll see that the net impact from the NAV of -- is the net impact of $10.8 million markup from the up round that happened and selling $14.6 million for cash, which reduces our NAV for Juspay in the mark value by $3.8 million in the quarter. The other thing to point out on this slide on Slide 5 is Solfacil rolled off a recent transaction to mark-to-model as it completed 12 months from the transaction. And Solfacil, Konfio and Nibo valuations under mark-to-model valuation methodology were impacted by the March sell-off in comps across tech, fintech and SaaS. And outside the impact of the comps, each of these businesses continue to deliver in line with or ahead of our business plan. So the markdowns were purely a symptom of market moves. Getting into this in a bit more depth on Slide 6. We show the breakdown of the dollar NAV evolution over the quarter. And you can see the biggest impact on the NAV in the quarter was really the sell-off in comps and there are multiple impact on the mark-to-model portion of the portfolio. This impacted our NAV to the tune of $14 million and it's reflected in the valuations of the companies and the mark-to-model methodology, names like Konfio, Solfacil, and Nibo. And the -- this was offset to some extent by the portfolio performance, which had a $10 million positive impact on the NAV. Under the latest transaction portion of the portfolio, you'll see like a negative $4 million move in this section of the portfolio. And that is purely the $10 million uplift in the Juspay valuation, offset by selling $14.6 million in Juspay. And the corporate cash increases $10 million, that is predominantly from the proceeds of the sale of Juspay offset in part by OpEx and coupon payments in the quarter. Overall, the FX impact was neutral in the quarter. And the net impact of all of these moves was, as Dave mentioned, the 5.8% contraction in NAV quarter-over-quarter. On Slide 7, we continue to -- we just want to reiterate that we continue to feel more and more confident in our -- in the quality of the portfolio and its ability to compound from here. We see our portfolio growing at 25% to 30% year-on-year from a profitable base with our large late-stage top 3 holdings driving much of this on a self-sustaining basis. And we're encouraged by the deal activity we're seeing across our geographies and feel proud of our companies and their ability to continue attracting fresh capital, which drives real value growth and creates liquidity options. And we're also proud to find opportunities to continue converting slices of our NAV to cash at or above the marks we hold them at whilst delivering benchmark returns like we did in the Juspay round. So moving to Slide 8. We just wanted to reflect a little bit and update everybody on what Juspay is as a business, our history with the company and where we stand after this transaction. So Juspay is the leading payment orchestrator in India with a dominant market share. Juspay powers some of the largest enterprises in India and now has a large payment infrastructure business, powering UPI apps and bank infrastructure. Juspay has also now launched an international business, and they have offices across Asia, Europe, the Middle East, U.S. and Brazil. And by the numbers, Juspay powers over $450 billion of annualized TPV, representing about 70 million average daily transactions, and it's growing its top line in over 50% year-on-year and the business quality is high with near 0 churn over 80% gross margins and it's been profitable for over a year now. Juspay was our first investment in India. And we made 2 -- we wrote 2 checks into the business, 1 of $13 million in early 2020 and $8.1 million in December 2021. And since our first investment, revenues have grown over 10x and the company has raised money in rounds led by Tier 1 investors, including SoftBank, Kedaara and WestBridge. And if we include the 2 realizations of $29.4 million, our invested capital has grown from $21.1 million to $94.9 million representing a 4.5x MOIC in USD terms. And the proceeds of our latest secondary sale, the Series D follow-on represents 6.6x MOIC and a 38% IRR in U.S. dollar terms. As we mentioned, we retain a Board seat at Juspay post this transaction and a 6.4% stake in the business. And Juspay really operates at the bleeding edge of tech by any standards, and we continue to be very excited about the potential of the business and the path that it's on. We believe they will be in a position to announce some more international success very soon. And we've become -- and it's become one of the strongest AI native companies across the fintech ecosystems that we've seen with a product road map to reflect that. We're excited to continue our journey with Vimal and Sheetal into the future. On Slide 9 we just wanted to update our summary of exits of the last 18 months in a slide. And so since November 2024, we've delivered 4 exits totaling $52 million. We continue to target opportunistically converting our NAV to cash at or above our marks to strengthen our balance sheet and improve optionality in an environment where we see plenty of opportunity. Overall, the $52 million in exits represented by the BlackBuck IPO in sale, the Gringo sale to Corpay and the 2 Juspay partial sales to Kedaara and WestBridge, were executed at an 8% premium to the pre-transaction NAV marks on these companies. A 1.4x aggregate MOIC and 11% gross IRR over a 3.5-year holding period. And if we include the retained stake in Juspay, the total value of these investments would represent a 2.5x MOIC and 24% gross IRR, including the unrealized gains at Juspay. And we continue to work towards more exits of a similar standard going forward. Dave, back to you. David Nangle: Thank you very much, Alexis. I mean, look, a few slides to wrap up, and then we'll open up to Q&A for anybody who wants. But leaning on from where Alexis talked about the exit there, most notably Juspay, the most recent one. A lot of this has been about strengthening our balance sheet from a period of 2 years ago where we had a debt position. We're long a portfolio of private EM assets, and we start making promises to the market about being focused on exits, delivering those exits close to NAV, then getting that capital in, strengthening our balance sheet, looking at our debt, start to pay that down as a priority, then looking at our equity and everything that extrapolates from there. And where we're at as of the end of Q1, approximately we're cash neutral in that we've got $25 million approximate of cash from the exit and the buildup over the last 12 to 15 months. And our debt outstanding at current FX is about $25 million. So our capital position is in a much more, let's call it, healthy position, but work to be done. We're still very much focused on strengthening the balance sheet. And I think capital allocation and ideology, what would I share with you today, I think what you saw last year was Capital Allocation Policy 101. As funds came in, we paid down half our debt. We showed the market we were serious about that. So deleveraging the balance sheet, strengthening our position. And then we nibbled at our shares and bought back a couple of percent at what are significantly low valuations, especially as we're realizing at NAV positions as we go. At this moment in time, we're out there talking to our investors, talking to the market, we're listening and we're logical as we go. So we've got a priority. We've got a bond falling due at year-end. We already pay that down or roll it, but that's in our focused vision. And then after that, you have the natural hurdle of your shares trading at a deep discount, and it will be very hard for the dollar to work beyond that in the near term with incremental capital coming in. At this point, it's all theoretical because we are in a capital position we are in. But as more capital comes in, we'll start to shape this out and give the market more color where we think. But the bonds, our own shares is definitely where our head space is. It's where our head space was last year, that's how we acted. So just by our actions as we go. Moving back to a macro level. I talked about this at the start, but I saw the slide of our exposure as an investment company. And geographically, we are exposed heavily to Latin America and then India with some small snippets elsewhere in the emerging world. We're very cognizant. We're not complacent of what's going on in the Middle East. We've seen this many times before. We know there are the first order immediate effects of these things as commodity prices spike and people look at the most obvious things. But then there's second and third order depending on the longevity and the depth of this situation as it feeds into global macro inflation, interest rates from a holistic point of view, but also on individual markets. I guess what we can say today being close to our countries and our company, the focus is that we're in a relatively good position, and it's all relative in the world that we live in. But Latin America is a strong point and Brazil specifically. It is a size commodity-producing country, both food and hard and soft commodities. It is benefiting, obviously, from the spike as well insulated from a lot of the issues given the geography. What we've seen is the Bovespa being one of the most impressive or best-performing markets year-to-date. Also the BRL, the local currency, I think as of today, it's about 10% versus U.S. dollar year-to-date. And I was just reading about BlackRock, Brazilian ETFs are seeing record inflows. So some of these are read across from what we are in exposure that we have, but some of them are actually fundamental as in the BRL. We are directly exposed by Creditas, Solfacil and Nibo and to the local currency. It's a nice tailwind for what we do. And we're not a macro fund, but we do take the macro benefits when they come. So we're well situated at this time. We're watchful of countries like India who are net importers of commodities. But through the prism of all our companies, we see no issues to share with you to date. We have some small exposure in the Middle East via Abhi, mainly a Pakistani company, a small growing part of the business with no issues today. And so I think geography, geopolitics, we feel well positioned. We are watchful, and we will continue to share as we go. And getting on to Creditas on a micro level, so we're talking back and forth between macro and micro because it's that kind of quarter. But what you're seeing at Creditas is, as I said at the start, we're liking the compounding nature quarter-on-quarter-on-quarter of both news flow and performance. I think the loan portfolio year-on-year growth, we started talking about this early last year, how it's starting to accelerate, but nothing is real until you see it. And you're seeing the acceleration of the loan book near 20% year-on-year as of Q4. I expect that to continue into Q1. That feeds into revenue growth. And probably as exciting, something that we didn't predict when we start talking about Creditas, return to growth status back at the start of 2025 was the efficiency drive and the second order benefits we're now seeing from AI and it is becoming an AI-first or native company when it comes to a lot of parts of its business, and that's really driving elements like the CAC falling, and we're seeing more growth versus cost, revenue growth should exceed cost. There's a lot of positive starting to feed in there, which we'll get into gradually over time. We share some metrics here around origination growth being 2x versus the percentage growth in OpEx, which is very nice to see. And just on AI, what I'd say here is we're kind of putting a flag down this quarter. We're starting to share on AI. Alexis talked about Juspay and its initiatives. I'm seeing it personally through Creditas really around the CAC, the customer acquisition cost, which was running at 20% of originations only a few years ago, it's now fallen below 10%, so record low levels. A lot of what they're doing is around collateral underwriting, their go-to-market customer service, fraud, you've seen the same in Konfio in Mexico. But where these things become real and where we can start sharing and get excited and get you excited is when they start to hit the numbers. So the CAC is one example that Creditas shares openly with the market. The operational efficiency, where we've got 2x growth in originations and only 25% of OpEx in the last 2 years. And finally, the headcount, which peaked at over 4,000 is now below 2,000 and moving. So there's a lot of nice trends here -- excuse me one second. Yes, a lot of nice underlying trends that we're seeing from the AI-driven efficiency drive. And this goes well beyond the top 3 companies in our portfolio. And then moving to the last slide, Slide 14. Just to wrap up, what would I say, very similar to what we've said in previous quarters with some tweaks. We like to be consistent and evolve our messaging, nothing too dramatic. But it always comes back to portfolio. We're very happy with our portfolio. It's a very focused portfolio. Cash flow profiles are very positive there, getting to that neutral position and then moving into positivity, growing again. We want growth in this environment. Efficiency drives are kicking in some names. We get nice jaws starting to evolve it early and raising fresh capital, as Alexis said, new marks for Juspay, for Creditas, best-in-class companies raise capital inside in these markets. And I think the exit is something that you're going to hear from us again and again and again, because we're very happy and proud of the fact that we're delivering them. They're hard. We're delivering them at the right price. And then you build that cash pile, you strengthen your balance sheet and then it's what you do with it. I think so far, our experience has been around focusing on debt and looking at our shares and looking forward. I don't see that being too much different. It's just a matter of which we prioritize and when with what cash balance that comes at us and watch this space, we will be communicating, but we get what we should be doing. We're listening to the market. It's obvious. And finally, pipeline, I think this is a long-term story at VEF that continues. We are well situated in the world of emerging market fintech, well connected. We're seeing a lot of good companies that we would like our and your capital in. There will be a time for that, and we're positioning ourselves for that always. And so I'll stop there and very happy to open up for questions from the floor. Operator: [Operator Instructions] We will now take the first question from the line of Linus Sigurdson from DNB Carnegie. Linus Sigurdson: I hope you're good. Starting with a question on Creditas. And anything you can say about the growth outlook. I mean, Sergio talks about accelerating to over 25% this year. And I think you wrote 25% to 30% plus in your presentation today. How much of, say, blue sky scenario is this? Or rather, how should investors think about the visibility on this number? What are the main moving parts on the revenue side? David Nangle: Yes. Linus, thanks for the question. And it was good, we have Sergio in Stockholm. It's good to have him out there meeting people like yourselves and telling the story. He does talk a range in fairness to them, 25% to 30%. I think 25% is a level he would think he can achieve and 30% is the level that he wants to aspire to in the current environment. I think you'd rather do multiple years of compounding at these levels, not speaking for him, but just getting the read from him as opposed to accelerating to 50% to 100% growth given what they did in the past and burning to get there. We'd rather do it on a cash-neutral basis and nice sustainable, because that obviously feeds into an IPO narrative where you've got compounding growth that seems logical and forecastable to the market as opposed to highs and lows in those trends. So I think that's the way he's thinking. And I think if you look at the year-on-year growth of the loan book into Q4, what, 19%, 20% and just keep on moving up quarter-on-quarter through the year, you can see 20% plus in Q1, I'd like to think we'll see and how that extrapolates. I think the caveat here, Linus, are everybody is going to caveat everything with global geopolitics and macro. And if that turns or changes, it could change everything everywhere. That's just one caveat that's natural. The other is around Brazil and interest rates staying high. We had our first 25 bps rate cut earlier this year. We're hoping for more, but I understand why the Central Bank of Brazil held a little bit higher for longer, given what's happening in the world and the risks to inflation. And then in Q4 in Brazil, we have elections, which are always interesting to say the least, the far left and far right going off against each other, which is the natural order of play. So it can get a bit noisy and nuanced in Q3 into Q4, things may slow down before they pick up again. So there's a few caveats here and there. But given everything we and he sees through the business, I think he's confident enough to go out with those numbers and he wouldn't say them unless he think he could achieve them. Linus Sigurdson: That's good color. And then, I just wanted to ask on with Creditas and Juspay now at latest transactions, I guess, Konfio will be key here in the next coming quarters and the sort of 2026 story. Could you just double-click a bit on operations and how you think about the outlook for this year in Konfio? David Nangle: Yes, that's fair. Like I think there's many ways of looking at the first part, what you said, there's many ways of looking at our -- what's important and what's key for this year. And obviously, for us, the performance of Creditas, Juspay, Konfio, and then Nibo is all key. But we're less likely to see a markup in Creditas or Juspay given that they just raised even though one never knows. So Konfio, I think, is where you're leaning on in that regard in terms of mark-to-model or a raising capital. But to answer your question specifically on Konfio, it is business-as-usual. They are also accelerating growth like Creditas. They didn't reach the 20% highs that Creditas got to from a near no growth at the start of last year. I think Konfio from memory, got 15%, 16% year-on-year growth. But they would be in a similar trajectory or aspirational category to Creditas in terms of growing the loan book in that 20% to 30% in 2026. And margins are healthy, and they are cash flow positive on the bottom line. So they're building a bit of cash. So it's nicely self-sustaining. We always allude to the bank license, which is an ongoing process. And we like the fact that they've been given out in Brazil or Mexico to many aspiring entities. We like the fact that Konfio is towards the top of the list, but it's very hard to put a mark on when it happens. But the underlying business is in rude health. And I'd say it's just tracking Creditas, but maybe 3, 6 months behind in terms of getting to that growth level. Operator: We will now take the next question from the line of Stefan Knutsson from Redeye. Stefan Knutsson: I hope you are well. Just a question on the balance sheet. I see now that at the recent transaction, you are close to have a neutral situation in the net debt maybe your 1 exit away from, yes, being able to be deploying capital again. But just hypothetically, if you were to do another exit, how would you prioritize the capital that you would gain? David Nangle: Yes. Stefan, it's -- yes, look, there's different ways that we can deploy capital right now and let's be honest, I'd like to get rid of the debt. And I think that's the most obvious thing we shouldn't be funding long-term, long-duration private assets and emerging markets with short duration sector. It serves as purpose, and we're very happy and proud of the Swedish market supporting us with the debt. But we're down to a manageable level that we'd rather pay off, and we don't want our need, I think we may to do that market again in the future. But -- so I would edge towards the prior prioritization of that. And given the small amount of debt that it is, it's very hard to pay down some, but not all. You got to roll it all or you pay it off. So I think it's a little bit binary. So we had a decent other exit probably that, but I don't give me 100% on that. And then you look at your own shares. It does hurt us. We are shareholders. We work very hard for this company. We see how our portfolio is doing. We report everything we see to the market. We get exits at NAV in the market is what it is. But the market isn't going to reward our shares with that delivery and those exits at NAV plus/minus, we'll just do it ourselves, buy back our shares all day. So it's very hard to look beyond your shares. So -- the easier to answer in a normal world where I had all the choices you do a bit of both. But given how that markets work, it's probably lean into your debt clearing it before you start to eat away at your shares. Stefan Knutsson: Perfect. And regarding exits, how are you thinking strategically on portfolio concentration, like we have seen you exit a few of your smaller holdings concentrating into the top holdings. Is that the way forward? Or are you also looking to maybe decrease the size of the exposure for Creditas that is over 50% now? David Nangle: Yes. There's a little bit of strategy here, and there's a little bit of the markets give you what they give you as you try and do a lot of things at the same time. But strategically, we are definitely trying to shrink and focus the portfolio. We don't have a small amount of winning names. That's good for us from the opportunity cost over time, and it's good for communicating to the market. Within that, I don't mind, I'm very comfortable with concentration. Once concentration is on quality, where I believe it is today, so that makes me sleep well at night. And we'll continue to try and clean up or exit position some smaller names for sure. And then on the top names, they're just constant work streams where we may have done 2 exits from Juspay in the last 12 months, but they could have easily been Konfio or Creditas or other names, had the market and the opportunity being there at the time. So these are work streams across a number of names that are leading us to a smaller number of holdings, a more concentrated quality portfolio and what excess capital that comes in being delivered to deleverage the balance sheet and buy back our shares at these beautiful levels. Operator: Thank you. There are no further questions at this time. I would now like to turn the conference back to David Nangle for closing remarks. David Nangle: Yes. Thanks, Andre, and thank you, everybody, as always, for joining us on this call. Very happy with what we're seeing at VEF irrespective of what is a very noisy and volatile world. We will continue to deliver and focus on all the right things, and we'll continue to listen to our investors and our partners as we go. And looking forward to talking to you again next quarter. Thank you. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Good afternoon, and welcome to the J.B. Hunt Transport Services, Inc. First Quarter 2026 Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Andrew Hall. Please go ahead. Andrew Hall: Good afternoon. Before I introduce the speakers, I would like to provide some disclosures regarding forward-looking statements. This call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “anticipates,” “intends,” “estimates,” and similar expressions are intended to identify these forward-looking statements. These statements are based on J.B. Hunt Transport Services, Inc.’s current plans and expectations and involve risks and uncertainties that could cause future activities and results to be materially different from those set forth in the forward-looking statements. For more information regarding risk factors, please refer to J.B. Hunt Transport Services, Inc.’s annual report on Form 10-Ks and other reports and filings with the Securities and Exchange Commission. Now, I would like to introduce the speakers on today's call. This afternoon, I am joined by our President and CEO, Shelley Simpson; our CFO, Brad Delco; Spencer Frazier, EVP of Sales and Marketing; our COO and President of Highway Services and Final Mile, Nick Hobbs; Brad Hicks, President of Dedicated Contract Services; and Darren Field, President of Intermodal. I would now like to turn the call over to our CEO, Ms. Shelley Simpson, for some opening comments. Shelley? Shelley Simpson: Thank you, Andrew, and good afternoon. I want to begin by thanking our teams for the work they continue to do every day for our customers. The year-over-year improvement we delivered both financially and operationally is a direct result of the focus, discipline, and commitment across this organization. We delivered strong results relative to the market in a still challenging environment, reflecting disciplined execution against the strategy we laid out. We are taking share driven by the strength of our execution and consistent service for our customers. As we moved through the first quarter, the freight environment felt meaningfully different than what we have operated in over the past several years. When we spoke last quarter, I described the truckload market as fragile, and that we are testing the elasticity of supply. And that assessment proved accurate. Continued regulatory enforcement to improve safety in our industry has removed non-compliant capacity, and when combined with early signs of improved demand, resulted in a tighter truckload market throughout the quarter. While predicting inflection points is never precise, we believe we are on a path of recovery. We feel confident about how we are positioned. The operational discipline we have established over the past several years is showing up in year-over-year financial improvements and enhanced customer responses, enabling us to shift from a defensive posture to playing offense from a position of strength. This confidence is grounded in results. We have delivered exceptional performance in safety and service, surpassed expectations on lowering our cost to serve, and maintained very high customer retention. Our strong execution has earned the company multiple Carrier of the Year awards as customers increasingly choose J.B. Hunt Transport Services, Inc. This opens doors to growth opportunities, and we are approaching them with intentionality and discipline. Let me close by outlining our key priorities for the year, and how they position us for success in this dynamic environment. First, we are focused on disciplined growth driven by operational excellence. Customer conversations during bid season have become more constructive, though there is still work to do to fully restore pricing and margins to expected levels. We are pushing where appropriate and remain confident in the value we deliver. We are seeing increased traction in ICS and JBT consistent with early cycle market shifts and there remains opportunity in intermodal, which Darren will discuss. Second, we will continue to leverage our investments in people, technology, and capacity to drive sustainable, competitive advantages in our business. We consistently invest in our people who represent J.B. Hunt Transport Services, Inc. to our customers and are central to our operational excellence. Our technology connects and empowers our people, and helps us optimally utilize our capacity. And we are building on our innovative foundation to drive greater automation and productivity. We have prefunded our capacity needs, particularly in intermodal, at the bottom of the cycle. These remain the core foundations in our business and we expect to see future benefit from these investments. Third, we remain focused on repairing margins and driving long-term shareholder value. We are a disciplined growth company, and equally disciplined in how we deploy capital. We have momentum in the business and we will continue to build on our strong start to the year. With that, I would like to turn the call over to Brad. Brad Delco: Thanks, Shelley, and good afternoon. Let me start with the first quarter results. On a GAAP basis, revenue was up 5%, while operating income improved 16%, and diluted earnings per share improved 27% versus the prior-year period. We experienced strong demand for our service offerings as a predominantly supply-driven freight recovery continued to gain steam, coupled with some modest improvements in demand. During the quarter, we executed well across our service, safety, and cost-to-serve initiatives which continue to gain momentum. As we discussed during the first quarter conference circuit, this momentum was partially offset by the impact of weather, which negatively impacted incremental margins in the quarter. We also saw volatile fuel prices. Our business and our industry have fuel surcharge programs that protect our operations from fluctuations in fuel markets. Admittedly, intermodal is a very fuel-efficient solution for our customers, so higher fuel prices enhance the value proposition of our leading intermodal franchise. It is worth reminding our investors fuel is generally a pass-through expense and typically has a small impact on profit dollars quarter to quarter; however, it is dilutive to overall margins. Let me turn to our lowering our cost to serve initiative. We have given an update each quarter since we announced our $100 million target to remove structural cost from our business. In the first quarter, we continued to make additional progress, eliminating over $30 million during the quarter. Again, our intent is to make sure these cost initiatives are visible in our results and despite further investments in our people, higher insurance premiums, medical cost, and fuel prices, and worse weather, we were able to expand margins 70 basis points year over year in the quarter with pricing that still did not cover core inflation. Going forward, we will continue to challenge ourselves on our structural cost without sacrificing our ability to capitalize on market opportunities to compound our growth ahead. The discipline across our company also extends to our capital deployment. We continue to prioritize reinvestment in the business and will reiterate our guidance of a $600 million to $800 million net CapEx plan for the year. Success-based growth opportunities in Dedicated will continue to be the main catalyst to influence this range. We retired $700 million of notes that matured on March 1 and ended the quarter with 0.8 turns of debt, below our stated target of one turn. We repurchased 380 thousand shares of stock in the quarter, approximately $80 million. Finally, back in January, the Board authorized a 2% increase in our dividend which is also the 22nd consecutive year of increasing our quarterly dividend. Let me close with this. First, we are executing extremely well across the organization on operational excellence in service, safety, and lowering our cost to serve. Second, without any meaningful tailwinds from price driven by this recent market inflection, we have already put ourselves on a path to restoring our margins, which we think is a differentiator in the market. Third, we have prefunded a lot of our growth while maintaining a significant amount of flexibility to deploy capital to drive long-term value for our shareholders. We are operating from a position of strength. That concludes my comments, and I will turn it over to Spencer. Spencer Frazier: Thank you, Brad, and good afternoon. I want to start with what we are seeing from customers and across our network. Throughout the first quarter, there has been an evolving narrative from customers that tightening in the truckload market would be temporary in nature. Today, most customers understand there has been and continues to be a shift in industry capacity that is impacting the truckload market, and this is a structural change. Customers have not seen a capacity-led cycle change with the exception of when the industry implemented ELDs or experienced a constrained market since 2022. What we are seeing is a freight market that has fundamentally less slack than it did in prior cycles. Capacity has been steadily exiting for an extended period driven by regulatory enforcement, rising costs, and financial performance that does not support capital reinvestment. Even if spot rates increase, capacity continues to leave the industry. You can look at most industry KPIs and they are either at their highest or lowest levels since 2022. Truckload rates, tender rejections, the ISM PMI, and several others are all at their highest levels since 2022. And trucking employment is at the lowest levels since 2022. All proof points of structural change. At the same time, customers’ supply chains are leaner, agile, and more synchronized than they have ever been while their demand is solid and increasing. This combination matters. It means the system is far more sensitive to even modest changes in volume or disruption. We saw that dynamic clearly late last year. As volumes increased around peak, conditions tightened quickly. Service became more valuable, and customers leaned into partners they trust to execute—partners who can honor commitments when it matters. This dynamic continued into the first quarter. For J.B. Hunt Transport Services, Inc., that environment plays directly to our strengths. We are seeing strong customer retention, continued share gains across all our services, an expanding pipeline, and much more disciplined pricing conversations. We are not chasing volume, but we are taking market share. We are focused on freight that fits our networks, creates value for our customers, and at the right rate to generate durable returns. What is also different this time is how customers are behaving. We are seeing far less price-led decision making and far more focus on execution quality. They are adjusting to capacity challenges with frequent mini-bids, they are consolidating freight with fewer, more reliable providers, and they are prioritizing scale, visibility, and execution. So while we remain mindful about the macro and recognize today’s risks, we are confident in our positioning. We built this company for environments like this, where operational excellence, reliability, and network depth matter. Our focus remains the same: execute at a high level, honor commitments when the market tightens, and use our platform to help customers manage volatility. That approach has driven share gains in the past and we believe it will continue to do so well into the future. I will now hand it over to Nick. Nick Hobbs: Thanks, Spencer, and good afternoon. I am going to start with safety. We are coming off three consecutive years of record safety performance as measured by DOT preventable accidents per million miles. I am proud to say that we continue to lead the industry and set new records for ourselves, besting last year’s first-quarter result by 14% despite a materially more challenging, weather-impacted quarter versus prior year. This performance directly reflects the commitment of our drivers and broader teams to operating safe and secure every day. As we continue to grow with customers and take market share, we will bring on drivers and operations-focused employees to maintain our operational excellence our customers expect. In fact, our current driver need is the highest it has been since June 2022. As the driver market has tightened, we have begun to execute various strategies that allow us to recruit to meet our needs and support our growth. As these new drivers are onboarded, our emphasis on safety starts day one, with our more tenured drivers reinforcing our culture through training and the sharing of best practices. Moving to the business, I will start with Final Mile. End-market demand has shown signs of stabilization across furniture and exercise equipment, with appliance replacement demand remaining solid. We continue to see strength in our fulfillment business driven primarily by off-price retail channels. Going forward, our focus has not changed. We are committed to providing high service levels for customers and being safe and secure while continuing to lead the industry in background verification standards. Last quarter, we spoke to an expected $90 million revenue headwind this year from some lost business. Since then, we have secured new wins and see a strong and developing pipeline as we work to offset as much of that headwind as possible without sacrificing returns for the unique value we provide. Moving on to our highway businesses. Overall demand was better than normal seasonality with more spot opportunities as tender rejections remained high and routing guides were breaking down. On capacity, the truckload market remained unseasonably tight as market factors continued to pressure capacity. We believe the market tightness was driven primarily by shortage of supply, but with some positive elements of demand, which is a slight positive development from Q4 which seemed to be mostly supply driven. In JBT, we reported our fourth consecutive quarter of double-digit volume growth as our focus on operational excellence is leading to additional opportunities for growth and market share gains. Execution remains strong as we continue to grow revenue while effectively managing controllable cost. However, the tight truckload market and rapid rise in fuel prices late in the quarter created challenges for independent contractors, leading us to source more third-party capacity to cover loads in the first quarter. To put this in context, our revenue increased 23% on 19% load growth, but our gross profit declined 5%, primarily due to the higher purchased transportation rates. Going forward, our focus remains on disciplined growth of our trailing network while continuing to improve the utilization of our assets through improved box turns. I will close with ICS. We have positive momentum in this business that has not yet translated to improved financial performance, due to continued gross margin pressure from higher purchased transportation costs. This margin pressure is normal at this point in the cycle as we balance honoring customer commitments and working with customers to reprice freight as needed. So far in bid season, we are winning more volume and securing rate increases. While spot market opportunities have increased, they were not enough to offset the margin pressure on our contractual business. Going forward, we are encouraged by the momentum we have and remain focused on leveraging our cost as we scale the business. With that, I would like to turn the call over to Brad. Brad Hicks: Thanks, Nick, and good afternoon, everybody. I will provide an update on our Dedicated business. Starting with the quarter, at a high level, our first-quarter results continue to highlight the resiliency of our Dedicated business. Weather did negatively impact our operations during the quarter, particularly in January and February. As a result, we have not seen much of spring surge with our lawn and garden customers across much of the northern half of the country, which could be delayed from the lingering winter weather. Regardless of this, the team did a great job managing our costs and continuing to lower our cost to serve while maintaining high service levels and delivering value for customers. The combination of these factors plus a record safety performance in the first quarter allowed us to grow operating income 9% compared to the prior year on only modestly higher revenue. During the first quarter, we sold approximately 295 trucks and remain confident in our ability to achieve our full-year target for net truck sales of 800 to 1 thousand new trucks this year. Our sales pipeline is strong and strengthening, while also broad with a lot of diverse fleets from both a customer size and industry perspective. As the truckload market has tightened over the past several months, we have seen an uptick in interest from customers for a Dedicated solution. I commented last quarter that we added a record 40 new customer names to the portfolio in 2025. Historically, we have been able to get in the door with customers and prove out the value of our differentiated service; this has led to additional opportunities for growth at new locations for these customers. This has been a large part of what has driven our success—operational excellence on execution and service. We get the customer in the door, get our people involved in running and managing the business, get the equipment and drivers in position, and stand up our processes and service standards, and a majority of the time customers realize our service truly is differentiated and new growth opportunities present themselves. I spoke last quarter about expecting only modest operating income growth in our Dedicated business in 2026, and I still believe that is the right framework for this year. I also spoke about needing to see a wave of truck growth for about six months before we see material increases in profit performance given the nature of starting up new accounts and incurring expenses there. We are now on two consecutive quarters of strong truck sales and our pipeline has strengthened recently. I am confident this wave of new business is coming, just the timing was pushed out a little later than we anticipated. To wrap up, I want to hit on a couple of things that could impact our results for the rest of the year. First, as I mentioned earlier, we are seeing increased interest from customers for a Dedicated solution. Actually, during the first quarter, we had our second highest month in the last five years of new deals priced. This is encouraging for potential truck growth, but keep in mind the more successful we are at selling new trucks, the more startup expense we incur. Next, we have seen a significant increase in fuel prices over the past several weeks. While fuel is predominantly a pass-through in our business, it is dilutive to operating ratio or margin percent, but not dilutive to margin dollars. Finally, with the capacity rationalization that has taken place in the market, we are experiencing increased challenges in driver hiring that we have not seen in years. We are well positioned to handle these challenges; it is a notably different environment. With that, I would like to turn it over to Darren. Darren Field: Thank you, Brad, and thank you everyone for joining us this afternoon. Our intermodal business executed extremely well on our strategy during the first quarter with high service levels to meet elevated customer demand despite some really harsh weather conditions in parts of the country. Our focus on operational excellence is resonating with customers and is leading to market share gains and continued road-to-rail conversion. I am proud of the team and encouraged by our strong start to the year. During the first quarter, demand for our intermodal service outperformed normal seasonality and we set a record for first-quarter volume. We also set a weekly volume record in March with over 46 thousand loads delivered, an unusual occurrence in the first quarter when fall peak season is typically when we break volume records. The strength in demand was broad-based among customers and across the network. For the quarter, volumes were up 3% year over year and by month were down 1% in January, up 1% in February, and up 8% in March. Despite facing difficult year-over-year comparisons in our Eastern network, we grew Eastern loads 7% against a 13% comp, while transcon volume was flat. We are seeing road-to-rail conversion continue in the East. Also, with elevated truckload spot rates and rising fuel prices, the value proposition of our intermodal offering becomes increasingly more attractive for customers. We continue to see strong rail service from all of our rail providers, a trend we have seen for several years now. During a winter in which we saw several impactful storms across the country, the rail networks were able to quickly recover their service, a testament to the investments that have been made in their networks and service over the past few years. We and our rail providers know the true test of network resiliency will come once demand strengthens. As we enter this “prove it” time for rail networks, we and the railroads are confident service levels can be maintained even in a period of sustained volume growth. I will close with some comments on pricing. As we have said previously, but it bears repeating, given the nature of our bid cycle, we are living with the results of last year’s bid season in 2026. Turning to the current bid season, we are in the final stretch and, as is our normal practice, we are not going to provide any updates on overall results or expectations until we wrap up this bid season. That said, I will give a few high-level thoughts and observations. Early in bid season, we saw westbound backhaul freight reprice down year over year as the market for this freight was competitive as it is every year. In the rest of our network, the emphasis on operational excellence has positioned us well to have conversations with customers in the bid season leaning into the value we create with our differentiated service. In the Eastern network where we compete more directly with truck, our ability to push price and the reception from customers to price increases is different than the transcon market. So far in the transcon network, we have seen a more competitive bid season, particularly outbound off the West Coast, than we had expected. Our strategy is to remain disciplined in our growth and our pricing, expecting the value we create for customers when we leverage our network to be realized in the returns we generate. My confidence in the strength of our intermodal franchise and the opportunities for growth that are ahead of us remains high. We have prefunded our capacity needs and are ready to meet our customer growth demand with our unmatched scale and density. Our focus on operational excellence and industry-leading service are competitive advantages that further differentiate us with customers. As we have stated before, we have long-term intermodal solutions for our customers in any operating environment and provide seamless coast-to-coast intermodal service today as we have for years. With that, I would like to turn it back over to the operator to open the call for questions. Thank you. 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. The first question will come from Jonathan Chappell with Evercore ISI. Please go ahead. Jonathan Chappell: Question is for Spencer, but anyone can answer it. One of the big takeaways, I think, from the January call was the reluctance to call the inflection so much. And the one quote that really stood out was you are hesitant to suggest there is some big pricing opportunity this year. Sounds like a lot has changed in the last three months up to and including customers’ willingness to kind of acknowledge the durability of this. So you know, Darren kind of talked on intermodal bid season. I know you are not going to get into any more detail there. Just broadly speaking for the business, does it feel today that there is a better pricing opportunity, whether it be for 2026 or 2027, than you maybe anticipated back in January? Spencer Frazier: Yeah. Hey, John, thanks for the question. I do think it feels quite a bit different today than it did in January. But as you mentioned, when we talked in January, we referenced we started to see some tightening both in demand and then also really tightening of capacity. That took place really around Thanksgiving and through the end of Q4. And that just continued through this quarter. Capacity, I will just say this, has inverted. And it has changed rapidly as regulatory enforcement continues to be implemented. And we believe that enforcement is going to continue to accelerate. Also, there are multiple shipper and other surveys out there done by several of you that indicate that their perspective of capacity is now that pricing is going up with solid demand. And one other thing I just want to mention—and I mentioned it early in my comments today—really talking about how this cycle is a little bit different than in the past, but a little bit similar to the prior two cycles, the prior two up cycles, specifically the capacity-led one in 2017–2018 with ELDs, and then also the demand cycle and shock associated with 2020 through 2022. Here are the things that really are illustrated in our results, but also match the patterns of those two cycles. Number one, spot price always is your real-time indicator of change, and it changed rapidly in both of those up cycles first. What is happening today? Spot pricing has changed first. Then you typically see, say, a three- to six-month window of contract pricing changing on the highway. Then maybe even a six- to twelve-month window of contract pricing changing in intermodal. Look at our revenue per load that we just shared: ICS up 9%, JBT up 3%, and our intermodal changing just a little bit slower. But I can tell you things are structurally different. Capacity is continuing to exit the industry. Customer demand is solid, and therefore, I think we are in this structural change and the first part of an upcycle. Nick Hobbs: John, this is Nick. I would just add from the highway segments, we have clearly seen a big shift from the first half to the second half of bid season, and customers more willing and coming back with different opportunities with a lot of mini-bids and rate increases. So it is moving quicker on the brokerage side, but it is also following quickly just on the pure truckload side as well. Darren Field: Yeah, this is Darren. I will chime in on intermodal. I just want to highlight that it is behaving a lot like we have seen in the past in that where we compete most directly with highway, we are going to see new opportunities for road-to-rail conversion, and that is happening. A 7% growth on top of 13% growth in our Eastern network a year ago is proof that those opportunities are presenting themselves. And so again, as the season goes on, we will continue to look for additional pricing improvement opportunities as the market certainly makes that available. Look, customers are under a lot of pressure. And our customers are fighting the path up. And that is not new. We have dealt with that for decades. We will continue to compete and we will continue to be disciplined with our approach on how we bring on volume. Operator: The next question will come from Brandon Oglenski with Barclays. Please go ahead. Brandon Oglenski: Hey, Brad. Maybe I will direct this one at you because I think you made a prepared comment about being on track to restore margins even though you have not really seen any material tailwinds from price yet. And I guess that fits in with the conversation on the last question. But you talk about your cost-to-serve programs here and maybe the confidence you are seeing on the cost side as well? Brad Delco: Yes, sure. Thanks, Brandon. So the announcement for this quarter was we are sort of running at a pace north of $30 million a quarter. We targeted $100 million. I think we are closer to running somewhere close to or just north of $130 million. So I think we are outperforming. That was also included in Shelley’s comments. But I think the important point that I really want to make sure is when you look at the year-over-year change in margin performance—and I know you all like looking at incremental margins in our business—we still have some pretty meaningful year-over-year headwinds in inflationary cost. I think I called out insurance premiums, medical cost. We continuously invest in our people. I think we have called out weather being more material in this first quarter than the prior first quarter. And so despite all of those, what I would say are sort of above-trend inflationary cost pressures, combined with the fact that I do not think if you aggregated our pricing performance over the last 12 months it would even exceed what I would consider core inflation, it sort of speaks to, okay, you have executed really well on your lowering our cost to serve. We have also executed extremely well on all the productivity we have seen in ICS and JBT and DCS, and FMS and in intermodal. And particularly, the callouts to me—and I will just point out—we did add a little bit of incremental financial color on JBT and introduced the concept of gross profit dollars; think of revenue and then purchased transportation cost. So with that sort of revenue growth both in ICS and JBT, our gross profit dollars were actually lower year over year, but you saw our operating expenses in each of those business units lower also year over year, despite meaningfully more volume. And I think that has been the story across really all of our segments, other than maybe Final Mile who is dealing with the customer loss that we disclosed last quarter. So without maybe giving a new number on cost to serve, I think it is probably really good for you and everyone else to think about how much productivity we have driven in our business, combined with the structural cost removal, to really put up what I think is meaningful improvements year over year with really without much tailwind yet from what we are seeing play out thus far in the market. Operator: The next question will come from Chris Wetherbee with Wells Fargo. Please go ahead. Chris Wetherbee: Hey, thanks for taking the question, guys. We have talked a lot about capacity, but maybe I wanted to ask a little bit about demand. It does seem like you guys are getting more constructive about the demand environment that we are in right now. And I think intermodal sounds like it accelerated a bit as you went through the quarter. So I was wondering, if you think about the March improvement, how much is that related to the increase that we saw in fuel? I guess, how do you think about broadly the demand environment? And then maybe as a second piece, how we should think about the knock-on effect of fuel driving volume to intermodal as we look forward? Spencer Frazier: Yes, Chris, I will take that. Just a couple of things. I think even associated with some of the comments around the consumer in your earnings release and several other banks, I think the consumer remains resilient. And that has been proven time and time again. I think that there is strength there. And then again, our customers continue to compete and drive value for their customers in unique ways. And as we meet with them at conferences throughout the first quarter and have multiple conversations with our customer and sales teams on a daily basis, they are confident in their demand outlook. And I would just call it solid. And, you know, to your point on fuel, I think fuel definitely is potentially a watch-out there. That is what we talked about. There are some risks that we are aware of. But also definitely a big opportunity for customers when they look at optimization of their networks, which they consistently do. They are trying to optimize orders, shipments, modes, and fleets, and that really plays into the strength of our opportunity for mode conversion, as well as fleet expansion. And I think that, kind of one other thing—Brad, you mentioned this in your Dedicated remarks—talking about really a strengthening pipeline inside DCS. I would also say that is across the board in all of our services. Our pipelines are strong and growing. That really goes to the value proposition that we put out there related to some fuel nuances, but also mostly related to operational excellence and the value we create for our customers. Darren Field: I just want to comment real quick. This is Darren on intermodal. I think that while fuel certainly is a major headline and has been for a few weeks now, largely in the first quarter that was not present yet. And so a lot of success we were having in our Eastern network growth, I would not characterize our results in the first quarter as being very driven from fuel. It has certainly elevated the opportunity for discussions with our customers. And we have got some anecdotal examples where maybe a customer split a lane between intermodal and highway and they ran a little bit more intermodal or will continue to do that as the year goes on. But I know that our operational excellence—as proven by 13% growth in the Eastern network a year ago in the first quarter without any fuel tailwinds—is driving the majority of our opportunity to continue to grow in the East. Shelley Simpson: Chris, this is Shelley. I would just add also that if you think about what has happened here in the first quarter, really January and February plagued with weather, and then fuel prices here in March, our customers’ routing guides and their budgets have not really gone as they had planned. And so anytime that happens, for whatever reason, our customers become more interested in our ideas around creating a more efficient way of transportation. And so I think our pipelines are up as they are thinking about who can I go to, who do I trust? I think we are one of those names that come to the forefront of their mind when things like that are happening. And as Spencer talked about the structural change happening on the supply side, we continue to see customers leaning more into us to say, okay, let me think about you more from a conversion perspective. Let me get help building a Dedicated fleet. Let us think about technology and the platform with 360, with Mix, and certainly Final Mile, and we differentiate the way we are going into home. So I think those conversations are happening more today than they were at the first part of the year and it is because of all of those things I have just mentioned. Operator: The next question will come from Scott Group with Wolfe Research. Please go ahead. Scott Group: Hey, thanks. Afternoon, guys. So Darren, we have always seen intermodal price lag truckload price. That is very normal. I just want to get a little perspective about some of your comments. Like, when intermodal pricing does start to turn, do you typically see it first in the East and transcon lags? And what you are saying right now is very normal, or is this abnormal where East price is starting to turn positive but transcon is lagging? I just do not know if this is normal or not. And then maybe just if I can broaden it out just a little bit—Brad, your comment at the beginning of the call that price not covering inflation yet—do you ultimately have visibility that we get there over the next couple of quarters? Darren Field: Well, first of all, Scott, I will say that I think Eastern network pricing improving faster than transcon I would consider very normal. It is more closely related to highway rates and the customer buying patterns. Shorter length of haul, cost to serve in those markets more impacted by certainly driver wages—that sort of thing can really push challenges in the East. Historically speaking, Eastern network would move faster than transcon. The transcon network is not competing head up against the highway to the degree that you do in the East. And so historically speaking, it certainly would lag a little bit longer. Brad Delco: Yeah, and maybe, Scott, just to make sure the context of my comment was taken correctly, I would actually say, yeah, based on what we are seeing, the change in price I think will exceed core inflation. When I say core inflation, I am thinking ECI, CPI. I think the challenging part—if you want me to add a layer to that—would be, I do not know when the cost of purchased transportation might settle. And so as you know, in JBT and in ICS, even with what I think are some pretty meaningful increases in rates, a lot of those rates are being passed to carriers to cover loads. And so I think you have seen that with margin compression in those two areas. And so if we wanted to say, hey, is pricing going to exceed core inflation, I would feel pretty confident the answer is going to be yes. The industry needs margin recovery and the industry needs better financial performance to support reinvestment. So I think that is probably the direction the industry is going to be heading. I just do not know at what point securing third-party capacity may set because, obviously, the direction has been up and to the right. Nick Hobbs: I would just say what we have seen so far is that it was really, really tight early on. March was very tight when I look at month over month, so it was kind of building. And then April was very typical—just kind of settled there. And that is what we are seeing—typical, I would say, on rate and on the carrier side as well. Particularly when you get into flatbed and temp, it is still really, really tight there. In brokerage, we are clearly seeing double-digit rate increases, and that is on some contract stuff as well, and spot is even higher than that. So it is driving higher. Brad Delco: Yeah. I hope that helps, Scott. Operator: The next question will come from Jordan Alliger with Goldman Sachs. Please go ahead. Jordan Alliger: Yes, hi. Just wanted to come back a little bit to the brokerage side. It is good