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Operator: Ladies and gentlemen, thank you for standing by. I am Gelly, your Chorus Call operator. Welcome, and thank you for joining the Ellaktor Group conference call and live webcast to present and discuss the Ellaktor's Group full year 2025 results. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Efthymios Bouloutas, CEO Ellaktor Group; and Mr. Dimosthenis Revelas, CFO Ellaktor Group. Mr. Revelas, you may now proceed. Dimosthenis Revelas: Thank you. Good afternoon, and welcome to Ellaktor's conference call for 2025 results. Our annual report for 2025, the press release announcing Ellaktor's financial and operating results for the year as well as a presentation were issued last Friday, all are available on the IR section of our website. In our call today, we will share with you a business update and a review of our financial results and ESG performance. A Q&A session will then follow. Allow me now to turn over the floor to Mr. Bouloutas. Efthymios Bouloutas: Thank you very much, Dimo. It's my turn to thank you for participating in Ellaktor's 2025 Annual Results Analysis and Presentation. I will follow the presentation that has been uploaded on Friday in our site. And I will cover the group business update and the basic financial results for 2025. Now 2025 was a pivotal year for Ellaktor that marked our transformation from a predominantly construction, [ DAS Energy, DAS Concessions ] and Waste Management Group to a real estate infrastructure group with significantly less dependence and reliance on public sector. We managed to complete all of the transactions that we have earmarked, i.e., we completed the sale of Helector to Motor Oil in January 2025, following the SPA that has been signed in July '24 for a consideration of EUR 114 million. On the real estate, we completed the Gournes sale to DIMAND in September '25 and the Cambas sale to DIMAND again in February 2026. In total, the 2 transactions totaled for approximately EUR 86 million. Now as you know, we have signed an SPA with Aktor Group in April 2025 for the sale of Aktor Concessions for an enterprise value of approximately EUR 367 million. Following the approval by the Hellenic Capital Market Commission, the financial closing was completed in September '25 with a final equity consideration of EUR 252 million. Now all this has brought a tremendous balance sheet transformation and the possibility with the cash that we had available for significant shareholder returns. So all in all, we managed to return in December 2025 and March '25 in total a total dividend, actually, it was a capital return, of EUR 470 million, approximately the size of our current market capitalization. Since July 2024, i.e., in less than 24 months, we have returned back a total of EUR 646 million, which amounts to EUR 136 million of our current market cap. That has left it -- we are still -- we still have an active group liquidity of approximately EUR 307 million as of December 2025 and a very solid capital structure, repaid almost all of our loans. Now in terms of new businesses, we have expanded in the hospitality sector through a 25-year lease of the Fiction Athens, which is a new hotel, 40 key upside -- upscale city hotel on Kifissias Ave, starting -- which opened in March '26. We acquired in late 2024, in December 2024, 10 yielding assets, the Hestia Apartments comprising of serviced apartments targeting short to midterm stays, strengthening the recurring income visibility. So 2025 has been our first full year of integration of this in our platform. And finally, in March '26, we acquired from Prodea Investments, a fully leased office building of 8,500 square meters in Vasilisis Sofias Ave for EUR 44 million, enhancing our exposure to prime real estate. Finally, our landmark project, which is Alimos Marina. The development is underway. We have filed all the required paperwork and relevant feasibility studies and expect the final licensing of both the seaside and the land part in the coming months. We expect to commence construction during 2026 with an approximate 24- to 30-month completion time line. Moving on to Page #6, which presents the financial highlights for the year. Here, I'd like to point out that group revenues for the full year amount to EUR 89 million, out of which approximately EUR 19 million derived from the continuous operations compared with EUR 354 million in 2024. So we have seen a decrease of approximately 75%. However, all of that is due to the transformation that I just mentioned. Net profit after tax amounted to EUR 152 million compared with EUR 57.4 million in 2024, and that includes, obviously, capital gains of EUR 187.3 million from the completed transaction. Group EBITDA amounted to losses of EUR 11.6 million compared with profits of EUR 170 million in 2024. We discussed the cash and cash equivalents, which stood at EUR 307 million approximately compared with EUR 293 million as of 31st of December of 2024. Now total equity amounted to approximately EUR 487 million compared to approximately EUR 777 million in the end of 2024, while equity attributable to majority shareholders amount to EUR 438 million, which amounts to approximately EUR 1.26 per share. The decrease is mainly due to the capital returns of EUR 0.85 per share in March '25 as well as the distribution of the interim dividend for '25 amounting to approximately EUR 0.50 per share in December 2026. Finally, our total borrowings as a group, excluding the lease liabilities amount to less than EUR 26 million, effectively fully deleveraged the group. And with this overview, I'd like to turn on the call to Mr. Dimosthenis Revelas, CFO of our group, to give you more details about our consolidated P&Ls, the balance sheet and the cash flows. Dimosthenis Revelas: Thank you, Efthymios. Let us go through briefly over the next slides as the main financial items have already been mentioned. Moving on to Page 8. We present a snapshot of our P&L broken down into continuing and discontinued operations in a more extended form. Operating level, losses of EUR 46 million in continuing operations were partly offset by an EBITDA of EUR 34.4 million in discontinued operations, thus yielding a consolidated operating loss of EUR 11.6 million. The bottom line, though, was positively impacted by significant EUR 187 million capital gain emanating, as already mentioned, from the sale transactions of Aktor Concessions and Helector. On the next slide, I mean, the 2 main comments are that following the shareholder rewards totaling EUR 470 million in 2025, i.e., the capital return of EUR 296 million plus the interim dividend of EUR 174 million, the total equity attributable to shareholders as at year-end amounted to EUR 438 million. This is EUR 1.26 per share. The group remains practically unlevered, which coupled with a solid liquidity position provides increased flexibility in assessing various investment initiatives. The group's net cash is presented in the next slide. While in the appendix, you can also discover in more detail the breakdown of the group's net debt or net cash position on a segmental basis -- on segment by segment. On Page 11 -- on Slide 11, we highlight the key flows of the year, which again are mostly linked on one hand to the inflows realized from the executed transactions and on the other to the payouts to shareholders. Allow me now to present an overview of our ESG performance and credentials, which demonstrates the group's steady progress in integrating ESG principles across its operations, supported by the strong performance and continuous improvement. On Slide 13, ESG KPIs and starting with the environment pillar, total greenhouse gas emissions amounted to 1,000 tonnes of CO2 equivalent with 62% corresponding to Scope 1 and 38% to Scope 2. Total energy consumption reached out 4,000 megawatt hours of which 23% originated from renewable sources. From a social perspective, women are represented at a rate of 39%. No incidents of human rights violations were recorded, underscoring our commitment to ethical conduct and respect for human rights. With regard to governance, no cases of data breaches, GDPR noncompliance or incidents of corruption or bribery were recorded. On the next slide, that is Slide 14, we highlight some key achievements that were important to -- that are important to note in the course of 2025. The group achieved a 95% ESG Transparency Score from the Athens Exchange and maintained an A ESG score from Synesgy for the second consecutive year. The group was also recognized among the 50 most sustainable companies in Greece. Our climate near-term targets were validated by the science-based targets initiative, while we received a B rating from CDP for climate disclosure. On the social side, we implemented a group-wide human rights training program and strengthened employee engagement through various internal initiatives. We also continue to support environmental education in public schools through the GREEN FUTURE program. On the rating slide that on the next slide, Slide 16, the group continues to perform strongly across major international agencies. Bloomberg ESG disclosure score reached 98.8 in 2025, showing significant improvement in recent years. LSEG ranks the group 16th out of 338 companies in its sector, while Sustainalytics places it -- places us, Ellaktor, in 77 (sic) [ 57th ] spot out of 353. Our S&P Global ESG score has improved to 55, significantly above the industry average. And FTSE Russell assigns a score of 4.3 out of 5, placing us in the 97th percentile globally. On Page 16, EU taxonomy 20% of our consolidated revenues are aligned, while with a larger share eligible but not yet aligned. While OpEx alignment remains limited, CapEx shows strong performance with 44% already aligned. This highlights our strategic focus on directing investments towards sustainable activities. This concludes our presentation for 2025, and I would now like to open the floor for any questions you may have. Thank you. Operator: [Operator Instructions] The first question is from the line of Katsios