to hear on the pricing front, obviously still a squeeze, still an impact on overall profitability. Can you maybe talk a little bit to how you are thinking about that profit profile for brokerage as you think ahead given the puts and takes with purchased transportation versus selling price and maybe getting back to the black? Thanks. Nick Hobbs: Yeah. I would just say I feel very good about where we are at. If we look at the volume that we have had—up 10% growth in ICS—very excited about that. The market was typically down, let us say 3% to 5%, and our direct expense was down 1%. So we think we are lining up very well from a cost perspective and being able to leverage our platform, our technology, and our people. And we have got a great retention rate going on there. So our customers love our brand, love our operational excellence. And we have got the capacity with the carriers. We are safe and secure. So it is lining up very well for us. We are excited about where we are going in the future. Operator: The next question will come from Brady Lares with Stephens Inc. Please go ahead. Brady Lares: Hey, great. Thanks. You know, Brad, I wanted to ask about the Dedicated and specifically the impact of the administration’s regulatory actions. You mentioned in your remarks a tighter market, more difficulty hiring drivers. Do you think this supply-driven nature of the tighter market could translate to a faster Dedicated sales timeline this cycle? And maybe on the other hand, do you expect any margin impact from the increased challenges hiring drivers and the subsequent potential increase to driver wages? Brad Hicks: Yes. Thanks, Brady. Nick touched upon it in his prepared remarks—kind of what we are seeing on the driver front. I made a reference we have definitely seen it tighten, certainly in some geographies more than others. But we absolutely do believe that the regulatory changes are playing through with respect to driver availability—not so much in terms of how we have been directly impacted because our programs largely provisioned us to not have as much exposure—but we do see the overall market tightening. In particular, I might add we have seen abnormalities in Ohio and Michigan, those that are close to the borders. I think that cabotage is a factor in those particular geographies, and then obviously English language proficiency as well as non-DOM is really more generally across the entire United States. We have seen our total needs climb for driver needs, but we feel and are very confident in the strategy that we have in our corporate driver personnel strategy, and so we believe that we are positioned better than anybody to overcome those market obstacles. To the second part of your question—yes, we have already seen the acceleration, and that was part of the reason why I wanted to highlight the comment on the volume of pricing that we have seen come through. And really pricing is after we do engineering work, and so we call that an engineered design request, and those were record volumes for us in the month of March in particular. And so we see our pipeline building. We feel great about how that looks both from diversity—it is really not getting propped up by big, big deals. Sometimes our pipeline, we could get some mega fleets that come through that will kind of artificially prop up our pipelines. But this is really the volume of deals that are helping the overall health of our pipeline. So all those things add up to huge optimism from my perspective for Dedicated opportunities. Now the trick for us is we have seen this play out before, and we want to make sure that we stay disciplined to not grow our business unit with what we would call capacity fleets—those that only want to have a guaranteed capacity at a guaranteed rate in these environments. We have got great businesses like ICS and JBT that can help provide customers solutions there. But we do see the acceleration. We do think that the combination of inflation and the risks that Brad referenced earlier—when you think about healthcare and insurance premiums—those are what will drive private fleets towards us. And those private fleets have particularly a more difficult time sourcing drivers than the success that we have. So we think that that recipe lines up nicely for us to have a really healthy growth year. Operator: The next question will come from Rich Harnain with Deutsche Bank. Please go ahead. Rich Harnain: Hi. So maybe a more longer-term oriented one for Shelley. Shelley, you commented on how you still have work to do to fully restore pricing and margins even on the back of the third consecutive quarter of margin expansion despite what Brad keeps reminding us is limited help from price thus far, so pretty impressive. Just maybe talk to us about your line of sight on margins longer term. In the past, you have indicated 10% to 12% as a potential for your intermodal business. Is that still what you are targeting or, given the structural changes Spencer spoke about coupled with the efficiencies you are uncovering with all your technology and such, could it be higher? And what do you think is a reasonable time frame to achieve that? Shelley Simpson: Yeah, thank you for that question, Rishan. And I will tell you we have talked a lot about our internal goals and the things that we want to get accomplished. We have not changed any of our margin targets externally, but I will tell you, I think we have got a few opportunities. One is really around the work we are doing in our transformation work that I have talked about now here for the last several quarters. So using our technology and our investments—and that being a core foundation for us—and really how we are using the disciplined, ROI-driven investment to lower cost to serve, how we think about AI and that really being a force multiplier across our entire organization. And know that we are early on in that; we do believe that there is good opportunity for us to think about that differently. But part of our ability to get margins back in our margin target—we are going to have to have more help from a demand perspective. So there is a lot happening from the supply side. The recovery is happening from that perspective, but we just need a more normalized environment from demand overall. Certainly, we have all been here a really long time. We have seen recoveries happen very quickly. Those tend to not work as well for us over the long term. And so if we can recover over the next one to two years, that is going to be healthier for our business over the next four to five years. If it is a huge inflection with pricing changing significantly very quickly in Darren’s business or really in any of our businesses, then when that settles back down, customers want to do something different there also and it also means there is probably more inflationary cost stick over the long term. So for us, we have been patient, we have grown impatient, we are really trying to help our customers understand where we are at, and I think that they are hearing us on that. But I cannot really speak to if our margins would change. I will tell you, we want to get first inside the margin targets, but that is not a stopping point for us. We will evaluate those as we get there. Operator: The next question will come from Ken Hoexter with Bank of America. Please go ahead. Ken Hoexter: Hey, good afternoon. Hey, Brad. So you noted in the past about 30% excess capacity in intermodal. I do not know where that—maybe an update on where that stands now. But given that backdrop, how do you balance pulling out the capacity and your ability to get pricing? Does that maybe delay the ramp in pricing as you move here? And then given the contrasting rising driver pay given the tighter market, I think you mentioned you are hiring drivers and ops teammates. Does that up the incremental margins? I guess that is a margin question going back to Shelley’s last answer. But just how you think about the pace of it in this recovery? Darren Field: Well, this is Darren. Let me just highlight, we have not added any capacity in some time now. And certainly, we have highlighted we think our network can support up to 20% more volume. I think that is what we have said in previous earnings calls. I do not know what I would call the industry excess capacity, but certainly most of the public competitors we fight with all talk about having similar excess capacity. And so I do not think we are necessarily talking about taking capacity out as much as we are talking about growing into our prefunded capacity investments that we have made. And so that has been our approach for some time now. I think with the discipline that we apply to not just using a reduction in pricing to add volume at weaker margins is where we really would draw the line. And we have maintained that discipline certainly over the last couple of years, have been very focused on improving our balance, looking at cost areas that we can attack in order to reduce our costs to serve, and in some ways to allow us to be even more competitive on our price and get volume growth. And I think that is our approach as we move on. I do not know—there is not a capacity exit in the intermodal space like there is in the highway space given the intermodal capacity is largely containers. And certainly the drivers and the drayage community used to operate intermodal is impacted by higher driver wages, but certainly it is a lower percentage of the total cost. And so as everybody looks for ways to grow, that is our plan in J.B. Hunt Transport Services, Inc.—to grow into our excess capacity. Operator: The next question will come from Brian Ossenbeck with JPMorgan. Please go ahead. Brian Ossenbeck: Hey, good afternoon, everybody. Two kind of follow-ups here. Just the first, Darren, coming back to your comment on transcon competition was a little bit tougher than you expect, at least to start. I do not know if you have a sense as to why that is given it seems everybody else is facing similar inflationary impacts, maybe more so than you all? And then just maybe a quick update as we get into the spring and summer here. What is most impactful in your perspective from the regulatory perspective as it comes to even increasingly squeezing out more of the truckload? Are there any other step changes you are looking for? Is it more of just increasing compliance and enforcement on a more gradual basis? Thank you. Darren Field: Yeah, I appreciate it, Brian. When we think about the transcon pricing, you highlighted what is the surprise to us. Certainly what appears to be depressed margins in the industry but yet a competitive environment out there—or at least what our customers are telling us and what they are willing to do in terms of put capacity at risk for their business based on pricing discussion. I want to be cautious and not over-highlight that issue. It is just we have grown zero—we are flat—in our transcon business as we highlighted. We are being very disciplined with our price so that we can achieve appropriate margin levels on that business. And in doing so this year, that has been harder than what we would have anticipated, given the environment that we are in. Also want to highlight that, look, we are pricing backhaul business. It is very competitive. That book of business actually repriced negative. Every headhaul segment we operate in is positive. Again, I think that it is not covering our inflationary cost, but certainly we are getting price increases. But we are not getting to the level of price increases that would cover our inflation at this point in the cycle. And as we continue to go through the summer, we will be looking for opportunities to grow with customers at returns that justify reinvestment in our business. I will hand the driver question off to Nick. Nick Hobbs: I would just say continued enforcement. You are seeing states like Indiana that just made an announcement—took 1.8 thousand non-DOM drivers out. You have seen the same thing in California. So you see a lot of states starting to enforce that. So I just think there will be continued enforcement. Then in May, you have got Roadcheck. I think that will be a big test there to see what supply looks like. They are going to really focus on ELDs and load securement. So it will be interesting to see what they do there. I just see this administration with chameleon carriers and authorization—they are going to continue to tighten the enforcement around that. They really want CDLs to mean something and have the right folks behind the wheels that are trained and certified. And so I think that is going to continue for some time. Brad Hicks: I would just add too, Brian, the volume of truck driving schools that have been shut down, the ELD providers that have been shut off—all of those are going to create a more challenging pathway for us to have growing capacity or new entrants into the marketplace. And then we have an administration that is looking to put more, I guess, controls in place for a carrier to even come into the industry. And so all those things, I think, are going to continue to add. It is hard to pinpoint which one is going to put more pressure on, but it is the collective that really is going to reveal itself. Operator: The last question will come from Tom Wadewitz with UBS. Please go ahead. Tom Wadewitz: Yes, good afternoon. Thanks for taking the question here. Hey, Brad—so I wanted to ask you—go back to intermodal. The monthly progression was pretty notably favorable. I am guessing the January, February some impact on the year-over-year volume, but up in March is pretty strong. How do you think about the way we should interpret that for the go-forward intermodal volume growth relative to 3% for the full quarter? Is it reasonable to expect some nice acceleration given that 8%? Or was there something quirky about that? And then I guess another component on just how we think about intermodal volume growth—you know, it is less driver intensive, which is great for the environment. But have you seen environments in the past where the driver market is so tight that you get squeezed on drayage and that is a constraint on your intermodal volume growth? Thank you. Darren Field: Well, thanks for the question, Tom. I am going to hit the driver question first. Look, driver wages—in a tight driver market it impacts every part of the transportation market that involves a truck driver. And so certainly higher wages is a challenge for intermodal. Do I think that drayage capacity has been a bottleneck for intermodal volumes in the past? Not to the extent that it shows up on the highway. I do think that one driver in a local environment in intermodal can certainly execute multiple loads in a day. And so the ability to add in intermodal drayage ends up being— you know, the intermodal drayage market certainly offers an opportunity, and it is a career path for a lot of highway capacity as intermodal demand climbs and more of those jobs grow. We have a very attractive job to go recruit to. And so that certainly helps the industry. In terms of the volume, look, you know us, Tom—cannot give you guidance on that. Certainly, March was very strong. We set a single-week volume record during the month of March that I am very, very proud of my team for their execution on. And we continue to see a strong pipeline and look forward to the remainder of the bid season. And as we head forward, we think the value of our business unit and the way that we provide our service to customers really gives us strong opportunity to keep growing in the future. Operator: This concludes our question and answer session. I would like to turn the conference back over to Ms. Shelley Simpson for any closing remarks. Shelley Simpson: Thanks again for the time today. It was a strong quarter for us and our people delivered that through great operational excellence. We have been focused on that the last two years. I think you are seeing that really come forward and show in our results and not being reliant on the environment. And so we have had reliable service, strong safety performance, our customer retention is excellent, and we continue to make great share gains with our customers. But we know there is more work to do, particularly as we want to continue to improve our returns and performance across the portfolio. But having said that, we like the progress that we are making, the investments that we have made in our people and our technology and capacity. I think that is clearly moving our business in the right direction. I am proud of the team and how they delivered this quarter. I am confident in our momentum and we are focused on continuing to build long-term value. Thanks for your time. Look forward to our discussion next call. Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
Operator: Hello, everyone, and thank you for joining the First Horizon Corporation First Quarter 2026 Earnings Conference Call. My name is Lucy, and I will be coordinating the call today. It is now my pleasure to hand over to your host, Tyler Craft, Head of Investor Relations, to begin. Please go ahead. Tyler Craft: Welcome to our first quarter 2026 results conference call. Thank you for joining. Today, our Chairman, President and CEO, D. Bryan Jordan, and Chief Financial Officer, Hope Dmuchowski, will provide prepared remarks, after which we will be happy to take your questions. We are also pleased to have our Chief Credit Officer, Thomas Hung, here to assist with questions as well. Our remarks today will reference our earnings presentation which is available on our website at ir.firsthorizon.com. As always, I need to remind you that we will make forward-looking statements that are subject to risks and uncertainties. Therefore, we ask you to review the factors that may cause our results to differ from our expectations on page two of our presentation and in our SEC filings. Additionally, please be aware that our comments will refer to adjusted results, which exclude the impact of notable items, and to other non-GAAP measures. Therefore, it is important for you to review the GAAP information in our earnings release, pages two and three of our presentation, and the non-GAAP reconciliations at the end of our presentation. And last but not least, our comments reflect our current views, and you should understand that we are not obligated to update them. I will now turn the call over to D. Bryan Jordan. D. Bryan Jordan: Good morning, everyone. We started 2026 with strong momentum. In the first quarter, we delivered our third straight quarter of 15% or greater adjusted ROTCE, in line with our expectations, fueled by strong C&I client growth and relationship-focused client activity across our markets. Through our differentiated business model, we continue to successfully execute by providing tailored solutions to meet client needs and turning insights into profitable outcomes. We are focused on building true client relationships, staying disciplined on price and structure, and supporting our clients with the full capabilities of our franchise. Our diversified business model with countercyclical businesses positions us well as the operating environment evolves. I will now turn the call over to Hope to walk through our first quarter results. I will provide some closing comments at the end of the call. Hope? Hope Dmuchowski: Thank you, D. Bryan Jordan. Good morning, everyone, and thank you for joining us today. Over the last year, we have talked a lot about our efforts to improve the profitability of the balance sheet and how we laid out our strategy for the entire organization. That work is evidenced in our results this quarter, which include a return on average assets of 1.3%, up 19 basis points from the first quarter last year. Amidst rate decreases over the last year, we have grown net interest income 6% year over year, which outpaced our loan portfolio growth of 3% in that same time, demonstrating our continued focus on profitable growth. We started 2026 with great momentum, including earnings per share of $0.53, which is an increase of $0.11 over 2025. Excluding loans to mortgage companies, our C&I portfolio grew $624 million in the quarter compared to approximately flat growth in 2025. Our performance also includes an 8% improvement in adjusted pre-provision net revenue compared to 2025. Our adjusted ROTCE of 15.1% increased over 200 basis points year over year. Starting on slide seven, we walk through our net interest income and margin performance in the first quarter, which saw NII consistent with the fourth quarter absent day count impact. Our margin expanded by 1 basis point on continued strong performance in managing deposit costs following the Fed’s last rate cut in December 2025. While our variable loan portfolio experienced yield declines in the quarter, our deposit pricing discipline offset this impact. On slide eight, we cover details around our deposit performance in the quarter. Period-end balances decreased by $1 billion compared to the prior quarter, driven primarily by reductions in brokered deposits. The average rate paid on interest-bearing deposits decreased to 2.28%, coming down from the fourth quarter average of 2.53%. We maintain a cumulative deposit beta of 69% since rates started to fall in September 2024. Our interest-bearing spot rate ended the quarter at 2.27%. On slide nine, we cover our quarterly loan growth. Period-end loans increased slightly by $21 million from the prior quarter. This quarter’s results include an impressive start to the year for our core C&I business, which saw $624 million in loan balance growth. This builds on momentum we saw in 2025 and is supported by continued strong pipelines in 2026. Loans to mortgage companies experienced typical seasonality in the first quarter and ended down $62 million versus year-end. This business continues to have momentum as a source of strength for our company. Commercial real estate continues to be a headwind for loan balance growth as stabilized loans move to permanent markets and non-pass loan resolutions reduce balances. Encouragingly, our CRE pipelines are strong and present notable opportunities to stabilize CRE balances in the future. I will also note that our consumer loan portfolio declined $198 million in the quarter, which is in line with normal fluctuations. Our goal for consumer lending is to focus on relationship expansion and profitability. While competition in the market is strong, commercial loan spreads remain generally in the mid-100 to upper-200 basis points. Turning to slide 10, we detail our fee income performance for the quarter, which decreased $12 million from the prior quarter excluding deferred compensation, and is up $13 million year over year. The largest decreases for fee income come from our service charges and fee lines, which were driven by the impact of day count and normal seasonality in other service charges like treasury management fees, interchange income, and NSF fees, and by quarter-over-quarter fluctuations in our equipment finance business. We saw a slight quarter-over-quarter decline in fixed income revenues due to the decrease in ADR to 742 thousand, though this is still a 27% increase year over year. We saw slightly lower ADRs at quarter-end as market volatility increased. On slide 11, we cover our adjusted expenses that, excluding deferred compensation, decreased $32 million from the prior quarter. Personnel expenses, excluding deferred comp, decreased by $10 million from last quarter, driven by an $8 million decline in incentives and commissions, which followed higher incentive accruals last quarter. Outside services decreased by $26 million, which includes reduced expenses related to technology initiatives from last quarter and decreased marketing expenses in the quarter. Turning to credit on slide 12, net charge-offs decreased by $1 million to $29 million. Our net charge-off ratio of 18 basis points remains in line with our expectations. We recorded a provision for credit losses of $15 million in the quarter and our ACL-to-loans ratio declined slightly to 1.28%. This was driven by mix change in the portfolio. On slide 13, we ended the quarter with a CET1 of 10.53%, driven by buyback activity and loan growth in the quarter. During the quarter, we bought back approximately $230 million of common shares. We have approximately $765 million in our current board authorization remaining. During the quarter, we successfully issued $400 million of Series H preferred stock, which drove the 44 basis point increase to our Tier 1 capital ratio of 11.95%. Our tangible book value per share is $14.34, which is up 9% year over year. This includes buybacks of $766 million during that period and an increase to our dividend. I will wrap up on slide 15. I am proud of the momentum we have to start 2026. We continue to maintain our full-year outlook and updated our near-term CET1 target to 10.5% during the first quarter. For the third consecutive quarter, we achieved 15% plus adjusted ROTCE, reflecting our focused execution on our business priorities. We continue focusing on deepening our client relationships, fully delivering our products and services across our excellent footprint, and enhancing our capabilities to create value for clients and shareholders. All of this moves us towards achieving the $100 million plus PPNR we noted last year as our opportunity in the next couple of years. We made initial progress on this objective last year and continued doing so in 2026. Our revenue expectations reflect continued capture of this profitability throughout the year. Expense discipline and underwriting consistency continue to be central to our company, and disciplined capital deployment continues moving us towards our intermediate-term CET1 targets. I will now turn it back over to D. Bryan Jordan. D. Bryan Jordan: Thank you, Hope. On the whole, we feel very good about how we started the year. We are seeing strong client activity in our commercial pipelines as well as business owners planning for growth. Relationship banking remains our priority, focusing on primary relationships, deepening treasury and wealth management, and making sure our solutions match client needs. In the first quarter, we saw strong production essentially evenly balanced between our regional banking and specialty verticals. C&I loan commitments reflected both deepening of existing relationships and new client acquisitions. And our CRE pipelines are as strong as they have been in years. We manage our business with three priorities: safety and soundness, profitability, and growth, which is evident in our results again this quarter. Competition is active, but our associates are protecting our base and winning with exceptional service and value. We expect that discipline, along with healthy C&I demand and the strength of our markets, to drive revenue growth as the year progresses. Our diversified model gives us a balance as the macro and geopolitical backdrop evolves. If the rate path is choppy or sentiment shifts, our countercyclical businesses are positioned to contribute. If confidence builds, our core banking engine benefits from client growth. Credit remains in line with our expectations, and we continue to approach opportunities selectively on price and structure. Our footprint is a real advantage. The Southeast and Texas remain growth corridors. We deliver big bank capabilities with the personalized touch of a community bank across our entire footprint. That combination allows us to serve clients locally while bringing the resources of the entire bank when they need them. We remain focused on expense discipline while strategically investing in talent, technology, and tools that make our associates more effective for their clients. We will stay thoughtful on capital management and we will be opportunistic with share repurchases. While the macroeconomic environment changes and creates new headwinds and uncertainties, I remain optimistic about our outlook for the year. Our job is to stack one good quarter on top of the next by effectively serving our clients and communities. Thank you to our associates for their hard work, and to our clients and shareholders for their continued confidence in First Horizon Corporation. Operator, with that, we can now open it up for questions. Operator: We will now open the call for questions. Thank you. The first question today is from Jon Glenn Arfstrom of RBC Capital Markets. Your line is now open. Please go ahead. Jon Glenn Arfstrom: Good morning. D. Bryan Jordan, you touched on some of this, but you seem a little more optimistic on the lending environment. If you could touch a little bit more on the pipelines in C&I and whether or not you have seen any impact on pipelines from the macro uncertainty? D. Bryan Jordan: Yes, happy to, Jon Glenn Arfstrom. The pipelines in C&I continue to be very, very good. And while the short-term effects of the disturbance or the trouble in the Middle East has people asking questions, it really has not had a significant downward impact on C&I pipelines at this point. In fact, we still see a continuation of what we saw building in 2025, which is business owners and leaders looking to grow, invest, and build. That has been positive. In addition, I mentioned, and I think Hope did as well, that CRE pipelines have continued to build. As you know, that is a business for us where loans originate and fund up over about a three-, four-, five-year period and then pay off all at once. We have not seen pipelines this strong since the 2021–2022 time frame when rates were essentially zero, so those pipelines are building. We are very optimistic about the outlook for lending growth over the course of this year. You will see in our results, and it is somewhat evident in the way that we have transformed our balance sheet over the last 18 months, we have continued to focus on profitable growth. We have repositioned the business to align around our consolidated strategy, and with that, we are seeing an improvement in the profitability of the lending that we are doing. We are focused very much on relationship lending; for things that are not relationship-oriented, we are being very disciplined. So we look at the year and are very optimistic. I said in my closing comments that the market is still very competitive, and without a doubt, the markets are still very competitive. Very good loan transactions have a lot of competition, and our bankers are doing a very nice job of not only getting our fair share, but maybe a little bit more. Jon Glenn Arfstrom: That is helpful. And then maybe one more on lending. I think, Hope, usually you handle this one. But on the loans to mortgage companies, despite the fact it has been maybe a choppy environment, you are still up like 35% year over year. Do you expect a typical seasonal bounce in warehouse balances? And since it is a bigger category for you, maybe you can size it for us and give us an idea of what we could see in Q2 and Q3. Hope Dmuchowski: Thanks, Jon Glenn Arfstrom. I will say we do expect to see a seasonal increase in Q2. We are already starting to see some of that fund up at the end of March and beginning of April. Now whether it is typical, I cannot say what typical is anymore. The last two years have been some of the lowest mortgage origination years in the last 20 years. I think the way rates have been going the first part of the year, we are probably going to see low mortgage origination and a low refinance rate. But we do expect that it will trend consistently with Q1 to Q2 and Q3 of the last two years. We have picked up market share, and that has shown and continued to show in our strong loans to mortgage company balances even at the end of Q4 and Q1. I have said before, I think one of the biggest upsides to our guidance would be if we saw a refi wave. I think it gets less likely the further that the 30-year rate goes up, but in the back half of the year that is still a possibility, although that is not built into our outlook today. Jon Glenn Arfstrom: Okay. Fair enough. Thank you very much. Appreciate it. Operator: Thank you. The next question comes from Michael Edward Rose of Raymond James. Your line is now open. Please go ahead. Michael Edward Rose: Good morning. Thanks for taking my questions. Maybe I will take the other side of the balance sheet from Jon Glenn Arfstrom. On deposit competition, I noticed that the interest-bearing spot rate was 2.27% versus the full-quarter average of 2.28%. Can you talk to us about deposit competition? It seems like anecdotally over the past month, it has definitely increased. What can we expect in terms of what you have modeled for rate scenarios for the year, and what is a more optimal environment for deposit pricing at this point? Hope Dmuchowski: Thanks for the question. I think this year is shaping up to look a lot like last year in the seasonality of deposit rates. As we expected more rate cuts, competitors brought in their terms and their rate guarantees. We are starting to see that shift to longer guarantees and higher rates for longer in competition. As you saw, our spot rate is still below our average, and we are generally there. I do think that deposit costs will slightly trend up in Q2 and Q3 if we do not see a rate cut. Additionally, I mentioned in my expense comments that marketing was down in Q1. We tend to do a lot more new-to-bank acquisitions in Q2. It is the time that consumers start thinking about moving their checking account, savings account. They have gotten tax refunds. With that new-to-bank promotion out there, we will see a little bit of uptake, and then we will walk it back just like we have the last two years. And that is in our guidance. Michael Edward Rose: Perfect. Really appreciate that. Then, there is a lot of focus separately on private credit and things like that. I appreciate some of the color that was in the deck. Looks like generally credit appears to be good. Maybe for Thomas Hung, anything you are seeing on the credit front? I noticed that you did not put any commentary on criticized/classified this quarter. Any updates there? Thomas Hung: Good morning, Michael Edward Rose. Happy to address those. Overall, I remain pleased with our very consistent credit performance, headlined by the 18 basis points net charge-off rate, which is slightly below the median of the range. That said, there are always things that we want to watch carefully. For me in particular, I am still carefully watching anything that is most closely tied to consumer discretionary spending, especially with recent increases in energy prices. That certainly affects discretionary spending. Sectors like trucking, auto, and restaurants are things that I want to watch more closely. On private credit, that is something that we are certainly monitoring as well, but I would point out we have very minimal exposure to that segment. In terms of direct exposure to private credit, it is less than 1% of our loan book, and substantially all of that is backed by tangible assets like real estate, inventory, equipment, or accounts receivable. There is very, very little enterprise value lending exposure. Michael Edward Rose: Very helpful. Thanks for taking my questions. I will step back. Operator: Thank you. The next question comes from Jared David Shaw of Barclays. Your line is now open. Please go ahead. Jared David Shaw: Good morning. On the $100 million of incremental PPNR, what are any of the assumptions behind that for cost savings and/or potentially slower hiring driven by AI implementation? If there is nothing included in there, is AI a positive or a negative to that $100 million? Hope Dmuchowski: Jared David Shaw, there is nothing in there about expenses. That is all deepening relationships and about revenue. In my prepared remarks, we talked about 6% more NII year over year with 3% balance growth in a decreasing rate environment. You can see the profitability of the existing relationships at renewal or new-to-bank additionally creating more value for us. There are no expense assumptions embedded. As far as AI, we do have a flat expense outlook excluding countercyclical commissions. We have said that is coming from the technology investments we have made over the years and continue to make so that we can scale revenue without having to scale the back office. It is less about cost savings right now in our outlook and more about being able to scale, invest in new hires, and grow our market share without having to add all of that support infrastructure. Jared David Shaw: Great. Thank you. And then on capital, what would cause you to lower that 10.5% target? You did some work on the capital stack this quarter. Could you feel comfortable with lower than 10.5%? D. Bryan Jordan: I will take that. Right now, we are comfortable with the 10.5%. As I have said in the past, this is something that we talk with our board continuously about, and we will continue to do that. Given the near-term uncertainty about what is happening with respect to oil prices and what that means to inflation in the economy, it is probably not a bad idea to see a few more cards here. Overall, we are very optimistic that the economy is still in a pretty good place and that over the next several weeks to months, we will start to see some of this uncertainty settle down. At that point, we will continue to evaluate whether we bring those ratios down. As we have said, we believe that we can operate the organization at a lower CET1 ratio than 10.5%, and over time, we will get there. Operator: Thank you. The next question comes from Casey Haire of Autonomous. Your line is now open. Please go ahead. Casey Haire: Yes, great. Good morning, guys. Wanted to revisit the NII outlook. Hope, you mentioned that deposit costs were going to feel some pressure going forward. Can you shed some light on loan yields and bond yields given the fixed-rate asset repricing benefits and, overall, what does that do for NIM? Hope Dmuchowski: Thanks for the question, Casey Haire. On the deposit side, what I said was slight pickup. I do not expect that to put a ton of pressure on NIM or NII. It is really the mix that you bring new-to-bank. I see that in the low to mid-single digits, and that is manageable for us in our current outlook. As far as bond prices and the outlook there, it is really hard to predict what is going to happen, as D. Bryan Jordan mentioned earlier. We saw a lot of volatility that impacted FHN Financial at the end of March, and April has started off slow. We have a slide in the back of our deck about where the market is for FHN Financial today, and we have it in red and green, and all but one factor is in red for them as of today. That does not mean it could not change going into the back half of the year, but we do see some risk there. We do not see any risk to our outlook of our guidance on total revenue. So NII would have come down with rate cuts, so we saw some stability. We could see FHN Financial pick up, maybe some additional refi. We feel that we are really balanced in the back half of the year to hit that revenue guide. D. Bryan Jordan: Casey Haire, you asked about fixed asset repricing. We have something like a little more than $1 billion of investment securities that reprice over the course of this year. And then on the fixed-rate loan side, whether it is a long-term ARM, etc., it is a little over $5 billion that reprices in 2026. In total, we have about $6 to $7 billion of assets that will reprice, principally at higher rates. Casey Haire: Thanks. I was wondering if the asset yields could offset some of the modest deposit pressure that you are feeling to keep the NIM stable? D. Bryan Jordan: The fixed-rate asset repricing will have some impact, clearly. But as Hope has alluded to in a couple of different ways, we are working to improve the profitability of the balance sheet, and so there is some offset there as well. We have talked in the past, for example, in our market investor CRE we have improved the yield significantly in that business on a year-over-year basis. We think we have lots of levers that allow us to continue to navigate through the deposit trends that are occurring in the market in the near term. Over the long term, we feel very good about the balance and the balance sheet and that we can navigate changing interest rate environments with as much or more stability than most. Casey Haire: Great. Just one more on the credit side. The ACL ratio has come down nicely. We got some mix shift and some credit resolution. I know it is difficult with the CECL modeling, but all else equal, what is a good landing spot for the ACL ratio versus that 1.28% level? Thomas Hung: It is hard to say because things evolve on a quarter-to-quarter basis. Depending on what happens with loan growth, grade migration, and classified resolutions, all of that can change the result quarter to quarter. But we feel like we are very adequately reserved at this current time. At our current ACL, that is approximately seven times our average net charge-offs over the last two years. I believe where we are currently is a very well-reserved position relative to our very steady net charge-off performance. Hope Dmuchowski: To add to that, I have said this in prior quarters: two or three basis points in the CECL model is not material. If you look at the last six quarters, we have gone down three one quarter, up two another. That is essentially flat in coverage with a portfolio that moves as much as ours does. Operator: The next question comes from Bernard Von Gazzicchi of Deutsche Bank. Your line is now open. Please go ahead. Bernard Von Gazzicchi: Hi, good morning. On the $100 million plus PPNR opportunity, you highlighted some progress made since mid-2025 on slide 15 of the deck. Could you walk us through these examples on the CRE pricing, the deeper ties between regional and specialty, and the treasury management and wealth management initiatives? Hope Dmuchowski: Absolutely. I will start with the note that this is in no way a holistic list of all the things. As we keep getting asked for points that we can show, we put a couple on slide 15. CRE pricing is one that D. Bryan Jordan has talked a lot about as we have been speaking with investors, which is the benefit of having a specialty model and a market-centric model. We have a strong CRE business with long-tenured bankers who are focused on exactly what is happening in the CRE industry across the country by sector and subsector. About a year and a half ago, we brought that specialty to every deal with a market banker who is doing a CRE deal. We have been able to see additional fee income come out of that partnership—origination fees, unused line fees—as well as increased margins as the appetite for CRE in our industry really shrunk over the last three years. Those spreads increased. It is really the benefit of a market-centric model with a specialty partnership. You are bringing the best of both to the client, and in addition to the financial benefits, we continue to hear from our clients how much they appreciate having somebody who can talk to exactly what is happening in the industry alongside a banker that knows exactly what is happening in the market. It has been a great enhancement for us. We have that in a lot of places—we have highlighted CRE—but we also have it in franchise finance, ABL, equipment finance. That partnership is paying additional dividends for us and is a big part of our $100 million PPNR opportunity that we are already realizing. D. Bryan Jordan: This is something that we have built into our expectations for 2026. It is really hard to highlight how much work goes into this. We have hundreds, thousands of bankers working on aspects of this every day. It really comes from the ability that our teams have created to see with a lot of granularity relationships and understand the interconnectedness of deposit or fee-based service and lending relationships. Those tools have helped us navigate opportunities for bringing new products and capabilities to customer relationships, making sure where we have underpriced a spread here or there that we are asking for appropriate spread—on the credit, the treasury service, the wealth, or whatever it happens to be. It is a work in progress. It is not completed in 2025 or 2026. It will continue, but it is part of the discipline that the organization is oriented around: building deep, broad, long-term relationships and creating win-win solutions for our customers that essentially create partnerships that are win-win for both sides. Bernard Von Gazzicchi: Great. Thanks for that color. Just a follow-up on loan growth. You reiterated expectations for mid-single-digit growth, but are contributors changing? Maybe stronger C&I than originally expected? Maybe a bit less CRE? You noted the headwinds, but pipelines remain strong. Do you think CRE will still be a positive contributor for loan growth this year? Thomas Hung: I am happy to tackle that one. I will start on the C&I side where you saw very strong continued momentum in Q1. What I am most pleased about in those results is how evenly spread that is between both our regional bank regions and our specialty lines of business. We saw momentum on both sides. On the CRE side, we have talked about the headwinds in terms of project starts over the last several years going into the perm market. We have started to really see the pace of our payoffs decelerate, and with a very, very strong pipeline, especially now compared to a year ago, we should start to see some very good net growth on the CRE side later this year as well. Overall, there is very good momentum up and down the balance sheet. Operator: The next question comes from Andrew Steven Leischner of KBW, on for Christopher McGratty. Your line is now open. Please go ahead. Andrew Steven Leischner: Thanks. On the 3% to 7% revenue guide, can you walk through the scenarios or assumptions that would get us to the higher end or lower end of that range? Hope Dmuchowski: Thanks. As I said, we are pretty balanced. The question is not how do we get to the higher or lower end of the range; it is whether it comes from fee income and countercyclical businesses or from NII and higher loan growth. One item not built into our outlook is a pickup in mortgage refi. As I said earlier, I do not expect it in the near term as 30-year rates keep moving up and there is uncertainty for the consumer, but that is the one item not built here. We are starting the year with 3% loan growth year over year and roughly 6.5% revenue growth year over year, so we have a strong start to that momentum. D. Bryan Jordan: I think the other driver is likely to be an acceleration of economic growth. The economy today is growing pretty steadily, probably in that 2.5% to 3% area. Given what we know today, there is probably greater downside risk than upside opportunity. If that gets resolved and the pace of growth in the economy picks up, loan growth will naturally pick up, and we could get to the higher end of that range. So it will be a combination of how interest rates play out and, more importantly, what that means in terms of economic growth overall. Andrew Steven Leischner: Great. Thank you. On the expense outlook, annualizing this quarter gets you a little lower than flat expenses. Outside of the lower marketing in the quarter, is this a good run rate from here, or were there some other items that were lower than usual? Hope Dmuchowski: There will be some movement throughout the quarters as it relates to marketing spend. We always have an issue with the way we do our income statement where marketing spend hits first and then the cash offer hits in other, so you will see some volatility there. Technology projects can also vary quarter to quarter. At the end of the year, we had a lot of projects complete, and they went from the expense part of their project to capitalization, which is more stable. But to your point, it is a good glide path on average. We do expect to be flat year over year with some variability quarter to quarter. D. Bryan Jordan: One thing I am excited about on the expense side is we have had very good success in hiring new revenue producers. If you look at the stream of press releases over the last several weeks, you will see we are having very good success recruiting bankers across our franchise. The point is that not only are we bringing good people into the organization, we are controlling cost while still continuing to invest in growth and driving the business forward. That combination is very positive for the long term. Operator: Thank you. The next question comes from Ben Gurlinger of Citi. Your line is now open. Please go ahead. Ben Gurlinger: Hi. Good morning. Hope Dmuchowski: Morning. Ben Gurlinger: You talked through CET1 and the appetite to potentially go lower, but as of now it is 10.5%. With the outlook for loan pipelines sounding robust, and considering seasonality where your balance sheet balloons a little bit with mortgage, how should we think about buybacks for the next couple of quarters given you are fairly close to 10.5%? Is it more opportunistic, or does capital need to go to growth? D. Bryan Jordan: We will be opportunistic as we always are. We have said that to the extent mortgage warehouse lending pushes down on a temporary basis our CET1 ratio, we are not uncomfortable with that. Our mortgage warehouse lending business has low credit losses historically. We see it as more of an operational risk, and our team does a very good job of controlling risk in that business. To the extent that that pushed us down a little bit here and there, that does not cause us concern in the near term. Against that backdrop, we will continue to be opportunistic to take the excess capital that we believe we have and that we generate and use that in share repurchases or repatriation of capital to our shareholders. Hope Dmuchowski: And just to add on to D. Bryan Jordan’s comments, as noted in our presentation, over the last 10 years our mortgage warehouse business has averaged about 1 basis point annual net charge-offs. Ben Gurlinger: That is great. I was not worried about the credit, more so the usage of capital over the next couple of quarters, but that is a great answer. Appreciate the time. That is all I had. Operator: The next question comes from Timur Braziler of UBS. Your line is now open. Please go ahead. Timur Braziler: Hi, good morning. D. Bryan Jordan: Morning. Timur Braziler: Looking at the expense guide relative to revenue, the revenue guide is still pretty wide versus a pretty tight expectation on expenses. How agnostic is the expense base toward the different ranges of the revenue guide, and what is embedded on the baseline for the flat year-on-year expense? Hope Dmuchowski: It is agnostic to the revenue guide with the exception of the countercyclical businesses. If we hit the higher end of the range and more of it comes year over year from the countercyclical businesses, you can assume a 60% commission on that delta. What is built in is flat countercyclical year over year to that flat guidance. New hires were built into our expense guide. Branches were built into our guide. The consolidation into a new hub in Charlotte is in our expense guide. All of the investments are already in there, and we believe expenses are flat. On the range of the revenue guide, every CFO will tell you it is easier to control expenses than revenue. The range for the guide is really the uncertainty of the economy right now. As D. Bryan Jordan mentioned earlier, could we see the economy start to rebound with consumer confidence, more spending, and loan growth? That is what is driving our larger range—not our internal understanding of where we think our businesses are going. It is just really hard right now to figure out what type of economy we are going to be lending into and what is going to happen in the wealth business over the next three quarters. Timur Braziler: Great. Thanks. As a follow-up, there is some increased conjecture this week surrounding M&A given all the volatility in the market. Can you give a reminder on both sides of M&A—your updated stance? D. Bryan Jordan: Nothing has changed with respect to M&A. Our number one priority is continuing to focus on the profitability of our business and driving the benefits that we can realize by investing in our core franchise. We have said that opportunistically, if we have the opportunity to do fill-ins in our existing footprint, we will evaluate them. As always, we will take an approach that we are going to maximize return on capital for our shareholders, and we are going to evaluate any opportunity that presents itself, but nothing has changed in our stance around M&A. Operator: Thank you. The next question comes from Anthony Albert Elian of JPMorgan. Your line is now open. Please go ahead. Anthony Albert Elian: Hi, everyone. Hope, to put a finer point on NIM, last quarter you pointed to a range in the mid-3.40s, but you have clearly outperformed that for a couple of quarters now. Given the earlier comments on loan yields and deposit costs picking up slightly, how are you thinking about NIM here? Thank you. Hope Dmuchowski: The mid-3.40s comment was about stabilization when we saw a flat rate environment and more consistent spreads. Near term, we do expect to be in the high 3.40s, within a few basis points of where we are right now. Anthony Albert Elian: Thank you. And then on capital, given the recent proposals, have you quantified any of the estimated impact or benefits you would see from the recent proposals? Hope Dmuchowski: Thanks, Anthony Albert Elian. We have calculated, and every consultant out there has sent us a deck and wants to meet with us on how to optimize it. It is clear that it is positive for everybody. It will definitely be a pickup for us, especially in some of the proposals for mortgage and some of the proposals for our fixed income business inventory. But we have not put a fine pen to say exactly what it is. There are still a lot of uncertainties out there in the model, as well as how we might react to some of those—how you change term of a loan, for example, gives you different capital treatment. But net positive for sure. Operator: Thank you. The next question comes from Christopher William Marinac of Brean Capital Research. Your line is now open. Please go ahead. Christopher William Marinac: Thanks. Good morning. Thomas Hung, I wanted to ask about the reserve as it pertains to both mortgage warehouse and any other NDFI. Should we see that grow over time, or how do you think about that? Thomas Hung: Mortgage warehouse and NDFI are all part of our ACL for the C&I business. I do not have it broken out in front of me in terms of specific lines of business. Overall, as you saw, we did add a little bit to our C&I reserves this quarter. That is more a reflection of some overall economic uncertainty around the conflict in the Middle East as well as how that is impacting discretionary consumer spend. Overall, I would say, as I mentioned earlier, we are well reserved from both a C&I basis as well as an overall ACL basis. Specific to NDFI, it may be helpful to break down the components a bit. From the call report, you will see we have a total of $8.6 billion of total NDFI. However, about 55% is the mortgage warehouse business that we have talked about, with very low charge-offs and very short tenure with an average dwell of under 20 days. Of the remaining $3.9 billion of non-mortgage-warehouse NDFI, about a third of that is categories that are NDFI in the call report but are really more akin to traditional C&I structuring and risk. Therefore, what is left—the remaining two-thirds—is really only about 4% of our overall loan book. The performance in that business has some pockets with elevated C&Cs we have to watch, as you would expect, but the overall performance of that remaining book is actually not too dissimilar from our overall C&I book. NPLs are slightly lower relative to our overall book; net charge-offs are slightly higher, but all very close to being in line. From my position, I do not think there is any specific reason to have outsized results tied to our NDFI book. Hope Dmuchowski: On your comment about mortgage warehouse and NDFI, I want to point out that for us, the way we do mortgage warehouse, we do not really consider it NDFI, although the call report does. We hold the underlying collateral. We take each note at closing. We have discussed that we had 1 basis point of charge-offs in the last 10-plus years on average annually. That comes down to operational risk. Should the company that we are lending to have an issue and can no longer be in business, we have the notes. We have worked through that and then pledge them and sell them or put them on our balance sheet. For us, NDFI is an operational risk. On the fraud piece of it, we have seen collateral double pledged elsewhere. We do not have that situation. We actually maintain the notes until they are sold. That is something that is different than how some others do mortgage warehouse in the industry. Thomas Hung: And just to make sure we are clear, the 1 basis point is the average annual charge-offs in that business. Christopher William Marinac: Great. Thanks, Hope, and thank you, Thomas Hung, for that additional detail—that is very helpful. Just to clarify, you mentioned there are some charge-offs in the other NDFI, that smaller component. Are these normal charge-offs, or have these changed at all in recent quarters? Thomas Hung: I would say it is relatively normal. I mentioned it is slightly higher than our overall net charge-off rate, but it is not anything alarming. Operator: The next question comes from David Chiaverini of Jefferies. Your line is now open. Please go ahead. Max Astaris: Hi. Good morning. Max Astaris on for David Chiaverini. A quick question around capital markets. Given recent yield curve volatility, I wanted your thoughts specifically around fixed income. How sensitive is the fixed income trading desk to the current shifting expectations around Fed easing? D. Bryan Jordan: The business has had its ups and downs, and volatility in interest rates over the longer term is good for the business. In the short term, it can be difficult. The uncertainty and the way rates have been moving have created some volatility from week to week. On the whole, we are pretty encouraged by the positioning of the business. Our ADR for the quarter was down slightly from the fourth quarter but up significantly from a year ago. All in all, we look at the business as a very strong contributor and our outlook is optimistic for the foreseeable future, recognizing that there are going to be potential events that can push rates up or bring rates down rapidly. We think we are well positioned and in a good place to benefit from that volatility over time. Max Astaris: Great. Thank you. Operator: The next question comes from John Pancari of Evercore. Your line is now open. Please go ahead. Gerard Sweeney: Hi. This is Gerard Sweeney on for John Pancari. You highlighted that this is the third straight quarter of 15% plus ROTCE. How should we think about ROTCE trajectory going forward? Do you see a path closer to high teens, or is maintaining the current level more your priority? If you were to get to a high teens level, what are the few steps that will get you there? D. Bryan Jordan: We are making progress, and Hope pointed out our ROTCE is up a couple hundred basis points from a year ago. We set 15% plus as a target; we did not set it as a destination. We will continue to build ROTCE. To the extent that you combine a few things—the improved profitability that we are driving with our existing balance sheet; the ability to leverage our balance sheet either through capital return or growth in the balance sheet and the combination thereof; and the regulatory guidance of bringing CET1 ratios down—we think we have the ability to push ROTCE higher over time. I am not going to try to put a fine point on it today. We are confident with the progress that we are making. We are focused on driving those returns higher, and I feel good about the work the organization is achieving every single day in that regard. Gerard Sweeney: Great. Thank you. And maybe going back to the prior question on the fixed income business, is there an ADR range embedded in your revenue guidance? I know there is a countercyclical side of it, but just how to size up from a modeling standpoint the rest of the year? Hope Dmuchowski: There are multiple ranges embedded in our guidance because, as I have said before, we trade NII for fee income or mortgage warehouse balances in a decreasing rate environment. We do not have a single outlook to hit our guidance regardless of whether rates increase, stay flat, or decrease. You will just see the revenue come from different places. Operator: We have no further questions at this time. I would like to hand it back to D. Bryan Jordan for closing remarks. D. Bryan Jordan: Thank you, Operator. Thank you all for joining our call this morning. Please reach out if you have any further questions. We appreciate your interest. Hope everyone has a wonderful day. Operator: This concludes today’s call. Thank you all for joining. You may now disconnect your line.