Nestoras with Optima Bank. Nestor Katsios: Just a couple of questions from my side. The first one has to do with the outlook for 2026. I can understand that the contribution from the hotel will commence from this year. So is it fair to assume that you will be breakeven at profitability, perhaps EBITDA or bottom line this year with the contribution from the hotel? And the second question on the dividend. We didn't hear anything -- any comments for the remaining dividend. Could you please give some color on your intention for the final dividend? Efthymios Bouloutas: Thank you very much. Answering the second question, the dividend proposal, obviously, it's a Board of Directors' decision, which will be directed to the general assembly of the company that will happen sometime in the next couple of months. So we cannot preempt the Board and their decisions. Regarding the hotel and the financial results of the company, I think it's too early in the year in order to make forecast for the full year. I think it would be fair to let at least the first semester pass by, and then we can update you on that. Operator: [Operator Instructions] Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to management for any closing comments. Thank you. Efthymios Bouloutas: Okay. Well, once again, thank you very much for your participation in the conference call in Ellaktor's conference call discussing the full year 2025 results. As answered in the question posed, I think it's really early in the year to make definitive statements and remarks on the full year progress. Thus, as there are no further questions, I would like to pause now, and thank you all for your participation. Thank you very much. Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a pleasant evening.
Operator: Ladies and gentlemen, thank you for standing by. I am Gelly, your Chorus Call operator. Welcome, and thank you for joining the Ellaktor Group conference call and live webcast to present and discuss the Ellaktor's Group full year 2025 results. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Efthymios Bouloutas, CEO Ellaktor Group; and Mr. Dimosthenis Revelas, CFO Ellaktor Group. Mr. Revelas, you may now proceed. Dimosthenis Revelas: Thank you. Good afternoon, and welcome to Ellaktor's conference call for 2025 results. Our annual report for 2025, the press release announcing Ellaktor's financial and operating results for the year as well as a presentation were issued last Friday, all are available on the IR section of our website. In our call today, we will share with you a business update and a review of our financial results and ESG performance. A Q&A session will then follow. Allow me now to turn over the floor to Mr. Bouloutas. Efthymios Bouloutas: Thank you very much, Dimo. It's my turn to thank you for participating in Ellaktor's 2025 Annual Results Analysis and Presentation. I will follow the presentation that has been uploaded on Friday in our site. And I will cover the group business update and the basic financial results for 2025. Now 2025 was a pivotal year for Ellaktor that marked our transformation from a predominantly construction, [ DAS Energy, DAS Concessions ] and Waste Management Group to a real estate infrastructure group with significantly less dependence and reliance on public sector. We managed to complete all of the transactions that we have earmarked, i.e., we completed the sale of Helector to Motor Oil in January 2025, following the SPA that has been signed in July '24 for a consideration of EUR 114 million. On the real estate, we completed the Gournes sale to DIMAND in September '25 and the Cambas sale to DIMAND again in February 2026. In total, the 2 transactions totaled for approximately EUR 86 million. Now as you know, we have signed an SPA with Aktor Group in April 2025 for the sale of Aktor Concessions for an enterprise value of approximately EUR 367 million. Following the approval by the Hellenic Capital Market Commission, the financial closing was completed in September '25 with a final equity consideration of EUR 252 million. Now all this has brought a tremendous balance sheet transformation and the possibility with the cash that we had available for significant shareholder returns. So all in all, we managed to return in December 2025 and March '25 in total a total dividend, actually, it was a capital return, of EUR 470 million, approximately the size of our current market capitalization. Since July 2024, i.e., in less than 24 months, we have returned back a total of EUR 646 million, which amounts to EUR 136 million of our current market cap. That has left it -- we are still -- we still have an active group liquidity of approximately EUR 307 million as of December 2025 and a very solid capital structure, repaid almost all of our loans. Now in terms of new businesses, we have expanded in the hospitality sector through a 25-year lease of the Fiction Athens, which is a new hotel, 40 key upside -- upscale city hotel on Kifissias Ave, starting -- which opened in March '26. We acquired in late 2024, in December 2024, 10 yielding assets, the Hestia Apartments comprising of serviced apartments targeting short to midterm stays, strengthening the recurring income visibility. So 2025 has been our first full year of integration of this in our platform. And finally, in March '26, we acquired from Prodea Investments, a fully leased office building of 8,500 square meters in Vasilisis Sofias Ave for EUR 44 million, enhancing our exposure to prime real estate. Finally, our landmark project, which is Alimos Marina. The development is underway. We have filed all the required paperwork and relevant feasibility studies and expect the final licensing of both the seaside and the land part in the coming months. We expect to commence construction during 2026 with an approximate 24- to 30-month completion time line. Moving on to Page #6, which presents the financial highlights for the year. Here, I'd like to point out that group revenues for the full year amount to EUR 89 million, out of which approximately EUR 19 million derived from the continuous operations compared with EUR 354 million in 2024. So we have seen a decrease of approximately 75%. However, all of that is due to the transformation that I just mentioned. Net profit after tax amounted to EUR 152 million compared with EUR 57.4 million in 2024, and that includes, obviously, capital gains of EUR 187.3 million from the completed transaction. Group EBITDA amounted to losses of EUR 11.6 million compared with profits of EUR 170 million in 2024. We discussed the cash and cash equivalents, which stood at EUR 307 million approximately compared with EUR 293 million as of 31st of December of 2024. Now total equity amounted to approximately EUR 487 million compared to approximately EUR 777 million in the end of 2024, while equity attributable to majority shareholders amount to EUR 438 million, which amounts to approximately EUR 1.26 per share. The decrease is mainly due to the capital returns of EUR 0.85 per share in March '25 as well as the distribution of the interim dividend for '25 amounting to approximately EUR 0.50 per share in December 2026. Finally, our total borrowings as a group, excluding the lease liabilities amount to less than EUR 26 million, effectively fully deleveraged the group. And with this overview, I'd like to turn on the call to Mr. Dimosthenis Revelas, CFO of our group, to give you more details about our consolidated P&Ls, the balance sheet and the cash flows. Dimosthenis Revelas: Thank you, Efthymios. Let us go through briefly over the next slides as the main financial items have already been mentioned. Moving on to Page 8. We present a snapshot of our P&L broken down into continuing and discontinued operations in a more extended form. Operating level, losses of EUR 46 million in continuing operations were partly offset by an EBITDA of EUR 34.4 million in discontinued operations, thus yielding a consolidated operating loss of EUR 11.6 million. The bottom line, though, was positively impacted by significant EUR 187 million capital gain emanating, as already mentioned, from the sale transactions of Aktor Concessions and Helector. On the next slide, I mean, the 2 main comments are that following the shareholder rewards totaling EUR 470 million in 2025, i.e., the capital return of EUR 296 million plus the interim dividend of EUR 174 million, the total equity attributable to shareholders as at year-end amounted to EUR 438 million. This is EUR 1.26 per share. The group remains practically unlevered, which coupled with a solid liquidity position provides increased flexibility in assessing various investment initiatives. The group's net cash is presented in the next slide. While in the appendix, you can also discover in more detail the breakdown of the group's net debt or net cash position on a segmental basis -- on segment by segment. On Page 11 -- on Slide 11, we highlight the key flows of the year, which again are mostly linked on one hand to the inflows realized from the executed transactions and on the other to the payouts to shareholders. Allow me now to present an overview of our ESG performance and credentials, which demonstrates the group's steady progress in integrating ESG principles across its operations, supported by the strong performance and continuous improvement. On Slide 13, ESG KPIs and starting with the environment pillar, total greenhouse gas emissions amounted to 1,000 tonnes of CO2 equivalent with 62% corresponding to Scope 1 and 38% to Scope 2. Total energy consumption reached out 4,000 megawatt hours of which 23% originated from renewable sources. From a social perspective, women are represented at a rate of 39%. No incidents of human rights violations were recorded, underscoring our commitment to ethical conduct and respect for human rights. With regard to governance, no cases of data breaches, GDPR noncompliance or incidents of corruption or bribery were recorded. On the next slide, that is Slide 14, we highlight some key achievements that were important to -- that are important to note in the course of 2025. The group