Operator: Greetings, and welcome to The PNC Financial Services Group, Inc. Q1 2026 Earnings Conference Call. At this time, participants are in a listen-only mode. A question and answer session will follow the formal presentation. Please note that this conference is being recorded. I will now turn the conference over to Bryan Gill, Executive VP and Director of Investor Relations. Thank you, Bryan. You may begin. Bryan Gill: Good morning. Welcome to today's conference call for The PNC Financial Services Group, Inc. I am Bryan Gill, the Director of Investor Relations for The PNC Financial Services Group, Inc. Participating on this call are The PNC Financial Services Group, Inc.’s chairman and CEO, Bill Demchak, and Rob Reilly, executive vice president and CFO. Today's presentation contains forward-looking information. Cautionary statements about this information, as well as reconciliations of non-GAAP measures, are included in today's earnings release materials as well as our SEC filings and other investor materials, and are all available on our corporate website pnc.com under Investor Relations. These statements speak only as of 04/15/2026, and The PNC Financial Services Group, Inc. undertakes no obligation to update them. I would like to turn the call over to Bill. Bill Demchak: Thank you, and good morning, everyone. As you have seen, we are off to a really strong start this year. We achieved a great deal this quarter and we continue to build upon the strength of our franchise. We completed the acquisition of FirstBank early in the quarter and we are well on our way to a mid-June conversion. Our financial performance was solid. Organic loan growth hit a three-year high, net interest margin expanded meaningfully, and we had 13% year-over-year fee income growth. Credit quality remains strong, and we returned significant capital to shareholders. Importantly, beyond the financial results, we continue to see strong momentum across our businesses with notably increased client activities. We continue to make meaningful investments in our technology and our branch network. While we recognize that there are many market concerns out there—from energy prices to AI to private credit—we are not seeing anything that suggests these issues are broadly impacting our customers or our credit quality in the near term. Specifically regarding the increased attention on banks’ exposure to nondepository financial institutions, Rob is going to walk through some of the details as it relates to our exposure, but the sound bite you ought to walk away with here is that we do not see any loss content in this book and certainly do not see any exposure to a systemic event, which, by the way, we do not expect. But were there to be one, a systemic event in private credit, I cannot speak to what other banks have in this category as the definition seems to capture random things. We are very outsized in our corporate receivables financing relative to others, which is a low-spread business with negligible risk. Importantly, the bulk of our loans actually have nothing to do with private credit despite the regulatory category in which they reside. Overall, our focus remains on disciplined execution of our strategy, which is clearly reflected in our results this quarter. Looking ahead, we are entering into the second quarter with a lot of momentum, and we continue to be excited about the opportunities in front of us. Finally, as always, I want to thank our employees for everything they do for our company and our customers. With that, I will turn it over to Rob to take you through the numbers. Rob? Rob Reilly: Thanks, Bill, and good morning, everyone. Our balance sheet is on Slide 4 and is presented on an average basis. As Bill mentioned, during the first quarter, we successfully completed our acquisition of FirstBank, and as a result, our overall balance sheet growth includes the impact of the acquisition, which represented $15 billion in loans and $22 billion in deposits. For the linked quarter, loans of $351 billion grew by $23 billion, or 7%. Investment securities of $145 billion increased $2 billion, or 2%. Deposit balances were up $19 billion, or 4%, and averaged $458 billion. Borrowings increased by $3 billion, or 4%, to $63 billion. Our tangible book value was $109.42 per common share, down 3% linked quarter due to the acquisition, but up 9% compared with the same period a year ago. We continue to be well positioned with capital flexibility. During the quarter, we returned $1.4 billion of capital to shareholders. Common dividends and share repurchases were approximately $700 million each, and we continue to expect quarterly repurchases to be in the range of $600 million to $700 million going forward. We remain well capitalized with an estimated CET1 of 10.1%, down 50 basis points from year-end 2025. The decline was primarily driven by the FirstBank acquisition, accounting for roughly 40 basis points, with the remainder attributable to strong loan growth. Regarding the recent Basel III proposal, we expect the changes to be a net positive for our CET1 ratio relative to the current framework. Our initial assessment reflects a reduction of approximately 10% of our RWAs, or $45 billion to $50 billion. The reduction amount is the same under both the revised standardized and the expanded methodologies, in line with our previous expectations. Slide 5 shows our loans in more detail. Loan balances averaged $351 billion in the first quarter, an increase of $23 billion, or 7% linked quarter. The growth reflected both higher commercial and consumer balances. Compared to the same period a year ago, average loans increased $34 billion, or 11%. The total average loan yield of 5.5% decreased 10 basis points linked quarter. On a spot basis, loans increased $29 billion, or 9% from year-end, including $15 billion from the FirstBank acquisition and $14 billion of growth in legacy The PNC Financial Services Group, Inc. loans. Specific to our legacy business, C&I loans increased $15 billion, driven by broad-based growth across businesses, reflecting strong new production and higher utilization rates. CRE balances reached an inflection point and increased approximately $100 million; we expect moderate growth through the remainder of the year. Consumer loans declined $1 billion due to lower residential mortgage balances. Slide 6 covers our deposit balances in more detail. Average deposits were $458 billion, up $19 billion, or 4%, driven by the addition of FirstBank balances partially offset by a reduction in brokered CDs. Excluding those items, deposit trends were consistent with typical seasonality as growth in consumer balances more than offset a seasonal decline in commercial deposits. DDAs continue to represent 22% of total deposits. Our total rate paid on interest-bearing deposits decreased 18 basis points to 1.96% in the first quarter, reflecting lower rates. Turning to Slide 7, we highlight our income statement trends comparing the first quarter to the most recent fourth quarter, and again including the impact of the FirstBank acquisition. Total revenue was $6.2 billion and grew $94 million, or 2%. Noninterest expense of $3.8 billion increased $165 million, or 5%, of which $97 million was integration expense. Excluding integration costs, noninterest expense increased 2% and PPNR grew 1%. Provision was $210 million and our effective tax rate was 19%. As a result, our first quarter net income was $1.8 billion, or $4.13 per common share, and $4.32 when adjusted for integration costs. Turning to Slide 8, we detail our revenue trends. First-quarter revenue increased $94 million, or 2%, compared to the prior quarter. Net interest income of $4.0 billion increased $230 million, or 6%. The growth was driven by the addition of FirstBank as well as lower funding costs and commercial loan growth. Our net interest margin was 2.95%, an increase of 11 basis points. Noninterest income of $2.2 billion decreased $136 million, or 6%. Inside of that, fee income decreased $44 million, or 2% linked quarter. Looking at the details, asset management and brokerage increased $9 million, or 2%, due to higher average equity markets and client activity. Capital markets and advisory revenue declined $26 million, or 5%, reflecting lower M&A advisory activity off elevated fourth-quarter levels, partially offset by higher underwriting and trading revenue. Card and cash management increased $5 million, or 1%, as higher treasury management revenue was partially offset by seasonally lower credit card activity. Lending and deposit services decreased by $2 million, or 1%. Mortgage revenue decreased $30 million, or 20%, largely attributable to a $31 million decline in MSR valuations given the heightened rate volatility during the quarter. Other noninterest income of $125 million included $32 million of Visa derivative costs, as well as negative private equity valuations, partially offset by $28 million of net securities gains. Compared to the same period a year ago, we demonstrated strong momentum across our franchise. Importantly, fee income grew $240 million, or 13%, driven by broad-based growth in our businesses. Turning to Slide 9, first-quarter expenses increased $165 million, or 5% linked quarter, which included $97 million of integration costs. Noninterest expense excluding the impact of integration expense increased $68 million, or 2%, as the addition of FirstBank’s operating expenses more than offset lower legacy The PNC Financial Services Group, Inc. expenses. We remain focused on expense management, and as we have previously stated, we have a goal to reduce costs by $350 million in 2026 through our continuous improvement program, which is independent of the FirstBank acquisition. This program will continue to fund a significant portion of our ongoing business and technology investments. Our credit metrics are presented on Slide 10. Overall credit quality remains strong. Our NPL and delinquency ratios each improved on both a linked-quarter and year-over-year basis, reflecting the strong credit quality we continue to see across our portfolio, and the linked-quarter growth in balances was entirely attributable to the addition of FirstBank. Nonperforming loans increased $25 million, or 1%, and represented 0.62% of total loans, down from 0.67% last quarter. Total delinquencies increased $115 million to $1.6 billion, and our accruing loans past due declined to 0.43%, down from 0.44% last quarter. Total net loan charge-offs of $253 million included $45 million of purchase accounting related to the acquisition. Excluding these acquired charge-offs, our NCO ratio was 24 basis points. At the end of the first quarter, our allowance for credit losses totaled $5.5 billion, or 1.52% of total loans. I want to take a moment to cover the details of our NDFI loans, which are highlighted on Slide 11. We have discussed this topic at recent investor conferences, and importantly, nothing has changed in terms of the composition of the book or the underlying risk. NDFI loans continue to represent our lowest risk loans. Approximately 90% of our NDFI loans are investment grade or investment grade equivalent, and all have robust collateral monitoring requirements. Because there has been a lot of focus on the regulatory reporting category of business credit intermediaries, we have further broken out the components in detail on the slide. This category for The PNC Financial Services Group, Inc. includes asset securitizations, primarily trade receivable securitizations, of which The PNC Financial Services Group, Inc. is an industry-leading provider. These are loans to bankruptcy-remote subsidiaries of corporate borrowers secured by diversified pools of receivables. These loans represent approximately 80% of the business credit intermediaries category for The PNC Financial Services Group, Inc. The remaining 20% of our business credit intermediaries category—approximately $7 billion—is mostly comprised of CLOs secured by private credit provider assets. These are well-structured assets all supported by senior positions with substantial excess collateral. We have been in these businesses for a long time and have experienced virtually no losses going back 25-plus years. We feel very good about the risk content of our NDFI loans and, based on the composition of these low-risk assets, expect zero losses going forward. To summarize, The PNC Financial Services Group, Inc. reported a strong first quarter and we are well positioned for the remainder of 2026. Regarding our view of the overall economy, our base case assumes GDP growth to be approximately 1.9% in 2026 and the unemployment rate to drift slightly higher to 4.6% by year-end. We do not expect the Federal Reserve to cut rates during 2026. Our outlook for 2Q 2026 compared to 1Q 2026 is as follows: We expect average loans to be up 2% to 3%, net interest income to be up approximately 3%, fee income to be up 2.5%, and other noninterest income to be in the range of $150 million to $200 million. Taking the component pieces of revenue together, we expect total revenue to be up approximately 3.5%. We expect noninterest expense, excluding integration expenses, to be up approximately 2%. We expect second-quarter net charge-offs to be approximately $225 million. Considering our first-quarter operating results, second-quarter expectations, and current economic forecast, our outlook for the full year 2026 compared to 2025 results is as follows: We expect full-year average loan growth to be up approximately 11%. We expect full-year net interest income to be up approximately 14.5%. We expect noninterest income to be up approximately 6%. Taking the component pieces of revenue together, we expect total revenue to be up approximately 11%. Noninterest expense, excluding integration expenses, to be up approximately 7%, and we expect our effective tax rate to be approximately 19.5%. As a reminder, our expectation for nonrecurring merger and integration costs is approximately $325 million. We recognized $98 million in the first quarter and anticipate approximately $150 million in the second quarter, with the remaining balance to be recognized in the second half of the year. With that, Bill and I are ready to take your questions. Operator: Thank you. We will now open the call for questions. Our first questions come from the line of Ebrahim Poonawala with Bank of America. Please proceed with your questions. Ebrahim Poonawala: Hey, good morning. I guess maybe Rob, Bill, just if you could talk about deposit growth as we think about a period—we have not been here in the better part of the last 15 years—where rates are higher for longer. I think, as you mentioned in the forward curve, we may not get any rate cuts. Just give us a sense of the algorithm to grow core deposits in this environment. How do you think about it? What is the approach? And how difficult do you think it is going to be for The PNC Financial Services Group, Inc. and the industry to actually grow low-cost core deposits? Bill Demchak: I would frame it a bit differently and talk about growth in DDA accounts and retail clients broadly, which in turn causes deposits to grow. Think about the average balance somebody holds as a function of how high rates are and how competitive outside alternatives are. Think about total shots on goal as the number of retail clients we have. Our focus has been on growing retail clients, which is the key to growing deposits long term. In a period where rates are steady for a time and people are fighting to expand, you see at the margin—and you have heard competitors talk about this—that in certain price categories, people are paying up to maintain balances and/or attract new clients. But look, we are opening branches. We have opened eight so far this year. We are going to—what is our total for the year—another 50 or something? 55. Our digital acquisition has been really strong, and we just need to continue that. That ultimately will lead to deposit growth. Rob Reilly: And we do, Ebrahim. Just as a reminder, we do have deposit growth expectations for the year. Sort of staying at these levels—we had a good first quarter—with some incremental growth in 2026. Ebrahim Poonawala: Understood. Got it. And I guess separately, around customer sentiment—think all sorts of risks over the last month including speculation on what higher oil prices and energy prices would mean for the consumer. Did we see some decline in sentiment over the course of the last month, or are you as constructive when you think about the growth outlook? Obviously, the guidance suggests nothing has dramatically changed, but we came in with a lot of excitement around the tax incentives for businesses and consumers. Is all of that more or less mostly intact? Bill Demchak: I do not know that we can square for you the headline surveys on consumer confidence or small business confidence, which are all not great, with what we actually see. When you look through spending patterns, growth in savings, activity levels, loan growth—what we see day to day in our business is almost at complete odds with the surveys you see on confidence. Rob Reilly: I would just add to that. In terms of sentiment, obviously there has to be a higher level of concern, but to Bill's point, the activity has not changed. Bill Demchak: Spending has accelerated. Ebrahim Poonawala: That is actually good color. Thank you. Operator: Sure. Thank you. Our next questions come from the line of Scott Siefers with Piper Sandler. Please proceed with your questions. Scott Siefers: Good morning, guys. Thanks for taking the question. I wanted to follow up on that sentiment question and also about what it suggests for loan growth. You had pretty good performance in the first quarter, and when I look at the guide, it does not necessarily imply much growth in future quarters off the first-quarter base. But I inferred at least that your commentary on utilization rates sounded good. It sounds like they are increasing. Do you see anything specifically that would cause you to be conservative, or you are sort of approaching with an abundance of caution? Rob Reilly: Sure, Scott. Clearly, we saw more than what we expected in terms of loan growth in the first quarter, and on an average basis that is going to pull into the second quarter. On a spot basis going into the second quarter, we actually see it staying flattish because we do have some paydowns that are coming that will offset continued new production. That gets you through the second quarter. When you look at the back half of the year, we are pointing to growth, but not at the rate that we have seen in the first quarter nor that we expect in the second quarter. To your point, that is related to concerns that ultimately end up reducing the visibility of what can happen in the second half. Bill Demchak: Long story short, you have followed us long enough—we are never going to go out there and say loan growth is going to be this big number. We cannot predict it, but we banked some in the first quarter, so we put that in the authority base and go forward, and if we are pleasantly surprised, that will be great. Rob Reilly: And that will be accretive. Scott Siefers: Perfect. Okay. Thank you. And then, Rob, maybe just some expanded thoughts on how capital management might change, should these Fed proposals or NPRs indeed come through. How much more aggressively might you think about things, or what are the governing factors you think about? You get this big relief, but then it is unclear the ratings agencies are necessarily on board. What are the puts and takes you see, or the factors as you walk through that? Rob Reilly: Sure, Scott. Under both methodologies, we see a reduction in RWA of about 10% as I mentioned in the opening comments, which is good. We are still in the proposal or comment stage, so we have to work through the nuances. But at first blush, because AOCI is blended in under both methodologies over the five years upfront, there is no AOCI; that is close to a full point of capital for us. Bill Demchak: The other issue—you mentioned the rating agencies—and inside of their rating methodologies, they look at risk-weighted assets. I have not actually thought through the notion of, “Hey, we have less, so does this actually just pull through to how they are going to look at us as well?” But I think it will. Rob Reilly: We have not had that discussion point with the rating agencies, but they had adjusted their expectations with the change of these proposals, so they have worked the numbers down under the current framework. It is logical to expect that it would extend into the new methodology. Scott Siefers: Okay. Perfect. Thank you very much. Operator: Sure, Scott. Thank you. Our next questions come from the line of Manav Ghisalya with Morgan Stanley. Please proceed with your questions. Manav Ghisalya: Hey, good morning. Thanks for taking my questions. On the capital question, you noted that ERBA adoption benefit is similar to adopting the revised standardized approach. Would it still make sense to adopt the ERBA as it relates to maybe the flexibility that it could give you in managing the business going forward—maybe if you wanted to lean in on the investment grade credit side or lower LTV CRE? Just wanted to know how to think about this going forward. Rob Reilly: I think you are right. On the surface, the ERBA—because of the benefit coming through investment grade equivalent loans, which are our wheelhouse—makes that methodology appealing. But we are still in the analysis stage here. There are still a lot of nuances to figure out, and obviously potential changes after the comment period. But you are on the right track. Manav Ghisalya: Got it. And maybe if I can ask the loan growth question and compare it to the NII guide. You are pretty close to the 3% NIM number you had indicated, and you are taking the loan growth guide up by three percentage points. The NII guide is going up, but maybe to a lesser extent. Is there anything that we should be thinking about on loan spreads or deposit rates that you are baking in now that is different to where we were at the start of the year? Rob Reilly: The short answer is loan mix on the new production piece. If you go back to January when we called for 8% average loan growth, we used average spreads on the new production through 2026. Where we find ourselves today after the first quarter is we have generated, on a relative basis, much higher volume of higher credit quality deals, which by definition carry relatively lower spreads. Still attractive spreads, still attractive returns, particularly given the non-credit portion of those relationships. It is just a mix change that, when we look out for the full year, will have higher volume on relatively lower spreads, and as you point out, that results in higher NII than we thought in January. Manav Ghisalya: Which is a good thing. Rob Reilly: As far as NIM, we might as well cover NIM because someone will ask the question. We saw a nice increase in the first quarter relative to our expectations. We still expect to go above 3% in the second half. As you pointed out, we are at 2.95%, so if we are going to be above 3% in the second half, you can do the math in between. Most of the expansion is still coming from the fixed-rate asset repricing. That continues to be very strong. Manav Ghisalya: That is great color. Thank you. Operator: Thank you. Our next questions come from the line of John Pancari with Evercore. Please proceed with your questions. John Pancari: Good morning. Bill Demchak: Morning, John. John Pancari: On the fee side, I know your capital markets revenues decreased a bit off the particularly solid fourth quarter, particularly on the M&A front. Can you update us on the outlook here in terms of pipelines and how you will be thinking about M&A and your other capital markets revenue, given the current backdrop? Thanks. Rob Reilly: Sure. Harris Williams had a strong quarter in the first quarter. It was off the elevated levels of the fourth quarter but higher than what we expected. The good news is their pipelines are strong. Going into the second quarter, we expect them to be at the levels they were at in the first quarter, which again is more than what we thought. Strong activity there, and that is leading to the guide. In the second quarter, we have capital markets essentially being at the same level, and more importantly, for the full year still up double digits. John Pancari: Got it. Okay, great. And then on the capital front, appreciate the buyback color in terms of the plans for the second quarter. Maybe more broadly, can you talk about capital allocation priorities, and Bill, give us an update on where you stand on M&A interest given the backdrop and regulatory posture to deals? Bill Demchak: Real simply, we like to use our capital on clients and our business. We have increased our buyback given capacity to do so. We have—and you should expect that we will continue to have—healthy dividends. In the ordinary course, we will otherwise be giving back more capital to shareholders than perhaps we have in the last handful of years. The M&A side—the noise and activity levels, forgetting about us, just what I see going on around us—seems to have died down. We are focused on growing our company organically. We have great momentum on that. We keep our eyes open, but I do not think there is going to be a lot of M&A activity, particularly with us. People are happy to do what they want to do, and we are not going to push on a string, nor do we need to. John Pancari: Got it. Thanks, Bill. Appreciate it. Operator: Thank you. Our next questions come from the line of Ken Usdin with Autonomous Research. Please proceed with your questions. Ken Usdin: I was wondering—obviously we see the outlook for costs still intact for the year, and then higher first to second. Can you remind us of the expected conversion of FirstBank and then the magnitude of saves you are expecting and how that cascades to a run rate as you get through the rest of the year? Rob Reilly: Sure, Ken. Our full-year guide holds in terms of expenses up 7%, which includes the operating expenses of FirstBank. Relative to the first quarter, we spent a little less than we expected; that will fall into the second quarter, largely around technology investments and the timing of those investments. On FirstBank itself, everything is going well. We are still planning to convert mid-June. We expect approximately $325 million of integration charges. We will see the decline of their run rate in 2026. There will be some residual integration charges in the second half, but the majority will be completed in the second quarter, which will be about $150 million. That is all in our guidance, on track, and we feel good about it. Ken Usdin: Got it. So then we would assume that the cost saves would run rate by the fourth quarter and then that gives you a good starting point to think about next year? Rob Reilly: That is a good place to start. Ken Usdin: Cool. Great. And Rob, can you dig on that point a little bit? There is a push-off of some spending from first to second. Does that demonstrate the flexibility that you have? Rob Reilly: We of course have flexibility, but that was not what drove it. It was just timing. Some items slipped into the second quarter versus what was planned for the last couple weeks of the first quarter. Nothing major. Ken Usdin: Okay. Got it. Thanks a lot. Operator: Thank you. Our next questions come from the line of David Schieterini with Jefferies. Please proceed with your questions. David Schieterini: Hi, thanks for taking the question. On deposit pricing competition, are there any differences in competitiveness by geography in your footprint? Rob Reilly: Not really. Bill Demchak: In a retail memo, there were comments on the Midwest being tight with high promo offers by a few competitors. But it depends—some parts of the country people are doing big promo CDs, in other parts, they are focused on money market funds. People are fighting for deposits, and people are fighting for clients. Rob Reilly: Not particularly harder in any geography. David Schieterini: That is fair. It sounds like it is mostly stable, so that is good. Shifting to the loan side, can you talk about borrower sentiment, pipelines, and competitiveness on the loan pricing front? Rob Reilly: The quarter was really strong. It is always competitive. As I said, our new production was skewed toward higher credit quality, lower spread, and the pipelines look strong—a continuation of that into the second quarter. Bill Demchak: The only thing we have really seen on spread widening is in leveraged lending. We do not do much of that. In business credit, we have seen spreads move. Our partnership with TCW on cash flow lending—those spreads have gapped 50 basis points on new production because of the scare around what is going on in the process. Rob Reilly: The other thing to mention around loans is that we reached the inflection point on our commercial real estate balances, which we called for in 2026. As you know, that has been a headwind for a number of quarters, and we have reached that inflection point as we expected. David Schieterini: Great. Thank you. Operator: Thank you. Our next questions come from the line of Chris McGratty with KBW. Please proceed with your questions. Chris McGratty: Great. Good morning. Rob, you talked a lot about your confidence in the credit of the private credit portfolio and NDFI lending. Where would that rank in the wall of worry within the company? It seems like the market is, to your point, overestimating the loss content. Where in the risk curve does that live? Bill Demchak: It is not even on the curve. If you go through that whole bucket, the riskiest piece in the whole thing is that little $5 billion slice that is to REITs, leasing, and this and that. A AAA CLO senior tranche—static maturity—to my memory, there has never been a loss in the history of the product. The BDC exposure is really small. Even if that whole market blows up, which I do not think it is going to, that just causes that product to early amortize. You would have to have massive corporate defaults at low recovery rates to ever get hit on that. Remember when we highlighted our real estate book—we said we were worried about office, we are through it, we reserved a lot of it. This NDFI stuff is not even on the page of what we are looking at. It is nothing. It is a great business. It does not worry me. I worry about trucking companies, and I worry about people who are dependent on fuel and what is going to happen to discretionary spending. This is not in that list. Rob Reilly: Just as a follow-up, that real estate piece that you pointed to—that is the most risk—is still very little risk. That is on a relative basis. I think we had one loss back in 2014 in that category, and we are still talking about it. Bill Demchak: I get that the end of the market has seen liquidity events in a small slice of what is private credit, and it has scared everybody. Rob Reilly: Because a lot of people focus on that category of business credit intermediaries. The vast majority of ours are trade securitizations, so people sometimes mistakenly call that whole category private credit, and for us it is quite the opposite. Bill Demchak: To hammer on this point—way back in the financial crisis when corporate receivable securitizations used to be done through CP, it all stopped with the reversal at money funds. A handful of us started doing it on balance sheet. Really high credit quality, not a great spread, great return on economic risk, kind of lousy return on liquidity, decent return on regulatory capital. We are by far the market leader in it, and that is what is blowing up that category for us when you look at comparisons of how much we have in the book. But it is not risky. It is a great business and we are going to keep doing it, and we are going to have some conversations with the regulators on the uselessness of what they have defined as NDFIs. Chris McGratty: Great color. Thank you. Just my follow-up: the $350 million you talked about as the savings. I am interested beyond this year—you have the cost savings from this program and also the FirstBank deal. Is there more potential to cut costs as you couple of years go by, as the narrative around AI and technology investments evolves? Is there another benefit that yields? Bill Demchak: Yes is the short answer. I do not know that it is a standout structural change in the efficiency of banks in the sense that we have been automating for years and have largely kept our headcount flat as we doubled or tripled the size of the company. That continues. AI allows that to continue. Maybe it accelerates through time. Maybe you can establish a competitive advantage early on and be a leader in it, but everybody is eventually going to catch up and get to a place where banking follows the same trend we have been on forever and ever. The winner is going to be the low-cost provider of really good products with trust behind it. We are going to squeeze costs out of the production of what we offer to customers. You are going to need to do that to win in a consolidated industry. Rob Reilly: But that is likely over multiple years. For 2026, our continuous improvement $350 million of savings is part of our guide, which is up 7%. Operator: Thank you. Our next questions come from the line of Matt O'Connor with Deutsche Bank. Please proceed with your question. Matt O'Connor: Good morning. Can you talk about your interest rate position right now and how you are thinking about hedging? I feel like the best hedges are put on when the market does not really know where rates might go, which is kind of where we are right now. Where are you right now, and what are you more concerned about protecting—downside or upside? Bill Demchak: Sort of technical answer: we are basically economic value of capital flat—duration is zero in our equity. We are flat to overall rate movement inside of our balance sheet. Having said that, we have continued the process, as you have seen us do last year and this year, of locking in forward curve rates, particularly when we see some volatility to the upside in the belly of the curve. We have done that and it gives us greater certainty around some of our comments for 2026, but even 2027 and into 2028 as we lock down some of these rates. So neutral in 2026 and looking to lock in some in 2027 and 2028 similar to what we did last year. Rob Reilly: Yes. Bill Demchak: Part of this discussion, of course, is do not confuse that—we are going to have really good NII trajectory for the next couple of years. We are going to do that despite being flat total rate exposure, which means we are not trading our future five years out for the ability to produce really strong NII in the first couple of years. Matt O'Connor: That is helpful. Specifically within some of these MSR hedges, residential and commercial—I understand this is not the broader interest rate risk management—but anything to read through there? You have had pretty strong net gains the last several quarters, and this time it was more offsetting. Anything interesting to point out there? Bill Demchak: We got chopped up. That is a massively negative convexity book and you are short options every which way you try to hedge it, and realized vol was way higher than implied. As we tried to hedge out that risk, we got chopped up. It happens, and you are exposed to it anytime you have rate swings as aggressively as we saw in the first quarter around some of the news. Through time, that tends to be an income-producing line item for us—usually we are plus, I do not know, $10 million. It is not a driver, to your point. We just got chopped this quarter. Rob Reilly: This quarter, the heightened rate volatility was the driver of an unusually large negative for us. Bill Demchak: But it was not like anybody screwed up. It was not a trading thing. Literally, realized volatility was higher than what was implied. Anything that has optionality in it gets hurt in that environment. Matt O'Connor: Okay. I realize the residential and commercial essentially offset each other, so that is not too bad getting chopped up. Operator: Thank you. Our next questions come from the line of Mike Mayo with Wells Fargo. Please proceed with your questions. Mike Mayo: To the extent that RWA with Basel III might be 10% less, how would you plan to use that extra capital, and when might you start leaning into using more capital—or maybe you are doing so already? Clearly, you are leaning into using capital with the loan growth that you had and expect. But maybe more buybacks, a deal—how do you think about using that excess capital and when? Thanks. Bill Demchak: It is down the road. We have increased our buyback. We have seen good deployment to our growth in the franchise. We will see when this gets approved and done after comments, and then it will be a whole new environment and we will figure out what we do at that point in time. It is a nice problem to have. We are going to drop a point of capital into our pocket. We will figure it out when it shows up. Mike Mayo: How do you see competition? It seems like the industry is all playing offense. You have been growing unused commitments, and that is playing out to a certain degree. You have already been competing, but others are coming back more in force. How do you see competition generally, especially with regard to loan growth? How are you getting so much more loan growth than the industry? To what degree are you competing on price? It just seems like everyone has excess capital and in those situations historically you have seen competition swing a little too far. Bill Demchak: That is not our story. We are bringing all these new markets online. We have more shots on goal. We are seeing more opportunities as opposed to trying to rebid the same deal I have been in for 22 years in our local market. That is a big part of it, and that is why when we went through the Southeast, now it is accelerating—BBVA and FirstBank markets. The other issue is we have much more specialty lending—do not read that as high risk—but we are in a lot of lending products that are not commodity capital. Whether it is our corporate receivables business or asset-based lending or equipment finance, we are in a lot of things that are not simply throwing money out as a generic good. At the margin, that always helps us outperform. Rob Reilly: The other piece is the expansion of the new markets—what we call our expansion markets—for our market-based corporate loans. Our national businesses aside, they are now more than half our loans and growing at twice the pace. That is a big driver. Mike Mayo: I missed what you said there. What is half your loans? Rob Reilly: More than 51% of our market-based loans. We have national businesses that are not market-based, but in all the markets that we have entered within the last 12 years, half of our corporate loans are in those markets. Mike Mayo: That is interesting. And what was that percentage a few years ago? Rob Reilly: I do not have it, but it probably started in the 30s, depending on where you are. Mike Mayo: And it is growing at two times the rate. Generally speaking, do you want to call out any of the expansion markets as being stronger than others? Rob Reilly: We have done very well in the Southeast, where we have been the longest. With the Southwest—Texas and California, Colorado now—we are online there. California has been, in some ways, shockingly strong. Bill Demchak: It is a target-rich environment. The amount of commercial middle market clients within the ZIP codes of California—great clients, great fee. And we have not done this by just doing loans. Our fee income percentage in these new markets is actually equal to or higher than our legacy markets. It is not like we are running out throwing money at people. It is an integrated relationship. We are really good at it, and we are growing. Mike Mayo: That is helpful. Thank you. Operator: Thank you. Our next questions come from the line of Gerard Cassidy with RBC Capital Markets. Please proceed with your questions. Gerard Cassidy: Hi, Bill. Hi, Rob. Bill, on your comments about the focus on organic growth, can you share an update? I think at the BAP Conference in November, Robin Gunner gave details about the retail expansion you are undertaking. How is that going? What are you learning from the process? Are you pleased with the pace? Bill Demchak: I am chuckling because Alex is going to be amused that his older brother gave the presentation. First of all, it is working. What have we learned? It is actually hard to build 60 or 100 branches a year. The site location, the teams that you need in each market to pull this off—we have created a production factory around it. We have learned a lot about how to create a massive buzz around a new branch opening, particularly when we are trying to get our fair share in a newer market where we are building a lot of branches. We have not leaned into pricing to attract new customers necessarily, which is an accelerant if we want to use it. But they are working really well. Gerard Cassidy: On the metrics, have you crystallized what you need in deposits or the type of deposits to bring a branch up to breakeven, and how long does it take to reach that point? Rob Reilly: Everything is on track, Gerard, and as Alex pointed out back in November, we pencil in three years to get to breakeven. We are running a little better than that right now. Everything is on plan and we are excited about it. Gerard Cassidy: Pivoting away from this growth, there has been a change in the leveraged lending guidelines by the FDIC and OCC. Have you been able to optimize any of your lending now that these restrictions went away in December? Are you seeing benefits where you are winning new business because you have more flexibility? Bill Demchak: Most of our struggle with that was that it was capturing business we were going to do anyway because it was really good business and they just had the definition wrong. Maybe at the margin we have seen some acceleration, but mostly it opened the window for banks to do good, smart business and not try to write a four-paragraph description of what is a good or a bad loan, which you just cannot do today. Gerard Cassidy: Very good. Operator: Thank you. Our next questions come from the line of Erika Najarian with UBS. Please proceed with your questions. Erika Najarian: Hi, good morning. A few quick follow-ups. Bill and Rob, I know you were asked a lot about the deposit opportunity. Just pulling up—if the Fed does not cut this year, how do you think deposit costs behave? Do you think that you could hold the line on deposit costs if the Fed does not cut? Rob Reilly: Yes. If the Fed does not cut, which is our expectation, deposit costs are fairly steady through the second quarter and then, by our estimates, maybe go up 1 or 2 basis points. Generally speaking, the pressure up is not from competition but rather repricing back book as things roll—back book customers to a closer-to-market level—which at the margin will cause our deposit cost to go up over the next period if the Fed does not move. It is all in our guidance, it is not material, and we will still hit the 3% NIM. That back book repricing is a dynamic that has been in place for a while; that is not new. There is obviously a risk if loan growth continues to exceed and there is pressure on those deposits, but that would be a good thing. Erika Najarian: Got it. Finally, one of your peers, David Solomon, talked about widening spreads in certain pockets of NDFI lending. Are you observing similar spread expansion in certain NDFI-type credits? Bill Demchak: Inside of NDFIs, the spot everybody is focused on is private credit. Inside of our bucket, the $7 billion is 90% CLOs. AAA tranches I imagine have widened. Facilities to BDCs are going to widen as the fear factor steps in. We have like $500 million—even less—of BDC exposure. The odds of me figuring out that there is a spread movement in there is unlikely because we are huge in the trade receivables flow business. Erika Najarian: Got it. Perfect. Thank you. Operator: Thank you. Our next questions come from the line of John McDonald with Truist. Please proceed with your questions. John McDonald: Hi, thanks. Good morning. Rob, as loan growth is picking up here, your reserve ratios look solid, but any need to start to provide a little for loan growth as we look ahead? Rob Reilly: That will be part of it. If you take a look at our provision increase quarter over quarter, that was largely driven by the loan growth we saw. That comes along with loan growth. These tend to be higher credit quality, so it is not as much, but I would expect provision expense to go up with the growth amount. John McDonald: On ROTCE, any updated thoughts? I think you talked earlier about exiting the year at kind of an 18% ROTCE heading higher next year. Any updates there? Rob Reilly: Same as what we said back in January. We finished 2025 at approximately 18% ROTCE—that was elevated a little by the tax reserve release in the quarter. We said, and still believe, we are going to go down during 2026 because of the FirstBank acquisition and the impact on that. Then when we deliver everything that we intend to deliver in 2026 along our guidance, we will be back to approximately 18% in the fourth quarter of 2026. The important part is we would expect to drift higher as we go into 2027. That is still the plan. John McDonald: Got it. And that is a function of operating leverage and growth next year in terms of moving higher? Rob Reilly: That is right. You bet. Operator: Thank you. We have reached the end of our question and answer session. With that, I would like to turn the floor back over to Bryan Gill for closing comments. Bryan Gill: Thank you all for joining our call today and for your interest in The PNC Financial Services Group, Inc. Please feel free to reach out to the IR team if you have any additional questions. Operator: Ladies and gentlemen, thank you. That does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time and enjoy the rest of your day.
Operator: Good morning. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Equity Bancshares, Inc. 2026 First Quarter Earnings Conference Call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star key followed by the number 1. If you would like to withdraw your question, press star 1 again. At this time, I would like to turn the conference over to Brian Katzfey, Vice President, Corporate Development and Investor Relations. Please go ahead. Brian Katzfey: Good morning. Welcome, everyone, and thank you for joining Equity Bancshares, Inc.'s first quarter earnings call. A quick note before we dive in. Today's call is being recorded and is available via webcast at investor.equitybank.com with our earnings release and presentation materials. Today's presentation contains forward-looking statements, which are subject to certain risks, uncertainties, and other factors that could cause actual results to differ materially from those discussed. After the presentation, we will open the floor for questions and further discussion. Thank you for being here with us today. We have a lot of exciting news to share. Joining me are Rick Sems, our bank CEO, and Chris Navratil, our CFO. With that, let me turn the call over to our Chairman and CEO, Brad Elliott. Brad Elliott: We hit the ground running in 2026, welcoming new customers and team members in Nebraska on January 1. Entering the Nebraska market has been a strategic priority for us, and I could not be more excited about what we will accomplish for the communities we now have the privilege to serve. The Frontier acquisition drove a 20% increase in assets and contributed to record quarterly revenue. It will be a great organic driver setting us up for an exceptional 2026 and beyond. As we grow the teams in Nebraska, as we have been growing the teams throughout our entire footprint, this is going to be a great strategic platform for us to grow organically. In February, we completed the Frontier core system conversion on time and on plan. The ability of our team to align vendors, allocate resources, and execute complex integrations is a genuine competitive advantage. Julie Huber, David Pass, and every team member who worked with them and made this possible, I want to say thank you. As reflected in the year-over-year changes, we have accomplished a great deal over the past twelve months. Compared to March 2025, our asset base has grown by more than 40%. While driving that level of growth through strategic acquisitions, we have grown tangible book value per share by 5% and just posted a quarter with core EPS of $1.32 and a core return on average tangible equity of 16.1%, exceeding the same period of 2025 by 324 and 6%, respectively. Core net income for the quarter grew faster than model expectations for the combined company. When you put this with less tangible book value dilution than we expected, the result is an exceptional start to 2026. Having added Oklahoma City, Omaha, Lincoln, Des Moines, and many other exceptional community markets to our legacy markets, we are positioned to continue to provide exceptional shareholder returns. Beyond merger-driven momentum, our bankers entered 2026 with purpose and energy, focused on our mission: creating opportunities for growth, rolling out new products and processes to better serve our communities, staying laser focused on delivering outstanding returns, and driving a more efficient company. Serving our customers is the core of what we do, and we never lose sight of it. We are leveraging technology and continuously monitoring performance to ensure we are meeting the needs of every customer who relies on us. In the first quarter, we opened a record number of DDA accounts as a result of our retail teams, led by Jonathan Root, prioritizing customer needs and delivering differentiated, exceptional service. We began 2026 with a larger, stronger balance sheet and earnings that meet even our own expectations. We are deploying capital with conviction, driving toward our mission of being a premier community bank in our market while delivering exceptional returns for our shareholders. The market is competitive, but our value proposition is intact, and our balance sheet gives us the runway to execute. Capital is strong, capital generation capacity is at an all-time high, and we remain confident in our $5 per share target for 2026. Our board, leadership, and team are aligned for continued growth. We are operating at a high level as the additional opportunities on the horizon come into view, and I am very excited about what lies ahead. Now let me hand it over to Chris to walk you through the numbers. Chris Navratil: Last night, we reported net income of $17 million, or $0.80 per diluted share. Adjusting for noncore items in the quarter, including merger expense of $5.7 million and Frontier-related provisioning of $6.1 million, adjusted earnings were $26.2 million, or $1.23 per diluted share, up from adjusted earnings of $23.3 million, or $1.21 per diluted share, in the prior quarter. Purchase accounting accretion on the loan portfolio was $3.3 million in the current period, compared to $2.3 million in Q4 2025. Excluding the after-tax impact of core deposit intangible amortization of $1.5 million and $1.0 million, respectively, adjusted earnings on tangible common equity were $27.7 million versus $24.3 million. Adjusted return on average tangible common equity was a strong 16.1% for the quarter. Net interest income was $73.7 million, up $10.2 million linked quarter. Margin came in at 4.33% versus 4.47% last quarter. That dynamic—higher earnings, slightly lower margin—reflects the expected impact of integrating Frontier's balance sheet. Purchase accounting accretion came in $800 thousand ahead of forecast. Normalizing for that, margin would have been 4.29%, right in line with expectations. Noninterest income held steady at $9.5 million. Expanding fee lines, including debit card, credit card, mortgage, insurance, and trust and wealth, offset declines in securities transaction losses and swap fee revenue for the period. Noninterest expenses for the quarter were $55 million. Adjusting for M&A charges in both periods and the prior period's litigation settlement accrual, noninterest expenses were $49.2 million versus $44.1 million, an 11.5% increase linked quarter driven by the Frontier integration. On a normalized basis, adjusted noninterest expense as a percentage of average assets improved 25 basis points to 2.57%. Pretax pre-provision net revenue, excluding M&A costs and $748 thousand in provisioning for unfunded commitments, was $34.7 million, or $1.63 per share, up from $28.8 million, or $1.56 per share, in the prior quarter. Comparing to the same period in 2025, the ratio has improved from $1.23 per share, or 33.1%. The effective tax rate for the quarter was 23.7%, impacted by periodic items not expected to recur; we continue to forecast a full-year effective rate of 22% to 23%. Our GAAP net income included a $6 million provision for loan losses attributable to loan balances added through the Frontier acquisition. Ending ACL coverage was 1.18%. The ending reserve ratio, inclusive of merger-related discounts, closed at 1.77%, up from 1.67%. During the quarter, we were active under our repurchase authorization, buying back 500 thousand shares at a weighted average cost of $44.74. A total of 327 thousand 662 shares remain under the board's September 2025 authorization. TCE closed the quarter at 9%, while CET1 and total capital were 11.5% and 14.4%, respectively. At the bank level, the TCE ratio closed at 9.8%. Now let me hand it to Rick to walk through asset quality. Rick Sems: Q1 delivered strong underlying credit. Nonperforming assets closed at $58.3 million, up $11.6 million, primarily attributed to the addition of Frontier. As a percentage of total assets, they moved just three basis points higher to 0.8%. Nonaccrual loans rose similarly to $52.4 million from $40.3 million, again primarily driven by the addition of Frontier assets. Our nonaccrual exposure is granular, with only four relationships exceeding $1.5 million. Charge-offs reflect continued resolution activity on credits we previously flagged. Loans past due and nonaccrual as a percentage of end-of-period loans increased to 1.86% from 1.53% linked quarter. The move is primarily in the 30- to 59-day bucket, concentrated in one acquired market. It is a merger process issue, not a credit issue. These bankers are simply navigating a new renewal process post-conversion. We anticipate full resolution in Q2. We see nothing systematic that would suggest that this becomes the new normal for our portfolio. Net charge-offs annualized were 10 basis points for the quarter as a percentage of average loans, up three basis points linked quarter. Looking ahead, we remain confident in our credit trajectory. Despite macro uncertainty, credit quality trends across our portfolio are stable and running below historic norms. The Frontier portfolio is granular and well underwritten, as evidenced by their track record, and we do not expect a meaningful impact on our credit quality going forward. Chris Navratil: As I mentioned, margin closed the quarter at 4.33%, ahead of expectations. Loan purchase accounting contributed $3.3 million, or 19 basis points, in the period. Absent near-term payoffs on acquired loans, we anticipate purchase accounting normalizing to approximately $2.5 million in future quarters. Adjusting March results for anticipated accretion yields a normalized margin of 4.29%. Frontier contributed a funding portfolio with a higher cost of funds as compared to legacy Equity Bancshares, Inc., improving future liability sensitivity while creating the anticipated near-term margin tightening. The addition of Frontier balances drove average interest-earning asset growth of 22.2%, average interest-bearing liability growth of 25.6%, and the ending interest-bearing liabilities to interest-earning assets ratio of 76.4%. Our loan-to-deposit ratio closed the quarter at 86%. We continue to expect full-year results consistent with our outlook in the slide deck, including margin in the 4.20% to 4.35% range, with periodic variability tied to purchase accounting. Rick Sems: Before I get into loan production, I wanted to take a moment to recognize the extraordinary effort of the Equity Bank team over the last 180 days. This has been a truly transformational period for our company, and it would not have been possible without the best community bankers in the business showing up every single day. As we enter 2026, we operate in six states, including seven major metros and a deep network of strong communities. We have the tools, the products, and the motivated teams to deliver outstanding performance. During Q1, our production teams continued to fire on all cylinders across the footprint. Loan production was $267 million, up 21.7% linked quarter. Originations came on at an average rate of 6.87%, continuing to drive accretion to current coupon yield, with a 10 basis point increase versus the prior period. Both our metro and community legacy markets contributed positively to the production outcome and were net positive for loans in the quarter. As we discussed, the first nine to twelve months following a merger involves intentional portfolio optimization and planned integration-related attrition, a dynamic we have managed proactively. We have recruited and hired new bankers in Wichita, Oklahoma City, Lincoln, and Omaha, and we will keep adding talent across the footprint. The opportunity to deepen commercial relationships—both loans and deposits—across these new markets is significant, and our teams are locked in on growing our organic engine. Our pipelines continue to build throughout the banker network. At quarter end, our 75% pipeline stands at $517 million. Line utilization was up slightly for the quarter at approximately 56%, with unfunded positions rising alongside production growth, and the addition of Frontier creating meaningful opportunity going forward. Total deposits increased approximately $1.2 billion during the quarter. In addition to the contribution of Frontier, the majority of our legacy markets saw growth, as our retail teams continue to gain traction and execute on our aggressive goals. Outside of our administrative and Nebraska cost centers, balances increased $191 million, including more than 5% growth in five of our community markets. I want to specifically call out our North Central Missouri market, including Kirksville, which saw a 7% increase in balances in the quarter. Acquired in 2024, I am excited to see Norman Baylis and his team finding success to kick off the year. Frontier carried brokered funding positions that are now part of our balance sheet. We have a clear, disciplined plan to reprice and replace those with core relationship deposits over time. Noninterest-bearing accounts are 20.2% of total deposits. Our retail teams are off to a terrific start in 2026, opening record levels of DDAs and executing on the company's goal of deepening wallet share and delivering exceptional service. Heading into 2026, we are well positioned to deploy available liquidity and drive growth across our markets. We continue to anticipate mid-single-digit organic loan growth. The addition of NBC and Frontier adds asset generation depth to our footprint while our community markets continue to provide strong funding opportunities. Management and team members are aligned and bought in. I am genuinely excited about what we will deliver in 2026. Brad? Brad Elliott: I take enormous pride in everything this team continues to accomplish. Growing our asset base by more than 40% across two transactions, both fully converted and integrated, is a remarkable achievement that speaks directly to the caliber of our people. I have never been more confident in what we will build together in 2026. We are committed to empowering our people, serving our customers and communities with excellence, and delivering strong, consistent returns for our shareholders. Our board and leadership team are fully aligned, and we are ready to keep executing on our mission. Sourcing, negotiating, and integrating franchise-accretive M&A transactions is a core competency of Equity Bancshares, Inc. Our team has significant experience in this area given the number of transactions we have completed, and I am proud to announce that we are consistently achieving results better than what was expected at the time of announcement. This is a testament to the team's hard work and prudent and realistic modeling assumptions. This outperformance allows us to drive enhanced earnings and shorter tangible book value earnbacks. We fully appreciate the importance of tangible book value growth over time as a key metric for shareholders' performance and are committed to executing M&A transactions that align with our goals. We are putting the right tools, strategies, and people in place to drive both organic and acquisitive growth, and I genuinely believe we are setting ourselves up for sustained long-term success across the entire footprint. Thank you for joining us today. We are happy to take your questions. Operator: Thank you. We will now open the call for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. We will go first to Jeff Rulis at D.A. Davidson. Jeff Rulis: Thanks. Good morning. Just a question on the acquired loan balance. Do you have the Frontier loan balance at acquisition in millions? I know you said $1.3 billion, but also at acquisition and at quarter end, trying to get back into sounds like some decent organic growth. But if you had those Frontier balances, that would be great. Chris Navratil: Yeah, Jeff. It was about $1.28 billion in terms of acquired assets pre-purchase accounting mark. The decline period over period, excluding that—about $40 million we talked about yesterday, and Rick can expand on here—is effectively what we saw in some short-term optimization decline in the Frontier footprint, offset by what is positive production everywhere else in the footprint. So really a good outcome for us in our minds in terms of periodic production, but some of those headwinds exist at the beginning of the integration of that Frontier footprint. Jeff Rulis: But maybe put another way, do you have—it is a combined company as of January 1—but do you have, like, a legacy organic growth that you could also identify, or is that difficult to carve out? Rick Sems: On the loan side specifically, we grew just under 1% in our nonacquired markets—so if you take out Oklahoma and you take out Nebraska—on a point-to-point basis. So just under that, call it roughly 3% to 4% annualized, in those legacy markets on the loan side. Jeff Rulis: Okay. Appreciate it. And then maybe a similar question on the nonaccrual increase. I think roughly $8 million added from Frontier, $4 million from sort of the legacy unit. And maybe if you could put any color on the type of loans that were brought on? And then second piece to that—I think, Rick, you mentioned, sorry, I missed the piece about the—sounded like there was a past due. If you could just outline the balance of that one that was brought on that sounds like it has a quick resolution ahead. Rick Sems: It really was not a single loan. We have one specific market from Nebraska that did not understand how to get renewals done and manage those during that time. Those are all correcting themselves or already have been corrected at this point, Jeff. Brad, what was the balance of those loans? Brad Elliott: It is a little over $30 million. But it is not one loan. It is about 30 or 40 different relationships. Jeff Rulis: Okay. And then maybe last one, if I could. The margin—maybe, Chris, you kind of talked about a 4.29% core. Do you know what that core NIM was for the month of March? It sounds like you have an opportunity to kind of alter Frontier's funding mix a bit, and it sounded more leaning upward than not. But do you have a March figure that would compare to the 4.29% core for the quarter? Chris Navratil: Yeah, Jeff, March actually compares pretty consistently with that 4.29% figure. There are still some potential tailwinds as we look into Q2 and beyond as we are working to reprice some of those Frontier deposits. But that was happening throughout the quarter and really accelerating towards the end of the quarter, so we are not seeing that benefit in March. We will see more of it in April and beyond. The range that is provided in the outlook—I have some optimism that we can hit the high end of that range based on some of those dynamics. But I think because of the periodicity of accretion and the challenges of continuing to work through a balance sheet, there is a risk there as well. So somewhere in that range is fully accomplishable. I think the high end is also accomplishable based on some of those dynamics, but we have to execute on it. Jeff Rulis: Great. Makes sense. Thanks. Operator: We will move next to Adam Kroll at Piper Sandler. Analyst: Hi. I am on for Nathan Race. Good morning, and thanks for taking my question. Maybe starting on funding costs—you know, with deposit costs rising this quarter with the Frontier acquisition, and I know they had a piece of brokered deposits—so I guess I am curious if you could provide some additional color into repricing opportunities you have on the deposit side from both DDA and nonmaturity. Chris Navratil: I think there is an ample amount of repricing capacity. For some color, they had about $100 million that did get repriced in Q1. That was at a weighted average cost of 4.50%. So that is an aspect of their cost of funds that, again, accelerated towards the end of the quarter, that we have been able to reposition into what is comparatively cheaper. Even the newly issued brokered in the period is about 3.75%, so you are picking up 75 basis points on $100 million. They brought in a relatively higher overall cost of funding base, so we will continue to see opportunities to reprice. Some of that did have some duration on it—there is some lockout—so we will continue to have some heavier cost over time, but we are going to continue to see opportunities to bring some of those things down and anticipate being able to do so. Analyst: Got it. I appreciate the color there. Maybe moving to capital management. It is nice to see the step up in the buyback during the quarter, and you have obviously been active on the M&A front with the two deals over the past year. Do you expect to continue to be active on the buyback, and are you seeing opportunities on the M&A front as well? Brad Elliott: We look at capital utilization all the time. Yes, we continue to look opportunistically at buybacks, and we also think we have plenty of capital for continued M&A. We have good capital ratios. We are building capital at a little over $25 million of capital generation a quarter, so we have good capital generation from the operating company. We have different prospects and lots of different opportunities we are talking to on the M&A front, and we will remain active on the buyback side if it works. Analyst: Got it. Thanks for taking my question. Operator: We will go next to Matt Olney at Stephens. Analyst: Wanted to ask more about the expense outlook from here and get some updated thoughts around deal cost savings from Frontier with that conversion now behind us. I am curious how the cost savings are looking compared to the original expectations, and would just love to get some thoughts on when you expect to get the fully loaded cost savings this year. Chris Navratil: A couple of things on that, Matt. On the technology side—the integration as well as some of the people that we maintained through that conversion date—all of those items have been fully taken out of run rate at this point. The cost savings on technology and people are in line with what we expected, and we will start to realize that. We started to realize it at the back end of the first quarter, and we will fully realize it in the second quarter. Generally speaking, as it relates to the cost saves around this transaction, they were relatively conservative—something around 23% on expected cost savings—and I think our execution will realize that or better as we think into Q2 and beyond. So we anticipate being in line to a little bit ahead of where we originally anticipated as we contemplated the transaction. Analyst: And I guess the other part of that is there was a mention about reinvestments, new producer hires—just maybe an update on what you are seeing thus far, new producer hires, and what is in the pipeline? Rick Sems: We have hired probably about 10 additional new bankers between Oklahoma City, Omaha, and Lincoln. Some are replacements and others are adds. All real positive there. The pipeline remains kind of consistent with where it was at the end of the year, and that number really bodes well for second and third quarter. Production numbers look really good. We are seeing a number of additional projects and things that both Brad and I are getting out to see customers and prospects on. It looks like fairly robust opportunities for us. As we have mentioned before, pricing always comes into play on this, and you never count it until it is in. We do have a couple of competitors pricing aggressively on things, but for the most part people are coming back to a little bit more in line with where we are on pricing. So that is positive. That bodes well. Operator: We will take our next question from Damon Del Monte at KBW. Damon Del Monte: Good morning, guys. Hope everybody is doing well. Thanks for taking my questions. Probably for Chris on the reserve and the provision outlook. The reserve came down six basis points quarter over quarter even though there were purchase marks against the acquired loans. Just trying to get a feel for where you are comfortable with where the loan loss reserve can trend over the coming quarters? Chris Navratil: Yeah, Damon, I would look at it as being consistent with where it is on a relative-to-asset basis. As we start to see depletion of those purchase accounting marks and look at the total position relative to the portfolio, there may be opportunity or need to build back up to, call it, a 1.23% type of reserve. But I think in the near term, thinking about it as 1.18% from here plus whatever production is makes sense. My anticipation for need to provide—absent any significant specific reserve items or specific deterioration in credits—is that it is going to account for the production in the portfolio. As we grow the portfolio, so too will we grow the reserve. Damon Del Monte: Okay. So the $6 million to $8 million guidance for 2026 for the total provision—if you back out the one-time CECL impact in the first quarter—we kind of just extrapolate the remaining three quarters to fall in between that range? Chris Navratil: Maybe a little bit less, Damon. I think thinking about it as kind of a $1.5 million to $2 million run rate depending on growth is a good way to continue to think about it. Damon Del Monte: Got it. Okay. That is helpful. And then lastly, on the fee income side of things, can you talk about some of the opportunities to tap into the Frontier franchise and what products and services you think have the best opportunity to ramp up revenues for you? Rick Sems: First and foremost, treasury management. We have brought in a new head of treasury management, and we see that as a real opportunity. That was not something that was really at the forefront of what they were doing. Second, they had a decent-sized mortgage business, and we are continuing to see some potential for mortgage fees going forward. We see that across the footprint—continuing to get the team built out—and we use that as a product for our core customers and for bringing in core customers. We are not really a mortgage shop just to bring in mortgages. Third is wealth management. We are already seeing some real positive results there and being able to grow wealth management. We are looking to add a couple of additional people in our markets. We do really well in the community markets, so in Nebraska—Falls City, Pender, Norfolk, and Madison, where we are—we see those as real opportunities for growth in the future as well. Operator: As a reminder, if you would like to ask a question, press star 1. At this time, we have no further questions. This concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the Gloo Fiscal Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the conference over to Oliver Roll, Chief Marketing and Communications Officer. Please go ahead. Oliver Roll: Thank you, operator. And thank you to all of you for joining our fiscal third quarter 2025 earnings conference call. We will be discussing Gloo's performance for the third quarter ended October 31 2025, as well as providing guidance for the fiscal fourth quarter 2025 and fiscal year 2026. Joining me on today's call are CEO and Co-Founder, Scott Beck, and CFO, Paul Seamon. Our Board Chair and Head of Technology, Pat Gelsinger, will also join the Q&A session. Before we begin, please be reminded that this call will contain forward-looking statements which are based on Gloo's current expectations, but which are subject to risks and uncertainties relating to future events and/or the future financial performance of Gloo. Actual results could differ materially from those anticipated in these forward-looking statements. A discussion of some of the risks that could cause actual results to differ materially from our forward-looking statements can be found in today's press release and elsewhere in our filings with the Securities and Exchange Commission, including our Prospectus dated November 18, 2025 and our subsequent quarterly report on Form 10-Q that we expect to file later this week. Both will be available on Gloo's investor relations website at investors.gloo.com and the SEC's website. In addition, during today's call, we will discuss certain non-GAAP financial measures. Reconciliations of these non-GAAP metrics to the most directly comparable GAAP metrics, as well as the definitions of each measure, their limitations and our rationale for using them, are included in today's press release and in our Form 10-Q. And now, I will turn the call over to Scott. Scott Beck: Thanks Oliver, and thank you all for joining us today, for our first earnings call as a public company. Q3 has been a solid start to this next chapter of our journey. Revenue grew 432% year-over-year, and 101% compared to Q2. This reflects strong demand across our platform and meaningful growth through acquisitions that have strengthened our business and expanded our capabilities. We also delivered sequential adjusted EBITDA improvement. And we expect additional EBITDA improvement in Q4, and we expect the pace of that improvement to accelerate, beginning in Q1 2026. We are executing on our growth plan, and expect revenue in excess of $180 million in fiscal year 2026. Moreover, we are committed to achieving positive adjusted EBITDA by the end of Q4 2026. Because this is our first earnings call as a public company, I'd like to take a few minutes to provide an overview of Gloo, our mission, the value we deliver, and our strategy for long-term growth. Gloo is building the leading technology platform that connects and serves the faith and flourishing ecosystem. This ecosystem is one of the oldest, largest, and most resilient in the world, yet one that remains highly fragmented and significantly underserved by modern technology. Let me briefly describe the two core parts of this ecosystem. You will hear us refer to them often. First, there are churches and frontline organizations, actually there are more than 315,000 churches in the United States and over 100,000 other nonprofits organizations serving people and communities on critical social issues, such as recovery, anti-human trafficking and many more. Second, there are Network Capability Providers, the organizations that develop the tech, content, solutions and services that equip those churches and the frontline practitioners. Importantly, Gloo serves both sides of this ecosystem. The Gloo platform includes technology infrastructure, advertising tech, marketing services, and consulting solutions. Gloo also has a marketplace for churches and ministries. All of this is offered directly by us, and by our subsidiaries, which we refer to as Gloo Capital Partners. Additionally, values-aligned AI capabilities are embedded across the Gloo offerings, ensuring that AI can be harnessed for good, helping people flourish and communities thrive. Our platform benefits from a powerful Flywheel effect. The platform becomes more valuable to churches and frontline leaders every time a new Network Capability Provider joins. And as more churches and frontline leaders engage on the platform, the distribution opportunity becomes more valuable to Network Capability Providers. This mutually reinforcing model strengthens the Network effects and increases the platform stickiness over time. Becoming a public company helps us accelerate this flywheel, giving us greater ability to invest in both organic growth and strategic acquisitions. As we have announced we recently closed two new acquisitions. The first is Igniter, a 15 year old media innovator that serves over 10,000 churches with content and media subscriptions. The second is XRI Global, a leader in AI, delivering advanced voice and language translation tech. I will also note that since our IPO the pipeline and pace of our M&A opportunities has increased. Through acquisitions, we bring the best-in-class Network Capability Providers into Gloo as capital partners which expands our offerings, deepens the value of our platform, and further reinforces the flywheel as we scale. For example, earlier this year we acquired Masterworks, a leading ad tech, marketing and fundraising company. They help organizations grow their impact, accelerate their mission, and deepen donor relationships. Today we are also super excited to announce our definitive agreement to acquire Westfall Gold, a leader in major donor engagement. This latest planned acquisition is another powerful example of our flywheel in action. Westfall Gold will deepen our role in helping organizations build sustainable, mission-aligned funding models. They provide donor development capabilities for non-profit organizations engaging high capacity and high impact donors. They do this with data driven insights and world class donor experiences. This is particularly significant because donor management is the very heart of the faith and flourishing ecosystem. Together with Masterworks, this extends our core competency in the central economic engine of this ecosystem, increasing donations. Masterworks and Westfall Gold with decades of proven success, also create significant cross sell and up sell opportunities with one another, as well as with our Barna and Gloo 360 offerings. We expect the acquisition to contribute approximately $20 million in revenue in fiscal year 2026 and contribute positive 2026 EBITDA as well. We intend to close this transaction before our fiscal year-end on January 31, 2026. Now I'd like to turn to our AI strategy. Gloo is developing vertical-specific, values-aligned AI. It is designed to serve the unique needs of the faith and flourishing ecosystem. As I mentioned earlier, this quarter we expanded our AI capabilities through the acquisition of XRI Global. XRI has pioneered advanced voice AI and multilingual technologies that engage people across thousands of languages, including low-resource languages that most AI models can't serve. This acquisition significantly strengthens our AI stack. It also increases the revenue opportunity for Gloo AI and Gloo 360, a few of our subscription-based enterprise offerings. As we advance these capabilities, we are also building and equipping a broader community of developers to innovate on top of the Gloo platform. The developer response has been strong. This year Gloo AI Hackathon brought together more than 700 developers to create faith-aligned AI applications leveraging our platform. We continue to take a leadership role in shaping AI for good. This includes developing a comprehensive benchmarking framework, so that developers and organizations can measure how the leading large language models perform in accordance with the seven dimensions of human flourishing. Earlier this week, we introduced the Flourishing AI Christian Benchmark, a new tool that provides insight into how various models support the Christian Worldview. Overall we've seen good customer momentum across both sides of the ecosystem, churches and frontline organizations, and the Network Capability Providers who serve them. So far in 2025 we have secured 20 customers that will contribute over $1 million in annual contract revenue, and we expect this pace to accelerate in 2026. Notable engagements include a multi-faceted, multi-year, enterprise-level engagement with American Bible Society for both Gloo 360 and Masterworks. Gloo 360 will support their technology infrastructure to enhance reliability, scalability, and long-term efficiency. Masterworks will serve as their mass fundraising and marketing agency, supporting their brand vision and revenue growth objectives. We are also very excited to announce a new initiative to develop the world's first biblically aligned AI, with YouVersion as a key partner. Working with YouVersion, who recently reached one billion installs across their Family of Bible Apps, we'll ensure this becomes a trusted tool for users worldwide. This will combine machine learning with centuries of biblical wisdom to help people engage with scripture safely, deeply, and accurately. Other customer wins in Q3 include expanded agreements with Biblica, United Way of Greater Atlanta, and Project Rescue. Looking ahead our long-term ambition is to extend our position as the trusted infrastructure for technology-enabled impact across the faith and flourishing ecosystem. We remain committed to harnessing technology for good, so that we can serve those who serve, and through them, more people can flourish and organizations and communities can thrive. Paul will now take you through Q3 results in more detail, cover our guidance for Q4, and provide preliminary growth and profitability metrics for 2026. Paul, over to you. Paul Seamon: Thank you Scott. It's good to be with you for our first earnings call as a public company. Building on the strategic context Scott just shared, I'll walk you through our financial performance for the quarter. This was a solid first quarter as a public company and our results reflect good execution across the business and a significant inflection point for revenue growth. As Scott highlighted demand across both sides of the ecosystem combined with the early impact of our acquisitions, contributed to strong top-line growth. Revenue for the quarter was $32.6 million, an increase of 432%, compared to the same period. Last year, and 101% sequential growth compared to Q2. Year-over-year results were driven by solid organic growth across our portfolio, as well as acquisitions of several Capital Partner businesses, most notably Masterworks and Midwestern. Our Platform revenue includes advertising, marketplace and subscription offerings. Platform revenue totaled $19.8 million, an increase of $13.7 million from Q3 of last year, and 127% sequential growth. Much of this growth was driven by advertising revenue from Masterworks as new clients signed in Q2, fully ramped in Q3. This reflects the strong go-to-market execution referenced earlier. During the quarter, we also closed the acquisition of Igniter, which had a small impact on revenue in the quarter. Going forward, Igniter's subscription media products will primarily contribute to Platform revenue and align well with the broader platform strategy Scott described. Our Platform Solutions revenue includes technology, consulting and marketing services, primarily delivered by our Capital Partners, Masterworks, Midwestern and Servant. Platform. Solutions revenue was $12.7 million, up 71% sequentially, supported by strong performance from both Masterworks and Midwestern. Masterworks experienced a shift in timing, with some revenue typically associated with the fourth quarter taking place in the third quarter. Midwestern continues to see strong demand for development services and is expanding its sales capacity to meet that interest. As a reminder, Masterworks provides advertising offerings reported in Platform revenue and marketing and consulting services reported in Platform Solutions revenue. Midwestern provides technology consulting, also reported in Platform Solutions. Cost of revenue was 76%, an improvement from 81% in the prior year period. The improvement was due to increases in Subscription revenue and Platform Solutions revenue which carry higher margins, partially offset by the shift of revenue timing at Masterworks, affecting the quarter's margin mix. We see clear visibility to cost of revenue declining to below 50% over time. Adjusted EBITDA improved sequentially at negative $19.2 million, a [ $500 thousand ] improvement from Q2. This improvement reflects incremental gains across nearly all our Capital Partners. As a reminder, our adjusted EBITDA calculation includes expenses associated with acquisitions that other companies may consider one time in nature. As of October 31st, 2025, we had $15.1 million of cash and cash equivalents. Our November IPO added approximately $72.3 million after underwriting discounts and expenses, significantly strengthening our balance sheet and converting the significant majority of our debt to equity. I'd like to now turn to our Q4 2025 outlook. We expect revenue to be between $28 million and $30 million. This represents a more than tripling revenue growth year-over-year. Our fourth quarter guidance assumes continued strong demand across the platform, partially offset by the shift in Masterworks timing I mentioned earlier, and the normal slower December and January seasonality in this ecosystem. For Q4, adjusted EBITDA loss is expected to be between negative $19.5 million and negative $18.5 million, reflecting continued cost discipline. Westfall, which is expected to close in early 2026, is an adjusted EBITDA positive business and will play a positive role in our path to profitability. As a business in excess of $20 million in revenue, we expect a modest revenue contribution in Q4 with minimal EBITDA effect. As Scott noted, Westfall is a strategic fit for the platform given the critical importance of donor management to the faith and flourishing ecosystem. For Q4, we expect a weighted average share count of approximately 66 million shares normalizing to approximately 81 million shares in Q1 following the IPO, debt conversion, and recent M&A issuance. Importantly, $143.1 million of debt converted into equity, which left us with approximately $36.7 million of debt on the balance sheet. $17.0 million of this is owner financing from several acquisitions, $12.9 million is senior secured notes that did not convert as part of the IPO, and the remainder is from other notes payables. This significant reduction will meaningfully reduce interest expense moving forward. As part of this successful debt conversion related to the IPO, we incurred a number of meaningful non-routine direct and non-cash expenses totalling $11.2 million, that do not continue after the IPO. These charges are adjusted out of our non-GAAP net loss attributable to members of $26.7 million. Additionally, $12.3 million of non-routine, non-cash financing matters are reflected as deductions attributable to members. The combination of these two sets of non-routine costs results in a non-GAAP net loss of $39.0 million available to stockholders. This amount available is used to calculate non-GAAP loss per unit, which is negative $4.71 for Q3. Looking ahead, our financial approach is focused on building a scalable business by expanding our core offerings, integrating strategic acquisitions, and managing costs responsibly. With significant foundational investments already made, we believe we can now leverage our cost base more effectively to grow the top-line and improve profitability. We are experiencing an exciting financial turning point for the company and are issuing early guidance for 2026 to provide investors with a roadmap for our growth. We expect to nearly double revenue in 2026 to over $180 million. We are experiencing strong organic growth across the Gloo platform, including Gloo 360 and other offerings. We are also assuming that $40 million of the $180 million will come from incremental acquisitions. Our acquisition of Westfall contributes approximately $20 million of that $40 million. We have a robust and actionable M&A pipeline and expect M&A to be front half weighted next year. Additionally, we are firmly committed to achieving positive Adjusted EBITDA profitability in Q4 2026 and expect meaningful sequential improvement in Adjusted EBITDA to begin in Q1 2026 as cost savings actions combined with revenue growth will begin to flow through at that point. With that, I will turn the call back to Scott for some closing comments. Scott Beck: Thank you, Paul. Let me close by saying thank you to our team, our partners, our investors, and all the organizations and the people that we serve. Together, we've spent more than a decade laying the groundwork for Gloo, investing heavily in our technology, our partnerships, and our mission. Q3 marks a key inflection point in our business. We're now continuing this hockey-stick growth phase that we've been building toward, setting us up for a very strong 2026. Our goal is simple, to build a large, profitable, mission-driven company that serves those who serve and the Faith and Flourishing ecosystem so that these organizations can scale and thrive and the people that they serve can flourish, and we're doing this for the decades that are ahead. You have our commitment that we will execute with discipline. We will communicate transparently, and deliver on doing what we say we're going to do. Over to you, operator for Q&A. Operator: [Operator Instructions] Our first question for the day will be coming from Richard Baldry of ROTH Capital. Richard Baldry: Congrats on a great quarter. You essentially hit my 6-month out revenue target, so it makes life a little easier. I want to start with the more than 20 customers that should ramp to be over $1 million in annual contract value each. Can you walk through what they're buying? Are they multiproduct, multiservice buys? Or are they large scale within one of the offerings? Sort of where those buckets are coming in because that's obviously a good driver, an important driver of your organic growth. Scott Beck: Thank you, Rich. This is Scott Beck. It comes from a couple of different areas. Obviously, our Gloo 360 offering is a very significant offering to be able to bring advanced technologies to take over the infrastructure for many of these ministries and organizations that just have a hard time keeping up with that. In many instances, they can be decades behind and our ability to come in and to now be able to provide next-generation AI-powered infrastructures is a very significant driver of this. But in addition to that, we also got a lot of that from the Masterworks side where we've got major agreements and relationships as we're basically helping them develop from a donor standpoint, helping those organizations be able to reach more people, be able to get them powering the different organizations that they serve with greater donor engagement. We talked about earlier, a good example of that being ABS, American Bible Society, which we're working with on both the Gloo 360 side as well as on the Masterwork side. So those things are significant contributions as well. In addition, one other area, Rich, would be what we're doing with Midwestern. Midwestern has been a great partner of ours, being able to bring next-generation technologies, leveraging our platform to be able to build tech for other businesses and other ministries in this ecosystem. So I keep going and the pipeline is really strong as we look at 2026, but we're super excited and to be able to be delivering at scale, important technologies to the space and human flourishing ecosystem with many customers in excess of $1 million for the year. Richard Baldry: And maybe drilling underneath that a little bit, can you talk about what the factors are that gate how quickly those turn from deals to revenue? Sort of what pace is that are they all sort of similar or some that ramp quickly, some that take a little more time, so we get sort of an idea of our backdrop to how quickly those impact organic growth? Patrick Gelsinger: Yes. This is Pat, and I'll give a little bit of color on that. And what we've seen is an acceleration of those opportunities this year. And we're definitely seeing some of these deals now that we have solid proof points across different categories. For instance, in the bible translation category, the ADS example that we gave, where we had very [indiscernible] earlier in the year. So that's caused acceleration to other bible translators. We have multiple in the campus state area. So we've seen acceleration in that category. We've now seen the university segment is now turning on and accelerating as well. So as we see the first proof points, we're able then to see acceleration for the subsequent closures. So I would say that everything that we're indicating is that the sales pipeline is robust, growing and closing faster than we would have expected. And the results that we already are seeing this quarter would be indicative of that accelerating pipeline. Richard Baldry: Got it. And I'll just ask one more, as I don't want to hog the call too much. But with the pace of growth, you're doubling revenue sequentially. Obviously, acquisitions have been important to that. And the pace has been fast enough that I don't think anyone thinks you should have realized all your synergies out of that yet. Can you talk about just how much in synergy realization you should be able to see going forward from what you've put together, sort of how far along you are maybe ones that you've done a year ago versus ones that are just about to close? Just so we get an idea for how big a driver that can be of your move to adjusted EBITDA positive? Patrick Gelsinger: It is a factor for us next year as we look at our drive to profitability next year and accelerating quarter-by-quarter improvements in EBITDA next year, the synergy realizations across the acquisitions that we've done, but also our current core businesses become an increasing important role in accomplishing that EBITDA. Now that we have a solid platform in place, offerings like 360 in place, we're seeing the acceleration in those benefits. But it is an area of cost discipline that we have to put in place across everything that we're doing. Those efforts are already underway as we would say, and thus we have confidence in the next year because we've already initiated quite a number of those synergy realization and cost improvements. So we think we're quite good for those. They're accelerating. You'll see those showing up somewhat next quarter, but on an accelerated basis in Q1 and beyond. Scott Beck: I would add that the synergies both on the cost side as well as we were pointing out on the revenue side. Those revenue side synergies are super important. One of the things that we're so excited about, that's going on with Midwestern and what's happened there with MasterWorks, all of those basically create channel and partnership and synergy on the revenue side, which is also super important to accomplishing that Rich. Operator: And our next question will be coming from the line of Yun Kim of Loop Capital Markets. Yun Suk Kim: All right. Scott, Pat, Paul, first, super congrats on a strong first quarter out of the gate. Scott, if you can give us some update on what type of investments you are making in regard to your Gloo 360 business in terms of both sales, headcount growth and overall service delivery capability? Scott Beck: Sure. Thanks for the question. Pat, why don't you give us your perspective on the investment in Gloo 360 and [indiscernible] is that. Yes. And [indiscernible] for it, it really fits into 3 different dimensions. One is sales capacity, as you suggest, and we are ramping up our sales force and that is giving us more capacity to reach more segments, that hiring is underway. We're able to find very good candidates who have proven records in sales, software sales, enterprise software that want to join a faith and values-based organization like Gloo. So we're ramping up the sales capacity. Second, many of the Gloo 360 customers, we are taking on their staff. So immediately, we get the infusion of their talent, which we're rightsizing, upskilling and being able to add to our focus of resources for delivery. And then third is very targeted capabilities in areas like specific staff application, specific areas like security and IT services, but maybe most importantly, augmenting for AI and agentic capability that allow us to bring more margin to those relationships. So across that full set of capabilities, we're adding talent and seeing a very wide market for 360. But I'd also emphasize that it's not just 360 proper, but when we have a beachhead of 360, we're able to deliver AI services. We have the opportunity to become their marketing partner with Masterworks. And in many cases, the teams that we have at service and Midwestern become the project teams but also are being further as a result of those relationships. So we see those 360 or enterprise relationships really being the beachhead for us to be able to service the network providers at scale across the full value proposition of Gloo. Yun Suk Kim: Okay. Great. And given that the sales cycle related to Gloo 360 is probably fairly long given the size of those deals, should we expect a typical seasonal back-end loaded kind of linearity for next year 2026 in terms of overall booking performance where majority of the bookings could happen more likely in the second half of the year? Patrick Gelsinger: Actually, the behavior that we're seeing is not the we are seeing the acceleration in the pipeline and the acceleration of deal closure for 360. So while exactly the characteristics that I would have expected is what you described, we're not seeing that. Once you have proof points in the category, we're seeing the category sales occur quickly, and we're seeing the ability then for those accounts to come on board on an accelerated basis. So I think you're going to see nice quarter-by-quarter improvements in our revenue and in our EBIT contribution as a result of those accounts. And I'd also say that just emphasizes the value that Gloo brings to this ecosystem. They have technology gaps. They have deep needs for capabilities and our ability to now have improvement cases like the ABS example that American Bible Society, example that we gave on the call is an evidence that we have capabilities that are desperately needed, desired and accelerating this ecosystem. Yun Suk Kim: Okay. And then one last question for me. Pat, in regard to the overall AI efforts, obviously, there's a lot of talk about a capacity issue in the market. Are you running into any capacity issue? And if you are, what are the steps you're taking to minimize that impact? Patrick Gelsinger: Overall, our AI [indiscernible] at scale yet that we're hitting any of those capacity issues. However, we do see one of our opportunities to be the values aligned provider to the ecosystem, build the cost structure and scale, which is the question that you're really asking, and we're making sure that we're building all 3 of those. We're going to build a great platform. We have a leading-edge capability. We have values aligned with capacity and cost to serve this ecosystem, and we're planning carefully to make sure we have enough capacity in '26 and beyond to satisfy the ecosystem requirements. So a very active topic. But so far, we don't see any constraints in our ability to deliver. Operator: And our next question will be coming from the line of Jason Kreyer of Craig-Hallum. Jason Kreyer: Wonderful. Great quarter. So I want to go back to the $20 million customers. As you look across the platform today, how many customers that you are currently engaged with have the potential to be $1 million customers? Patrick Gelsinger: Yes, great question. I mean we've been working, as you know, in this ecosystem for over a decade. And those relationships run substantially deep. When you look at our pipeline, our pipeline includes a lot of those long-term relationships, people that we've been working with as well as a lot of current customers. So I think from our perspective, it's a pretty unbelievably large set of potential customers and current customers that can scale to over $1 million. Now if you remember, we've got 2 sides of this ecosystem that we serve, right? One side are the churches and the frontline organizations. That's not where we're going to see $1 million customers. That's where we're being able to scale. We're adding paying customers over there at scale, super excited and happy with that growth rate. But that's not where your $1 million customers come from. Your million customers come from the Network Capability Providers, right? The folks that are basically out there providing services like Westfall Gold or MasterWorks itself, the organizations that are the not-for-profit on the front line, whether it's the campus ministries, whether it's the child development organization, the different bible translation organization on and on and on. So when you look at that as well as combining that with the customer base that Midwestern has got, the current customer base that 360 is working against, we see a very, very significant customer base opportunity in million plus. Scott Beck: I would just add 2 other quick points. One is you measure the [indiscernible] available for those network capability providers. They are in the $60 billion range. So this is a very large market with tens of thousands of brands in that segment. So we see that there's just many customers for us to reach for it. I'd also say that the $1 million customers, we see increased penetration inside those customers as well. So even as we are happy with the $20 million or the $20 million over $1 million, we see that there's increased opportunity inside every one of those customers. Jason Kreyer: I appreciate that. And then can you just maybe kind of compare and contrast the services or the capabilities that you're getting from Masterworks versus what you're bringing in with Westfall. And then maybe like if you look at the last several months since you've had Masterworks, it seems like a very logical cross-sell. And I'm just curious if there's any pushback and if kind of Westfall can help fill in some of those gaps in terms of where there might be pushback. Patrick Gelsinger: Yes. Thanks for sure. These are incredibly synergistic. As we said, the donor is the heart of this ecosystem, right? The donors whether they're small donors into a church or the bigger donors into the different major ministries that are out there, it's at the heart. And this is a very good set of synergies. You can think about Westfall Gold, which we're delighted to be bringing into the Gloo family today is really the top end of the donor pyramid. They do amazing data-driven, create incredible experiences, the best-in-class to be able to nurture major donors into multi-hundred thousand, multimillion dollar types of commitments. They do this better than anybody in the ecosystem. However, after those events that they do and how do you keep nurturing those organizations between those major events. That's when a Masterworks shows up who's excellent at being able to do that nurture in between the events as well as the nurture for the smaller donors that then can become the larger donors. So both of those are really core to what we're thinking about in terms of going forward. We're delighted with it and they're delighted with one level. I mean the folks at Masterworks are so excited that we've got Westfall Gold and the folks at Westfall Gold likewise are so excited to be able to partner at a deeper level with Masterworks. Operator: And our next question will be coming from the line of Dan Kurnos of The Benchmark Company. Daniel Kurnos: Great. Obviously, I will echo congratulations to you guys coming out strong out of the blocks. And Scott and Pat, since this is your guys' first call, and I know you've touched on pieces of this, but can you guys spend a little bit more time just kind of talking through the [ doctrine ] or guidelines that's informing the M&A for you guys, whether it's what you're paying, the price that you're willing to pay, the synergy opportunities that you see? And Pat and Scott, you both mentioned that the opportunity, the pipeline is probably better than you anticipated that it was. Is there anything that would sort of incentivize or make you guys be willing to be more opportunistic if the right particular product sets or capabilities broke your way? Scott Beck: Sure. Yes. So from our standpoint, it's important to realize that on the M&A front, we start with organizations that are already connected to our platform. We have been working with Masterworks for years. We've been working with Westfall Gold for years as an example. Midwestern, which was a very significant acquisition we have been working. So these are not strangers. Our pipeline is very strong and it's significant as we described. When you look at the prioritization, there's a couple of different categories that they drop into one of these capabilities around being able to serve the churches and those frontline organizations around donor, around marketing, around content that can add into the overall AI engine that we're doing. But we're also looking for things that are accretive. They're accretive from the standpoint of revenue and help us to build our revenue base. They're accretive in terms of EBITDA and EBITDA moving us and accelerating us to EBITDA profitability. And they're accretive from the standpoint of continuing to build the synergies within the Gloo platform, which strengthens the overall moat that we have in positively serving this ecosystem. But we're also looking for technology as an important part of that. Pat why don't you talk about that. Patrick Gelsinger: XRI acquisition is a great example of that. And acquisitions like that will definitely be part of the thesis going forward, strengthening offers that we already have deepening them in the marketplace. And the customer that we announced American Bible Society does Bible translation. And now we have maybe the leading logistics capabilities in the world with XRI in the AI-driven logistics area. So those are the areas that continue to excite us in strengthening the platform. Clearly, with 360, we're expanding the number of services, the range of services that we're offering. So we want to strengthen our capabilities there. And as Scott said, accretive. We're incredibly focused on getting the profitability as Paul will keep reminding us. And with that, we want to keep a high discipline on both the multiples that we apply and being able to rapidly see accretion in the financials that we result in. So those factors and a great pipeline of opportunities give us a lot of flexibility both exercise [indiscernible] but also opportunity. Daniel Kurnos: Got it. That's really helpful. And then just to kind of follow up on, I think, Jason's question and maybe your answer, Scott, as we go into '26, and we know that you're adding capabilities all the time here, how should we think about growth from upsell and conversion from the existing customer base versus how much growth might come from new customers? And just to be clear, I don't think it does, but does the '26 guidance include any major wins or major deals like we saw with [indiscernible] in the prior year? Scott Beck: Couple of questions there. Number one, we're not seeing in our 2026 numbers, any big specific campaigns or it's the run of the middle of what we do. Gloo 360, more of that, MasterWorks, more of that, Midwestern, more of that, our media network, more of that. So there isn't anything in there except grinding it out good, solid organic growth with what we've already got. And then we had a little bit of M&A in that $180 million number. But we already just booked $20 million of that, right? So that number might have been $40 million that we were thinking about moving forward on a go-forward basis. $20 million of that is already in the bank. So we feel really good about that. But no, we don't see any major engager or one-timers that are coming through. Obviously, if something shows up, we would take advantage of it, but that's not what's driving our numbers. Daniel Kurnos: And the question, Scott, just on new versus existing upsell, cross-sell? Scott Beck: Yes, sure. A balance between those for sure. We're going to be adding to the current customers that we've got. But when you look at a lot of the things, in particular, Gloo 360, a lot of that is going to be new. If you look at Masterworks, I think a lot of that is going to be able to be able to upsell. A perfect example of that upsell is the Westfall Gold being now be available to a Masterworks customer. So I think we've got a good balance between both of those. Patrick Gelsinger: Yes. And as I was indicating earlier, for us, additional customers within a category where we have proven success and we're able to move, I'll call it, horizontally within the category as opposed to vertically into a new category, that's a very efficient sale for us. And you get lots of synergies, essentially a Bible translator works with another Bible translator. Today they want us to be working with both of them. So we see a lot of affinity there. So it's deepening in the category as well. It's a very efficient sale for us, and we're seeing that very much in the realization of that growing sales pipeline and the accelerating sales pipeline. And we're just beginning to open up entirely new categories of that like we do with the Christian University segment, which we're starting to see some success. So we do think that we have the opportunity to go deeper with existing accounts bring more of the Gloo offering into those accounts, move within the segments that we're in, but then also begin to open up new categories as well. Scott Beck: We operate in a very collaborative ecosystem right now. And it's not one that we take lightly. I mean we love the work that these folks are doing. I mean what's better than being able to help more Bible translation is get to more places in the world. What's more being able to help the organizations that are out there on campuses help people that today are so much in need of community. And so not only are they collaborative, but that sets us up to be able to serve them well so that they can help more people and they can help the communities thrive. Operator: And the next question will be coming from the line of Eric Wold of Texas Capital Securities. Eric Wold: A couple of questions. One, kind of a follow-up. Talk about the -- Scott, you talked about the pipeline for next year, the pipe of acquisition has obviously gotten stronger since the IPO. And you talked about next year being front half weighted and now you've done basically half of the $40 million already with Westfall. What would you need to see to maybe bring something from a '27 pipeline of acquisitions into '26 or accelerate that? And how much of that decision is really on your side, meaning you don't want to put too much on your plate, you want to wait for something to make sure it's accretive versus one of your partners on the platform, maybe not think it's the right time for them to be acquired and kind of waiting a little bit longer before taking that step? Scott Beck: Number one, discipline in strategy, right? We're going to be very strategic in terms of the investments and the acquisitions that we make. We're going to be very strategic and be very disciplined. We've been able to bring these partners in, been able to help them scale at this point, and we're going to continue to be hold that in check. And at the same time, we're going to be available to opportunities. The right partners and the right acquisitions come along. As long as they're being super accretive, we feel like we've got the right synergy and we can integrate them in a good way, we'll move on that. But strategic and disciplined. All of this ultimately then helps develop more moat and more synergies amongst themselves. And it also is then driving us towards that intense focus on EBITDA profitability in Q4. We're not going to let things get in the way of that. We're only going to be doing things that are going to be supportive of that. But it's got to fit from a strategic standpoint, and we've got to be disciplined. Eric Wold: Got it. And then kind of following up on that, as you think about an acquisition taking place and the company moving from an existing partner, NCP on your platform to an acquired company within Gloo Capital Partners. I guess how long has it typically taken? Obviously you've done a number of acquisitions in the past couple of years. How long does it typically take from that target to move from kind of the current revenue run rate to kind of actually seeing some synergies, revenue synergies kind of a boost to organic growth occur, I guess, for example, the $20 million you noted for Westfall in '26. How different is that from their current revenue run rate in terms of kind of expecting kind of meaningful organic growth on top of that to get to that $20 million? Scott Beck: We have a disciplined process of presenting business case and those business cases with synergies, both on the revenue and on the cost side. We're conservative in terms of how we build our business cases and what kind of revenue acceleration and cost acceleration we expect. We do not want to get ahead of ourselves on that. So we plan on that being very conservative and then we aggressively get after it. So in that $20 million, there isn't a lot of synergy built in. We believe that there is a lot of opportunity for synergy, but we don't build that in. If you look at the organizations that we've gotten involved with, we had on an overall basis, when we look at it cumulatively, we had very nice growth. In order to get to our number this year of $180 million, in addition to the $40 million of acquisitions that we've talked about and you guys have got a lot of them in your numbers, there is a lot of organic growth in that. And that organic growth is coming both from the Gloo platform offering as well as helping to organically grow [indiscernible] positions. Operator: And the last question for the day will be coming from the line of Ryan Meyers of Lake Street Capital Markets. Ryan Meyers: Congrats on your first quarter as a public company. First one for me. I don't think you called this out in the prepared remarks, but what was the mix of recurring revenue during the quarter? Unknown Executive: Ryan, good to talk with you. We don't break that out specifically within it. It really lines up with the revenue categories we break out in the [indiscernible] subscription, marketplace, advertising and platform solutions. But we don't have that detail right now. Ryan Meyers: Okay. And then just kind of as a follow-up on that, if we think about the 2026 revenue guide, I know you guys don't break it out by segment. But directionally, how should we be thinking about the mix across those 4 areas being subscription, marketplace, advertising and Platform Solutions, just so we can get a good idea of what to expect for '26. Scott Beck: Yes. I think that what you're going to see is as we're continuing on M&A as well as growing what we've got right now, Gloo 360, which is a big grower of ours is in that subscription area. There's some of the stuff that we brought in, let's say, like with Westfall Gold that's going to be a little bit more on the Platform Solutions side. So I think that you'll be able to see a continued trend in terms of what we've seen. You saw the platform grew faster than Platform Solutions as a percentage in this last quarter. And I think that, that is what we would expect to continue to see as we go through the year where the platform grows faster than the Platform subscription. But a little bit of that is also going to depend on M&A and where we ultimately go with that and how that fits in the mix. Our organic growth from [indiscernible] definitely geared towards platform and Platform and Subscription. Operator: Thank you. And this does conclude today's conference call. Thank you all for participating. You may now disconnect.