achieved a 95% ESG Transparency Score from the Athens Exchange and maintained an A ESG score from Synesgy for the second consecutive year. The group was also recognized among the 50 most sustainable companies in Greece. Our climate near-term targets were validated by the science-based targets initiative, while we received a B rating from CDP for climate disclosure. On the social side, we implemented a group-wide human rights training program and strengthened employee engagement through various internal initiatives. We also continue to support environmental education in public schools through the GREEN FUTURE program. On the rating slide that on the next slide, Slide 16, the group continues to perform strongly across major international agencies. Bloomberg ESG disclosure score reached 98.8 in 2025, showing significant improvement in recent years. LSEG ranks the group 16th out of 338 companies in its sector, while Sustainalytics places it -- places us, Ellaktor, in 77 (sic) [ 57th ] spot out of 353. Our S&P Global ESG score has improved to 55, significantly above the industry average. And FTSE Russell assigns a score of 4.3 out of 5, placing us in the 97th percentile globally. On Page 16, EU taxonomy 20% of our consolidated revenues are aligned, while with a larger share eligible but not yet aligned. While OpEx alignment remains limited, CapEx shows strong performance with 44% already aligned. This highlights our strategic focus on directing investments towards sustainable activities. This concludes our presentation for 2025, and I would now like to open the floor for any questions you may have. Thank you. Operator: [Operator Instructions] The first question is from the line of Katsios Nestoras with Optima Bank. Nestor Katsios: Just a couple of questions from my side. The first one has to do with the outlook for 2026. I can understand that the contribution from the hotel will commence from this year. So is it fair to assume that you will be breakeven at profitability, perhaps EBITDA or bottom line this year with the contribution from the hotel? And the second question on the dividend. We didn't hear anything -- any comments for the remaining dividend. Could you please give some color on your intention for the final dividend? Efthymios Bouloutas: Thank you very much. Answering the second question, the dividend proposal, obviously, it's a Board of Directors' decision, which will be directed to the general assembly of the company that will happen sometime in the next couple of months. So we cannot preempt the Board and their decisions. Regarding the hotel and the financial results of the company, I think it's too early in the year in order to make forecast for the full year. I think it would be fair to let at least the first semester pass by, and then we can update you on that. Operator: [Operator Instructions] Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to management for any closing comments. Thank you. Efthymios Bouloutas: Okay. Well, once again, thank you very much for your participation in the conference call in Ellaktor's conference call discussing the full year 2025 results. As answered in the question posed, I think it's really early in the year to make definitive statements and remarks on the full year progress. Thus, as there are no further questions, I would like to pause now, and thank you all for your participation. Thank you very much. Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a pleasant evening.
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Nano-X Fourth Quarter 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would like now to turn the conference over to Mike Cavanaugh, Investor Relations. Please go ahead. Mike Cavanaugh: Good morning, and welcome to the Nano-X Imaging Fourth Quarter 2025 Investor Call. Earlier today, Nano-X Imaging Ltd. released financial results for the quarter ending December 31, 2025. The release is currently available on the Investors section of the company's website. With me today are Erez Meltzer, Chief Executive Officer and acting Chairman; and Ran Daniel, Chief Financial Officer. Before we get started, I would like to remind everyone that management will be making statements during this call that include forward-looking statements regarding the company's financial results, research and development, manufacturing and commercialization activities, regulatory process and clinical activities, among other matters. These statements are subject to risks, uncertainties and assumptions that are based on management's current expectations as of today and may not be updated in the future. Therefore, these statements should not be relied upon as representing the company's views as of any subsequent date. Factors that may cause such a difference include, but are not limited to, those described in the company's filings with the Securities and Exchange Commission. We will also refer to certain non-GAAP financial measures to provide additional information to investors. A reconciliation of the non-GAAP to GAAP measures is provided with our press release with the primary differences being non-GAAP net loss attributable to ordinary shares, non-GAAP cost of revenue, non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP research and development expenses, non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses and non-GAAP gross loss per share. With that, I'd now like to turn the call over to Erez Meltzer. Erez Meltzer: Thank you, Mike, and thank you all for joining us today. In the fourth quarter of 2025, we continued to move the business forward across multiple fronts. While our primary focus remains on expanding our commercial presence, given the current geopolitical situation, we spent a lot of efforts during the quarter and the beginning of 2026 to secure our supply chain and strengthen our financial positions as well. On top of that, we made good progress advancing the capabilities of Nanox platform and strengthening the operational infrastructure needed to support our long-term growth. I'm happy to report that we recently entered into an agreement with Howard Technology Solutions, a division of Howard Industries, which has a national reach and an established presence in health care and public sector market, providing us with a scalable framework for expanding Nanox.ARC deployment. This agreement reflects our confidence in the commercial demand for the Nanox.ARC and our ability to engage partners that can support sustained growth in system placement across the U.S. Under the framework of this agreement, Howard is expected to deploy 300 Nanox.ARC systems over a 3 years period, of which 60 are indicated to be deployed in the first year. We also recently announced multiple commercial agreement, which together accumulates to roughly 360 systems over a 2 to 3 years' period. These partnerships expand our reach across imaging centers and specialty care setting where point-of-care imaging is integral to clinical workflow and patient management. This represents a fundamental shift in how we are poised to scale our business from providing our technology to the deploying it in a meaningful volume, shifting toward a growing CapEx portion. This is what we see as getting us closer to our indicated revenue of 2026. The framework has the potential to become a meaningful contributor over time and gives us confidence in our ability to convert our robust pipeline into revenue as we move forward. We view this as continued momentum and see ourselves moving closer to an inflection point. We observed a clear shift in the market perception at major radiology conferences, including RSNA in the U.S. and ECR in Europe, where engagement and inbound interest increased meaningfully. We've also taken important steps to strengthen our operational foundation. A key component of this initiative is the restructuring of certain activities in our Korean manufacturing facility in order to reduce our Korean operation's OpEx and cash burn and improve efficiency while maintaining our supply of Nanox.ARC system component. We are very pleased with the progress we have made recently, but it is clear that the pace of deployment continues to be influenced by various external processes, including import licenses, construction time line, and regulatory requirements in certain markets. These steps take time to complete. And while we are not satisfied with the pace and would like to see deployments move faster, this reflects the current operating reality across multiple markets. We expect that many of these processes will streamlined as additional sites move through the pipeline. Introducing new technology of any kind into a medical environment is always complex process. It requires alignment across clinical workflow, regulatory framework, and operational infrastructure as well as changing behaviors which all takes time to achieve it. While this can slow down the early stages of deployment, it is also a natural part of introducing innovative technology into the health care systems. Turning to revenues. We continue to target $35 million in revenue for the full year of 2026 based on the execution of our current plans. Today, as part of the above mentioned, we have signed commercial agreement, which we believe could result in present and future placements up to about 400 systems globally over the next 2, 3 years. Of this, approximately 38 systems are currently at various stages of deployment, including demonstration, commercial installation and systems pending construction and/or regulatory approval. In addition, there are approximately 15 systems that are expected to be installed over the next few months as part of our Nanox Imaging network. That said, it is important to emphasize that our current revenue base remain at an early stage and part of this deployed base is not generating revenues and the pace of ramp up will depend primarily on the timing of system activation, their transition into a revenue-generating operation and the impact of the deployment by the business partners. As more systems move into operation and utilization increases, we expect revenue to build accordingly. However, the exact timing of this trend may vary and always depending on the deployment process and progress and other factors. I will now provide some additional color on the Korea restructuring that I referenced in my opening remarks. Recently, we adopted a restructuring plan designed to better align our manufacturing cost structure with our long-term financial model, support our path toward improved gross margin and align our manufacturing capabilities with the company's strategic priorities. As part of this plan and our broader cost reduction efforts, we are closing our chip manufacturing line in South Korea, downsizing our fabrication facilities and shifting production to established international manufacturing partners, including CSEM, a Switzerland-based manufacturing partner. We currently hold substantial emitter inventory, which we plan to work through as we transition to a more efficient outsourced production model better aligned with current and projected demand. With these actions, we expect to reduce structural and overhead costs, lower our cash burn and enhance overall operation efficiency. With that overview, let's now take a detailed look at our various business segments, starting with the U.S. deployment. Beyond the Howard agreement, we also recently announced a distribution agreement with Imperial Imaging Technology, a U.S.