Jim Kavanagh: Hello, and welcome to ASML's Q1 2026 results video. Welcome, Christophe and Roger. Jim Kavanagh: Roger, if I could start with you and ask you to give us a summary of our Q1 2026 results. R.J.M. Dassen: For the quarter, total net sales came in at EUR 8.8 billion. That was within guidance. Included in the EUR 8.8 billion was EUR 2.5 billion for Installed Base revenue. That was a little bit above the guidance. If you look at the gross margin for Q1, 53%. That was at the high end of the gross margin that we guided. If you look at the Installed Base business, as I just mentioned, the Installed Base business was higher than we anticipated. But also if you look at the components in the Installed Base business, there were components in there that actually come in at quite some strong gross margins. So as a result of that, a pretty high gross margin at 53%. Net income for the quarter, EUR 2.8 billion. Jim Kavanagh: Can you also provide us with a guide for Q2 '26 results, please? R.J.M. Dassen: For Q2, we expect EUR 8.4 billion to EUR 9 billion of total net sales. Included in there, again, EUR 2.5 billion of Installed Base business. We expect the gross margin to be between 51% and 52%. Jim Kavanagh: Christophe, if I can switch to you. And can I ask you to give us an outlook on the market and how you're seeing things at the moment? Christophe Fouquet: Well, I think we see that the semiconductor industry growth continued to solidify. This is still very much driven by investment in AI infrastructure. So this translates into a lot of demand for advanced memory, for advanced logic. And we expect, in fact, that the supply will not meet the demand for the foreseeable future. So this is creating a strong constraint in the end market from AI to mobile and PC. And as a result, our customers are strongly invited to create more capacity. So if we look at memory, what our customers tell us is that they are sold out for 2026 and their supply constraint will last beyond 2026. For advanced logic, we see our customer building capacity for several nodes, while they also continue to ramp 2-nanometer in order to address the AI products. Jim Kavanagh: So then I guess it's fair to say, a lot of those capacity additions are adding positively to our own outlook? Christophe Fouquet: Well, absolutely, we see our memory and logic customers increasing their capital expenditure and trying to accelerate basically their capacity ramp in 2026 and beyond. What's also very interesting is that a lot of this demand is supported by long-term commitment at their customer. On top of that, we see both memory customers, DRAM customers and advanced logic customers continuing to increase their adoption of EUV but also immersion. So this translates basically into higher litho intensity and a higher litho demand for ASML. So we're going to continue to work very closely with our customers to increase our capacity. We are doing that in 2026. We'll continue to do that in 2027. Jim Kavanagh: And then maybe Roger, just adding on to that, can you provide a little bit more color or details on what we are actually going to do in terms of adding capacity to support market demand? R.J.M. Dassen: So I think Christophe said it right. We're very clearly working with our customers, fully aligned with customers to give them what they need, and that is in a combination of capacity in terms of new shipments, making sure that systems, that the performance of systems is upgraded as best as we can and also provide Installed Base products. So in that combination, we try to give customers what they need, specifically when it comes to our own capacity. What we're looking at for this year for 2026, we believe we can drive an output for this year of at least 60 systems for EUV Low NA. That's what we currently have. That's what we're currently driving. And added to that, we're looking at deep UV for 2026. As I mentioned a couple of months ago, when it comes to immersion deep UV, we actually had a bit of a slow start because in the course of last year, we decided to actually -- we were looking at a significantly lower demand for immersion. That has now reversed itself. And I would say in spite of that slow start, we're still for this year expecting to get pretty close to the immersion sales that we had last year in terms of unit numbers. So that's for 2026. When it comes to 2027, in terms of capability, we're increasing our move rate really quarter-on-quarter. And then when you look specifically at EUV Low NA, we expect that we're able to get to an output for 2027. Again, if customer demand really underpins that, we think that we can get to at least 80 Low NA EUV units. And we're also looking at having the non-EUV business being in line with what customers are asking for, for all of their nodes. Jim Kavanagh: And then specifically on 2026. Can you give us an update then on our own business then for the full year? R.J.M. Dassen: Yes. So clearly, 2026 is panning out very nicely. It's a very strong year. We're looking at a strong growth year. And based on all the customer dynamics that Christophe was talking about, we are actually narrowing the window and also increasing the window of our expectation to EUR 36 billion to EUR 40 billion for this year. If you look at the different moving parts as we already expected, EUV is strong this year. So EUV in combination of Low NA and High NA, strong year there. On the non-EUV business, previously, we were expecting that to be flat in comparison to last year. Right now, what we're looking at is, in fact, an increase of demand there as well. So increased revenue on the non-EUV business is what we're expecting. I already mentioned what we're doing on immersion, but also the dry business is doing quite nicely and also the application business. So we believe in contrast to where we were a couple of months ago, we're looking at an increase for the non-EUV business. When it comes to the Installed Base business, strong growth there because obviously, it is a very fast way for our customers to increase their capacity to cater to the demand that Christophe was talking about. And I would say that within the guidance that we provided, the EUR 36 billion to EUR 40 billion, we believe we can accommodate potential outcomes of the export control discussions that are currently ongoing. Jim Kavanagh: And how about the gross margin then for 2026? R.J.M. Dassen: For the gross margin, we maintain our expectation of 51% to 53%. Jim Kavanagh: Switching gears a bit to technology. Christophe, can you give us some insights and latest updates on how we're progressing with the technology and our road map? Christophe Fouquet: Yes, I think we continue to execute very nicely on our technology road map. I think every year, we use the SPIE conference to give a bit of an update to the entire world about what we have achieved. A few, I think, important news this year. The first one was our demonstration of the 1,000-watt source. And this is very important because it means that we can secure the extendibility of Low NA EUV for many, many years. It means, in fact, that in 2031, we'll be able to run this tool at 330 wafers per hour, which is a major step-up from what we have today. Now the progress on EUV also has a good impact on the short term. We have been able to increase the throughput of our NXE:3800E from 220 to 230 wafers per hour, which is also helping on the short term with capacity. Our customers are very happy to be able to get more wafers out on any tool. And we are also increasing the specs of our next system, the NXE:3800F to 260 wafers per hour. It used to be 250 wafers per hour, and this will help us also with capacity around 2028. Jim Kavanagh: And I think also at SPIE, there were some updates on our High NA platform progress. Can you share a little there? Christophe Fouquet: Yes. And I think what was good about SPIE is that our customers start to talk about High NA. And they reported a few things. The first thing is, of course, the fact that High NA can allow them to reduce the number of masks significantly. DRAM and logic customers were talking about going from 3 to 1 mask for EUV using High NA. And they also mentioned that this can reduce the number of process steps from 100 to 10, which is, of course, significant. That's, of course, the reason why we have High NA. I think we have seen also great progress on the ecosystem, some good presentation with some of our resist partners, pointing to the fact that High NA can be extended when it comes to logic to 18-nanometer line and space pitch. And when it comes to memory to 28-nanometer hole size. So it means basically that not only High NA is getting ready for prime time, but we already know that High NA can be extended mostly for 3, 4 nodes, which is, of course, very important for our customers. And finally, maturity of the tool is important. We continue to see better availability data, more wafers per day, more wafers out. And this is just, of course, becoming more and more important as we see our customers starting to test High NA on real products. Jim Kavanagh: So I'd like to thank you both for joining us today. And yes, thanks very much. R.J.M. Dassen: Pleasure.
Operator: Thank you for standing by, and welcome to the Evolution Mining Limited March 2026 quarter results. [Operator Instructions] I would now like to hand the conference over to Mr. Lawrie Conway, Managing Director and Chief Executive Officer. Please go ahead. Lawrie Conway: Thank you, Ashley, and good morning, everyone. I'm joined on the call today by Matt O'Neill, our Chief Operating Officer; Glenton Masterman, LVP Discovery; Fran Summerhayes, our CFO; and Peter Rocky O'Connor, our GM Investor. Today, we released our March Quarterly Report and an Exploration Update which will be the reference points for the call. A key milestone and highlight for the quarter was the transition to a net cash position on the back of another very good quarter. After generating $406 million in group cash flow at just under $2,500 per ounce, we are now in a net cash position of over $40 million. Our cash balance at the end of the quarter was $1.37 billion, and we have no debt repayments until FY '29. The rapid de-leveraging, where we have moved from over 30% gearing to net cash in just over two years, is a reflection of Evolution's high-margin portfolio consistently delivering to ensure the benefits of the high metal price environment are banked. To put this into perspective, we have removed around $1.7 billion of net at average achieved gold and copper prices that were $2,100 per ounce and $3,200 per tonne below current spot prices while still investing in high-grade projects and paying dividends to our shareholders. We are on track to generate approximately $3.6 billion of operating mine cash flow in FY '26, where the June quarter is planned to further improve our net cash position. The charts on page one of the quarterly report are a great graphical representation of our cash-generating capability and the momentum being built, while at the same time investing in high-return projects that either grow production or extend mine life. This outcome is a credit to everyone involved at Evolution who continue to safely deliver the plan with the right level of cost and capital discipline. In the March quarter, we produced 170,000 ounces of gold and 11,000 tonnes of copper at an all-in sustaining cost of $2,220 per ounce for continuing operations. The high all-in sustaining cost for the quarter was driven by the lower production and especially the lower copper by-product credits at Ernest Henry. We delivered the quarter safely with our TRIF remaining low at 5.9. The March quarter was expected to be a lower production quarter due to the impact of the weather event at Ernest Henry in December and the planned semi-annual maintenance work at Cowal. Ernest Henry is now back to normal operations. The outcomes of the weather impact at Ernest Henry will mean that we are expected to be around the low end of the group copper guidance. We remain on track to deliver our FY '26 group production at the all-in sustaining cost guidance of $1,640 to $1,760 per ounce. This all-in sustaining cost guidance is 6% lower or better than our original guidance. The group cash flow was on the back of $769 million and $486 million of operating and net mine cash flows respectively. It should be noted that these were achieved despite Ernest Henry being cash flow negative for the quarter. Mine cash flows are on track to lift significantly in the June quarter. All our projects remain on plan and budget. The recently approved E22 coarse particle flotation and expansion study projects have progressed well in the first six weeks, while the preparation to commence development of the Bert deposit at Ernest Henry is underway. I want to make a couple of comments about the current global fuel supply situation. To date, we've had no material operational impacts, not just from fuel, but our overall consumables. Matt and Fran are actively managing our supply chain logistics and have appropriate response action plans in place. The greater focus of the team is ensuring continuity of supply of all goods and services. Specifically on fuel, supplies are contracted with major oil distribution companies who continue to fulfill their obligations. Fuel represents 2% of our total costs, and while there is a current elevated pricing, it is not having a material impact on our cost base. On the exploration results released today, Glenton and I are very excited at what they offer in terms of adding low-cost ounces to the portfolio. They show that Mungari and Cowal, there is a lot more gold to be discovered at what are already long-life operations. Some key highlights include the very encouraging results in the underground areas of Genesis and Arctic at Mungari, which supports our aim of extending the high-grade underground mine life at current production rates. While at Cowal, significant high-grade results were received at the Oban underground target. Meanwhile, significant new results in multiple locations across the planned E41 open pit will provide useful insights into the full scale of the deposit ahead of its development. Regional exploration around Ernest Henry will be accelerated over the next six months following our consolidation of large tenement holdings surrounding the mine. We've also started work on the two most recent projects in British Columbia. With that, I'll now hand over to Matt to take us through the operational performance. Matthew O'Neill: Thanks, Lawrie. As Lawrie has already mentioned, the operational performance for the March quarter was in line with our plan on the back of the renovated Ernest Henry in and the normal plant maintenance schedules. Our safety performance remains in a very healthy position with the continued strong performance in this area, thanks to the tireless work occurring across all parts of our business. I'd like to take this opportunity to say a big thank you to all our employees who contribute to this every day. On the production front, we are on track to meet full year guidance for gold and to land at the lower end of guidance for copper. The most significant operational milestone through the March quarter was the resumption of normal operation. For me, the highlight of the work conducted by this team was the fact that it was completed without any significant injuries or incidents. Throughout the March quarter, the Cloncurry region continued to experience higher than average rainfall, which did slow our recovery activities, resulting in additional impacts to the full-year production for Ernest Henry, which are now estimated to be between 9,000 ounces to 11,000 ounces of gold and 6,000 tonnes to 8,000 tonnes of copper. At Cowal, we also saw wet weather have an impact on the completion of mining stage H in the E42 pit. Pleasingly, the processing plant operated uninterrupted, with additional feed sourced from surface stockpiles throughout these weather events. We also completed the regular plant maintenance program on schedule at Cowal. As we move into the June quarter, we will be mining the final ore from stage H, and as previously advised, we will then move to the stage I cutback and be processing stockpile ore in FY '27. This will see Cowal producing around 10% lower ounces next year. However, importantly, we'll not see a material change in cash flows from the processing of the already mined ore. Northparkes, Red Lake and Mount Rawdon all performed in line with expectations, with the quarter's highlights at these operations being the approval by the Board of the growth projects at Northparkes, the cash flow generated at both Red Lake, which was a record $104 million for the quarter and nearly $225 million year-to-date, and at Mount Rawdon, which was $13 million in the quarter and over $30 million year-to-date from processing very low stock material. Mount Rawdon is planned to complete processing at the end of this financial year. Mungari delivered a raft of new records over the quarter, with the fully commissioned mill operating at nameplate capacity throughout the quarter. Most notable of these records are the quarterly net mine cash flow of $175 million and gold production of 51,000 ounces. Mungari has generated over $320 million of net cash flow so far this year, confirming the decision to invest in the planned expansion and the establishment of the Castle Hill mining hub. Looking forward, we are well set for a strong final quarter with the return of Ernest Henry to normal operations, the continued strong performance at Mungari, and Cowal having completed its annual maintenance program and mining back in stage H. I'll now hand over to Glenn to talk through the exploration announcements made. Glenton Masterman: Thank you, Matt, and good morning, everyone. I'd like to turn your attention to our exploration announcement, which was also released this morning, to give a brief update on where we've seen some momentum over the last six months. Starting with Mungari, I want to briefly revisit some of the commentary I made the last time we updated our drilling results. What the team has achieved recently has fundamentally changed the view on historical geological thinking around Kundana, which had largely written off the potential for meaningful new discoveries, particularly beyond the well-known high-grade tram track positions. By challenging that old geological dogma, we've intersected high-grade veins in new structural positions outside where the traditional models were looking. That's significant because it effectively broken the old paradigm and opened up entirely new search spaces around Kundana. In practical terms, that gives us a much bigger opportunity to continue growing high-grade underground resources and reserves. The best example of this occurs at Genesis, where drilling has targeted extensions of a known system we discovered, which is shown in figure one of the update. Infill drilling across a 300-meter gap northwards towards the Barkers mine that previously had no drilling whatsoever, recently returned narrow intervals, but at very high grades, including numerous short intervals grading about 10 ounces to the tonne, yielding intercepts better than 90-gram meters and confirming mineralization occurs continuously across this zone. The results I am describing all occur outside the mineral resource footprint and are importantly located near existing underground infrastructure, so it has real implications for extending mine life. At the nearby Arctic deposit, surface drilling beneath the open pit has also yielded high-grade results. These build on previously reported work and continue to demonstrate the potential to expand underground resources, particularly at depth, where historical drilling has been limited. The objective of ongoing follow-up drilling is to delineate the scale, continuity, and geometry of these mineralized systems with the clear ambition of converting into a long-term underground reserve, securing high-grade production over a longer mine life, capable of maintaining at or above the currently achieved annualized rate of 200,000 ounces per annum. Turning now to Cowal, where step-out drilling highlighted in Figure 2 of the release has been equally encouraging. We recently received results from the surface drilling at E41, which as a reminder, is located a few hundred meters south of E42 and will be mined as part of the Open Pit Continuation project. Results released this morning returned broad, consistent intercepts beyond the outline of the planned E41 pit. What's notable is that drilling perpendicular to the mineralized veins rather than parallel as much of the historic drilling was, is opening up areas that were previously considered well-tested. This highlights clear potential to grow the E41 footprint, particularly to the north towards E42 and the underground mine. I should also add that the E41 pit shape referenced in Figure 2 was optimized at a very conservative gold price of $1,760 per ounce. Underground at Oban, results continue to build confidence. Drilling is targeting major mine-scale structures and a favorable geological contact that elsewhere at Cowal is known to host high-grade mineralization. Importantly, the recognition of this key contact, illustrated in Figure three on page four, has unlocked an entirely new search space to the north and south between the E41 pit and the Glenfiddich Fault, which has hardly ever been drilled. We received multiple high-grade intercepts that support the potential for Oban to evolve into a new independent mining front over time, and a geological position where I'm confident further work will lead to the delineation of future resource iteration in the mine plan in the years ahead. This will be a major focus going forward. Looking beyond the operations, we're also continuing to build our longer-term pipeline. In North Queensland, around Ernest Henry, we've expanded our landholding and identified several drill-ready copper-gold projects with an aggressive drilling program planned over the June and September quarters. In Canada, permitting and community engagement are progressing at Two Times Fred and Clisbako in British Columbia with drilling planned across the summer field season. Meanwhile, drilling is underway at the October Gold Project joint venture in Ontario, with assay results expected later in the June quarter. Overall, these results reflect our discovery strategy in action, continuing to unlock value in the short to medium term at our operating assets while building a strong pipeline of drill ready and more advanced exploration plays with the potential to deliver new greenfields production opportunities in the medium to long term. With that, I'll turn the call back to Ashley to open the line for questions. Operator: [Operator Instructions] Your first question today comes from Hugo Nicolaci with Goldman Sachs. Hugo Nicolaci: First one just on Mungari, you got above nameplate through the quarter. I just wanted to get a sense of how much of that is running softer, or are you already finding opportunities to start to push that nameplate a little bit? Lawrie Conway: Thanks, Hugo. I hand that to Matt asked in the same question while going at the higher rates, but it is all. Matthew O'Neill: No, it is. It's an obvious one when you look at those numbers. It is some of the transitional or easy-to-have ore from Castle Hill that's causing the increase there. That said, it's obviously something that we're going to target. At this stage, it's running at nameplate, but we put what we designed through it. Hugo Nicolaci: That's helpful. Second one, maybe a two-parter on exploration. I mean, obviously some exciting drilling results that you put out today. I guess just firstly, when should we start to see those flow into resource updates? Is that something for the update this year? Secondly, at Cowal, I think the resource and asset life upside tends to be firming up at both the open pit and underground there. I think I asked you this last time, but at what point do we start to consider mill expansion studies at Cowal? Lawrie Conway: Glen will talk to the first two parts. The last bit about the plant expansion is, I think as we get more information, we'll look at it. It's going to be predicated on once we get into E46 and E41, as to what we do with the plant. We're probably at least 12, 18 months off worrying about that one. Glenton Masterman: Yes, the results that we put out this morning for Mungari and for Cowal won't be captured in the next MRR update. They've just come in a little too late for us to write those. We have already delivered a resource and reserve at Genesis, so that is a growing kind of ongoing concern. It would be the best way to describe it, and what we're excited about is that we can see the opportunity unfolding along that trend between the Pope John Pit. So it's a hanging wall structure that sits outboard of it, and it looks like it's going to link into Barkers. We believe that we're going to fill in that gap between Genesis and Barkers. What we're looking to do, particularly in the next 12 months, is drill that really aggressively so that we can capture it in the 2026 MRR statement. That's the plan there. I would say turning to Cowal with the particularly what we're doing at Oban, there's a lot of space there and on Figure 3. One of the things that we really like at Oban is the contact that I described earlier appears to be very similar, if not a repeat, we haven't confirmed that, of the contact which controls all of the underground mineralization in the underground mine at the moment. We've got another one of these. What we're showing in that image is all of the drilling, and there's hardly anything along it. There's a long way to go there to explore, but we have the target at open, and we'll continue basically to expand the story as we know it along strike, north and south, and look to get more drilling into that space over the coming 12 to 18 months. Hugo Nicolaci: Fantastic. Just the last one. I know you're 100,000 to 200,000 away at Northparkes and Cowal. Any impacts to safety or mine disruption from the earthquake overnight? Lawrie Conway: No, none from the Northparkes or Cowal side. Operator: Your next question comes from Kate McCutcheon, Bank of America. Kate McCutcheon: Thank you for the '27 Cowal, remind you that. So for this year, still on track for the guidance. Help me think about the four key step up here to get you to that circa 190-ounce level that you did a couple of quarters back. I assume it's Cowal plus stage H grade with Ernest Henry normalizing. Can you just talk through that? Lawrie Conway: Yes. I'll get Matt to add to it. I think he's got too much to add, but the two biggest drivers are assets. Matthew O'Neill: Yes, I think the two big ones that people are well aware of, finishing the scheduled maintenance at Cowal, Ernest Henry coming back online are the two primary. Outside of that, the Mungari operation continuing to run at a pretty good rate, Northparkes doing what it's done. You will see a little dip with Northparkes with the old stockpiles from E31 coming towards the end. Outside of that, business as usual with the uplift from the two ones that you identified. Kate McCutcheon: Okay, got it. Cowal, the underground opportunity there, I like it, returning hits of 1 to 2 grams under E41 and the underground system is extending. Obviously, the prize is getting out more high-grade underground tonnes. Glenn spoke to this a little before, but I guess what do you need to get confidence to say another exploration decline there? How do we think about timing or stage gates for a larger underground operation? Glenton Masterman: Kate, I was hoping someone would ask that. Look, I think if we go back to the discovery in 2018 of the underground mine, particularly the Dalwhinnie Lode, which really made the difference there, the first drill hole results into commencing production in the underground. That is the timeframe that we would be thinking. A minimum of 3 years. This is going to require a lot of drilling. We actually also have to get new positions in to improve the angle of attack on the ore body, I should say. That would be something that we need to be doing and I'll be leaning on Matt very heavily to help drive that for us so that we can get the rigs in position to do that. I'd see that being a 3-year opportunity. I think, reflecting on the results at E41, the historical drilling has been largely oriented in an east-west direction, and that, as we have learned in the Cowal underground, has been a suboptimal drilling orientation. We've pivoted the rigs around now to hit those veins at a much better angle. What we have seen historically in the underground is when we've done that, we do see in some areas improvement in grades. We're hoping that as we start to fill that in at a much better angle, we'll see similar behavior at E41. Obviously, as I mentioned, the pit shell that we're showing there is a fairly conservative shell. We do expect as we get resource space drilling into E41, that we can improve the way that pit optimizes. Kate McCutcheon: Okay, got it. If I can sneak one last quick one in, the operating cash flow projected this year, you've noted no intent before to sit on a cash stockpile or do deals at record prices. Is it fair to assume the Board revisits the capital management policy at the FY, or how do we think about capital returns? Lawrie Conway: Yes, Kate. We previously said, as we get to the end of the financial year, once we've got our life of mine plans in, Fran and the team will put together an updated capital management plan, looking at what we do with dividend policies and capital returns. That will come out with the full-year financial results. Operator: Next question comes from Levi Spry with UBS. Levi Spry: Maybe another question for Fran then. Just on the costs, markets obviously focused on it across all sectors. Diesel's only a very small portion of your cost base, and you're probably relatively a much better set up than some of your peers. What about the rest of the pie chart? What are you seeing there? How do we think about what happens into FY '27? Lawrie Conway: Yes. Levi, just in regards to the costs, when you look at our cost structure, nearly 50% of our costs are labor. I would have said six months ago as inflation was sort of trending in that sort of 3.5%-3.8% range and trending down. That's certainly changed now. We would expect you're probably going to be seeing somewhere between 4% and 5% in terms of labor cost movement going into FY '27. When you then look at our other costs, power, fairly well set up there with Cowal and Northparkes pricing fixed. Ernest Henry and Mungari are through FY '27 as well in terms of pricing. Some slight escalation there. When you look at our consumables, it is going to be dependent upon how long the current situation lasts in terms of temporary pricing that we'd be requested to cover for additional logistics costs and the like. Given that that's sort of 50% of our cost base, you're probably going to see a few % increase in that bucket as well. Overall, I think, it's still being well managed, but it does depend on what happens over the next 3 to 6 months, Clyde. Operator: Your next question comes from Daniel Morgan with Barrenjoey. Daniel Morgan: My question is on Mungari, just on costs. For this question, can we just put diesel to one side for a moment about what we're experiencing in a live session? Just on cost, was this a representative quarter for Mungari, i.e., $2,150 AISC? In previous quarters on the cost side, we had obviously some capitalization of different spend, and obviously the project wasn't fully ramped up. Just wondering if you feel this is a representative quarter. Lawrie Conway: Yes, Dan, it's getting close. I mean, we said around a 16% reduction in all-in sustaining costs once they're running and depending then on the mix of the ore. We would see it's probably somewhere in the $2,250 to $2,350 range is what you would see, $2,400 at sort of the upper end, which would be in line with what we had projected. It was a good quarter, really predicated, I'd say, on the campaign of the EKJV. Higher grade material, therefore, helping us in terms of both mining and processing costs there. What you'd see in Q4 is slightly higher, but then you're getting close to the reflection of what Mungari will operate at. Daniel Morgan: Just on Cowal, it's quite clear that you're moving from stage H and that high-grade ore next quarter towards stage I, where you're going to be pushing back. Just wondering how long is it before you start to get material access to stage I ore? Is this FY '27? Obviously a lot of hard work through there, but do we start to see better grades in '28? Lawrie Conway: Yes, it'll be first half of FY '28 is when we'll start to get back into stage I ore, and also be getting into good material coming out of E46 as well. There'll be nothing really of substance in 2027, and a little bit coming through in the first half and the second half of 2028 is when you'll see it start to ramp up in stage I. It's about 18 months. Daniel Morgan: And last question just on Red Lake. It has been a period of better stability, delivery. I think one of the comments you say set up for a good end to the year. Can we just expand on the latest live view of ops through to the end of this year and anything beyond? Matthew O'Neill: Yes. It's Matthew, Dan. Essentially the final quarter, we're going into a couple of higher grade areas, driving an expected little bit of an uplift in grade. The development, if you have a look through that's been really quite consistent. Same thing, you get a little bit of a drop with some ore in terms of throughput in the quarter. We had a few interruptions with power and with the winter side of things. Outside of that's really where it's headed. Pretty consistent, pretty well set up for both grade and volume for the next quarter. Daniel Morgan: And is that sustainable or are the benefits sustainable? Lawrie Conway: So Dan, I mean, the position on Red Lake still hasn't changed. We're focused on getting 30,000 to 40,000 ounces out quarter-in, quarter-out, be positive cash, and what Matt's been working well with John and the team is making sure they've got contingency in the system, given you'd know the difficulties you have at Red Lake with those, make sure that when some things don't work out, they've got other areas to get to..... Daniel Morgan: Okay. Sorry. You just cut off. Operator: Our next question comes from Jon Sharp with JPMorgan. Jonathon Sharp: First question just on Ernest Henry. You've said you've returned to normal operations. Can you just explain what exactly back to normal is, and is there any improvements there to go in this quarter? Probably more importantly, has anything changed with dewatering or water management to prevent this happening again or even just decreasing the consequences? Just trying to understand if it remains an operational constraint in the future. Glenton Masterman: Yes. I'll address the first one. Normal operations basically back to running out of the cave as we were prior to the event. That's essentially what we've done, so running our truck loops and the crushers and everything back operating there. There's some minor work still to go. We're still dewatering the bottom section of the mine. It's not an operational area, it's where we're doing our development. There is still some dewatering activities occurring through there, but they don't impact the day-to-day operations at the moment. In terms of going forward, we've done the investigations and we're working through that process as we talk now. There will be some learnings from it, but I think it's important to remember that event was sort of three times what we'd seen previously in 2023. Whilst it's easy to sit here and say it's a one-off event, it's something that we need to learn from and the key for us will be preventing the water from getting there in the first place and then being able to work with it once it does. We are learning from it, and we will take steps to make sure we minimize the chance that it happens again. Jonathon Sharp: Yes. Okay. That's clear. And just second question, Lawrie, you've reiterated this morning that you're tracking below the original all-in sustaining cost guidance. With three quarters now complete, Ernest Henry back to normal, do you have enough visibility to indicate whether this year's all-in sustaining cost is likely to land below the midpoint of the updated range? Lawrie Conway: I won't put Matt into a difficult spot or Fran by saying where. Our view is we're going to get in that range. There's a number of things that will determine it. You've got the gold price, copper tonnes, copper price. One thing I will say, and it's mentioned on the call, the cost and capital discipline in the business, we're running very well in terms of our sustaining capital and our operating costs against budget. We'll be in the range. That's the political answer that you needed to give Matt some room. Operator: Next question comes from Matthew Frydman with MST Financial. Matthew Frydman: Sure. Can I firstly extend on Levi's question on diesel? Obviously, pretty modest in isolation on the pie chart at 2%. Just so I'm clear, how does that play through in terms of the various kind of rises and falls across some of your mining contracts and other contracts you might have in place across the business that are sort of sensitive to diesel? Are there any other exposures outside of that sort of 2% in isolation that we should be thinking of? In particular, I suppose your sort of CapEx plan, the major projects you've got in your pipeline, presumably a lot of that is waste movement or underground development, so should we be thinking about, I guess, diesel or explosives or sort of other cost sensitivities there also? Is it fair to kind of assume that sort of low single-digit number is a representative sensitivity in those areas of CapEx also? Lawrie Conway: Yes, Matt. If you look at it, the rise and fall for any of the contracts that require use of diesel, be that haulage or mining contractors, you will see that diesel cost flow through. As we've said, though, it's still captured in terms of the cost of our business. It's not the major part of it. Labor is still half, and then you've got power at around 9%, 10% and the like. We're not seeing a material impact, but those rise and falls do come through. In terms of then the capital, Yes, you look at the biggest mine development we've got going over the next couple of years is at Cowal with E46 stage I and the like. In terms of the mining cost, the material movement isn't going to be significantly higher or nothing that's of consequence for us in terms of our cost there. We just have to monitor it over the next few months to see where it all lands, Matt. Matthew Frydman: Understand. And maybe secondly, just quickly, it's not a particularly material one, but obviously noting that in Ernest Henry during the quarter, you kind of highlighted non-operating costs of $26 million related to recovery from the December quarter. Presumably with the ongoing impacts in the March quarter in terms of whether there'll be some ongoing, I guess, non-operational recovery costs in future quarters, can you give us a sort of indication of what we should expect there, whether that's going to be a bigger quantum in the June quarter or onwards? Yes, I expect there's some sort of tail costs there. Lawrie Conway: Yes, Matt. It looks similar to what we had in March '23. You'll start out as a large amount of costs of recovery and getting equipment out and getting all the infrastructure back to normal, and then it tails off. I would say through the June quarter you'll see some more. As Matt said, we've still got water at the bottom of the mine that we need to get out and the like. We've still got some equipment. It will trend out. I don't think you're going to see multiple quarters at $25 million, $26 million, but I think most of it is being captured in this first quarter. Operator: Your next question comes from Adam Baker with Macquarie. Adam Baker: Congrats on achieving your net cash position. Appreciate a new capital management plan will be provided with the financial results. I'm just keen to hear your initial thinking surrounding capital management moving forward. Do you think the current dividend policy fits the purpose or could we see a change to this current dividend policy or could we potentially see an implementation of a buyback like some of your peers have done? Lawrie Conway: Yes, Adam, thanks for the acknowledgement of net cash. It's actually really pleasing to see the business get to that point with what we've been able to do over the last couple of years. It does give us a good problem. I think it's fair to say over the last two quarters, Fran and I have received the most amount of feedback from shareholders as to what to do with the cash versus increased dividends, reinvestments, specials, buybacks. We'll take all of that into consideration into the June year-end and discuss it with the Board. As I said, it's a good problem to have. It's come earlier than we probably would have expected. I think the interim dividend that we paid, which was a material lift based on the cash that we've generated, and we paid forward some of the second-half cash. I think that's a good reflection of what shareholders should expect going forward. Adam Baker: That's a positive signal. Thank you. Just a clarifying remark with Cowal. You mentioned 10% lower ounces for FY '27. Just wondering, is that 10% lower versus the midpoint of current guidance or is that 10% lower versus the lower point of guidance? Just trying to get an understanding here. It could be anywhere between 275,000 and 286,000 ounces. Lawrie Conway: I'll try and help you out here, Adam. I'd say if you work out your estimate for the June quarter and take 10% off the full year, that's going to give you a pretty good estimate of how it would be for next year. Matt's explained we've finished the shutdown. You'll see an uplift in production in the fourth quarter. Work that one through and then that'll give you the number for next year. Matt and Joe won't like it. Operator: Your next question comes from Baden Moore with CLSA. Baden Moore: Thanks for your comments on your fuel supply situation. I was just wondering if you could talk a little bit more to the duration of your contract position, what sort of time frames that you have in place, and then maybe whether you've had any conversations with government about how all your suppliers on how you might be prioritized for fuel in the event there is any level of rationing in the country. I guess the third layer might be just how do you think about just resilience and planning around if there is any disruption to supply. How do you plan around that? What are the safeguards for you? Lawrie Conway: Yes, I'll answer the second question first in terms of government. Our position has always been that we're responsible for our operations and making sure that we've got continuity of supply. And that's what Matt and Fran and the site teams are working through. We don't put our reliance on in terms of that government support. In terms of if they make a decision on rationing, we would address what the impact is on our operations at that point in time. I think, the one thing I'd say is our open pits are the largest diesel consumers, and at both Mungari and Cowal, we do have stockpiled material that we'd be able to put through the plant. It would mean you would slow some of your mine development down to preserve that use of diesel. When we then look at the other consumables and everything like that is the work that Matt and Fran have got in place around what are our response actions that we need to take as we see any issues with consumables. The good news is that through March, we had no interruptions on anything in terms of supply of consumables into the business, and the outlook into the June quarter is very similar. In the first part, the contracts are multi-year contracts. We've got very good relationships with the oil companies that are the distributors for us. We would see them, as I said on the call earlier, they're fulfilling their obligations. We're not trying to do anything outside of the contract, and that's maintaining the really good relationship to guarantee our supply. Baden Moore: And just a quick follow-up. Can you talk to how many months inventory you'd have at hand? With the stockpiles you mentioned, what's the duration that, that would run for before you'd have any sort of impact to your cash flow? Lawrie Conway: Yes. Look, in terms of volumes on-site, as we've said, we've got adequate volumes on-site and continual delivery to our orders. That's not seen as an issue. Much relevance to say what the percentages are because they'll change today and they'll be different again next week as we either consume or get deliveries. We've got adequate coverage. If you look at it, the biggest one is at Cowal. We've got over 47 million tons of stockpiled ore. We run at 8.8 million tons per annum. I think it gives you enough understanding of the impact on our largest operating asset should we not be able to have fuel on-site. Operator: Your next question comes from Belinda Humphries with iQ Industry Queensland. Belinda Humphries: I just wanted to talk about the exploration efforts near Ernest Henry. Are you able to go into a bit more detail about what's going to happen in the June and September quarters of meters drilled, budget, that sort of thing? Lawrie Conway: I'll hand that over to Glenn. I don't think he's going to talk through the meters. I think he'll talk more to the programs are more important for us. Glenton Masterman: Yes. So look, the real objective of the program, on not just the recent tenements, but the sort of overall package that we've been sort of building up over the last several years, is to identify new production opportunities that can support filling the mill at Ernest Henry. We have latent capacity there, and so we're not looking for huge deposits, but if we find one, we absolutely take it. We're looking for probably more modest-style deposits that can help achieve that goal, essentially. The drilling programs, they'll commence in the next month or two. We've been basically waiting. There's been a lot of weather up there. We need to wait until everything is completely dry. Very difficult to get any access, particularly equipment, until it is dry. As soon as it is, we'll be drilling. We gave some examples of the types of targets that we're looking at this morning in our update. That gives you a bit of a sense, 10 km from Ernest Henry, previous drilling, identifying anomalies. The consolidation of the tenements up there is the really exciting thing that's happening because bringing those together means that we can explore the full opportunity rather than piecemeal it on tenement to tenement. That's actually really helped how we're going to prioritize the drilling program over the dry season. I just advise to stay tuned. We would look to be talking more about what we're getting at the end of the December quarter by the time we have some results from that drilling program. Operator: [Operator Instructions] Thank you. There are no further questions at this time. I'll now hand back to Mr. Conway for closing remarks. Lawrie Conway: Thanks, Ashley. It's pleasing to have delivered another very good quarter, and we're on track to deliver our group guidance and taking full advantage of the current high metal prices. Having moved to net cash and no debt repayments till FY '29, we're certainly building the flexibility and Upcoming, we'll release our 2025 MROR report in the next month. And then we also have an investor briefing and visits to Cowal and Northparkes. Thank you for your time on the call today. Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.