-based provider of diagnostic imaging solution, to support rollout across the Southeast, particularly in orthopedic-focused environment where there is strong demand for a point-of-care imaging. In addition, we signed agreements with distributors such as: Integrity Imaging, a U.S.-based provider of medical imaging solution with established relationships across imaging centers and health care providers; Elite Surgical, which serves surgical and specialty care environments; Digital X-Ray Imaging, a leading diagnostic imaging provider with deep regional presence across Arkansas; and most recently, a collaboration with [indiscernible], an imaging solution provider focused on expanding access to diagnostic imaging and radiology oncology system to support -- all to support the deployment of Nanox.ARC systems. These collaborations aim to strengthen our distribution capability by adding sales resources and on the ground presence, expands our geographic coverage, and we believe it has the potential to become a meaningful contributor to revenues over time. In parallel, we remain in active discussion with additional partners, reflecting continued interest from medical equipment providers and likely further expansion of our U.S. pipeline. Alongside our channel strategy, our U.S. direct sales team on the ground continues to make progress in targeted clinical segments. For example, we recently signed an agreement with [ Regional Sports Medicine in Orthopedic Group ], our first orthopedic practice customer in the United States. This represents an important step into a segment where imaging plays a central role in diagnostic and treatment decisions and where providers benefit from having imaging available on site. Orthopedics remain a high volume and imaging-driven specialty with strong incentives to retain imaging in-house. Additionally, we are advancing the Nanox Imaging Network, a focused initiative designed to build a network-based imaging services model in the U.S. This initiative target segments such as the workers' compensation and specialized care where reimbursement dynamics may support higher per scan pricing. We are currently deploying already systems across a number of sites in the U.S. Under this model, Nanox supports Nanox.ARC system deployment, maintenance and connectivity, while our partners manage site operation and local engagement. While still in the very early stage, we believe this initiative can become an important component of our long-term commercial strategy as the utilization increases and the model is further validated. To provide additional context around this shift in engagement, we participated in 2 major industry events during the period. At RSNA, the world's largest annual radiology conference held in the U.S., our booth featuring live demonstration of the Nanox.ARC system saw strong interest throughout the event. At the European Congress of Radiology, ECR, the largest radiology conference in Europe, we showcased the Nanox.ARC live in Europe for the first time and presented new clinical and AI data. Engagement levels were high, reflecting growing awareness of the system's clinical value and its potential role in routine imaging workflow. We were also proud to receive the Red Dot Award for Product Design 2026 for the Nanox.ARC X, a prestigious international recognition that reflects the maturity, usability and clinical readiness of our platform. Let's now turn to work outside of the U.S. As I mentioned earlier regarding ECR, we were also honored to receive the Newcomer award at ECR 2026, reflecting the growing recognition of Nanox within the European radiology community. In February, Nanox announced an exclusive distribution agreement with Intec SRL, a leading medical distributor in Argentina with more than 35 years of experience. Under this agreement, Intec will oversee marketing, distribution, installation and support for the Nanox.ARC system and related services across the country. The collaboration intended to support commercial expansion of Nanox's 3D digital tomosynthesis technology in Argentina and strengthened the company's presence in Latin America, leveraging Intec's established relationship with the health care providers and nationwide service capabilities. Commercialization will be subject to obtaining the required regulatory approval. In Latin America, we were expected for a significant presentation at the International Congress of Radiology, the ICR in Cartagena, Colombia. The presentation will support clinical discussion around digital tomosynthesis and contribute to engagement with regional clinicians and industry stakeholders. In Europe, we continue to build momentum through partners and additional regional distributors. As a reminder, over the past few quarters, we have announced multiple European collaborations, including France, Romania, Czech Republic, Serbia alongside additional engagement in other European markets. These collaborations support our ability to navigate local regulatory environment and advanced commercialization across multiple countries. Switching gears, we continue to advance regulatory work that supports our commercial initiatives by expanding the use cases for our solution and making them accessible in more markets. We have advanced key milestones, including TAP2D clearance in the United States. As a reminder, TAP2D is the 2D view image output for the Nanox.ARC system, a practical tool for radiologists to enhance their diagnostic confidence as they become more experienced evaluating digital tomosynthesis images in part of our broader vision to alleviate adjunctive-use limitation over time. We also updated the AMAR approval for Nanox.ARC in Israel based on our existing CE Mark, enabling use of the system without adjunct limitation. Removal of the adjunctive-use limitation in the U.S. remain a key regulatory priority. We believe this is an important step that can expand our addressable market and support broader adoption. We are also working to finalize our CE Mark submission for the Nanox.ARC in Europe, which is currently anticipated in 2026, subject to change based on regulatory priorities. Turning to our AI business. We continue to strengthen our position as a comprehensive platform for the interpretation of medical images. I'm happy to report that Cedars-Sinai Medical Center in Los Angeles is joining a trial studying the benefit of Nanox.AI aortic valve calcification measurement solution, which is currently under development. We have recently conducted an on-site revaluation of the model across approximately 600 retrospective cases. The result exceeded our expectations with 6 cases of severe classification identified and approximately 100 cases showing clinical relevant findings. The Cedars-Sinai team has also expressed interest in collaboration on scientific publications based on these results. We are very pleased to be partnering with Cedars-Sinai, one of the nation's premier medical institutions. Overall, we are seeing growth in Nanox.AI business driven by new customers, expansion of existing agreements and the integration of Nanox Health IT. During the quarter, we completed the strategic acquisition of VasoHealthcare IT, now Nanox Health IT, a health care IT provider serving hospitals and health care systems across the United States with expertise in health care IT implementation. Since completing the acquisition, we have been progressing with integration and alignment while also signing several new customer agreements. We are seeing growth driven by new customers, expansion of existing agreements and the integration of our health IT capabilities and we expect this business to contribute to revenue from day 1. In addition to increasing our footprint in AI, the Health IT platform enhance our ability to integrate into clinical workflow, expand customer cases access and support cross engagement across our ecosystems. Moreover, the rest of the organization is leveraging the Health IT team's expertise and market presence, particularly as it pertains to lead generation for the USARAD Nanox.AI and Nanox.ARC. Similar to our regulatory work, clinical validation remains central to our strategy and support our commercial efforts in generating evidence across multiple applications and supporting the use of Nanox solution. As already mentioned, the Cedars-Sinai Medical Center is joining a trial of Nanox.AI aortic valve calcification measurement solution and we've accomplished much more recently. In an exciting update from our collaboration with MDS wellness, an independent provider of wellness screening programs located in Michigan, we secured our first institutional review Board approval for a clinical trial within the U.S. The trial will focus on a lung cancer screening of high-risk patients and the applicability of Nanox.ARC technology as it relates to patient population of Nanox MDS. As I stated earlier, we attended the European Conference (sic) [ Congress ] of Radiology, the ECR, where we were able to present several scientific achievements and I'd like to share some highlights now. Dr. Nogah Shabshin, ARC's Chief Medical Officer, presented our scientific work on lung cancer screening using the Nanox.ARC in the work with our collaboration in what was shown that is the majority of patients, the screening outcomes based on the lung-RADS category, the standard lung cancer screening calcification system was similar when analyzing the CT and digital tomosynthesis. This further strengthens the applicability of the DTS as a potential addition to screening activities ramping up globally. Dr. Orit Wimpfheimer, senior medical and clinical adviser presented the proven value of our opportunistic screening for CT images using Nanox.AI 3 FDA-cleared algorithm enabling earlier detection of chronic disease. Our latest imaging addition, tomosynthesis augmented projection, known as TAP2D was also featured in several scientific posters showing value of TAP2D image as a supplemental image to DTS in lieu of the traditional 2D X-ray imaging with no additional dose or acquisition time inflicted on the patient. And in addition, at the recently concluded world conference of osteoporosis, Nanox.AI bone solution were featured, including updates from our ADOPT trial conducted across 4 NHS Trust and led by the University of Oxford as well as initial observation from our collaboration with the Greek Air Force. The data will show once more the clinical and economic benefits of AI-based opportunistic screening for routine CT exams. The validation abstract comparing the accuracy of the CCS 2.2 compared with cardiology expert reader as part of the AI INFORM trial was accepted as the poster at the Society of Cardiovascular Computed Tomography Annual Scientific Meeting in the coming July. Outside the U.S., we are excited about our recent collaboration with Meir Medical Center in Israel, which is part of the Clalit, the Israel largest health services organization, where we have an exciting relationship. The Nanox.ARC has been deployed in the emergency department and will be utilized by orthopedic staff as part of the clinical workflow to help establish the digital tomography as an effective tool with lower dose and more efficient workflow than today's CT-based workflow. This is the first time that Nanox.ARC is installed within an emergency department in a major hospital and represent the confidence our collaboration has in Nanox solution. I'll now provide an update on our robust OEM relationship. Nanox continued to advance its technology pipeline with ongoing development of next-generation field emission X-ray sources and tube architecture. Recent progress includes improvement in an emitter design and fabrication processes aimed to expanding chip lifetime and enhancing performance, development of micro focus and multi-zone emitter configuration for applications such as semiconductor inspection and [indiscernible] XRF and continued advancement of the Nanox.MDX, the multisource tube platform, enabling new system architecture for 3D imaging. The company is also progressing a multiple OEM collaboration and pilot projects across industrial, semiconductor and security market, supporting the expansion of Nanox's technology into new applications. We recently received a purchase order from a leading semiconductor equipment manufacturer for the developmental emitters, supporting advance inspection applications at the leading edge of next-generation IT technologies. With Oak Ridge National Laboratory, the U.S. government agency, a second round of prototype is currently in progress, and in process with preparations underway as required materials become available. In parallel, one global imaging component supplier has agreed to evaluate our micro-focus emitter technology and is preparing dedicated test infrastructure to support that work. Another major OEM continues to advance prototype development based on our emitter design with validation activities ongoing. Overall, these engagements reflect continued momentum across multiple development track as we work to validate our technology with established industry partners. Before I move on, I'd like to briefly note that despite the current geopolitical situation in the Middle East, we have not experienced any material disruption to our operation, and our business continues to operate as planned. With that, I will turn the call over to Ran to review our financials. Ran, over to you. Ran Daniel: Thank you, Erez. We reported a GAAP net loss for the fourth quarter of 2025 of $33.4 million, which is the reported period, compared with a net loss of $14.1 million in the fourth quarter of 2024, which is the comparable period. The increase was largely due to an impairment of long-lived assets in the amount of $17.5 million which was recorded during the reported period as a result of the company's restructuring plan that is intended to better align the company's manufacturing activities. The increase was also due to an increase of $0.7 million in the gross loss, increase of $1.1 million in the sales and marketing expenses and increase of $1.4 million in other expenses. Revenue for the reported period was $3.7 million compared to revenue of $3.0 million in the comparable period. The increase of $0.7 million, increase of 23% in the revenues stems from an increase of $0.3 million in our revenue from the teleradiology services and an increase of $0.4 million in our revenue due to the consolidation of Nanox Health IT Inc. since the completion of its acquisition on November 19, 2025. Gross loss for the quarter period was $3.6 million on a GAAP basis compared to a gross loss of $2.9 million in the comparable period on a GAAP basis. Non-GAAP gross loss for the reported period was $1.2 million as compared to a gross loss of $0.3 million in the comparable period which represents a gross loss margin of approximately 32% on a non-GAAP basis for the reported period as compared to a gross loss margin of 9% on a non-GAAP basis in the comparable period. Revenue from the teleradiology services for the reported period was $3.1 million compared to revenue of $2.8 million in the comparable period. The company's GAAP gross profit from the teleradiology services for the reported period was $0.9 million, gross profit margins of approximately 27%, compared to $0.6 million, gross profit margin of approximately 21% in the comparable period. Non-GAAP gross profit of the company's teleradiology services for the reported period was $1.5 million, gross profit margins of approximately 48%, compared to a non-GAAP gross profit of $1.1 million, gross profit margin of approximately 41%, in the comparable period. The increase in the company's revenue and gross profit from the teleradiology services was mainly attributable to customer retention, increased rates and increased volume of the company's reading services. During the reported period, the company generated revenue for the sales and deployment of its imaging systems, which amounted to $49,000 for the reported period with a gross loss of $2.6 million on a GAAP and non-GAAP basis compared to revenue of $136,000 with a gross loss of $1.5 million on a GAAP and non-GAAP basis in the comparable period. The revenue stems from the deployment of our Nanox.ARC systems and the sales of our OEM services in the U.S. The company's revenue from its AI and software solutions for the reported period was $0.5 million on a GAAP and non-GAAP basis compared to revenue of $0.1 million on a GAAP and non-GAAP basis in the comparable period. Included in the reported period were revenue of $0.4 million, which was generated by Nanox Health IT Inc. since the completion of its acquisition on November 19, 2025. The company's gross loss from its AI and software solutions for the reported period was $1.9 million on a GAAP basis compared to a gross loss of $2.0 million on a GAAP basis in the comparable period. Non-GAAP gross profit of the company's AI and software solutions for the reported period was $0.1 million compared to $6,000 in the comparable period. Research and development expenses net for the reported period were $4.8 million compared to $5.4 million in the comparable period, which represents a decrease of $0.6 million. The decrease was mainly due to a decrease of $0.2 million in share-based compensation, $0.6 million in grants received net and $0.4 million in expenses related to our research and development activities to maintain our current and future products. The decrease was mitigated by an increase of $0.5 million in salaries and wages. Sales and marketing expenses for the reported period were $2.0 million compared to $0.9 million in the comparable period, which represents an increase of $1.1 million, mainly due to an increase of $0.7 million in salaries and wages due to our increased efforts to commercialization -- of the commercialization of our products in the U.S. market and $0.4 million in sales and marketing activities mainly due to expenses that are related to the RSNA conference, which took place during the fourth quarter of 2025. General and administrative expenses for the reported period was $6.0 million compared to $5.8 million in the comparable period, that the increase of $0.2 million was mainly due to expenses that are related to the acquisitions of Nanox Health IT Inc. Other expenses net for the reported period were $1.4 million, largely due to the noncash settlement with the shareholder. Recently, we initiated a restructuring plan that is intended to better align our manufacturing and overhead cost structure and to support gross profit margin improvement to the company's long-term financial model and the company's strategic priorities. As part of this restructuring plan, the company will shift its manufacturing operations from the company-owned facilities into a fully outsourced model. The plan will reduce structuring