Operator: Good morning, and welcome to the American Strategic Investment Company's Fourth Quarter and Year-End 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Curtis Parker, Senior Vice President. Please go ahead. Curtis Parker: Thank you, operator. Good morning, everyone, and thank you for joining us for ASIC's fourth quarter and year-end earnings call. This event is also being webcast in the Investor Relations section of our website. Joining me today on the call to discuss this quarter's results are Nicholas Schorsch Jr., American Strategic Investment Company's Chief Executive Officer; and Mike LeSanto, the Chief Financial Officer. The following information contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. Please review the forward-looking and cautionary statements section at the end of our fourth quarter 2025 earnings release for various factors that could cause actual results to differ materially from forward-looking statements made during our call today. Should one or more of these risks or uncertainties materialize, actual results may differ materially from those expressed or implied by the forward-looking statements. We refer all of you to our SEC filings, including the Form 10-K filed for the year ended December 31, 2025, to be filed on April 15, 2026, for a more detailed discussion of the risk factors that could cause these differences. Any forward-looking statements provided during this call are only made as of the date of this call. As stated in our SEC filings, ASIC disclaims any intent or obligation to update or revise these forward-looking statements, except as required to do so by law. Please note that all fourth quarter 2025 financial information is unaudited. Also during today's call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating the company's financial and operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measure is available in our earnings release, which is posted on our website. Please also refer to our earnings release for more detailed information about what we consider to be implied investment-grade tenants, a term we will use throughout today's call. I'll now turn the call over to Nick Schorsch, Chief Executive Officer. Please go ahead, Nick. Nicholas Schorsch: Thanks, Curtis. Good morning, and thank you for joining us. Today, we will discuss our results for the fourth quarter and full year 2025. We remain committed to operating and unlocking value at our current assets with a focus on tenant retention, property improvements and cost efficiency, while simultaneously pruning our exposure to non-core assets. For the year, we executed 13 new and replacement leases totaling 117,000 square feet. We continue to focus our leasing efforts on securing tenants in resilient industries, such as well-capitalized financial service companies, medical institutions and government agencies. At year-end, our $382.6 million, 0.7 million square foot portfolio consisted of 5 real estate assets throughout New York City, primarily in Manhattan, with office properties located in submarkets in close proximity to major transportation hubs. The portfolio had occupancy of 80.3% and a weighted average remaining lease term of 6.1 years as of December 31, 2025. Our New York City-centric portfolio features a mix of large investment-grade tenants, of whom the top 10 tenants are 69% investment grade or implied investment grade rated based on straight-line rent with a weighted average remaining lease term of 6.9 years. Investment-grade tenants in our portfolio include CVS, Marshalls and government agencies. Our calendar year 2026 lease expirations are 5% of annualized straight-line rent and 57% of our leases now extend beyond 2030, up from 56% last quarter. We believe that this term, coupled with a high-quality, largely investment-grade tenant base provides significant portfolio stability. As discussed on last quarter's call, we completed the disposition of our 1140 Avenue of the Americas office property during the fourth quarter. We also pursued a cooperative consensual foreclosure with the lender. And in connection with that transaction, we removed the related assets and liabilities from our balance sheet and recognized a gain of $46.6 million that is reflected in the statements of operations for the year. We remain committed to strengthening our existing portfolio of real estate assets as we explore additional income-generating investments. We believe with the completion of past sales and the reinvigorated effort to sell 2 additional properties, we will be better positioned to take advantage of opportunities to invest in the long-term future of our portfolio. It is our intention to build a portfolio that we believe will be accretive to shareholders. With that, I'll turn it over to Mike LeSanto to go over the fourth quarter and full year 2025 results. Mike? Michael LeSanto: Thank you, Nick. Revenue was $43.3 million for the year ended December 31, 2025, compared to $61.6 million in 2024. The year-over-year change is primarily related to the disposition of properties, notably the dispositions of 9 Times Square in the late fourth quarter of 2024, and the 1140 Avenue of the Americas in fourth quarter 2025. Revenue for the fourth quarter 2025 was $6.5 million compared to $14.9 million in the fourth quarter of 2024. The company's full year GAAP net loss attributable to common stockholders was $21.2 million compared to a net loss of $140.6 million in 2024. Net loss for the quarter was $6.7 million, in line with the $6.7 million we recorded in the fourth quarter of 2024. Adjusted EBITDA for 2025 was $0.3 million and $1.2 million for the fourth quarter. Cash NOI for the full year was $16 million and $1.8 million in the fourth quarter. As always, a reconciliation of GAAP net income to non-GAAP measures can be found in our earnings release, supplemental and Form 10-K. The company's balance sheet includes 100% fixed rate debt and prudent net leverage of 47.5%. We ended the fourth quarter with net debt of $249.7 million at a weighted average effective interest rate of 4.5% and a weighted average remaining debt term of 1.5 years. Importantly, all of our debt is fixed rate or swapped to fixed rate after we locked in interest rates while they were broadly at historic lows. With that, I'll turn the call back to Nick for some closing remarks. Nicholas Schorsch: Thanks, Mike. We continue to focus on enhancing operational flexibility through efforts such as targeted dispositions. We are also assessing strategies for our properties at 123 William Street and 196 Orchard to generate the greatest long-term value for our portfolio, including potentially selling the properties. If sold, these sales would generate additional cash that we believe can be deployed into higher-yielding assets, creating future value for the portfolio. Simultaneously, our team is focused on leasing up available space, evaluating options for replacing maturing debt, renewing leases with existing tenants and maintaining tight controls on expenses. One final note. Please be on the lookout for a notice about our Annual Meeting of Shareholders, which will be distributed to you in the coming months. Thank you for joining us today. Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you again for your participation.
Operator: Good morning. Welcome to Morgan Stanley's First Quarter 2026 Earnings Call. On behalf of Morgan Stanley, I will begin the call with the following information and disclaimers. This call is being recorded. During today's presentation, we will refer to our earnings release and financial supplement, copies of which are available at morganstanley.com. Today's presentation may include forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially. Morgan Stanley does not undertake to update the forward-looking statements in this discussion. Please refer to our notices regarding forward-looking statements and non-GAAP measures that appear in the earnings release. This presentation may not be duplicated or reproduced without our consent. I will now turn the call over to Chairman and Chief Executive Officer, Ted Pick. Ted Pick: Thank you, and good morning. Thank you for joining us. Morgan Stanley entered 2026 from a position of strength. Amidst increased geopolitical uncertainty, the firm generated a record quarter with revenues of $20.6 billion and EPS of $3.43. The top and bottom line results are an ongoing demonstration of the capabilities of our integrated firm in periods when clients and markets are active. The first quarter's return on tangible of 27% evidences the operating leverage of Morgan Stanley's business model, a leading wealth and asset manager alongside a leading global investment bank. The consistent execution of the last 2 years plus is the proof of Morgan Stanley's ability to deliver on a higher plane of performance against different mini and macro backdrops of uncertainty. Wealth Management demonstrated continued momentum with growing durable fee-based revenues and increasing margins. Our client acquisition funnel remains unrivaled in driving industry-leading growth with $118 billion of net new assets and $54 billion of fee-based flows. With long-standing relationships across banking and markets, the investment bank was well positioned to serve clients around the world, underscored by a record $10.7 billion in quarterly revenues, inclusive of $5 billion plus in equities. A well-diversified investment management business continues to attract strong demand for Parametric. Across wealth and investment management, total client assets exceed $9 trillion on the road to $10 trillion plus. In the first quarter, we deployed resources to support client activity and opportunistically bought back stock. Our reported CET1 ratio of 15.1% against the capital requirement of 11.8% translates into a capital buffer of over 300 basis points. We're encouraged by this period of enhanced regulatory transparency and balance as we move through rule-making comments toward the finalization of Basel. It's worth noting that over the last 9 quarters, we've accreted $15 billion of capital. During the quarter, we also closed our acquisition of Equity Zen. As discussed in our annual letter, we remain mindful of the known unknowns of 2026, the accelerating adoption of AI at the enterprise level and the ongoing military conflict in the Middle East. Against this backdrop, our approach is one of measured confidence. Our institutional wealth clients demonstrate continued resilience and as much as ever seek the depth and breadth of content and market access that Morgan Stanley provides. At the same time, we remain vigilant in the context of higher asset prices, tight credit spreads and interest rate path uncertainty. We will endeavor to navigate the upcoming period with the same level of intensity and execution that has defined our performance over the last 9 quarters. The end of the end of history is now at hand and alongside accelerating AI development, we're committed to staying in our strategic lane to execute with rigor, humility and partnership and to be prepared to tactically pivot on the ongoing military disruption or technology adaptation warrant. Morgan Stanley strategy and client-centric culture is set to raise manage and allocate capital with excellence, to invest in our clients and technology across the integrated firm and to grow assets and compound earnings in a capital-efficient way. Now I'll turn it over to Sharon to discuss the quarter. Thank you, Sharon. Sharon Yeshaya: Thank you, and good morning. The firm produced record revenues of $20.6 billion and record EPS ex DVA of $3.43. Our ROTCE was very strong at 27.1%. The results this quarter demonstrated the strength of our integrated model and the scale of our global platform. Clients increasingly turned to our trusted advisers across the firm, particularly when market volatility became more pronounced. For the quarter, our efficiency ratio was 65% reflecting strong operating leverage and disciplined execution as we continue to invest strategically across the firm. Improved efficiency includes $178 million of severance charges. Now to the businesses. Institutional Securities delivered record revenues of $10.7 billion. Strength was broad-based across asset classes in both banking and markets and in all regions. The year began with optimism supported by solid economic growth in the U.S., significant strategic and financial assets waiting to transact an AI-driven transformational opportunities. AI themes followed by geopolitical uncertainty and market dispersions continued to -- contributed rather, to strong client engagement throughout our quarter. Our global team across the integrated investment bank led as a trusted and long-standing partner to advise clients in an increasingly complex environment. Investment banking revenues increased year-over-year to $2.1 billion, led by growth in the Americas. Investments in our talent are yielding results. And despite ongoing geopolitical volatility, capital market activity remains resilient and boardroom dialogue remains active. Advisory revenues of $978 million increased 74% versus the prior year, driven by higher completed activity in the Americas. Building on the momentum in the back half of last year, M&A activity broadened across sectors with notable strength in technology and industrials. Equity underwriting revenues were solid at $396 million, led by higher issuance across IPOs and convertibles compared to the prior year. Fixed income underwriting revenues were $742 million. Outperformance was driven by record issuance in the investment-grade market on the back of higher event-driven activity. Looking ahead to the remainder of the year, investment banking pipelines remain steady, supported by ongoing strategic activity from both corporates and sponsors and increasing needs for strategic capital formation. Our integrated investment bank remains global, diversified and well positioned to effectively support clients. Turning to equity. Revenues surpassed previous records reaching $5.1 billion for the first time. The performance reflected year-over-year growth across businesses and regions on the back of very strong levels of client activity. Our continued investment in technology is supporting scale and access across our global franchise. Prime brokerage revenues increased versus the prior year, driven by higher average balances that outperformed market indices, particularly in Asia with investor interest across the region. Cash results increased against the prior year, driven by higher volumes across regions. Derivative results were also a standout, up versus the prior year, driven by robust client activity across products and regions. Fixed income revenues were postcrisis record at $3.4 billion. Our performance this quarter highlights our business mix and our ability to capture market opportunities. Micro results increased meaningfully year-over-year, driven by securitized products and credit corporates. Macro results were solid, reflecting declines in foreign exchange, which benefited from a more favorable trading environment last year. Results in commodities increased significantly compared to the prior year. The business navigated elevated volatility in energy markets well, benefiting from increased flow and structured client activity. Turning to Wealth Management. Record revenues and robust margins in the first quarter reflected the scale of our platform that continues to drive exceptional performance. Retail clients were engaged across channels. Net new assets of $118 billion, fee-based flows of $54 billion and growth of bank lending balances all showcased that our investments supporting both advisers and clients are working. Revenues reached a record of $8.5 billion. The business delivered a PBT margin of 30.4%. Asset Management revenues grew year-over-year to $5.1 billion, reflecting higher market levels and the cumulative impact of consistently strong fee-based flows. We are setting the industry standard in fee-based flows, generating $54 billion this quarter, a new record, excluding prior acquisitions. Transactional revenues were $1.1 billion, Daily average trades reached the second highest level on record as clients remained active in volatile markets. Results were supported by ongoing demand for our diversified alternative offering, which had record sales this quarter. This was driven by significant growth in private equity and real assets highlighting the benefits of our scaled alternatives platform. Bank lending balances increased $5 billion quarter-over-quarter to $186 billion, driven by securities-based lending and steady growth in mortgages. Household penetration of lending products is now at 18%. This is up from 14% just 5 years ago. Through ongoing investments in technology, adviser and client education and an expanded product set. Sequentially, total period end deposits grew to $419 billion and net interest income increased to $2.2 billion. NII growth in the quarter was supported by both lending balances and higher average sweeps, which more than offset the impact of the 2 rate cuts in the fourth quarter. Continued growth in lending has supported a steady build in NII over the past 6 quarters. Looking ahead, we expect NII to build over the course of the year, with a modest increase in the second quarter compared to the first. Net new assets were very strong at $118 billion, the growth showcases our diverse asset gathering capabilities, which benefited from contributions across channels. Workplace stood out as having sourced clients who continue to aggregate assets onto our platform and benefit from stock [indiscernible] investing events. Finally, while driving exceptional quarterly results, we remain focused on long-term growth opportunities. We closed the acquisition of Equity Zen, enhancing our leadership position in the private credit markets ecosystem and further deepening market access for clients. We launched our digital asset pilot through our partnership with Zero Hash, enabling select clients to buy and sell several major digital currencies through eTrade and we are investing in the development of our agendic infrastructure. Most importantly, our investments in the funnel are servicing client needs and illustrating the value of advice. Since 2020, we have generated over $400 billion of new adviser-led assets from relationships that originated from either workplace or E-TRADE. Today, inclusive of workplace assets on our platform prior to the acquisition of E-TRADE, the total value of adviser-led assets sourced from Workplace and E-TRADE exceeds $1.2 trillion. This represents roughly 20% of our current $5.8 trillion of adviser-led assets. The scale of our client acquisition funnel is already powerful and combined with our ability to invest in the future, uniquely positions us as a category of one. Moving to Investment Management. Revenues were solid at $1.5 billion. Asset management and related fees that were up 3% year-over-year on the back of higher AUM were offset by declines in accrued carried interest in our private funds. Long-term net flows were $3.3 billion, driven by ongoing demand for our Parametric solutions and fixed income strategies, which help offset equity flows. Total AUM now stands at $1.9 trillion. Turning to the balance sheet. Total [indiscernible] assets were $1.6 trillion, we strategically deployed leverage-based capital this quarter to help facilitate client activity in our markets franchise. Standardized RWAs increased quarter-over-quarter as we actively supported clients. We ended the period with a standardized CET1 ratio of 15.1%. During the period, we opportunistically bought back $1.75 billion of common stock. Our first quarter tax rate was 19.6%. The lower rate was driven by share-based award conversions which largely take place in the first quarter. We continue to expect our 2026 tax rate to be between 22% and 23%, which similar to prior years, will exhibit some quarterly volatility. Our integrated firm has proven critical through this period. Clients are engaged relying on our advice in an increasingly complex environment. We are well positioned to continue to support clients as they navigate fast-moving markets, and we have the capital and the resources to do so. With that, we will now open the line up to questions. Operator: [Operator Instructions] We'll take our first question from Ebrahim Poonawala with Bank of America. Ebrahim Poonawala: Maybe, I guess we can start with all things, private credit. So heard your prepared remarks, there were 2 things, given kind of where Morgan Stanley interacts with private credit, you had the fund that you talked about, where we had some redemptions during the quarter. But just talk to us, Ted, your perspective on what's going on with the private credit market, how does that change or inform your view on how you deal with the business? And specifically, if it's caused you to rethink how to distribute some of these products through the retail channel in wealth? Ted Pick: Well, I think what's important over the last number of days is that there's more balance in the conversation. As you know, private credit as a sub-asset class has come of age over the last number of years as a new set of lenders has stepped in post the financial crisis in the place of Wall Street. While it's still a growing class, it's having a learning moment. We call it an adolescent moment where both the lenders and the borrowers are being looked at carefully. But the reality is it's credit and credit is going to broadly perform when the economy is in the kind of good shape it's in right now. And the fact that it's called private credit has sort of taken on a bit of it -- took on a bit of a life of its own for a while. But now I think now we're all seeing that there's resiliency in the underlying product that the structures and the terms on collateral are very well thought through. And that this is a market that over the long term has extraordinary growth potential, it's just a question of time and working through economic cycles. Our own participation in this is in line with The Street. As a distributor, bear in mind, Ebrahim, as you know, alts are about 5% of our total FA phasing wealth management pile. So quite small, that's all alts. That would include real estate, private equity, private credit infrastructure. And then private credit is 1%. So even smaller there. And in fact, as you've seen spreads widen a bit, either has been an institutional bid and others from the highly sophisticated institutional community on the private wealth side have come in and stepped in and we've seen net buying across these sub-asset classes in the first quarter. And then with respect to investment management, private credit is less than 1% of our total AUM, well under $20 billion of $1.9 trillion. So our exposures are small, are modest, but it is an asset class that I think there was a lot of learning around over the last couple of weeks. I think that is very healthy. But we just need to sort of remember the headline point here, which is credit should perform during periods when the economy is performing. This will be no different. Some portfolios may be overloaded in a particular sector or a particular type of name in which case, there'll be winners and losers among asset managers but credit generally is going to perform as the economy performs. And right now, we're not talking about the R word, and that's positive for broad credit. Ebrahim Poonawala: Super clear. And I guess maybe one for you, Sharon, just around liquidity management. To the extent you can -- if you can help us understand the reorg that was approved by the Fed for the German bank into the U.S. entity, like what does that mean in terms of adding liquidity and there are things that you may be able to do going forward? Just how should we think about the impact of that to the P&L. Sharon Yeshaya: Sure. I would say -- remember, it's a bank reorg and in terms of the bank reorganization, Basically, we moved over $100 billion of assets over the course of the quarter on to the bank. When looking at that, that will allow us to fund assets more effectively and make us more competitive, more broadly like our peer set and make us sort of fit for purpose as you think about how we play versus our peers in being able to distribute various products. The 100 [indiscernible] that we moved over, over the course of the quarter, you can think of about 30% of those assets at this point, being able to be better funded from -- you can compare unsecured funding to sort of a wholesale deposit rate. The math in being able to think about what the opportunity is that you will see just for that asset -- those assets over the course, say, starting in 2027, but it's really not just a 2027 story. This is something that over time, as I said, we were formed differently as a bank than some of our peers, and we're playing now at a different playing field with our peer set. And we should be able to see more assets and more growth and more competitive pricing and certain types of product sets that we offer to our clients, which should enable us to grow within our risk envelope in the same way with just a better funding structure. Operator: We'll move to our next question from Dan Fannon with Jefferies. Daniel Fannon: Sharon, was hoping you could expand around your comments on organic growth within the wealth channel. You highlighted workplace, but any additional context around that strength would be helpful. Sharon Yeshaya: Sure. I think that that's a fantastic question, mainly because I think what you've seen is quite encouraging over the course of this [indiscernible]. Sometimes there we call out numbers over $100 billion of NNA, and we talk about a single driver or something that's really changed the profile of that particular quarter. In this quarter, there was no one single driver that you can really point out. You still had really high levels of engagement across the adviser-led platform. But what I tried to point out in my prepared remarks is that workplace is becoming a bigger and bigger contributor and a more effective sort of thoughtful way of where we're actually seeing new client engagement. Specifically, with this quarter, you'll see that often and not surprisingly, that in the first quarter, you'll see unvested assets best. And what we saw in workplace this quarter is greater retention of the assets invested. So that's the first right, in this kind of funnel concept of what's going on with Workplace. The first is we retain those assets, and we'll see -- in this particular quarter, we saw greater asset retention from Workplace, which translated into NNA. And then over time, and this is what I was highlighting at the sort of conclusion of my Wealth Management comments is we are seeing channel migration, and that's technology and investment where those workplace assets are now actually seeking advice and that migration is something that has helped to contribute to over $1 trillion of total assets in our adviser-led strategy. Daniel Fannon: That's helpful. And then sticking with Wealth. There's been a lot of discussion around client cash optimization and -- so longer term, I was hoping you guys could talk about how you think about your ability to earn NII on client cash as there are more tools available to move cash around more efficiently? Sharon Yeshaya: Yes. I think that's a great question and certainly very topical. The Wealth Management team with Jed and Andy at the helm, have always been there sort of thinking about ways to disrupt and continue to think about disrupting ourselves and what tools will be available in the new frontier. As you know, for us, and as you think about the current client sweep balances, those sweeps we've largely said have behaved -- there are certain places that are similar where they're looking for yield-seeking behavior. But then there's also a transactional nature to that cash itself. And that's what you've seen bottom out. So that's right now in the near term. Over the long term, we're moving towards thinking about ways and in this new world, you actually have value of advice. So if you talk all -- where do you work through a tokenized world? How do you think of an on chain world where you can move assets quickly. The same way you'd be able to move those liabilities quickly, we would be there to offer different types of products on the asset side. So what type -- what kinds of things might exist on the lending side for on-chain advice? And then how do you also move and think about all of those digital assets, be that things that are yield seeking or like we said on the asset side that you're also able to get advice. So how do you actually act and execute. So I think that as things move on, there's a lot of creative space in terms of the advice-driven model. We do, as you know, currently also offer ways to move around cash that's currently yield-seeking in nature. Operator: We'll move to our next question from Steven Chubak with Wolfe Research. Steven Chubak: So Sharon, I was hoping you could speak to the Fed's new Basel III capital proposal. And given you should benefit from long overdue changes, notably to the G-SIB surcharge calculation removal of double accounting in the stress test, how that might inform where you could be comfortable running on CET1 longer term versus, say, the older legacy framework? Sharon Yeshaya: Yes. So let's just take a step back and just talk about what's actually been proposed. There are 3 proposals that I think about. One is -- one, the models that obviously, we've put comments in II Basel and III G-SIB. So first, taking G-SIB and [indiscernible], that's the most obvious quantitative metric. If you look at the 3.5% G-SIB bucket buffer that we were in at the end of the fourth quarter. That number in the new framework, as proposed currently would be 2.2%, and that gives you a sense of just the base in terms of the rebates from where you would be from G-SIB. But as you know, very well, Steve, you'd also be in a position that you'd see RWA inflation associated with the Basel proposal. And we would hope that there will also be some comments taken from the stress testing models in terms of PPNR and the way you think about income-based modeling sort of for fee-based assets and the wealth management business as well as expenses. If you take all of that together, we would expect that we're modestly up here, either where we are today from capital neutral to modestly positive in terms of the overall amount of capital that we should have. But we'll have to see to quantify that, really where all 3 of those land and the interplay between them. In terms of the actual CET1 metric, you'll see that we are using excess capital. We did see Specifically, we had the relaxation or the change, I should say, the overall change of SLR. We deployed SLR and leverage-based capital over the course of the quarter, and we continue to increase our RWAs to support our client base. Ted Pick: Yes. The only thing I would add is that the firm view is that we hope to work well with the regulator, along with the rest of the group to get Basel finalized. We have a window here and the big picture is let's put the puck on the ice once and for all. And not everyone is going to get everything they want that's, by definition, the way these things would be. But that take as much of the lot that is reasonable to balance that, which ensures ongoing stability amongst these firms, but also allows us to the pivotal role that we do in helping to power the real economy. So with that in mind, it's absolutely critical that we keep the momentum going and we land this. Steven Chubak: That's great. And for my follow-up, if I could just double click a little bit more into some of the organic growth opportunities. You talked about leaning more heavily into markets. We certainly saw a nice uptick in loan growth in the quarter. Just want to get a better sense as we start to look under the new proposal, what are some opportunities that might be more compelling just given the strength of your capital position that you might be more inclined to lean into here? James Mitchell: I think you just have to go to the business model as it exists. The 3 segments, the TAMs are all growing at 2x GDP organically, and our share, depending on the space is somewhere between 10% and 15%. So that alone, knowing what we do and getting after it is critical. It's interesting when Sharon gave the earlier answer with respect to how the funnel is working. That's an accelerating phenomenon inside of wealth. But it also gives cause for the corporate coverage Officer and Investment Banking to talk to the CEO or talk to CFO and ask her how the stock administration plan is going and how employees feel about that. And now their coverage under the Wealth Management model. So there is a lot of really interesting work that can be done within the frame of the integrated firm. I think the decisions with respect to how we deploy capital really has to be around client selection, where we think that there is a long-term reward and wallet setup that is appropriate against our risk parameters. I'd also point out that the Investment Bank is really a global investment bank coming of age now. If you see the growth that's been experienced in Asia, not just in Greater China. And of course, Japan, where, as you know, we have a special relationship with our partners, MUFG, who own 1/4 of the firm, but also the growth we've seen in the re-equitization of India and then, of course, the AI connectivity that exists in Korea and Taiwan. So too, we are now putting in incremental management strength in places like Germany and the core of Continental Europe, which is looking to reindustrialize given everything that's going on. So being a global firm and doing it the way we've done it, but also to stick -- it's why I reiterated very simply in the opening that we stick to our strategic knitting, which is that we raise manage and allocate capital for institutions and individuals and that we keep it that way. And on the organic front, assuming the economy continues to grow, we think we've got a ton of opportunity to put top line up and continue to carry margin. Operator: We'll move to our next question from Brennan Hawken with BMO Capital Markets. Brennan Hawken: I'd love to circle back on some of the comments 1 you made on cash. You spoke to on-chain. I don't know if you guys saw, but a competitor in the annual report, JPMorgan put out that they're planning to reduce some of the friction on brokerage cash. Is it right that in your comments around on-chain that that's the direction you guys are thinking of going as far as reducing that friction? And then relatedly, it's -- today is the 15th tax day tends to be a big event seasonally for you in your wealth business, how should we think about cash and then net new? And what the expected impact is on that this year? Sharon Yeshaya: Thanks so much, Brennan. So going first, just to cash, we continue to offer our clients different ways to access cash, talk about cash, talk about the cash management. And as we've talked about before, there are a lot of different places for people to think through. And we have been talking to our clients around various cash management over time, just given what's gone on over the course of the last 5 years. But we're obviously, as you know, always looking at ways to continue to enhance conversations that we have with various clients. As it relates just to Tax Day and what we've seen so far this quarter, so far, right now, taxes are as we would have expected, but it's worth noting that from an SBL perspective, we've started the quarter strong. So the lending growth that we've talked about even at the beginning of this year continues. And we've put in a lot of resources towards lending products more broadly. So digital tools, digital enhancement and using automation to be able to help with the paper backlog associated with some of the various lending products more broadly. Brennan Hawken: Got it. And Ted, you spoke to an adolescent moment for private credit, which I thought was an interesting way to put it. You also flagged as a distributor, 1% of client assets in private credit, obviously, very small. But curious, but you do have great touch points across your Wealth Management business. And clearly, all the attention here is around wealth specifically given these vehicles. What are you hearing from the field around the temperature on some of these non-traded BDCs. Is the concern coming from more of the FA population or the investor side? And is there any emerging signs of looking at other asset classes besides credit? Ted Pick: Yes. Adolescent I mean to say sort of coming of age. The asset clients did not exist. And when the private lenders stepped in effectively in the place of the traditional Wall Street firms, it was new and of course, became part of the story for private and also public asset managers. We have to remember that this class is real. It's at anywhere between $1.5 trillion, $1.7 trillion, high yield, similar size, levered lending, similar size. But the IG market, obviously, is enormously bigger at $13 trillion to $15 trillion. So it's just 1 piece of the credit stack. And the reality is that with spreads having widened out a bit, there is an institutional bid. And we've seen this now in the last week where a number of the top asset managers have underwritten, and we've been very happy to act as underwriter on some benchmark issuances, they have been actually 2 over the last couple of days, wherein the -- at the asset manager level, at the BDC level, our real capital has been raised at quite reasonable rates to help get at the refinancing phenomenon that will exist in the years ahead. Now the reality is some asset managers are going to outperform other asset managers, and that's just the nature of product selection and diversification. Part of the reason that the FAs do such a brilliant job with our clients is that they very much preach this idea of durably growing your portfolio in a risk-managed way, taking into account your liquidity needs in every imaginable scenario. And then importantly, to think about how alts over time, over decades, generations and even lifetimes can be an additive part of your portfolio. And even with that, through the decades of alt being introduced into the system. This is going back to the financial crisis, through COVID through BREIT a number of years ago. These products have sort of sustained the test of time. And even now, the penetration is only 5%. So on the one hand, it's material. On the other hand, it is still an area of growth. And the key is to be selective in how you've put that capital across different alternative selections, whether it's PE, private credit infrastructure, and do -- or just straight private equity and then real estate, the 4 big ones and how you have selected managers on a diversified basis on the basis of where they have expertise by sector, what their history is of deployment, what their history is of return on capital, and that is part of the learning. And I think that has been taking place. And the data point that I would put to you, which we've heard elsewhere to is that during the quarter, notwithstanding all of the press and discussion, the system was a better buyer of alts. And so that is an important indicator that folks want to be participating at the right price with the right manager. And then over time, the asset managers that perform will generate terrific results. And the ones that perform less or -- less well will underperform, and that becomes part of the asset manager selection dynamic. Operator: We'll move to our next question from Devin Ryan with Citizens Bank. Devin Ryan: Question on Wealth Management. Stocks obviously sold off several times during the quarter on AI feature announcements the customer cash sweep optimization. I think to Dan's question was one of the events about other automation tools, I think, and just potential implications on revenue models. So the market seems like it's currently weighing AI as a negative for wealth towards a risk. And I suspect you don't agree with that. So it'd just be great to hear more about your view on some of the biggest implications of AI on the business. I know you guys have been investing for a number of years here. Ted Pick: Yes, I want to weigh in on that one. AI is our friend, okay? It is just the latest generation of technology that is going to be part of the ecosystem. And we're at an important moment. We're working with Claude mythos, the beta version, and we are looking at different places inside of infrastructure, where we will just continue to -- there'll just be continuous improvement and that's going to go on with the firms that have the history that we have of cybersecurity infrastructure as the #1 priority. This is not a new phenomenon. What is new is that we are beginning to evolve from pure efficiency exercises where you could have effectively replacements of what might have been a a call center or what might have been an operational function to automate routine tasks like moving money to something that over time becomes a productivity phenomenon. And that efficiency and effectiveness transform is super compelling. The efficiency you talked about, but what about the effectiveness where you can have the historical context as between the financial adviser and the client where she is well aware of the past interactions and how that might drive against certain market dynamics, future action. And so that co-piloting, I think, is something that Jed Fin under the leadership of Andy Saperstein is spending a lot of time on where they effectively have corridors or super agents they are going to be working to drive, again, efficiency and effectiveness across the portfolio in wealth. I'd also say that this phenomenon is taking place inside of our our equities business, where, as you know, we have a leadership business where we are able to take some of the complex questions that are asked, but sort of of the technical type and they can be answered directly by a client agent inside of the electronic trading platform. And then, of course, there are the numerous examples inside of core infrastructure, where efficiency around classic operational flow and surveilling is a foot. So there will be the continuous arms race of one AI platform versus another, but this is not new, and this is something we consider to be additive to what we have, which is world-class technology, world-class cyber defense and then the best trusted advisers sitting with the client. That is ultimately, again, the secret sauce, whether it's the investment banker, the asset manager coverage Officer or importantly, the wealth management and financial adviser. That is the key. Devin Ryan: I appreciate that color. As a follow-up, I want to touch just on Asia, 45% of the firm sequential revenue improvement came from Asia. It's only 16% of firm-wide revenues. I know a lot of that delta is from prime brokerage, but can you just expand a bit on the momentum in Asia? How sustainable is it further growth opportunity in the region, just given the big step-up we've been seeing here? Ted Pick: Well, it's a question of people. The person who runs Asia for Morgan Stanley is Gogo Leroy, who is a plus or minus 3-decade veteran of the firm. And he's 1 of the trusted leaders of the firm. He is also the co-head of equities with [indiscernible] Thomas, and they've done a phenomenal job in equities. But the Asia strategy has been one where we have really integrated the effort as between the bankers and the sales and trading unit inside of Institutional Securities for the last many years, there's a firm that has been a leader in Hong Kong from the '90s right through SARS and the handover and through recent years, but the game changer for us, of course, was during the depths of the financial crisis to be effectively married to our friends at MUFG and the senior management team of the firm travels to Tokyo 3, sometimes 4, times a year to meet with our partners day in turn, join us, they have 2 seats on our board. So we are deeply sconced in Japan with 2 ventures that were formed 20 years ago. We expanded our capability across our research, integrating the research and equities trading platform now we help MUFG monetize through the old Bank of Tokyo, foreign exchange spot flow, which is incredibly powerful. So this is one of the classic cases where a great idea somewhat out of necessity was nurtured through management teams through the years of Mr. Gorman and now this management team has really gone even further to think about what Align 3.0 could look like, which is to really tap into the demography and opportunity that's inside of Japan. So the ecosystem works. We also have a world-class wealth business inside of Hong Kong that caters to the Asia Pac region. That's quietly a $1 billion business. And then the last piece I'd say is some of this is location strategy. We decided years ago to exit a number of places. We exited the Russia ecosystem. We lightened up on non-core parts of of the emerging world. But we really doubled down on places like Korea and Taiwan and then importantly, in India, where we not only have 15,000 people as an infrastructure phenomenon, but we have a world-class investment banking trading business. So this is not sort of the region [indiscernible], this is a region where we've had a leadership position. Actually, I think we've attracted some incremental competition into the space. So in a way that actually makes the challenge harder now. because I think people have seen the success, but that's the nature of our business, and we just keep on going. As these countries re-equitize, they take great companies and they want to list them and they want to effectively also deal with the issues around a lack of energy independence or where they sit in the AI ecosystem. You can expect some very interesting M&A and hybrid activity. And that's right in the sweet spot for corporate finance coverage. So we like that region very much, and we like the growth potential and it's, of course, also very closely risk-managed. Operator: We'll move to our next question from Glenn Schorr with Evercore. Glenn Schorr: I wonder if we could talk about and equity pipeline for a second, usually when the markets are this strong. It's a little bit better, but I know it's building, and I know there's some really big ones out there that might -- that are talked about coming. But thought one of the interesting angles on this was also that it seems like some of these big IPOs are very partial towards having a big retail allocation. And just curious if you thought that's true, how you use E-TRADE as part of your selling process? And then just talk about the overall pipeline in general would be helpful. So appreciate that. Sharon Yeshaya: Yes. So it's a great question. And I think that you do continue to see the democratization sort of products more broadly. That's one of the reasons when you actually think about the acquisition of Equity Zen and what we're trying to do, right? So a place where there's stuff within the private domain that's actually already beginning to transact. We see that as a technology that can help us. We have already begun to offerings come through that platform, and we would expect that to continue. So that is a market, as you know, it's growing. There are a lot of places within the retail channel, the different companies are looking to attract, and we have that channel and those capabilities. you have it already existing on the adviser side, you have an existing to some degree when you think about the underlying E-TRADE side, but what you really need is to make sure that you also have the private market ecosystem necessarily before you see an IPO come through the marketplace that you're able to have different access and different corporate relationships. And those are the pieces that Jed and Andy have really begun to lay the foundation and build over time. So it's not just one thing. I'd say that it's a build across the other. And I think we have that offering to many of these companies that are looking for ability to transact within retail. Glenn Schorr: And do you have any numbers that you could throw at the pipeline or some soft details, we've been all been waiting for years on the sponsor-led pipeline, but in general, it feels like a backdrop that should be improving. Just curious on your take. Ted Pick: Yes, Glenn, what I'd say on that is, as you know, the PE firms are sitting on $1 trillion plus of dry powder. There are 1,500 companies plus that are privately held with an average duration of 5 years that are worth $1 billion plus. And the entire ecosystem of private companies, hard to know. Is it -- are they worth $3 trillion or $5 trillion, but they're -- there were multiple trillions. And so the question now is, do they come and how do the markets feel? And I think the reality is I give you a balanced answer on this. I think that on the one hand, you see the earnings power of the large-cap group, the balance sheets and the earnings growth. And of course, now if the war is contained, 7,000 S&P and NASDAQ working its way back to. So pretty constructive backdrop. The fact is that the sponsors, as you know, would like to crystallize some of this portfolio, especially the publicly traded ones so they can keep this process going of effectively deploying and raising. I do think that not every company is going to be able to make it as an IPO in this environment. Some -- there's going to be some selection. And what we're seeing is that the largest asset managers, the largest private equity firms, some of whom have very high-quality companies are likely to be the first to move. And the data point I'd give you is that there are increased numbers of bake-offs with sponsors. And again, think of it the way Dan Simkowitz would describe it is think about sort of corporates think about public asset managers, private asset managers. There's effectively competition and horizontal to see where capital clears is the way I'd put it. And a number of these bake-offs are two track, can we make a sale or can we list? And I think if we can get to a period now where we resume some of the narrative that we had going into 2026, which was a very strong one. I think what you'll see is effectively the resumption of pipeline hitting the marketplace, whether it's through outright sales to other sponsors or likely to strategics or partial sales through IPOs, which is kind of a call that we collectively made going into the year. But I do think there is some selection. There are going to be mid-cap or small and mid-cap companies that aren't going to be ready to make it as public companies because the reality is that the bar is very high for public manager and investors, as you know, against the resiliency that's been demonstrated across sectors in the C-suite through COVID and now this period. So the comps in a sense are tougher. But I do think that the desire for private equity sponsors to begin steadfastly to liquefy chunks of their portfolio in order to get to the next, which is to deploy capital into the next leg of the cycle. I think that has increased. And I think what you should expect to see is a reasonable drumbeat of leading sponsor and leading companies hitting either the private or public markets if the macro environment permits. Operator: We'll move to our next question from Mike Mayo with Wells Fargo Securities. Michael Mayo: Can you elaborate more on the financing business within trading? I assume that's for both private credit and liquid markets, and that's just been growing so much the last year for this decade and a comment on the resiliency of that. Does that mean trading is less volatile than it used to be or if and when we get a bear market, does this shrink back down? Sharon Yeshaya: Sure. Thank you so much, Mike, for the question. There is a stabilizer, I would say, over the course of the last 10 years. I mean you've been covering us nearly 2 decades, I think. The last decade in fixed income has been marked by refocusing our business on clients and also creating durable sources of revenue. What you point out to is one of those sources of revenue. It is, to some degree, the intent is to be more stable on a balanced business. But as Ted said, it is a credit risk business. So overall, all of those types of products are looking at underlying credit, looking at counter-party risk, understanding both risk limits as well as the diversification, the structural protections that you might have, the various haircuts. What I think is important, specifically about the private credit business we started the call is that you also have this ability to look down on a loan-by-loan basis and we have the ability to both mark and margin across that. So there's a lot there within the ecosystem. But yes, that has been a stabilizing factor within our fixed income revenue results. Ted Pick: What I would add to that is I think the durability of the lending business is good. Of course, it kind of speaks to the proposition around valuation is repeatable P&L. But one of the things that Sharon and I have observed over the last number of quarters, the leadership groups in both and this is, I think, part of your underlying question, Mike, as well, in equities and fixed income have both really looked to try to build a well-governed classic trading business, effectively the moving of inventory market making, taking the world-class content that Katy Huberty has and getting it to clients in all kinds of different forms, not just traditional big conferences, but finding curated ways to get institutions to effectively act on bespoke ideas in a moment where you had to take a view when we had so-called Good Vol at the beginning of the year, and we have the content available for you to express that view. And then we effectively take that content and offer market access. And that market access is to be on the cash desk where the equities guys did a fantastic job. And then importantly, in the derivatives business, that has really grown into a classic market-making, risk management business around Morgan Stanley's content. Similarly, in fixed income, again, contain risk alongside of -- largely it being a financing business, but doing that around clients wanting to express a view. So one of the things we kind of look at is having enough of the durable financing revenues throughout these businesses, and by the way, similarly in Wealth Management. There is an element of wanting to expand the lending product, but also we're looking very closely at DARTs and other indicators of just transaction activity, whether it's in cash form or derivatized form. And the answer is we want both because there are going to be periods where the markets are not going to be conducive to activity where either it will be risk off or just people sort of set in what they want to do, in which case, the financing revenues are the kind of durable P&L that allow you to sort of sustain the balance of the firm. But at the same time, we want to have the right levels of activity around times when Morgan Stanley content matters. When we're delivering something that actually is differentiated and importantly can be acted upon. And then we wish to try to find a way to express that through liquid markets and market access. So it's an excellent question because I think one doesn't want to go too far to one end of the continuum or the other. But the fact that we really have built this financing business with some of our smartest people throughout the firm and that we have these credits as well structured and focused on as we have over the last number of years allows us to have an interesting activities based business alongside of it. And that, again, is not just in the Institutional Securities business, very much in the wealth business as well. Michael Mayo: Sticking -- sticking to that topic of risk and following up on the other question. all I have are the headlines in the paper about Anthropic and the [indiscernible] model. And the article said only a few players had that model. It sounds like you said you have the beta version of the Anthropic [indiscernible] model. And again, the articles said that you guys were summing down to D.C. and that people are extremely concerned. And you say AI is your friend and you should be a beneficiary, not a victim. But I'm just wondering about the cyber risk and how that may have increased and what extra steps you're taking now that you're looking to the model if you're allowed to disclose what you've learned? Ted Pick: Well, we have the regular way meetings in Washington, the Financial Services Forum. So we happen to have been down there, and the press as reported, we all got together. This is not new. We've gotten together before cyber resiliency, as you know, has been a top priority at this firm and other firms. And yes, we are permissioned on -- I think the official name is Claude Mythos preview. And certainly, the reality is that cyber risk is in the ecosystem, Mike, as you know, an increasing threat broadly. And so our ability to, along with others, I assume, continue to act a stalwart defense in our industry is important. So we will, I would imagine, collectively get better via that, and then there will be other competitive products. This is another step in kind of the long tail technology transformation that we've been talking about that is once in a generation, and now it's here. And as you've heard others say, cyber resiliency is a top priority at institutions like ours across all of our businesses. And if the ecosystem risk is likely increasing because of the quality and muscularity of the model than we do need to get our gloves up and take it to another level, and that's exactly what you'd expect, and we very much intend to do so. But I want to say on the back end, that a lot of the good that AI is going to bring both as an efficiency and effectiveness matter should not get dismissed because that's an important phenomenon that's going to continue to transform this firm. Operator: We'll take our last question from Erika Najarian with UBS. L. Erika Penala: Sorry to prolong an already long call, but just wanted to ask one question? Ted Pick: Erica, for you. We're very happy to take that last question. You stepped in there, you stepped in there. What was that $25 ago. L. Erika Penala: Hopefully, some people are still listening. So anyway, can you hear some my question. Ted Pick: It may just be you and me, but I'm going I know exactly. We're good. We're good. You talked about organic growth opportunities in wealth you talked about broad-based drivers for NNA. You talked about AI being your friend and you talked about advisers really being empowered by AI. As we think about the pretax margin of 30% in a quarter where wealth comp had some upward pressure. Should we think about the low 30s as sort of a high level where you can sustain? Or is there potential for upward pressure given all of the dynamics that you mentioned? Sharon Yeshaya: Yes. Thank you so much for the question, Erika, and thank you for noting all the places that we're investing. We reaffirmed our targets at 30% in the strategy deck. And we did that for good reason, mainly because we want to be in a position that we can invest and so we've never really managed the margin quarter-by-quarter. We've said that multiple quarters. We always said when we were below 30% that could cut our way very quickly to a 30% margin. But for us, what's most important is that we're constantly investing and there are so many places within this best business to invest and it's paying off. And over time, we'll continue to move up the margin on its own organically. The most important thing for us is to continue to put dollars to work to service both our clients and advisers and continue to be a category of one in this business. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you, everyone, for participating. You may now disconnect, and have a great day.