and overhead cost by downsizing the manufacturing facilities located in the company's fab in South Korea and transfer the production to other international manufacturers such as the Swiss chip maker, CSEM. The restructuring plan is expected to be largely completed in fiscal year 2026 and resulted with the company recording a noncash impairment of its long-lived assets of approximately $17.5 million in fiscal year of 2025, a cost that is related to the impairment of its machinery and equipment of the company's chip manufacturing line. We continue to evaluate the overall composition of the restructuring-related charges, including potential additional cash components. The remaining restructuring-related costs, if any, are expected to be incurred over the course of the implementation of the restructuring plan that estimates of the total charges and the timing thereof are subject to a number of assumptions and uncertainties and actual results may differ materially. Non-GAAP net loss attributable to ordinary shares for the reported period was $11.2 million compared to $10 million in the comparable period. The increase of $1.2 million in the non-GAAP net loss attributable to ordinary shares was mainly due to an increase of $0.9 million in the non-GAAP gross loss and an increase of $1.4 million in the non-GAAP operating expenses. Please refer to the non-GAAP adjustments, which were included in the financial portion of the PR that we have issued today. Turning to our balance sheet. As of December 31, 2025, we had cash, cash equivalents and marketable securities of approximately $60 million compared to $55.5 million as of September 30, 2025. We also had a $3.1 million short-term loan from a bank as of December 31, 2025. We ended the quarter with a property and equipment net of $29.7 million compared to $45.4 million as of December 31, 2024. The decrease was mainly attributable to an impairment of approximately $17.5 million that was recorded in the reported period as a result of the above-mentioned impairment related to the machinery and equipment of the company's Korean fab. We had approximately 69.6 million and 63.8 million shares outstanding as of December 31, 2025, and December 31, 2024, respectively. During the fourth quarter of 2025, the company sold approximately 4.2 million ordinary shares, which generated net proceeds of approximately $15.5 million, net of issuance expenses. With that, I will hand the call back over to Erez. Erez Meltzer: Thank you, Ran. Before closing, I'd like to address the leadership update. After 5 years with the company, our great Chief Financial Officer, Ran Daniel, decided to step down from his role to explore other opportunities. During his tenure, Ran played an important role in strengthening our financial discipline, supporting our transition to a public company, in building the financial and reporting infrastructure needed to support our long-term strategy. He also led successful capital raises that strengthened our balance sheet. In addition to leading our finance organization, Ran also oversaw our Investor Relations activity and worked closely with investors and analysts throughout his tenure. We are grateful for his many contributions and wish him continued success in his future endeavors. Ran will remain with the company to support a smooth transition period. As we look ahead, we are pleased to announce that Guy Nathanzon will be joining Nanox as Chief Financial Officer. Guy brings extensive financial leadership experience with the U.S. publicly traded companies, including several senior CFO and CEO roles in the med-tech companies as well as his deep experience supporting growth, scale and global operations. His background includes capital raising, capital markets, both sell-side and buy-side M&A and global financial operations. Guy also brings deep medical technology leadership experience with senior CFO and COO roles at multiple med-tech companies during periods of commercialization, scale-up, and global expansion. Guy also brings medical technology experience, having served in senior leadership roles during periods of commercialization and expansion. He has previously served as the CFO of Scopio Labs medical technology company developing AI-based diagnostic platform and most recently was CFO of Valens Semiconductor, a New York Stock Exchange listed company. We are pleased to welcome Guy to the leadership team. He will join the company and will assume the role of Chief Financial Officer as of August 1. As we look back to this quarter and ahead to the rest of 2026, I want to leave you with a few takeaways that underscore the momentum we are building at Nanox. First, our commercial progress in the United States has been good. We have established a strong foundation with various partners expected to place systems over the next 2 to 3 years, including significant agreements with Howard Industries, Imperial Imaging, Integrity Imaging and others. This represents a fundamental shift in how we are poised to scale our business. From providing our technology to deploying in a meaningful volume, shifting towards a growing CapEx portion, this is what we believe will get us closer to our indicated revenues of 2026. Second, our strategic acquisition of VasoHealthcare IT, now operating as Nanox Health IT, has immediately strengthened our capabilities and revenue base. The recognition we received at RSNA and ECR, including the Newcomer award at ECR, reflect the broader truth. Nanox is now recognized as a credible player contributing to conversation around the future standard of care in the medical imaging. That perception shift in translating into deeper market engagement and robust pipeline. The foundation we have built positions us well to convert our pipeline into revenues and deliver on our growth objectives. We are excited about what lies ahead and remain committed to executing on our vision of democratizing medical imaging globally. Thank you all for your continued support, and we look forward to updating you on our progress in the quarters ahead. Operators, please open the call for questions. Operator: [Operator Instructions] And the first question comes from Jeffrey Cohen with Ladenburg Thalmann & Company. Jeffrey Cohen: Just a couple of questions. I'd like you to dive in a little further. So could you talk a little bit about your footprint and commercial organization, mainly related in the U.S. as far as teams that are direct sales organizations and talk a little bit about how that works with your distribution channels in the U.S. Erez Meltzer: Okay. So we have in the U.S., what we call Nanox Impact. We have 5 direct salespeople with the Director of Sales, the national sales that is coming from one of the biggest distributors in the country with a lot of experience. In addition, we have which we call the clinical education specialists where their role and assignment is to go to the places that we have the systems installed, train the people, trying to get a better understanding of the referring physician who works with this site. So their job is to build awareness around the site and what's the clinical value that can be added for other referring physicians that will do there. We are -- we have a few administration and operational responsibilities, including tech people who are doing the part of the installation. And in addition, we have people who are doing the STR, like building the deal flow. We are in the process of adding another 2 people who would be responsible for the channel management. But right now, since we have almost 10 business partners, one of them, as mentioned today, is huge. This will require a lot of coordination, a lot of support. We have an onboarding process for each one of them, which is very methodological that we do in the process to -- when we sign an agreement, the training process, the demo unit, for example, we have a few of the business partners that we lately signed, we have tens of meetings that already were arranged with the potential customers in order to expand and to fulfill what they are committed to in this agreement. Jeffrey Cohen: Okay. Got it. And then as a follow-up, could you talk a little bit about the South Korean facility and the impairment, what should we expect for 2026, you anticipate further restructuring and impairment? And will that be in the front half of the year versus the back half of the year? And could you guesstimate for us if that will be cash and noncash? Ran Daniel: Besides the impairment expenses we recorded in 2025, which was the impairment of mainly whatever is related to the chip line in Korean fab which was amounted to $17.5 million in the noncash expense, we do anticipate relatively minor expenses which are related to more efficiency steps that we're going to enact. It won't be -- we don't anticipate that it will be a significant amount of dollars. So that's actually going probably to be a cash expense. But as I said, it's not going to be material. Erez Meltzer: Bear in mind that this fab was built during COVID when semiconductors were not necessarily available. So right now, we are rationalizing the situation where we have a sustainable supplier with a much lower cost of the chips that we do. The fab in Korea will be converted to more of R&D center for the ceramic tubes that we are developing there and might be even another product which is going to come out from this region. Operator: [Operator Instructions] Our next question will come from Scott Henry with AGP. Scott Henry: First, Ran, it was a pleasure working with you. I wish you the best in your future endeavors. Ran Daniel: But don't give me yet. I have another one earnings call. Scott Henry: Excellent. And then, I guess, the first question. When we look at the guidance for 2026, the $35 million, which is strong growth. Can you talk about the cadence throughout the year? Q1 is over. So when will we see that inflection point to reach those impressive numbers? Ran Daniel: I think that you will see most of it in the second half -- towards the second half of 2026. I don't think that they should expect a big ramp in the revenue in Q1. But I think once we will be able to materialize all the opportunities in terms of distribution agreements that we just announced, you will see -- you may see a ramp-up in the second half of 2026. Erez Meltzer: Scott, most of the agreements were signed beginning of about a month or 2 after the RSNA and part of them also after the ECR. And most of them -- most of the business partners agreements, which are going to shift our revenues to be more coming from more from CapEx rather than only the MSaaS has been signed in the last few weeks, let's say, a month. So right now, what we will do, we will start the onboarding the process and the ramp-up will be, hopefully, exponential towards, as Ran said, towards the second part of the year. Scott Henry: Okay. I appreciate that color. And just from a modeling perspective, the teleradiology services, which at this point is still your largest revenue driver. For 2026, should we be thinking about kind of low double-digit growth? Is it still on that trajectory? Ran Daniel: I don't think that we refer to the specific segment in our guidance. So I don't want to make any specific attribution to any specific line of business or segments, but generally saying I think that your assumption would be... Erez Meltzer: Not far from real. Ran Daniel: Not far from real, yes. Scott Henry: And then when we look at spending for Q4 removing the onetime items, it was a little elevated from Q3. With the restructuring, do you -- would you think that it should start declining from Q4 levels going forward? How should we think about those trends in spending? Ran Daniel: Well, what happened in the -- you mean, if you look at the non-GAAP, of course, which adds on the impairment expenses and the expense -- the other expenses, that's mainly related to the settlement with the shareholder, you've seen an increase in G&A, which is, I would call it a seasonal increase mainly because of audit and all kind of other year-end items and expenses that were related to the acquisition of VasoHealthcare, which is onetime in nature. On the other hand, you also see an increase in the sales and marketing, which are -- some of it is related to the commercialization efforts in the U.S. market. So that's actually something that is not onetime item in nature, but on the other hand, and if we will participate again in RSNA conference, that will depend on the questions. We participated in the RSNA in the fourth quarter, as you remember, that cost money, unfortunately. But if we participate again, so then it will be recurring. If we won't, it won't. Operator: Thank you. And this does conclude today's conference call. Thank you for your participation, and you may now disconnect.
Operator: Good morning, ladies and gentlemen, and welcome to the Groupe Dynamite Fourth Quarter and Fiscal 2025 Results Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] And I would like to turn the conference over to Alex Limosani, Manager, Investor Relations and Corporate Finance at Groupe Dynamite. Please go ahead. Alex Limosani: Thank you, and good morning, everyone. Joining me on the call are Andrew Lutfy, Chief Executive Officer and Chair of the Board; Stacie Beaver, President and Chief Operating Officer; and JP Lachance, Chief Financial Officer. This morning, Groupe Dynamite released its financial results for the 13- and 52-week periods ended January 31, 2026. The press release and related disclosure documents are available in the Investors section of our corporate website at groupedynamite.com and on SEDAR+. We will begin the call with short remarks by management, followed by a question-and-answer period with financial analysts only. A replay of this webcast will be available shortly after the conclusion of the call. Before we begin, I would like to refer you to Slide 2 of our Q4 2025 investor presentation, also available in the Investors section of our website for a full statement on forward-looking information and to the presentation's appendix for your reconciliation of non-IFRS to IFRS financial measures. I will now turn the call over to Andrew. Andrew Lutfy: Thanks, Alex, and good morning. I'd like to welcome you, our valued participants. We know your time is precious, so thank you for prioritizing us in your busy schedules. As most of you know, Q4 marks a strong finish to what has been a defining year for Groupe Dynamite. Fiscal '25's performance was nothing short of exceptional. Notwithstanding a great number of challenges, most of which were outside our control, our performance truly exceeded expectations. As we often say, first who, then what. Well, our agile GDI family, living our shared values, proved to be the right whos delivering incredible results, proactively mitigating risk and often enough, turning them into opportunities. As for the numbers, they speak for themselves. This was both a record Q4 and fiscal year, putting us in a class of our own. Q4's comparable brick-and-mortar sales were up 30.4% and 26.7% for the year. Q4's adjusted EBITDA margin was 36.6%, up a staggering 740 basis points and for the year, 36.5%, up 490 basis points. Q4's gross margin was a healthy 63%, up 400 basis points and 63.8% for the year, up a remarkable 100 basis points. One metric which is near and dear to our hearts, inventory turns, reached an astonishing 9.9x. It's the singular metric that speaks volumes to taking the fashion risk out of fashion. Staying with numbers, we're also pleased to report 8 weeks into Q1, comparable brick-and-mortar sales are up 28%, same-store sales. But enough of the quantitative in these tumultuous times, what is clear is we are delivering on emotion. The brand heat is real. Alex and Rachel are happy. And speaking of happy, pleased to report our 2 best store openings in GDI's history were recorded most recently with the opening of GARAGE Bluewater and our GARAGE flagship on Oxford Street. These 2 stores joined the U.K. e-commerce platform, which has been live since the beginning of February. It's very early days, but incredibly encouraging to see how obsessed this U.K. Alex is for her GARAGE. And allow me to make a big shout out to the teams who brought this all to life. Congratulations. You should be proud. You guys crushed it. [Foreign Language] So that was what I would call a political message. So now back to our regular programming. So let's talk about ownership culture. Proud to report all employees are shareholders through our shared success program with many also participating in our generous share purchase plan. That equity not only drives engagement, but creates an important alignment of business interest. Effectively, we're all rowing in the same direction. Still on the people front, once again, we've been recognized as one of Canada's top employers for young people and one of Montreal's top employers, 2 distinct awards. From an investment standpoint, this was another record year of capital investment. Whether the opening of new stores or upgrading and relocating existing ones, we have stayed true to our strategy of investing in top-tier assets while staying disciplined in closing stores, which did not elevate the brand. It's worth noting the vast majority of stores we do close are, in fact, profitable. They're just not profitable enough, and they create burdens on our teams and inventories. As we look ahead, we remain disciplined and relentless in execution while accelerating innovation at scale, including the continued strategic deployment of AI to drive performance, efficiency and maintain our competitive advantage. We are confident in our ability to sustain clear measurable leadership across the metrics that define performance, which are revenue growth, adjusted EBITDA, return on assets and best-in-class inventory turns, outperforming both our direct and most luxury peers. With that, let me hand it over to Stacie. Stacie Beaver: Thank you, Andrew, and good morning, everyone. Fiscal 2025 was a strong year for the business and one we're really proud of. We entered the fiscal year focused on elevating how the brand shows up across every touch point, and we're seeing that translate into the performance across both GARAGE and Dynamite. We stayed focused in our approach, aligning product, storytelling and the customer experience across digital and stores. When those elements combined together, we see a clear response from the customer, and that's what drove the business this year. Before getting into each part of the business, I want to highlight the strength of our operating model. As you know, one of our key strengths is the agility of our supply chain, which allows us to read the business in real time and react quickly to buy closer to demand and to adjust our inventory in season. That flexibility allows us to reduce risk, stay relevant and move with the customer as trends evolve. You see that reflected in our results with inventory turns reaching 9.85x this year. Now turning to our stores. Our store network continues to be the primary engine of new customer acquisition and growth. For the full year, we achieved $952 in sales per square foot. This productivity reflects our disciplined real estate strategy as we continue to prioritize higher-quality locations where footfall is stronger and our brands sit alongside premium and luxury peers. The U.S. remains a key growth driver for us with 20 stores opened this year in high-quality locations that maximize our visibility, examples including Somerset Collection in Troy, Michigan, which opened in May; and Oakbrook Center in Chicago, which opened in December. At the same time, we renovated and relocated 13 stores within existing malls, upgrading them into higher-quality spaces. This included a relocated GARAGE and a new Dynamite 3.0 concept at West Edmonton Mall in Alberta, along with 2 additional Dynamite 3.0 locations at Promenade St. Bruno and Carrefour Laval here in Quebec. On the digital side, we're pleased to see e-commerce grow 44.2% in fiscal 2025 with penetration reaching nearly 19%. This performance was supported by continued investments in our platform and capabilities, including the rollout