Operator: Hello, and welcome to the Vince Holding Corp. Fourth Quarter and Full Year Fiscal 2025 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Akiko Okuma, Chief Administrative Officer and General Counsel. You may begin. Akiko Okuma: Thank you, and good morning, everyone. Welcome to Vince Holding Corp. Fourth Quarter and Full Year Fiscal 2025 Results Conference Call. Hosting the call today is Brendan Hoffman, Chief Executive Officer; and Yuji Okumura, Chief Financial Officer. Before we begin, let me remind you that certain statements made on this call may constitute forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ from those that the company expects. Those risks and uncertainties are described in today's press release and in the company's SEC filings, which are available on the company's website. Investors should not assume that statements made during the call will remain operative at a later time, and the company undertakes no obligation to update any information discussed on the call. In addition, in today's discussion, the company is presenting its financial results in conformity with GAAP and on an adjusted basis. The adjusted results that the company presents today are non-GAAP measures. Discussions of these non-GAAP measures and information on reconciliations of them to their most comparable GAAP measures are included in today's press release and related schedules, which are available in the Investors section of the company's website at investors.vince.com. Now I'll turn the call over to Brendan. Brendan Hoffman: Thank you, and good morning, everyone. I'm incredibly proud of the strong operating results we are announcing today, highlighting the exceptional momentum we delivered at the end of the year that has continued into the start of fiscal 2026. As we announced earlier this year, we saw incredible strength in our direct-to-consumer business over the holiday period, and that remained the case throughout the full quarter. For the fourth quarter, sales in our direct-to-consumer business increased about 10% compared to last year, supported by our ongoing efforts in improving the customer experience and by the strategic pricing actions taken earlier in the fall. For the overall quarter, sales were up nearly 5% compared to last year and profitability outpacing the high end of our prior guidance range. We are especially proud of this performance given the disruption we experienced with developments from Saks Global, which presented a headwind to sales of approximately $2 million in the quarter. With the recent reorganization of Saks Global, we now have more clarity into the situation and are working with our partners there as they move forward in their plans. As a reminder, Saks Global recently represented less than 7% of our total sales. We remain supportive and confident in the new leadership team's ability to stabilize the business. We believe any change in penetration from this one partner going forward will be offset by strength elsewhere in the channel, given our diversified base and strong relationships across our wholesale business. This is a credit to not only our strong partnerships, but to the great product that is resonating across both men's and women's. We were also really pleased as we continue to elevate the product offering appealing to our broad customer base. This strong performance supported by our fiscal 2025 results, which delivered sales growth of over 2% and adjusted EBITDA growth of about 8% despite contending with approximately $8 million of incremental tariff costs. As we have discussed, our teams have done a tremendous job in mitigating the tariff pressures we faced. We acted swiftly, diversifying our sourcing across Asia and globally while working closely with manufacturing partners to maintain the quality standards that define Vince. We also implemented strategic pricing increases while maintaining unit sales validating the strength and quality of our product. As we enter fiscal 2026, I am encouraged by the growth we are continuing to drive, and I'm more confident than ever in the trajectory ahead for Vince Holding Corp. Given this, we are exploring opportunities to continue to invest in the customer experience within our full-price direct-to-consumer business. We are looking at areas like special events, people and store operations, including remodels and new store openings, while also continuing to leverage our digital platform and expand drop ship to additional categories. In spring 2026, these categories will include handbags, tailored clothing, belts and accessories, creating revenue opportunity with minimal inventory risk for the business. In addition, we are continuing to scale our men's business. We ended the year with men's representing approximately 24% of total sales and continue to see opportunity to expand this to 30% penetration, driven by growth in wholesale partnerships and expanded assortments in our own stores and online. And with respect to our international business, our second London store in Marylebone exceeded expectations this year and validated our thoughts on further international expansion. This success gives us confidence to explore additional flagship opportunities in gateway cities like Paris in the next 2 years. Finally, the strategy, I believe, will really help to accelerate our growth is our focus on maximizing Vince Holding Corp as a platform. While we do not have anything yet to report, we are continuing to look for opportunities to leverage our platform our world-class team and capabilities to support additional brands. This will create a new revenue stream for Vince Holding Corp. We could not be more enthused by our partnership with ABG, which not only opens channels for us, but also provides great opportunities with respect to marketing and engaging customers. We are thrilled to partner with the ABG team with a recent event at the Masters last week, and we are looking forward to doing similar types of interactive activations with the team for future high-profile events. This is in addition to the elevated outreach that we are also doing in partnership with our wholesale partners. Following the successful brand events at the end of last year with Nordstrom and celebrating our holiday campaign at our Madison Avenue, New York City flagship, we have continued the storytelling around the Vince brand. We recently celebrated an exclusive capsule collection for Spring 2026 as part of Bloomingdale's California Love campaign and hosted an influencer and editor event to showcase the capsule and preview of our Spring 2026 collection with over 100 editors and influencers in attendance. As part of the event, we also co-hosted a private VIC dinner with Bloomingdale VICs complete with a fashion show and model presentation to great success. Fiscal '26 is off to a strong start in all accounts. As Yuji will review and as seen in our outlook in today's press release, the momentum we ended fiscal '25 with has continued across all channels. Our full-price business has never been stronger, reflecting the customers' continued love for the product and value they see for the brand. We believe macro events aside, we are positioned well to continue to deliver healthy profitable growth. A little over a year ago, I returned to Vince as CEO. I cannot emphasize enough the pride that I have in our team, our business and the results we have delivered to date. I want to thank our incredible associates for their dedication and execution throughout fiscal '25. Their ability to evolve the product, maintain quality and execute against our strategic priorities gives me tremendous confidence in the future. We are operating from a position of strength with disciplined execution and a clear road map for growth. I look forward to updating you on our progress as we move through the year. Now I'll turn it over to Yuji to discuss our financial results and outlook in more detail. Yuji Okumura: Thank you, Brendan, and good morning, everyone. As Brendan reviewed, our fourth quarter performance reflected ongoing strong momentum in our direct-to-consumer segment that we are pleased to see continue into the start of the new year. Before I discuss our first quarter and fiscal 2026 outlook, let me review our fourth quarter results in more detail. Total company net sales for the fourth quarter increased 4.7% to $83.7 million compared to $80 million in the fourth quarter of fiscal 2024. With respect to channel performance, our direct-to-consumer segment increased 10.4%, driven by strong performances across both our e-commerce business and stores. This performance offset the 1.2% decline in our wholesale channel, largely driven by the decision to pause shipments to Saks Global. Gross profit in the fourth quarter was $41.1 million or 49.1% of net sales. This compares to $40.1 million or 50.1% of net sales in the fourth quarter of last year. The decrease in gross margin rate was primarily driven by approximately 300 basis points due to the unfavorable impact of higher tariffs, 160 basis points due to the success of our promotional Black Friday and Cyber Monday events and approximately 125 basis points due to increased freight costs. These factors were partially offset by a favorable impact of approximately 380 basis points, primarily due to higher pricing. Selling, general and administrative expenses in the quarter were $44 million or 52.6% of net sales as compared to $37.8 million or 47.2% of net sales for the fourth quarter of last year. The increase in SG&A dollars was primarily driven by $6 million of bad debt expense related to Saks reorganization. Loss from operations for the fourth quarter was $2.9 million compared to loss from operations of $29.7 million in the same period last year. Adjusted operating income, which excludes the $6 million related to the Saks reorganization, was $3.1 million. This is compared to adjusted operating income of $2.5 million in the same period last year, excluding the impact of goodwill impairment charges and P180 transaction expenses incurred in the period. Net interest expense for the quarter decreased to $0.7 million compared to $1.6 million in the prior year. The decrease was primarily due to paydown of the third lien facility which occurred during January 2025. At the end of the fourth quarter of fiscal 2025, our long-term debt balance was $19.5 million. Income tax expense was $0.5 million compared to $2 million income tax benefit in the same period last year. The year-over-year change is primarily driven by tax benefit taken in the prior comparative quarter due to the reversal of the noncash deferred tax liability associated with the goodwill impairment, which previously could not be used as a source of income to support the realization of certain deferred tax assets related to company's net operating losses. Net loss for the fourth quarter was $3.6 million or a loss per share of $0.28 compared to a net loss of $28.3 million or a loss per share of $2.24 in the fourth quarter of last year. Adjusted net income for the fourth quarter of fiscal 2025, which excludes the bad debt expense previously reviewed, was $2.4 million or $0.18 per share. This is compared to the prior year period adjusted net income of $0.8 million or $0.06 per share, which excludes the impact of the goodwill impairment charge and its associated tax impact and the transaction expenses incurred during that period. Adjusted EBITDA was $4.5 million for the fourth quarter compared to $5.4 million in the prior year. This performance capped off a solid year overall despite navigating a highly dynamic environment, resulting in a net sales growth of 2.2% reported net income of $6.4 million and adjusted EBITDA of $15.1 million. Please refer to our press release for more details on our full year performance and reconciliation of non-GAAP measures. Moving to the balance sheet. Net inventory was $66.2 million at the end of fourth quarter as compared to $59.1 million at the end of fourth quarter last year. The year-over-year increase was primarily driven by approximately $4.8 million higher inventory carrying value due to tariffs. Turning to our outlook. As discussed, we have seen the momentum experienced in the fourth quarter continue into the start of fiscal 2026. In addition, our outlook assumes a reduced reciprocal tariff rate of 15% which we expect any benefit to be largely offset by the increase in supply chain costs driven by the rise in fuel and shipping costs. We are also not assuming any benefit with respect to potential tariff refunds. For the first quarter, we expect total net sales growth of approximately 8.5% to 10.5%, adjusted operating loss as a percentage of net sales of approximately negative 3.5% to negative 4.5% and adjusted EBITDA as a percentage of net sales to be approximately negative 1.5% to negative 2.5%, reflecting year-over-year expansion compared to negative 5.2% in the prior year period. For the full year fiscal 2026, we expect net sales growth to be approximately 3% to 6%, adjusted operating income as a percentage of net sales to be approximately 3.5% to 4% and for adjusted EBITDA as a percentage of net sales to be approximately 5% to 5.5%, compared to the 5% in the prior year. In summary, we are very pleased with our strong end of fiscal 2025 and the momentum we are driving to start fiscal 2026, underscoring our team's disciplined approach and our commitment to executing on our objectives. This concludes our remarks, and I'll now turn it over to the operator to open the call for questions. Operator: [Operator Instructions] Your first question comes from Eric Beder with SCC Research. Eric Beder: Congratulations on a great year. I want to talk a little bit about some of the changes you're doing in terms of the stores. So talk to me about -- so in our store business, we saw continued emphasis kind of on showing more color and a growing emphasis on some of the newer categories like drop shipping and suiting and handbags. So what should we be seeing as we move through 2026 in terms of how the stores are going to tweak for kind of these changes to maximize kind of further growth? Brendan Hoffman: Yes. I think we're continuing to experiment with some of our store setups, especially as we do some renovations. We pull out some legacy cash wraps, which opens up the stores, allows us to better showcase the way Caroline and the team envisioned kind of the way people are outfitting, mixing and matching and some doing group sets with our product. I think in terms of the other categories you mentioned, drop ship is a tool we are able to use online to take advantage of our licensed partners inventory. We started with shoes, with Caleres and we'll add in handbags, suitings, accessories in Q2. But to your point about being able to showcase some of these categories in the stores, I've always felt that was taught by our founders that it's important to have some more texture in the store that can only be given by having additional categories beyond just apparel. And so I think we are strategically utilizing those categories like handbags and accessories and cold weather and some others to provide more interest when the consumer is shopping. To the extent they become real revenue drivers, I mean, that's a bonus. And I think we have that potential, but more so online because of the drop ship. But it also allows us to storytell better, both in-store and with some of our social media and digital marketing. So we're really pleased with the way we've been able to expand categories and the partnership with Authentic Brands to drive that. Eric Beder: Great. And when we look at -- I know that there was some of a -- what's the word here. There were some of -- the tariffs kind of was kind of a little bit of shock in terms of this. But how should we be thinking about for this year and going forward in terms of the potential for both domestic and international stores? I know you mentioned Paris and London stores have done really well. How should we be thinking about the potential here in the U.S. now that we're, for you to say it's somewhat more normalized than we were last year. Brendan Hoffman: Yes. I think in terms of domestic stores. We're going to open some, we're going to close some. We obviously are very enthusiastic about the performance we had in Q4 with our stores. And as we mentioned in our remarks, that's continued in Q1. Probably the best performance I've seen over the course of 6 months in our stores in my 6 years here on and off. So I'm more bullish than ever on our ability to really drive productivity in our stores. And that gives me more confidence and the team more confidence to go out there and look for new locations. I don't think at the end of the day, you will see a huge increase in our store count. I think it will be -- hopefully, incrementally, we'll be able to add a few. But I think in large part, we're in most of the markets we want to be in, and it's more about rationalizing some of the stores and driving more productivity through the existing boxes. I think internationally, as you mentioned, Paris would be probably first on our wish list in terms of the next international gateway. We've had such great success with our Marylebone store in London, and I visited it in about 6 weeks ago. And truly, it's as good as stores we have in our fleet in terms of representing the Vince brand, where it's located amongst our peers. And I think if anything, it's just raised the bar for us in Paris because to the extent we are able to find something in Paris, it really needs to be a flagship store. We don't really have much representation in Paris. So we want to put our best foot forward, which just makes it a little bit more difficult to find the right location as opposed to finding a secondary store, but I think it's all for the right reasons. And so we'll continue to assess and update you as we have more information. Eric Beder: And last question on wholesale. So Nordstrom, you've expanded now to all Nordstrom stores, both men and women. When you look -- and they are a significant part of your business. When you look at the whole wholesale piece, is it adding new partners becoming deeper into the partners you have? How should we be thinking about how wholesale can continue to evolve? Brendan Hoffman: Yes. Thanks, Eric. Yes. I think it's becoming more -- continuing to become more important with the partners we have only because we're in most of the partners that are appropriate for men's, whether it be department stores or specialty stores. We clearly have a lot more growth in Bloomingdale's based on the fact that we've only been back with them for about 4 or 5 years, just gone men's all doors. And you see their results, and we have a great relationship with Olivier and Denise and the team there. We just did an event with them out in L.A. that was terrific. We just did an event with the Nordstrom team, Jamie Nordstrom in Dallas. So continuing to push that relationship. And then cautiously optimistic that Saks Global, Saks and Neiman and Bergdorf will -- are moving in the right direction. We obviously went through the trials and tribulations last year and took a hit in Q4. But with the new -- the old team, new team back with Geoffrey and Lana and then, of course, Tracy at Bergdorf. We know all of them well, and Darcy. And so we're hopeful that we can get that business back on track. But currently, clearly, Nordstrom's and Bloomingdale's are what's driving our wholesale business. Operator: Your next question comes from Michael Kupinski with Noble Capital. Michael Kupinski: I offer my congratulations on a great quarter and a great year as well. I was just wondering, there's been some reports that there has been renewed amount of traffic in malls and stores as well. And I was just wondering overall, are we -- are you seeing that trend? Or is that just some headline news that it's just not really translating into what is actual out there? Brendan Hoffman: Yes. I can't speak to the macro environment. But certainly, us, as an example, is consistent with that. Again, we've had a great 6-month run with our store business, driven by traffic, driven by conversion, driven by the increased prices that have been so well absorbed. And we have some malls, but then we have a lot of lifestyle and street front centers. And just couldn't be more pleased with some of the outsized performance we're seeing. And I think some of it has to do with the centers themselves and how they've kind of expanded and reinvented themselves. We have a great lifestyle store in Chestnut Hill. I hadn't been there in 5, 6 years since I've been going from Vince. I went and visited and the center is double what it once was. So that just brings more traffic and we're advantaged there. So some of these malls are investing in themselves and adding in new tenants are expanding, and that's all really positive for bringing qualified traffic that then we could take advantage of. Michael Kupinski: Great. And have you seen more -- where have you seen more of the pressure from competitors recently? I was just wondering if you can just kind of give us the lay of the land on the competition in your lane. Brendan Hoffman: Again, I think we're taking market share in our lane. So we certainly respect the peer brands we sit with and a lot of them are -- they're all navigating the same issues we are and some doing it well and some struggling. But I don't think our peer group has shifted all that much in the last few years. And as I just kind of implied with the retail locations, the centers, we actually do better when we're surrounded by our peer group and some luxury players to provide some context in, because I think we show up so well, especially with the product doing so well right now when people can compare and contrast us to some of the others that we're neighbors with. Michael Kupinski: And I know that you tapped on this with a couple of Eric's good questions. I was just wondering, where do you see the most operating leverage that you have untapped right now? And what are some of the more internal bottlenecks that you might be actively working on to remove? Brendan Hoffman: Yes. Well, I think prior to me returning, the team did a great job with their transformation process and really improved margin through IMU. And some of that. Thankfully, we did that because obviously, there were in our challenges now with some of the input costs with -- depending on what happens with tariffs. And as Yuji mentioned, with some of the disruption around fuel. But as those things start to play out and hopefully normalize, I think we'll have an opportunity longer term to recapture gross margin accretion. I think also as we start to grow the business and you saw our forecast for this year, that would really be a breakout for us to get out of that $300 million collar we've been in, we should start to get some SG&A leverage and be able to make some investments back in the business to sustain this growth or be more of a catalyst for this growth. And then as I've mentioned in the past, we're actively looking at other ways we can utilize our platform in partnerships. So we think we have a lot of different levers to pull, and we're hoping that some of the macro issues start to subside, but really proud of the way we got through the last 12 months and couldn't be more confident with how we're situated for success. Operator: This concludes the question-and-answer session. I'll turn the call to Brendan for closing remarks. Brendan Hoffman: Great. Thank you, everyone. We appreciate your continued interest in Vince, and we look forward to updating you on our Q1 results in June. Have a good day. Operator: This concludes today's conference call. Thank you for joining. You may now disconnect.
Operator: Hello, and welcome to the Vince Holding Corp. Fourth Quarter and Full Year Fiscal 2025 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Akiko Okuma, Chief Administrative Officer and General Counsel. You may begin. Akiko Okuma: Thank you, and good morning, everyone. Welcome to Vince Holding Corp Fourth Quarter and Full Year Fiscal 2025 Results Conference Call. Hosting the call today is Brendan Hoffman, Chief Executive Officer; and Yuji Okumura, Chief Financial Officer. Before we begin, let me remind you that certain statements made on this call may constitute forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ from those that the company expects. Those risks and uncertainties are described in today's press release and in the company's SEC filings, which are available on the company's website. Investors should not assume that statements made during the call will remain operative at a later time, and the company undertakes no obligation to update any information discussed on the call. In addition, in today's discussion, the company is presenting its financial results in conformity with GAAP and on an adjusted basis. The adjusted results that the company presents today are non-GAAP measures. Discussions of these non-GAAP measures and information on reconciliations [ of them ] to their most comparable GAAP measures are included in today's press release and related schedules, which are available in the Investors section of the company's website at investors.vince.com. Now I'll turn the call over to Brendan. Brendan Hoffman: Thank you, and good morning, everyone. I'm incredibly proud of the strong operating results we are announcing today, highlighting the exceptional momentum we delivered at the end of the year that has continued into the start of fiscal 2026. As we announced earlier this year, we saw incredible strength in our direct-to-consumer business over the holiday period, and that remained the case throughout the full quarter. For the fourth quarter, sales in our direct-to-consumer business increased about 10% compared to last year, supported by our ongoing efforts in improving the customer experience and by the strategic pricing actions taken earlier in the fall. For the overall quarter, sales were up nearly 5% compared to last year and profitability outpacing the high end of our prior guidance raise. We are especially proud of this performance, given the disruption we experienced with developments from Saks Global, which presented a headwind to sales of approximately $2 million in the quarter. With the recent reorganization of Saks Global, we now have more clarity into the situation and are working with our partners there as they move forward in their plans. As a reminder, Saks Global recently represented less than 7% of our total sales. We remain supportive and confident in the new leadership team's ability to stabilize the business. We believe any change in penetration from this one partner going forward will be offset by strength elsewhere in the channel given our diversified base and strong relationships across our wholesale business. This is a credit to not only our strong partnerships, but to a great product that is resonating across both men's and women's. We're also really pleased as we continue to elevate the product offering appealing to our broad customer base. This strong performance supported by our fiscal 2025 results, which delivered sales growth of over 2% and adjusted EBITDA growth of about 8% despite contending with approximately $8 million of incremental tariff costs. As we have discussed, our teams have done a tremendous job in mitigating the tariff pressures we face. We acted swiftly, diversifying our sourcing across Asia and globally while working closely with manufacturing partners to maintain the quality standard for the [ fine ] Vince. We also implemented strategic pricing increases while maintaining unit sales validating the strength and quality of our product. As we enter fiscal 2026, I am encouraged by the growth we are continuing to drive, and I'm more confident than ever in the trajectory ahead for Vince Holding Corp. Given this, we are exploring opportunities to continue to invest in the customer experience within our full-price direct-to-consumer business. We are looking at areas like special events, people and store operations, including remodels and new store openings, while also continuing to leverage our digital platform and expand dropship to additional categories. In spring 2026, these categories will include handbags, tailor clothing, belts and accessories, creating revenue opportunity with minimal inventory risk for the business. In addition, we are continuing to scale our men's business. We ended the year with men's representing approximately 24% of total sales and continue to see opportunity to expand this 30% penetration, driven by growth in wholesale partnerships and expanded assortments in our own stores and online. And with respect to our international business, our second London store in Marylebone exceeded expectations this year and validated our thoughts on further international expansion. This success gives us confidence to explore additional flagship opportunities in gateway cities like Paris in the next 2 years. Finally, the strategy, I believe, will really help to accelerate our growth as our focus on maximizing [ Vince Holding Corp ] as a platform. While we do not have anything yet to report, we are continuing to look for opportunities to leverage our platform our world-class team and capabilities to support additional brands. This will create a new revenue stream for Vince Holding Corp. We could not be more enthused by our partnership with ABG, which not only opens channels for us, but also provides great opportunities with respect to marketing and engaging customers. We are thrilled to partner with the ABG team with a recent event of the [ Masters ] last week, and we're looking forward to doing similar types of interactive activations with the team for future high-profile events. This is in addition to the elevated outreach that we were also doing in partnership with our wholesale partners. Following the successful brand events at the end of last year with Nordstorm and celebrating our holiday campaign at our Madison Avenue, New York City flagship, we have continued the storytelling around the Vince brand. We recently celebrated an exclusive capsule collection for Spring 2026 as part of Bloomingdale's California Love campaign and hosted an influencer and editor event to showcase the capsule and preview of our Spring 2026 collection with over 100 editors and influencers in attendance. As part of the event, we also [ hosted ] a private VIC dinner with Bloomingdale VICs complete with a fashion show and model presentation to great success. Fiscal '26 is off to a strong start on all accounts. As Yuji will review and have seen in our outlook in today's press release, the momentum we ended fiscal '25 with has continued across all channels. Our full-price business has never been stronger, reflecting the customers' continued [ look ] for the product and value they see for the brand. We believe macro events aside, we are positioned well to continue to deliver healthy profitable growth. A little over a year ago, I returned to Vince as CEO. I cannot emphasize enough the pride that I have in our team, our business and the results we have delivered to date. I want to thank our incredible associates for their dedication and execution throughout fiscal '25. Their ability to evolve the product, maintain quality and execute against our strategic priorities gives me tremendous confidence in the future. We are operating from a position of strength with disciplined execution and a clear road map for growth. I look forward to updating you on our progress as we move through the year. Now I'll turn it over to Yuji to discuss our financial results and outlook in more detail. Yuji Okumura: Thank you, Brendan, and good morning, everyone. As Brendan reviewed, our fourth quarter performance reflected ongoing strong momentum in our direct-to-consumer segment that we are pleased to see continue into the start of the new year. Before I discuss our first quarter and fiscal 2026 outlook. Let me review our fourth quarter results in more detail. Total company net sales for the fourth quarter increased 4.7% to $83.7 million compared to $80 million in the fourth quarter of fiscal 2024. With respect to channel performance, our direct-to-consumer segment increased 10.4%, driven by strong performances across both our e-commerce business and stores. This performance offset the 1.2% decline in our wholesale channel, largely driven by the decision to pause shipments to Saks Global. Gross profit in the fourth quarter was $41.1 million or 49.1% of net sales. This compares to $40.1 million or 50.1% of net sales in the fourth quarter of last year. The decrease in gross margin rate was primarily driven by approximately 300 basis points due to the unfavorable impact of higher tariffs, 160 basis points due to the success of our promotional Black Friday and Cyber Monday events and approximately 125 basis points due to increased freight costs. These factors were partially offset by a favorable impact of approximately 380 basis points, primarily due to higher pricing. Selling, general and administrative expenses in the quarter were $44 million or 52.6% of net sales as compared to $37.8 million or 47.2% of net sales for the fourth quarter of last year. The increase in SG&A dollars was primarily driven by $6 million of bad debt expense related to Saks reorganization. Loss from operations for the fourth quarter was $2.9 million comes from operations of $29.7 million in the same period last year. Adjusted operating income, which excludes the $6 million related to the Saks reorganization was $3.1 million. This is compared to adjusted operating income of $2.5 million in the same period last year, excluding the impact of goodwill impairment charges and P180 transaction expenses incurred in the period. Net interest expense for the quarter decreased to $0.7 million compared to $1.6 million in the prior year. The decrease was primarily due to paydown of the third lien facility which occurred during January 2025. At the end of the fourth quarter of fiscal 2025, our long-term debt balance was $19.5 million. Income tax expense was $0.5 million compared to $2 million income tax benefit in the same period last year. The year-over-year change is primarily driven by tax benefits taken in the prior comparative quarter due to the reversal of the noncash deferred tax liability associated with the goodwill impairment, which previously could not be used as a source of income to support the realization of certain deferred tax assets related to company's net operating losses. Net loss for the fourth quarter was $3.6 million or a loss per share of $0.28 compared to a net loss of $28.3 million or loss per share of $2.24 in the fourth quarter of last year. Adjusted net income for the fourth quarter of fiscal 2025, which excludes the bad debt expense previously reviewed was $2.4 million or $0.18 per share. This is compared to the prior year period adjusted net income of $0.8 million or $0.06 per share, which excludes the impact of the goodwill impairment charge and its associated tax impact and the transaction expenses incurred during that period. Adjusted EBITDA was $4.5 million for the fourth quarter compared to $5.4 million in the prior year. This performance capped off a solid year overall despite navigating a highly dynamic environment, resulting in a net sales growth of 2.2%, reported net income of $6.4 million and adjusted EBITDA of $15.1 million. Please refer to our press release for more details on our full year performance and reconciliation of non-GAAP measures. Moving to the balance sheet. Net inventory was $66.2 million at the end of fourth quarter as compared to $59.1 million at the end of fourth quarter last year. The year-over-year increase was primarily driven by approximately $4.8 million higher inventory carrying value due to tariffs. Turning to our outlook. As discussed, we have seen the momentum experienced in the fourth quarter continue into the start of fiscal 2026. In addition, our outlook assumes a reduced reciprocal tariff rate of 15% and which we expect any benefit to be largely offset by the increase in supply chain costs driven by the rise in fuel and shipping costs. We are also not assuming any benefit with respect to potential tariff refunds. For the first quarter, we expect total net sales growth of approximately 8.5% to 10.5%, adjusted operating loss as a percentage of net sales of approximately negative 3.5% to negative 4.5% and adjusted EBITDA as a percentage of net sales to be approximately negative 1.5% to negative 2.5%, reflecting year-over-year expansion compared to negative 5.2% in the prior year period. For the full year fiscal 2026, we expect net sales growth to be approximately 3% to 6%. Adjusted operating income as a percentage of net sales to be approximately 3.5% to 4%. And for adjusted EBITDA as a percentage of net sales to be approximately 5% to 5.5%, compared to the 5% in the prior year. In summary, we are very pleased with our strong end of fiscal 2025 and the momentum we are driving to start fiscal 2026 underscoring our team's disciplined approach and our commitment to executing on our objectives. This concludes our remarks, and I will now turn it over to the operator to open the call for questions. Operator: [Operator Instructions] Your first question comes from Eric Beder with SCC Research. Eric Beder: Congratulations on a great year. Let's talk a little bit about some of the changes you're doing in terms of the stores. So talk to me about -- so in our services, we saw continued emphasis kind of on showing more color and are growing emphasis on some of the newer categories like [ drop ] shipping and suiting and handbags. So what should we be seeing as we move through 2026 in terms of how the stores are going to tweak for kind of these changes to maximize, kind of, further growth? Brendan Hoffman: Yes. I think we're continuing to experiment with some of our store setup, especially as we do some renovations. We pull out some legacy cash wraps, which opens up the stores, allows us to better showcase the way Caroline and the team envisioned kind of the way people are outfitting, mixing and matching and some doing group sets with our product. I think in terms of the other categories you mentioned, drop ship is a tool we are able to use online to take advantage of our license partners inventory. We started with shoes, with Caleres and we'll add in handbags, suiting accessories in Q2. But to your point about being able to showcase some of these categories in the stores, I've always felt and was taught by our founders that it's important to have some more texture in the store that can only be given by having additional categories beyond just apparel. And so I think we are strategically utilizing those categories like handbags and accessories and [ cold ] weather and some others to provide more interest when the consumer is shopping. To the extent they become real revenue drivers, I mean that's a bonus. And I think we have that potential, but more so online because of the drop ship. But it also allows us to storytell better, both in-store and with some of our social media and digital marketing. So we're really pleased with the way we've been able to expand categories and the partnership with authentic brands to drive that. Eric Beder: Great. And when we look at that, I know that there was some of a -- what's the word here. There were some of the tariffs kind of was kind of a little bit shock in terms of this, how should we be thinking about for this year and going forward in terms of the potential for both domestic and international stores? I know you mentioned Paris and London stores have done really well. How should we be thinking about the potential here in the U.S. now that we're, I guess, [ free somewhat ] more normalized than we were last year. Brendan Hoffman: Yes. I think in terms of domestic stores, we're going to open some we're going to close some. We obviously are very enthusiastic about the performance we had in Q4 with our stores. And as we mentioned in our remarks, that's continued in Q1. Probably the best performance I've seen over the course of 6 months in our stores in my 6 years here on and off. So I'm more bullish than ever on our ability to really drive productivity in our stores. And that gives me more confidence and the team more confidence to go out there and look for new locations. I don't think at the end of the day, you will see a huge increase in our store count. I think it will be -- hopefully, incrementally, we'll be able to add a few, but I think in large part, we're in most of the markets we want to be in, and it's more about rationalizing some of the stores and driving more productivity through the existing boxes. I think internationally, as you mentioned, Paris would be probably first on our wish list in terms of the next international gateway. We've had such great success with our Marylebone store in London, and I visited in about 6 weeks ago. And truly, it's as good as stores we have in our fleet in terms of representing the Vince brand, where it's located amongst our peers. And I think if anything, it's just raised the bar for us in Paris because to the extent we are able to find something in Paris, it really needs to be a flagship store. We don't really have much representation in Paris. So we want to put our best foot forward, which just makes it a little bit more difficult to find the right location as opposed to finding a secondary store, but I think it's all for the right reasons. And so we'll continue to assess and update you as we have more information. Eric Beder: And last question on wholesale. So Nordstorm, you've expanded down to all [ Nordstorm stores ] of men and women. When you look -- and they are a narrow significant part of your business, when you look at the whole wholesale piece, is it adding a new partners becoming deeper into the partners you have? How should we be thinking about how wholesale can continue to evolve? Brendan Hoffman: Thanks, Eric. Yes. I think it's becoming more -- continuing to become more important with the partners we have only because we're in most of the partners that are appropriate remains, whether it be department stores or specialty stores. We clearly have a lot more growth in Bloomingdale's based on the fact that we've only been back with them for about 4 or 5 years, just going men's all doors. And you see their results, and we have a great relationship with [ Olivier ] and [ Denise ] and the team there. We just did an event with them out in LA. That was terrific. We just did an event with the Nordstrom team, [ Jamie ] Nordstrom in Dallas. So continuing to push that relationship. And then cautiously optimistic that Saks Global, Saks and Neiman and [ Berger ] will are moving in the right direction. We obviously went through the trials and tribulations last year and took a hit in Q4. But with the new -- the old team, new team back with [ Jeff ] and [indiscernible] and then of course, Tracy at [ Bergdorf ]. We know all them well and [ Darcy ]. And so we're hopeful that we can get that business back on track. But currently, clearly, Nordstrom and Bloomingdale's are what's driving our wholesale business. Operator: Your next question comes from Michael Kupinski with Noble Capital. Michael Kupinski: And I offer my congratulations on a great quarter and a great year as well. I'm just wondering, there's been some reports that there has been renewed amount of traffic in malls and stores as well. And I was just wondering overall, are we -- are you seeing that trend? Or is that just some headline news that it's just not really translating into what is actual out there. Brendan Hoffman: Yes, I can't speak to the macro environment. But certainly, as an example, is consistent with that. Again, we've had a great 6-month run with our store business, driven by traffic, driven by conversion, driven by the increased prices that have been so well absorbed. And we have some malls, but then we have a lot of lifestyle and street front centers. And just going to be more pleased with some of the outsized performance we're seeing. And I think some of it has to do with the centers themselves and how they've kind of expanded and reinvented themselves. We have a great lifestyle store in [ Chestnut ] Hill I hadn't been there in 5, 6 years since I've been going from Vince. I went and visited and the center is double what it once was. So that just brings more traffic and we're advantaged there. So some of these malls are investing in themselves and adding in new tenants are expanding. And that's all really positive for bringing qualified traffic that then we could take advantage of. Michael Kupinski: Great. And have you seen more -- where have you seen more of the pressure from competitors recently. I was just wondering if you can just kind of give us a lay of land on the competition in your lane. Brendan Hoffman: Again, I think we're taking market share in our way. So we certainly respect the peer brands we sit with and a lot of them are -- they're all navigating the same issues with [ your ] and some doing it well and some struggling. But I don't think our peer group has shifted all that much in the last few years. And as I just kind of implied with the retail locations, the centers, we actually do better when we're surrounded by our peer group and some luxury players to provide some context in because I think we show up so well, especially with the product doing so well right now when people can compare and contrast us to some of the others that we're neighbors with. Michael Kupinski: And I know that you tapped on this with a couple of Eric's good questions. I was just wondering -- where do you see the most operating leverage that you have on tap right now? And what are some of the more internal bottlenecks that you might be actively working on to remove? Brendan Hoffman: Yes. Well, I think prior to me returning, the team did a great job with their transformation process and really improved margin through IMU. And some of that. Thankfully, we did that because obviously, there were our challenges now with some of the input costs with -- depending on what happens with tariffs. And as Yuji mentioned, with some of the disruption around fuel, but as those things start to play out and hopefully normalize, I think we'll have an opportunity longer term to recapture gross margin accretion. I think also as we start to grow the business and you saw our forecast for this year, that would really be a breakout for us to get out of that $300 million [ toller ] we've been in. We should start to get some SG&A leverage and be able to make some investments back in the business to sustain this growth or be more of a catalyst for this growth. And then as I've mentioned in the past, we're actively looking at other ways we can utilize our platform in partnerships. So we think we have a lot of different levers to pull, and we're hoping that some of the macro issues start to subside, but really proud of the way we got through the last 12 months and couldn't be more confident with how we're situated for success. Operator: This concludes the question-and-answer session. I'll turn the call to Brendan for closing remarks. Brendan Hoffman: Great. Thank you, everyone. We appreciate your continued interest in Vince, and we look forward to updating you on our Q1 results in June. Have a good day. Operator: This concludes today's conference call. Thank you for joining. You may now disconnect.
Operator: Hello, and welcome, everyone, joining today's Bank of America earnings announcement. [Operator Instructions] Please note, this call is being recorded. [Operator Instructions] It is now my pleasure to turn the meeting over to Lee McEntire with Bank of America. Lee McEntire: Good morning. Thank you. Thanks for joining us to talk through our first quarter results. As always, the earnings release and presentation are posted on the Investor Relations section of bankofamerica.com and we'll reference those materials during the call. Brian will start us off with a few opening thoughts, and then Alastair will walk through the quarter and provide more detail on the results. Before we begin, a quick reminder that during the call, we may make forward-looking statements and refer to non-GAAP financial measures. Those reflect management's current views and are subject to risks and uncertainties, which are outlined along with the relevant GAAP reconciliations in our earnings material and the SEC filings on our website. With that, Brian, over to you. Brian Moynihan: Good morning, and thank you for joining us all of us. It's the our earnings report for the first quarter of 2026. I'm going to begin on Slide 2. Bank of America delivered strong first quarter 2026 results. Revenue grew 7% year-over-year to $30.3 billion. Earnings per share were up 25% year-over-year to $1.11 per share. This performance was driven by balanced results across our businesses, continued operating leverage, solid client activity and stable to modestly improved asset quality. We also saw solid year-over-year growth in both loans and deposits. Our capital and liquidity positions remain strong and well above current regulatory requirements. Along the bottom of Slide 2, you can see the progress against some of our most important operating metrics. We delivered operating leverage of 290 basis points this quarter. The efficiency ratio for our company improved 170 basis points year-over-year to 61%. And importantly, we generated return on tangible common equity, ROTCE of 16%. The biggest highlight I can provide you is you flip to Slide 3, there you can see that every segment of the company contributed to our year-over-year growth. Every segment grew revenue. Every segment grew earnings. Every segment grew average deposits and every segment grew loans and every segment drove strong returns. Now moving to Slide 4. Let me talk about some of the primary drivers of results before Alastair takes you through additional details. First, net interest income performed better than expected. On an FTE basis, net interest income was $15.9 billion, up 9% year-over-year. Second, our fee-based market-facing businesses performed well, markets, wealth and investment banking, all show good momentum. Client activity remained healthy and revenues in each of these areas grew at double-digit rates compared to the first quarter of 2025. Third, our team continued to manage expenses well. Reported noninterest expense of $18.5 million in the first quarter, which was in line with roughly 4% year-over-year increase we discussed in our last quarterly earnings call. Let me just spend a few moments on expense and how we think about them in the context of delivering growth and returns for our shareholders. Having said consistently, our focus is on delivering durable earnings and returns. Expense discipline is embedded in how we run our company. And it's also one of the reasons we're able to convert scale, productivity and macro tailwinds and operating leverage over time. In the quarter -- the first quarter, our expenses reflect the deliberate choices we made. First, we continue to invest in our revenue-producing capabilities, whether it's relationship managers in all the businesses, new branches, technology of all types delivered throughout the platform and product enhancements of all types, all those support the client activity, market share gains and long-term earnings power of this company. These investments are return on investment driven. They're tied to businesses where you see clear demand and attractive returns. The second thing we do is we continue to offset those investments through productivity and simplification. The continued digitization of activities by our clients and inside our company, the application of artificial intelligence that detailed process reengineering all help reduce manual work, lowered unit costs, limited increase in our base cost structure. That's why even as we've invested, we continue to deliver positive operating leverage. It's simply put that our revenue growth rate is faster than our expense growth rate. Third, we remain highly disciplined in nonstrategic spend. We are conscious not to add complexity, layers or fixed costs that don't support the clients and what they need from us. That discipline is part of our responsible growth culture has been going on for many years. If you think about that in terms of headcount, we are down about 1,070 people from year-end 2025 through attrition, and we'll continue to drive that. We continue to heavily extend the franchise, deepen the client relations and deliver attractive terms. And we're doing -- while reducing the FTEs and absorbing cost and inflationary cost out in the market. Turning briefly to asset quality. We saw improvement from last year. Net charge-offs, card delinquencies, reservable criticized assets and nonperforming loans all declined versus the first quarter '25. Provision expense was $1.3 billion, compared to $1.5 billion last year, reflecting continued benign credit results. Finally, capital generation remains strong. We continue to deploy excess capital to support RWA growth across all the businesses, while returning capital to shareholders through dividends and share repurchases. We ended the quarter with a strong capital position, including $200 billion plus CET1 capital. We also continue to benefit from the many quarters of organic growth across our businesses. We include our standard organic growth view, beginning on Slide 19 and following in the appendix. I commend you to look at those across all the different business lines, all the activity and all the digital activity are there. All that activity remains a key differentiator for us, driving continued growth in deposits, investment assets, lending balances and trade counter party. This combines with that strong engagement across our digital platforms, and we believe driving ongoing share gains in targeted markets and products. Overall results again demonstrate the value of our diversified earnings stream. The growth in [indiscernible] of all our businesses across different environments. In the end this is a strong performance by our team here at Bank of America, and I thank him for another great quarter. Before I turn to Alastair to go through a few observations -- go through the quarter. I'm going to give you a few observations we see about the economy beginning on Slide 5. So we have 2 things that Bank of America to help us view the economy. First is our very strong research team and they provide great data to us based on their view of the world. And you can see that on the left-hand side of Slide 5, but we also couple that with our internal data, what our customers really do both on the consumer side, corporate side, small business side, et cetera, and you can see that on the consumer expressed on the right-hand side of the slide. [indiscernible] team continues to see the economy that is resilient, that the core activities economy continue to push along even with all the uncertainty that you've all written about out there. We see the forward look of GDP growth rates in the U.S. in the 2% range, and we see a faster growth rate around the world. When you look at the inflation, you can see on the lower left, you can see that the projections for it to be -- remain elevated in '26 and into '27 and we -- both at the U.S. basis and the global basis. But when you look on the right, you can see where the resilience comes from in the U.S. The U.S. consumer continues to spend through all these different platforms here, Bank of America. To put that in context of total spending by consumers across all the ways they move money into the U.S. economy Bank of America is $4.5 trillion a year. For 2025, you can see that was up 5% from 2024. And at 5% growth has been consistent in the first quarter of '26 compared to the first quarter '25. And during that quarter, customers moved $1 trillion plus in the economy. As you look on the lower right, you can see the debit and credit card spending was up 6% year-over-year. This total is about 25% of the way consumers spend money at Bank of America. If you look within the categories, you can see it's up in entertainment and services and travel and retail. And yes, it's up in gas prices, and we note that in March, it was up 16% year-over-year. At the same time, we look at this data and see what it tells us. We're also mindful of all the risks out there, the ongoing conflicts in the Middle East, including implications for the energy market inflation and growth. We look at global trade flows and broader financial conditions. To date, these impacts have been measured and absorbed by the economies here and around the world, and we continue to watch them carefully. Looking ahead, our research team expects moderate U.S. and global growth over the next several years, and our data supports that view. In this environment, I'm asked at the capital markets activity has really inflected or is this just the volatility producing the results that our markets team produced or our investment banking team. What we're seeing is improved breadth in our global businesses, not just episodic activity. Trading has been in for volatility. In fact, this is the 15th quarter we have year-over-year revenue growth. But more importantly, investment banking pipelines are building and engagement is up across all products. One of our corporate clients is strong. Like wonder about all the things I spoke about, they continue to conduct strong activity. That activity is healthier than a year ago and supports a continued constructive fee environment. In our view, while those risks are out there, the macro backdrop remains constructive and a diversified business model position us well to continue to deliver for you across a range of economic scenarios. With that context, I'll turn it over to Alastair for more details. Alastair Borthwick: Thanks, Brian. I'm going to begin with the balance sheet, starting on Slide 6. You can see total assets ended the quarter at approximately $3.5 trillion, up 2% linked quarter, reflecting loan growth, deposit growth and balance sheet to support our clients' increased activity in global markets. Deposits increased to more than $2 trillion, driven by continued strength in both commercial and consumer client engagement. Common shareholders' equity was approximately $276 billion and relatively stable quarter-over-quarter as earnings generation was more than offset by the capital we returned to shareholders through dividends and share repurchases. This quarter, we paid $2 billion in common dividends and we bought back $7.2 billion of common shares. From a regulatory perspective, the CET1 capital ratio declined 14 basis points to 11.2%, and that decline primarily reflects the capital return to shareholders above earnings generation as well as balance sheet growth and mix change in support of our clients, and our ratio remains well above regulatory requirements. Looking ahead, we don't have any meaningful updates to report on the recently proposed Basel III Endgame or G-SIB capital changes. As proposed, Basel III would result in modestly higher capital requirements. However, the proposed changes to the G-SIB surcharge are expected to more than offset the Basel III end game impact for U.S. G-SIBs. Taken together, if Basel III Endgame and G-SIB frameworks are adopted as proposed, we believe Bank of America is likely to see some reduction in overall capital requirements relative to the current regime in future periods, and the public comment period concludes in mid-June, and we look forward to the finalization of the rules. Liquidity remains strong with global liquidity sources of more than $960 billion, well above regulatory requirements. And now as we go a little deeper on the balance sheet, we'll focus on loans and deposits. So I start with deposits on Slide 7, where our franchise continues to demonstrate strength, stability and discipline. Average deposits remained solid during the quarter, increasing approximately $59 billion year-over-year or 3%, reflecting the depth of our client relationships and the value customers place safety, liquidity and convenience, particularly in an environment where rates and market conditions remain dynamic. It's notable that both interest-bearing and noninterest-bearing deposits grew 3%. Growth was led by commercial clients, while Consumer Banking grew more modestly, marking its fourth consecutive quarter now of year-over-year growth. Composition of our deposits remains a key differentiator. We benefit from a high-quality mix with a meaningful portion in low-cost operational balances and strong engagement across consumer, wealth and commercial clients. That mix has continued to benefit our funding costs even as pricing competition persists across the industry. The total rate paid on our deposits declined 16 basis points to 1.47%, and this allows us to maintain one of the lowest cost funding profiles among the large U.S. banks. Turning to loans on Slide 8. Average balances grew nearly 9% year-over-year driven primarily by client demand in our commercial portfolios. That growth was broad-based, and it reflects good core operating client activity. And as always, we remain disciplined in how we deploy our capital, prioritizing returns, credit quality and relationship depth over volume. Consumer loan balances were up about 4% year-over-year, including 3% credit card growth. Wealth Management contributed nicely to consumer loan growth through strong securities-based lending. And across both consumer and commercial folios, the credit performance remained consistent with our expectations, and we've not changed our risk posture. We remain highly liquid. We're focused on protecting our margin and preserving flexibility while continuing to support our clients. Let's turn to net interest income on Slide 9. In the first quarter, net interest income on a fully taxable equivalent basis was $15.9 billion. On a year-over-year, NII increased by $1.3 billion or 9% driven by growth in average loans and deposits, the ongoing benefit of fixed rate asset repricing and higher global markets client-related activity, and those tailwinds were partially offset by the impact of lower average rates in the quarter. Compared to Q4, NII was materially flat and reflected similar underlying benefits that were nearly enough to offset the negative impact of 2 fewer days of interest accrual in Q1. Net interest yield for the quarter was 2.07%, up 8 basis points year-over-year, reflecting disciplined balance sheet management, funding optimization and the continued benefit of repricing dynamics even as rates declined across the curve. Regarding interest rate sensitivity, we continue to provide a 12-month dynamic deposit-based sensitivity relative to the forward curve. And on that basis, an additional 100 basis point decline in rates beyond the forward curve, would reduce NII over the next 12 months by $2 billion, while a 100 basis point increase would benefit NII by a little less than $500 million. Looking ahead, while the rate environment remains dynamic, continue to see multiple levers supporting NII, including balanced growth, funding optimization and ongoing roll-off of lower-yielding assets. Given our outperformance against expectations of NII in Q1 and based on the most recent interest rate curve, which has now shifted from 2 rate cuts expected to having none currently, we're raising our full year NII growth guidance range for 2026 versus 2025 to be up 6% to 8%, and that outlook continues to assume moderate deposit and loan growth. Turning to expenses on Slide 10. In the first quarter, noninterest expense was $18.5 billion. That was up 4% and consistent with the guidance we provided on our Q4 earnings call. We generated 290 basis points of operating leverage, and that translated into measurable improvement in both our efficiency ratio from 63% to 61% and an increase in the ROTCE to 16%. We continue to manage our cost base with discipline while investing selectively to support client activity and long-term growth. The year-over-year increase in expense largely reflects double-digit revenue growth in Investment Banking, asset management fees and sales and trading and the associated higher revenue-related incentives and transaction expenses. Stepping back, our approach here remains unchanged. And we're [ testing ] where returns are clear. We tightly manage the discretionary spend, and we maintain our sharp focus on operating leverage, including expanding our use of technology and AI to improve operational efficiency and sales effectiveness. Looking ahead, we continue to expect more than 200 basis points of positive operating leverage for the year, consistent with our prior guidance. And we also have levers that preserve our flexibility to help navigate changing market conditions as required. Let's turn to Slide 11 for a discussion of asset quality. Credit performance remained stable and consistent with our expectations. Net charge-offs were approximately $1.4 billion with a net loss rate of 48 basis points. Both of those were down from Q1 '25 and modestly up from Q4, primarily reflecting the normal seasonality in our card portfolio with continued stability across the commercial portfolio and improved results in CRE office loans. Provision expense was approximately $1.3 billion, including a modest net reserve release driven by improvements in card and commercial real estate and partially offset by growth-related and targeted build supporting corporate and commercial lending portfolios. Overall, as you can see, our credit results remain benign, and we continue to feel good about the quality of our portfolio. Turning to Slide 12 for some other credit metrics and a couple of comments here. Commercial reservable criticized exposure declined to roughly $24 billion, while nonperforming loans were flat quarter-over-quarter. It's also worth noting that this was the first quarter in more than 3 years with no new inflows of nonperforming assets into office exposures, which is another sign improvement in that portfolio. For perspective, we've now been in a benign credit environment for some time, and our performance reflects the benefit of decades long underwriting practices and responsible growth culture. We expect that approach to serve us well across a range of potential economic cycles. And we've updated the more detailed credit disclosures in the appendix beginning on Slide 19. In addition, on Slides 24 and 25, we've chosen to include updated disclosure around our Global Markets loan portfolio. Let me start by saying we've not experienced any material losses in Global Markets loans, and we feel good about the underwriting and the secured positions that we have here. We acknowledge the potential for underwriting dispersion in the portion that's considered the private credit market, particularly in the faster growth vintages and we know that, that risk sits first with sponsor equity and fund investors. Bank of America's exposure has structural insulation from those first loss positions. For losses to reach us, we believe operating company equity and a substantial portion of fund investor capital would need to be impaired before we would experience losses. We don't rely on sponsor marks. We reunderwrite collateral continuously for borrowing base purposes. And our exposure is governed by independently determined borrowing basis with ongoing performance tests. So that means where credits deteriorate, the borrowing base contracts before the losses migrate. We see the market activity is largely a repricing of liquidity. And growth expectations for alternative asset managers, not evidence of systemic credit impairment. We continue to monitor the market closely. We're comfortable with our positioning. And we're also glad to see the return of more traditional C&I loan growth in the first quarter. Turning to Slide 13. Let's shift our focus to the lines of business, and we'll start with consumer, where you can see Consumer Banking delivered a strong first quarter as customers continue to place their trust in Bank of America for their personal finances. Net income was $3.1 billion, up 21% year-over-year, driven by higher net interest income that led to 5% revenue growth, and we managed expense well. That resulted in over 500 basis points of operating leverage and a 53% efficiency ratio. We saw our fourth consecutive quarter of year-over-year deposit growth, with average deposits of $951 billion, while maintaining a high-quality mix with over half of balances in low and no interest checking. Client engagement remained a clear strength. We ended the quarter with a record 38.5 million consumer checking accounts, adding over 100,000 net new checking accounts this quarter. More than 90% of these relationships remain primary. Digital adoption remains strong with 79% of households digitally active and 71% of sales coming through the digital channels compared to 65% a year ago. Finally, credit performance in consumer remains solid and in line with expectations. On Slide 14, we turn to Global Wealth and Investment Management who also delivered a strong first quarter, benefiting from solid flows over the past 4 quarters, favorable market conditions and disciplined expense management, which together drove margin improvement and valuable operating leverage. Net income was $1.3 billion, up 32% year-over-year on record first quarter revenue of $6.7 billion, driven by higher asset management fees and solid client flows. Pretax margin was 26%, reflecting the operating leverage achieved through disciplined expense management. Client balances increased to $4.6 trillion, up 10% year-over-year supported by favorable market conditions and net client flows during the quarter. Asset Management flows remained solid at $20 billion and lending momentum continued with average loans up 13% year-over-year led by custom letting and securities-based lending. We remain focused on pricing discipline, adviser productivity and long-term client relationships. We're driving productivity higher on both newer and existing members of our financial advisers team, and we continue to attract talent across both new and experienced advisers. Now we move to commercial and corporate client-facing businesses and Global Banking on Slide 15, where Global Banking delivered solid results in the first quarter, reflecting strong client activity and continued balance sheet growth. Revenues were $6.3 billion, up 5% year-over-year, driven by higher net interest income and improved noninterest income. When combined with well-controlled expense, which rose only 1%, the business generated more than 350 basis points of operating leverage. Net income was $2.1 billion, up 8% from last year as the higher revenue was partially offset by continued investment in the business and a higher provision for credit losses through builds of reserves that were primarily for loan growth. Investment banking fees of $1.8 billion were up 21% year-over-year, and we're a clear positive in the quarter. Investment Banking fees, strong momentum was led by M&A with equity capital markets also up very nicely in the quarter. The year-over-year investment banking performance is particularly notable given our prior year first quarter included gains related to leveraged finance positions that didn't repeat this year. Balance sheet growth remained a strength. And you can see average loans increased 5% year-over-year with all lines of business contributing. Deposits increased 13% year-over-year, reflecting continued client engagement across the franchise, and rates paid was down linked quarter and year-over-year. Returns remained strong with a return on capital of 16%, which was higher year-over-year. Turning to Global Markets on Slide 16. I'll focus my remarks as usual ex DVA. And Global Markets strong first quarter was driven by robust client activity and disciplined risk management in a volatile trading environment heightened by geopolitical uncertainty. Revenues ex DVA were $7 billion, up 7% year-over-year, where Sales & Trading had its strongest performance in a decade increasing 12% to $6.3 billion, led primarily by equities performance. And despite the noted volatility, we had no trading loss days during the quarter. Equities had their best quarter ever with revenues up 30% year-over-year, reflecting increased client activity and capital extended to the business for growth. The increase was driven by client financing activity, particularly in Asia, as well as strong trading performance in derivatives. FICC results remained strong and were modestly higher with strength in commodities, partially offset by lower revenue in FX and interest rate products. Net income was $2 billion, which was up modestly from strong results in Q1 '25 that also included roughly $230 million in gains related to leveraged finance positions. Higher revenues were offset by increased expenses on higher activity levels, increased people costs and our continued investment in this business. Average assets grew 14% year-over-year to $1.1 trillion, reflecting higher inventory levels and strong client balances. Returns remain solid with a 15% return on capital. Overall, Global Markets continues to deliver for our clients producing consistent profitability, continued revenue momentum and it reinforces the durability of the franchise across different and challenging market environments. On Slide 17, all other shows a modest profit of roughly $100 million in Q1 with very little to cover here. So as I wrap up, I'll just note the Q1 effective tax rate was 17.5%, that was seasonally lower, reflecting the annual vesting of employee share-based awards. And as a reminder, for the full year 2026, we expect an effective tax rate of just a little more than 20%. So in closing, first quarter of '26 reflected continued revenue momentum, disciplined execution and improved efficiency and returns. Our diversified business model, strong balance sheet and prudent risk management position us well for the remainder of the year. And with that, we'll open up the line for questions, please, Leo. Operator: [Operator Instructions] Our first question comes from Manan Gosalia with Morgan Stanley. Manan Gosalia: First up, just on the expense side, the stronger NII guide was great to see, and you're keeping expense guide, but you're also keeping the operating leverage guide. I know there's some level of rounding in here, but how do you think about dropping the benefit of the better NII to the bottom line? Brian Moynihan: Manan, thanks for the question. We did this quarter, and we expect that the NII will drop to bottom line. And that -- and so if it goes up, you'd expect us to see a higher end of the operating leverage range like we did this quarter. Manan Gosalia: Got it. Perfect. And then maybe on the ROTCE side. So I guess you've already delivered on a 16% within the 16% to 18% target. How do you think about staying within that range in the near term as you deliver on the operating leverage? And are there any one-timers or anything else we should be considering for this quarter? Alastair Borthwick: So Manan, I don't think there's any one-timers to consider here. We provided that guidance of a medium-term range for ROTCE over the course of the medium term. And look, every quarter is going to be different. We're obviously gratified with 16% based on the strong operating leverage performance. But the key for us as a management team is just keep moving up the ladder. A couple of years ago, it was 13%, then 14%, every quarter will be different. We just got to keep making progress towards our goal, and that remains our focus as a management team. . Operator: We'll now move on to Glenn Schorr with Evercore. Glenn Schorr: Maybe an easy high of one on the consumer. I think your spending is so good. Employment and wages have been strong. So the easy question is why do you think loan and deposit growth in the consumer side is slow, sluggish. It's not like you're not opening new checking accounts, new credit card accounts. Just curious on the high level there. Alastair Borthwick: Well, Glenn, I think if we look back over time, on the deposit side, what's been interesting, we talked about 3 or 4 years ago, at some point after the deposits were seeking higher yield, consumer would begin to find its floor. When you look at what's happening right now, you can see now 4 quarters in a row of year-over-year deposit growth. So it looks like we're finding that floor and beginning to grow out of it. You can also see, if you look at our numbers, growth in noninterest-bearing, and a little bit more this quarter than we've seen in the prior quarter. So there -- the elements that are sort of saying it's beginning to pick up. Now obviously, there's an interest rate environment. There's a spend environment that go against deposits. But it feels to us like the consumer part, which is so powerful, is beginning to turn and grow at the beginnings of accelerating that's kind of where we are in the longer arc. On the lending side, we're in a period right now where unemployment is good. Home prices are good. Asset prices are good, savings remain elevated. So the lending is pretty broad-based within consumer, but you're getting 3% or 4% growth there. Can we see more over time? Yes. But at this point, I think relative to how the consumer is performing, we're in a good place. One final thing I'll just say is, we've talked about the fact that we've got to focus on our own balance sheet efficiency. We've talked about the fact that we've got the ability over time, just to allow some of the retail and the institutional CDs to pay off. And we've sort of done that. So we don't have to chase CDs at this point, that in turn has meant that we've been very disciplined on rate paid. So we could put up more deposit growth if we wanted to, but we're really choosing at this point to just maximize the core operating client account activity. That's what we're focused on. Glenn Schorr: Well, I think it's working. That's cool. I appreciate that. I was interested, you guys mentioned that headcount is down over 1,000 this year. If I look over the last 5 years, it's kind of flattish, but there's a lot underneath the covers, right? You're adding in growth areas, you're subtracting some other areas. And I think your attrition rate is more like 7%. So maybe can you talk about some of the puts and takes where you're adding, where you're shrinking and obviously, the question of how AI might -- where are you in the AI journey in terms of how that might bring a little bit larger headcount reduction or not replacing all the attrition going forward? Brian Moynihan: Well, in the long arc, if you look in 2007 before we bought Merrill and Countrywide to give you a sense, we had more employees at Bank of America than we have today. And so the application of technology, the process and the customer utilization of our technology has led us basically run the company 19 years later on less people. And so this is not a new trend. What you're seeing now is the continuation of those trends, and you're right. So if you -- as we showed you at Investor Day, we showed a shorter term, we showed headcount down to 8,000. We showed at 50,000 out the consumer set of businesses at 25,000 out of ops. What we're seeing now -- and during that time, we made massive investments in technologists and cybersecurity from a few hundred people or 3,000 people, et cetera, et cetera, new branches. So we continue to shift investment that went on again this quarter, where you saw headcount drift down out of operational process and managers and things like that. And that investment goes into developing more headcount in the relationship manager businesses across the board, and so we'll continue to do that to support the growth of the business. So we're doing it through attrition. Each month, we have to hire 1,300 people round numbers to stay neutral in the company. And so you can adjust the headcount by just being careful on hiring and let attrition be your friend as we call it, and that's how we got down 1,000 people, but it comes from eliminating work and applying technology and consumer and commercial customers using those technologies and AI gives us pieces to go, we haven't gone. And we've got 90 installations working, all 200,000 teammates have access to AI or can use it every day. Erica is more understood out there, but it's been brought across lots of platforms that the models. And so -- we're still in the early stages of what all this will do, but we're seeing real benefits out of it today. Operator: We'll now move on to John McDonald with Truist Securities. John McDonald: In terms of capital, with the peak at the new proposals, how are you thinking about a capital target as you strive towards your ROTCE goals? Just kind of wondering now that you have some -- do you have some more incremental comfort in narrowing that management buffer that you have today, which is over 100 basis points to the reg minimums? Alastair Borthwick: Thanks, John. Well, I think as we're getting more and more clarity, you've seen us take advantage of that by just allowing the capital ratios to drift down. So we'll wait ultimately to see what the final rules all look like, but it's pretty clear to us at the point that, yes, Basel III Endgame RWAs will be a little higher. Yes, it appears G-SIB inflation indexing is going to give us some relief, particularly as you move forward into future periods. So that's allowed us to do a little bit more buyback, it's allowed us to put out a little bit more balance sheet. So we're gaining a little more confidence. But at the end of the day, we're in a good place right now. We have plenty of capital, plenty of flexibility. We're earning well. Now we just got to wait for the fine rules. Brian Moynihan: John, I think your point about operating closer to the minimum [indiscernible] side, everything else have talked about and the shifts across time, the new rules, the old rules and the transition. The reality is as the -- as we have studied this, the volatility in our earnings stream under all the stress scenarios that we run every quarter is how we start to think about the cushion we have to maintain, and that's -- that cushion could be tighter to the reg minimum without having the same threats because of stability in the earnings streams and the capabilities of the company. So -- so we brought it from a broader range to a narrow range, expect us to keep it in the 50 basis points that we said. And so if the underlying requirement goes down, the whole number goes down , et cetera, so let it play out a little bit. But there's no philosophical change in maintaining a decent cushion but not an overly big cushion, but our fine-tuning of that across the last 3 or 4 years really is based on the earnings -- capabilities of this company to earn through. different things like the COVID and the regional bank crisis, et cetera, you can see that the volatility is just not there. John McDonald: Right. So what you're saying, Brian, is the 50 basis point kind of management buffer is over time, what you'd expect to gravitate to? Brian Moynihan: Yes. And we were moving there. But we're taking all earned capital out, right, to dividends and buybacks. That then leaves the nominal amount the same, and we're growing the company into it. And then we got all these rules and how they'll be implemented. Remember, there's step-ups and steps down and that kind of sort of see play out here. But you've got it right. I just think of the long term, 50 basis points over the minimum is more of what we're shooting for. John McDonald: Okay. And then, Alastair, could you give a little more color on the drivers of the change, the tweak in the NII outlook? And more specifically, what you're assuming within the modest loan and deposit growth inside of that guide? Alastair Borthwick: Yes. So we're not really changing anything in terms of the loan and deposit growth. We've been pretty encouraged with the way that started out the year. So it's more a continuation of what we've seen. But we've seen pretty good organic growth, so that's been good. The rotation is slowing from noninterest-bearing into interest-bearing. And in fact, noninterest-bearing picked up a little bit this quarter, so we're happy to see that. So for as long as the loan growth stays there, deposit growth looks good, last a couple of rate cuts. Those might have hurt us at the back end of the year. They're not going to hurt us in the same way. So all those things, you add them up, it's a little bit of all of them, but a little bit more balance sheet into global markets. So added up that all feels good. And final thing, John, is if you take a look at the loan growth disclosure that we put out, I think it's on Page 8 of our release, you'll see pretty broad-based now from each of the lines of business. Pretty broad-based by each of the products. So we're not reliant on any one thing, and that gives us a little more confidence around durability. Operator: We'll now move on to Jim Mitchell with Seaport Global. James Mitchell: Alastair, can you expand on the funding optimization point a little bit? It seems like you had a significant drop in rates paid on non-U.S. deposits. So overall, how much can you do on that fund opposition point? And how do we think about balance sheet growth in that context? Alastair Borthwick: Yes. So this is something we've talked about in prior earnings calls, Jim. So no change to what we've been thinking about over the course of the past couple of years. We had I'll call it, balance sheet puffiness around some of the longer-dated CDs and some of the repo activity. And as we go through the course of time, what we believe we can continue to do is just allow those to drift lower, which in turn is good for NIY, probably doesn't impact NII, particularly but it just -- we can fund the core growth of the clients while allowing some of that balance sheet tough to go out. So that's what we're doing. We're just sticking to that. You can see the CDs coming down quietly slowly over time, taken some of the repo down quietly slowly over time, while still giving more balance sheet to the business for clients. James Mitchell: And can you quantify how much you think is left of that? Alastair Borthwick: I think last time we got together, we said probably somewhere around $100 billion or so a little more, it could be a little less, but it's in that kind of a number. Brian Moynihan: And Jim, be careful about nominal. In other words, within your -- we grow core loans within the balance sheet and let other stuff go off. But the total footings at one point, but it's the -- what you're holding within those footings that's the key point and what your -- what liabilities you have within those footings. So I think it was pointing out one of your colleagues earlier, if you think about deposits in our company and you look at Slide 7 and look at the rate drop across the board, we are clearly at the core of core deposits in all the businesses. They have different aspects. Obviously, wealth management business. So core deposit is different than the mass market consumer business or even the small business versus a large corporation -- so a large corporation. So look at that page, just think about we're sitting with $2 trillion of positive [ trillion 2-ish ] of loans. And we're only going to take the deposits we need -- we take the deposits from the customers in line with their core operating capabilities in the core business. That's what we're focused on. James Mitchell: Yes. No, absolutely. And on the C&I side, Alastair, you mentioned that more traditional C&I growth has picked up. Is that an early read on taking some share from private credit, given disruptions there? Is it simply just broadly improving demand and an improvement in credit line utilization? Alastair Borthwick: It's mostly credit line utilization this quarter. So at the end of Q4, we saw a little bit of revolver pay down, which probably took our loan balances down, we still grew loans in Q4, but the growth wasn't quite as high because the revolver utilization came down. It just came back in a little bit more in Q1. So we probably picked up $5 billion to $10 billion of loan growth just for revolver draws. So it's sort of core middle market activity, building working capital across corporate America and internationally. That's where we saw the growth. Operator: We'll now move on to Mike Mayo with Wells Fargo Securities. Michael Mayo: What a difference a quarter makes. I think what I hear you saying is that you feel better about the short term and you can correct that. But you got the 16% ROTCE. You're guiding NII higher. You have 29 basis points of year-over-year operating leverage. So I think you're saying the short-term better, but since the last earnings report, there have been concerns about the long term, right, that AI agents will come and take your deposits. The AI bad actors will commit cybercrime against you, the AI spend will not bear fruit. So I know you guys have Erica and CashPro and GenAI and over 4,000 patents. And as you brought up less employees since 2007 and also some other advantages there. But as you think about that debate, the long-term debate AI, you being a victim or are you being a beneficiary, why is Bank of America and AI beneficiary? And if you could just frame it, somewhere I know that the question was asked already, but revenues per employee, how much would you expect that to increase or something around that? Brian Moynihan: Like Mike, I think in your question, you gave the answer, which is we are a beneficiary of the impacts of all technology, including AI. We've applied it and we'll continue to apply our team's job, and we've got catalyst efforts going on, on a corporate wide basis to bring all the ideas to bear. Our team's job is to benefit from the technology. It creates issues about cybersecurity and things like that that you're reading about in the paper and we take those extremely seriously and invest heavily to do it, and we work with our industry colleagues and colleagues and other industries to ensure the safety and security of our architecture. But there's -- there will always be positive pressure on the earnings due to the application technology and AI gives us a lot of efforts there. There's nothing new and different about the ability to move deposits that we can move them in our company instantaneously to other off balance sheet, on balance sheet, right? So the question is, what are deposits for. And I think like it's lost in all the discussions a little bit the reflection of the earlier discussion on deposit rate paid is we have the deposits because people buy their transaction accounts with us here moving money. The CD and at the market deposit practice in our company is a small part of what we do to drive the economic value. And our job and our -- is to stay with our customers to be the core depository institution and transactional banks with them as well as our lending bank. And we feel very strongly that we will not only take advantage of AI will help us drive greater market share and capabilities in the future. Michael Mayo: I guess as a follow-up to, I guess, you remind me like the primary checking account, I think, is what you're saying is very sticky. How to use AI to improve the trust of customers, whether it's with a cyber risk. I'm not sure if you were of the CEOs went down to DC or just trust with data and identity and the relationships? Brian Moynihan: Sure. I think the trust in our -- the customers go to our institution at all-time highs and the trust they see and in the way we use data and the way we use information, frankly, the -- some of the gates on our adoption of some of these technologies are, we're protecting customer data where other people are not. And that's been a constant struggle from cloud computing into the -- so we keep our data out of the models, we keep -- so that our customer data, et cetera, and take advantage of the models coming into us, but not feeding them. And that's what we owe our customers. We feel we're in a great trusted position. We spent a lot of time, effort and money over years, making sure we get to what we call never down and continue to deploy hot-hot hot backups and systems that will step in for each other. We work with the industry to ensure that, that goes throughout the other platforms, the FMUs and things like that. So we -- if you ask our customers, our digital capabilities, our technology capabilities and the trust in us is as high as it's ever been, matters higher than it's ever been, and it's growing literally month after month after month. So we feel good about that. Michael Mayo: And then last follow-up, just in 5 years from now, when we look back, say, okay, AI, tech, where should we see the benefits? Is it just the stickiness of the relationship? Or is it efficiency or where should that show up? Brian Moynihan: So if you think about the just on the consumer side, Mike, because 2 things. One, you said the core deposit account. There's a core deposit account is a core investment account. It's a core corporate transactional account. It's a core borrowing home. So each of these core is what you're seeking, not just growth overall. So I just want to make sure it's broader. But if you say 5 years from now and think about it, I think you'll see the same elements, we should continue to see more and more digital or AI generated interface to the client. But I think AI really helps us internally just to make it straightforward. 99% round numbers of all the interactions we have with our consumers are digital already. So there's no person involved. So as you start to think about that, you go the inverse, the cost of that 1% is a pretty high number, and we're working on that with all this technology, and we're working on the efficiency even of the 99% in house delivered. The example of that is Erica versus Alerts. Alerts are basically instead of doing prompts and asking questions, we're using the same technology delivered to a constant flow of information. That saves the interface on the prompts and things and also allows it to be more interactive with the customers. So in the AI intelligence technology intelligence is not different. So it will be more of it. I think at the end of the day, if you think about from [ '07 ] until now the same number of people, we'll be plowing into the front end, where relationship managers matter, the high-touch piece, which is critically important delivery. You'll see us keep adding there, and you'll see us keep taking out of the activities that are not directly facing the customer. But even on the customer facing with 90,000 sales force moving to agent force and AI and we'll get more efficient on that, too. So I'm not going to give you exactly because you know that's [indiscernible] because it never quite works out that way, but the trends will be more technology, more intimacy with the customers more agentic versus prompt more built into the process rather than have it be delivered by teammates doing something, it's part of the process, more customers doing more with us and expense will be -- and the operating leverage will be there. Operator: We'll now move on to Erika Najarian with UBS. L. Erika Penala: Just 2 quick follow-up questions from me. First, on the net interest income outlook. As we think about the possibility of no rate cuts. How should we think about how BofA is going to handle deposit costs in that scenario? Could deposit costs be contained particularly given sort of the loan growth in the market's balance sheet if the Fed doesn't cut? Alastair Borthwick: I think -- Erika, I think so. I mean if the rates aren't moving, I don't see a great deal of impetus for us to be changing what we're paying in the interest-bearing side. And then it will just be a question of which of the 2 categories grows faster, interest-bearing and noninterest-bearing pointed out right now, we've got a little bit of growth in both. So that's helpful. We'll have to watch that over the course of the year. But even with 2 rate cuts, no longer in the period in the second half, doesn't make a great deal of difference because you're really talking about 1 cut for 6 months, 1 for 3 months in the old version. So we'll be a slight beneficiary of that, but the main thing going on is just organic growth of the company. L. Erika Penala: Got it. And just a very technical question on some of the capital reform proposals. And this sort of came to everyone's attention when one of your peers reported yesterday, I fully appreciate that the regulators are trying to address retrospective inflation with the coefficient changes. But companies like Bank of America in theory, based on your 2025 G-SIB score are set to go up by January 1, 2028. Now clearly, a lot of that growth was related to the economy and your risk density continues to go down. As you think about the comment period, is that something you would address because obviously, there's 90 days, and there's a lot of dialogue, I'm sure, going on between the industry. But I thought that was particularly notable in terms of that 2025 score potentially bringing your G-SIB up by January 2028, despite the positive revision on the surcharge. Alastair Borthwick: Yes. So there are 2 worlds right now, Erika, there's the current rule and there's proposed rules. We don't have the proposed rules finalized yet. I'd just say the main thing you're talking about, which is G-SIB numbers going higher over time, the new proposal addresses that because there's inflation indexing. So what might look like a raise in the future may not be a rise in the G-SIB. So that's why we believe in the course of this. That's one of the most important things done here. We expect to be a beneficiary of that because we're an organic growth company as well all the large G-SIBs, one would think. Brian Moynihan: Erika, one thing to think about is in the words of the old song, you can't always get what you want, but can get what you need. The end of the day, we needed a concept of indexing because it was just -- it was in the original rule that after '12 data -- 2012 data that it was supposed to be indexed. So we needed that in there. What we would have wanted was a longer-term perspective than we are getting on it, but at least in the concept and we baked in a rule and we can go to work on how that impact because it was just -- we and the industry are not going to get everything who we want these proposals because at the end of the day, there's -- it's hard there's some negotiation going on. But on the other hand, we're getting what we need. We just a concept of indexing because it's meant to be an original rule, it wasn't put in and then with gross growth in the economy from '19 and now, we all had an increase in capital, 15%, 20% with no major risk. So we got the concept in, let them finalize the rules. We're never going to get everything in the industry should get or desires to get actually we believe we should get. But at the end of the day, we got to get moving along here so we can get this implemented and then fine-tune the models around. L. Erika Penala: Got it. And Brian, a fantastic job on addressing the efficiency questions very clearly earlier in the call. Operator: We'll now move on to Ken Usdin with Autonomous Research. Kenneth Usdin: Just one follow-up with a great start on the 9% growth in NII, and you took up the range to 6% to 8% in I'm just wondering, Alastair, just as you look through the year, like why couldn't the first year growth rate stay there? And are there any either comp things or shifts in kind of the expectations around markets-related NII from NII to fees given the higher for longer? Or any other points that we should just be mindful of? Or is it just -- we'll see because it's early in the year, there's a lot that could still play out. Alastair Borthwick: Well, it's a little bit of that. It's early in the year, we'll see how it plays out, but it's also a little bit of recognition that last year, we had a bigger second half just because of the shape of the fixed rate asset rebasing that took place. And we just got a little bit less of fixed rate asset repricing taking place in the second half of this year. So it's really a year-over-year comp thing that we're looking at. Now, by the way, the organic growth continues to pick up. Can we do better? Of course, but that's why we give give you as much guidance as we can in each quarter based on what we actually see. Kenneth Usdin: That's fair. And then on Brian's point about the great start to operating leverage, 290, same kind of question, like you did great in holding the line on cost, and I know you're trying to not focus is on a cost side per se, but is the demonstration of that flexibility going to be the ultimate driver of the incremental to get you from one side of the 200 to potentially the higher side. I mean I just kind of wonder just can you keep this range reasonably tight on the expense growth trajectory? Alastair Borthwick: Yes. So we provided a guidance on operating leverage looking forward over a 3- to 5-year period and said we're aiming for 200 to 300 basis points. If we can do more, we will. Every quarter is going to look different because you're comparable versus last year will look different. The growth will look different. And so we just -- we recognize we have to have a range because it's not going to be the same every single quarter. That's one point. Second. The main thing that we have to do on the expense side is just to be really disciplined on headcount because that remains 60% to 70% of the cost base when you really think about it. So you're going to look at the headcount, that's going to give you a pretty good idea as to whether or not we're really focused on the core operating expense being disciplined there. And then you've got revenue-related expense, many of those are good expenses. We don't want to have to apologize for that. That's why we focus people on the operating leverage because when assets under management fees are going up 15%, with investment banking is going up 20%, when the sales and trading is going up 12%, those are good things and with them come good costs. So -- that's what we're managing on the operating leverage. We had a good quarter this quarter. We run to the next. We're figuring out how we can do 200 and higher this next quarter. Operator: We'll now move on to Chris McGratty with KBW. . Christopher McGratty: I'm interested on the wealth strategy relative to the M&A targets laid out in November. Any recruiting or retention commentary would be great. Brian Moynihan: So I think we -- so 2 things. We'll update those targets not every quarter just because they're longer-term targets, medium-term, long-term targets on net new growth. The -- on recruiting, I think the team is doing a very good job and we're getting in, I think, doubled the amount of advisers this year first quarter as we did last year, something like that. But importantly, the attrition of the advisers is down to a low level, and it's a net benefit of that. So we feel that Lindsay and Eric and Katy and the [indiscernible] are well on the way to driving those metrics to where they should go. And the business had nice operating profit, which it will do when markets year-over-year up. It's a nice pickup and the margin continues to improve year-over-year, up a couple of hundred basis points. So they've done a good job. Importantly, you can look on the -- you get growth pages, you'll see some pieces in there about account, checking accounts and rounding out the relationship and the loan growth in Wealth Management was very strong for the last year or so. So we feel very good about it. We'll update you on those when we do more of a general update for the company, and we feel good. Glenn Schorr: Great. And then the popular question this quarter has been durability of trading revenues. I'm interested in how you see the potential of the firm to grow trading revenues and the mix within trading over the next near to medium term? Alastair Borthwick: Well, we still feel good about it. I mean, this is another quarter where we allocated a little bit more in the way of resources to the team. They delivered with another 15% return on allocated capital. And at the end of the day, we've got a big global diversified set of businesses in global markets. Equities did very well this quarter. Commodities did well this quarter. Our international businesses came through this quarter. So this is what you have when you've got a nice portfolio of businesses, activity can move from one to another, still end up with 12%, sales and trading increases year-over-year. So we've obviously invested a lot we'll continue to invest in this business. The client activity remains robust. There's a lot going on in the world and people have to think about them, their financing and their risk management and repositioning. So we've clearly been beneficiary of our client activity as well, but we feel good about the business, and we'll keep investing. Operator: We'll move next to Gerard Cassidy with RBC Capital Markets. Gerard Cassidy: Alastair, you talked about the loan growth and how the utilization rates have come up a bit, also mentioned about the consumer growth in the quarter or maybe Brian, at about 4%. The question I have is, we're starting to hear from a few banks that the underwriting standards might be getting stretched. And I know you guys emphasized you're sticking to your discipline on underwriting standards. But are you guys seeing that in any areas, particularly in the global markets lending area. Are people pushing it and you guys are just walking away from stuff maybe more often today than maybe 12 months ago? Alastair Borthwick: Well, we've not seen any of that here, and we haven't detected that elsewhere at this stage. Gerard Cassidy: Very good. And then as a follow-up, Brian, you talked about the growth of the consumer. You talked about the debit card growth and credit growth. I think it was Slide 5. We often hear about this cash recovery the lower end, struggling with inflation, the higher end, better off because of the affluence. Are there any -- what are the risks that may prop up or crop up for the higher end 6 or 12 months from now? Everybody is always focused on that lower end concern. Are there any -- should there be some concerns at the higher end? Or what could they be? Brian Moynihan: I think at the end of the day, whether you're talking about credit quality or the ability to spend money, it's always going to come back to -- for the broad base of American population that's critical the economy, they're working. And so unemployment level staying in the 4.5 range and et cetera? And then is wage growth there. And I think wage growth has been solid among all the different parts of the earnings spectrum. And the question will be, will wage growth continue. And both of those things have up to the quarter, you're saying spending grow among all those parts economy just at a faster rate in the -- if we look at 1/3, 1/3, 1/3, 1/3 in the lower-income strata, middle income high. And you look at it, it's growing everywhere at a faster rate in the middle and high but the wage growth has been solid across all those populations. And so the spending ought to be there. So I would just keep watching the unemployment, new claims are up around 200,000 change, continuing claims 1.8, they're levels that they were on a bigger workforce than they were in prepandemic. And so until those move, I don't see anything that interrupts the actual spending capability of all the consumers. And I know often people say you're optimistic. I'm giving what we see today in the spending even in early April here. And that's the critical thing what they do, not what they say they're going to do, and that's going to be dictated more am I employed, I have a job, my way just growing, and I feel that my money is being well spent. And that's where inflation can make them shift money around but not necessarily stop it. Gerard Cassidy: Very good. And I assume you guys are watching the tax refunds, which are coming in better than expected, which obviously will bolster consumer spending as well. Appreciate Brian and Alastair. . Operator: We'll now move on to David Chiaverini with Jefferies. David Chiaverini: Follow-up on loan pipelines and borrower sentient on the commercial side. Are you observing any change in borrower behavior given the Middle East tensions were the line utilization drawdowns defensive or normal course of business type of drawdowns. Alastair Borthwick: These were not panic draws. This has generally been BAU working capital type of activity at this stage. Brian Moynihan: David, I think when you talk to commercial customers and you think about where they were last year with Liberation Day in the middle of that, you come a year forward and a lot of things have been figured out with trade tariff policy immigration policy. Tax reform was in and deregulation was coming, the major principles of the new -- of the Trump administration were flowing through some -- obviously, the Middle East and the trade tariff and all that stuff, it's got them thinking but they're still seeing solid demand. So I'll trying to figure out what happens next. And so the borrowings right now are because they see opportunities, and we'll see what happens with the resolution of the Middle East conflict and other things and what the terms are, what the duration of the inflation is, and that could impact them, but you're not seeing it now. David Chiaverini: Great to hear. And then shift over to extense repricing. That's been a nice tailwind for you guys. At what point does the repricing tailwind begin to moderate? And if you happen to have at your fingertips, the dollar volume of fixed assets that are expected to reprice in coming quarters? Alastair Borthwick: So when we got together at Investor Day, we laid out, number one, the magnitude. Number two, the time period. You can think about it, David, is 5 years. So it's not going to be 1 quarter. It's going to be every quarter for the course of the next 5 years, assuming rates stay where they are. So we laid out pretty good disclosure there. I would encourage you just to take a look at that. One see is we put it in 3 different buckets. One was the residential mortgage, the auto loans that come our balance sheet with clients every quarter and new ones that come on. We laid it out in terms of treasuries and mortgage-backed securities in our securities portfolio that will mature and we reprice every quarter, and then we laid it out in terms of the cash flow swaps and the hedging activities we do. So there's pretty good disclosure there. It's a 5-year thing. It's a little bit longer than that, but the majority is -- the vast majority is in the next 5 years. We laid out the numbers, it might be helpful. Okay. Operator: We'll move on now to Saul Martinez with HSBC. Saul Martinez: I want to ask about reserving. I was a little bit surprised that you saw the slight reserve release this quarter given the macro uncertainties. And -- so I guess how are you factoring in macro volatility, downside case scenarios into reserving? Because it does seem like you take a different approach to reserving some of your peers. I fully agree that your track record on credit is comparatively strong. Loss content has been lower than your peers. You see that in the stress test that you guys have highlighted a number of times. But if I look at your reserve ratios by segment, but also things like reserve coverage of charge-offs, reserve coverage of delinquent loans, it tends to be lower than your peers. So I guess, why not be a little bit more conservative in your reserving? And I'm curious if you agree or disagree with my assessment that maybe you're -- I don't want to call it more aggressive in reserving, but maybe more realistic in your reserving than some of your peers. But I'm curious just philosophically, your approach here on reserving? And why not be a little bit more conservative in terms of your reserving? Alastair Borthwick: Okay. So first, I don't think we have any difference in the way we think about reserving relative to anyone else. We all will be under the same CECL methodology. We all operate in the same way. Second, I'd say, in terms of whether we have lower reserves or allowance tends for most banks to be reflective of the quality of their lending portfolio, the risk they take and their client selection. So when we show you on slides 20, 21 and 22, how we have transformed the company over the course of the past 15 years, we have a very different risk profile of our lending than many of our peers. So when you look at, for example, on Page 20 of the earnings, you'll see we've got a lot less of consumer unsecured. So a lot less of credit card, a lot less of home equity lines. We have a lot more of wealth loans. And when you look at the Federal Reserve stress test loss rate, we've been the lowest 13 of the last 14 years, which would tell you we probably should have a lower reserve because we have a more conservative approach to our client selection and the type of risk that we take. So we don't think we're any different than other people. We just think we've got a higher quality client base and a higher quality loan portfolio. And the final thing to say is in the course of any given quarter, you might take, like, for example, this quarter, we took 5% out of the upside case. We've put it in the baseline. So we're pretty heavily skewed at this point towards a downside case plus baseline. And the only thing that happened to offset that was we had some release from the continued improvement in CRE office where we had built reserve pretty significantly. And as that portfolio has gotten smaller, as we've got less and less in the way of NPLs and [indiscernible] there, we've been able to take some of the reserve back out. So that's all that's going on in this particular quarter. Saul Martinez: Okay. No, that's helpful. Maybe just a follow-up then on NII, obviously, encouraging to see the guidance increase. NII ex markets up about 5% year-on-year, which is a good number, obviously, lower than 9%, but a good number. How should we think about what the 6% to 8% means for growth in NII ex markets? And should we be thinking that global markets NII kind of stabilizes at current levels given that it's benefited from lower rates and if we see the Fed on hold here, maybe it kind of sticks around these levels? And also just remind us what proportion of Global Markets NII is revenue earnings neutral? Because my understanding is that some part of it is not, but it does flow to the bottom line. But is it predominantly offset by higher Global Markets NII offset by lower global markets noninterest revenue. So just any color you can give there, that would be helpful. Alastair Borthwick: Yes. So the Global Markets business NII has benefited over the course of the past couple of years from, number one, rates coming lower. And number two, continued balance sheet growth. If rates don't go lower, that engine for global markets NII growth wouldn't be there. So you can almost think that go forward, more and more of the NII growth is going to come from global banking, consumer and global wealth and less of it is probably coming from global markets. And then in terms of the NII, there will be quarters where a little bit of the NII is offset in MSA. Last quarter happened to be one where I noted we got about $100 million or so of NII benefit that was offset in MSA. But I don't anticipate that being a big story for us going forward. We've talked about the fact that the NII that we're generating is going to drop to the bottom line, that continues to be our position. Saul Martinez: Okay. And that's true in markets as well. Alastair Borthwick: Yes. Generally speaking, it just depends on the client activity in markets because sometimes they can change from on balance sheet to off balance sheet at sometimes is the NII composition. But if it ever came up where it was a large impact, I would share that. Saul Martinez: Okay. Got it. That's really helpful. . Operator: There are no further questions at this time. I'm happy to return the call to Brian Moynihan for closing comments. . Brian Moynihan: So thank you for joining us. It was a good quarter at Bank of America, the first quarter 2026, strong NII growth, strong overall revenue growth, great operating leverage and good returns. We look forward to delivering for that in the future. Thank you. Operator: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.