of our headless architecture on mobile app, a new refresh navigation on web and progress on personalization across multiple touch points, all improving speed, flexibility and the overall customer experience. At the same time, we see meaningful opportunities ahead as we continue to scale. This includes continuing leveraging AI to drive more personalized experience and conversion, further integrating the community and socials into this experience and building on the early momentum we're seeing from our U.K. store launch. Over the long term, we remain focused on increasing e-commerce penetration towards 25% of total sales as digital continues to play a central role in how we tell our brand story and engage with our customers. Another key fiscal 2025 initiative to highlight is our U.S. distribution center. We continue to ramp up in line with our plans, strengthening service levels for our U.S. customers while also adding important redundancy to our supply chain. From a brand perspective, we truly raised the bar this year in generating what we call brand heat. More specifically, we stayed close to culture and our community to create hyper-relevant products and campaigns. This includes our Sour Cherry color drop in July and Perky Plum drop in August, which featured influencer Hallie Batchelder, among others throughout the year. This resulted in us more than doubling our media impressions for the full year. This momentum translated into strong customer growth with our total active customer base up meaningfully to last year, driven by both strong new customers and returning customers both in frequency and in spend, increasing double digits year-over-year. Now a couple of words on Q4 performance specifically before JP dives into the numbers. Customer demand remains strong, supported by relevant product and clear brand messaging. We saw continued AUR growth with stable unit per transaction, reflecting both product relevance and disciplined pricing. In stores, comparable store sales were up 30.4%, driven by growth in both AUR and traffic with price contributing a slightly larger share. On digital, sales grew 63.3% in Q4, with penetration reaching 25.5%, driven by higher traffic and conversion as we continue to enhance the customer experience. Furthermore, the heat behind our brands continued to build. For GARAGE, our community-led storytelling reached new heights with the Midnight Blue, Teal Tease and Mint Julep color drops. These drops and brand moments drove significant top-of-funnel reach and reinforcing our fleece category as a top volume driver. For Dynamite, Q4 was driven by the strength of our Hotel Dynamite holiday campaign featuring Elsa Hosk, which firmly positioned the brand as a destination for holiday dressing, particularly in dresses. This campaign resonated strongly with customers, reinforcing our authority in social life wear and contributing to strong engagement and sell-through. The growth in our brands reflects the discipline and focus across our teams. We exit the year with a proven and improved playbook and the confidence to continue scaling our impact and deepening our customer relationships. As we look ahead to 2026, we're focused on execution and continued elevation of our brands across every touch point. As Andrew mentioned, the dedication of our teams grounded in our core values is what drives these results. I want to echo his gratitude to our 6,000-plus field associates and our head office teams for their agility and passion. They are the embodiment of our culture and their commitment is our greatest competitive edge. With the foundation we've built, we are poised to take our performance even higher. With that, I'll turn it over to JP to walk through the financials. Jean-Philippe Lachance: Thank you, Stacie, and good morning, everyone. Total revenue for Q4 2025 increased by 45% to $394.2 million, driven by strong retail performance, including comparable store sales growth of 30.4% alongside contributions from new store openings. For the full year, comparable store sales growth landed at 26.7%, consistent with our prior guidance. Staying on top line, we were very pleased to see online revenue increased 63.3% to $100.6 million with penetration expanding by 280 basis points year-over-year in Q4 to 25.5%. We remain focused on advancing our digital initiatives to support sustained growth and progress towards our medium- to long-term target of 25% online penetration while maintaining or improving the profitability of the e-comm channel. Gross profit for Q4 increased by 54.9% to $248.3 million with gross margin expanding 400 basis points to a record 63% for the fourth quarter. This performance reflects the strength of our pricing strategy, disciplined inventory management and lower markdowns. Turning to expenses. SG&A for Q4 2025 increased by 21.6% to $105.8 million, primarily driven by the company's growing scale and activities as well as increased marketing investments to support brand awareness. Administrative expenses declined year-over-year, benefiting from lower IPO-related costs and stock-based compensation versus last year. As a percentage of sales, adjusted SG&A decreased by 340 basis points to 26.2%, reflecting strong operating leverage. Moving down the P&L. Operating income increased by 128.8% to $116 million. Adjusted EBITDA grew by 81.6% to $144.4 million, representing a margin of 36.6%, up 740 basis points year-over-year, driven by both gross margin expansion and SG&A leverage, underscoring the scalability of our luxury-inspired business model and placing our margins in line with some of the world's leading luxury houses. For the full year, adjusted EBITDA margin landed at 36.5%, also consistent with our most recent guidance. Net earnings increased significantly, supported by higher revenue and profitability with adjusted net earnings up more than 120% year-over-year to reach $81.6 million. Turning to cash flow. We generated strong free cash flow of $101.5 million in Q4, nearly doubling year-over-year, reflecting higher earnings, partially offset by increased capital expenditures. For the full year, we generated free cash flow of $335.2 million, more than doubling year-over-year, while CapEx totaled $85.5 million, also in line with our most recent guidance range. From a balance sheet perspective, net leverage improved to 0.83 turns, reflecting strong EBITDA growth. We ended the year with over $82 million in cash and $312 million available under our credit facilities, providing significant financial flexibility. We also continue to deliver strong capital efficiency. Return on assets reached 36.2%, up from 26% last year, reflecting improved profitability and more effective use of our asset base. Return on capital employed increased to an impressive 70.3% compared to 47.4% in the prior year, driven by strong growth in operating income relative to the more measured increase in capital employed. Together, these metrics highlight the strength of our model and our disciplined approach to deploying capital. Turning to capital allocation. During fiscal 2025, we repurchased approximately 883,000 shares at an average price of $39.28 for a total of $34.7 million. We continue to view share repurchases as an efficient use of capital to return cash to shareholders, and we remain bullish on the underlying fundamentals of GRGD as we continue to execute our strategy with discipline. As of this morning, we have repurchased over 1.2 million shares under the NCIB, representing approximately 94% completion of our 2025-2026 program. Looking ahead to fiscal 2026, we are introducing guidance reflecting continued strong momentum across the business. From a real estate perspective, we expect to open 24 to 26 gross new stores, including 5 locations in the U.K., representing 10 to 12 net new openings as we expect to close approximately 14 stores during the year. Most of these openings will be under the GARAGE banner in the U.S., where we continue to see significant runway for growth. We continue to target approximately 350 stores by fiscal 2028 with potential upside as we see strong performance across all regions in which we operate. We expect comparable store sales growth of 11% to 14% and total revenue growth of 22% to 25%. Our comparable store sales outlook reflects strong year-to-date performance, coupled with our strategy of growing AUR at approximately twice the rate of inflation as well as positive traffic trends driven by the continued premiumization of our store portfolio as we believe higher quality real estate will continue to concentrate footfall. In addition, we expect online revenue to continue outpacing brick-and-mortar growth, while contributions from new store openings further support total revenue growth. From a margin perspective, we expect adjusted EBITDA margin expansion, leading to a range of 37.75% to 39.25%. As a reminder, the first half of fiscal 2025 was impacted by elevated tariff rates of 145% on imports from China. These major headwinds have fully flowed through our P&L, and given our best-in-class inventory turns which amounted to 9.85 turns for fiscal '25, were no longer impacting our business as of Q3 2025. As a result, the first half of fiscal 2026 presents a more favorable comparison period, supporting our outlook for margin expansion year-over-year. In addition, as our U.S. distribution center ramps towards full capacity, we expect incremental efficiencies to further support margins. Turning to capital expenditures. We expect CapEx of $100 million to $110 million in fiscal 2026. CapEx remains our top capital allocation priority with most of this envelope directed towards growth initiatives, including new store openings, store optimization and continued investment in our digital platforms. Fiscal 2026 is off to a strong start, and we are confident in our positioning within the consumer discretionary spectrum, supported by an operating model built to navigate uncertainty, anchored in our open-to-buy, chase-driven approach with over 50% of inventory dollars left open to read and react and disciplined inventory management. We remain focused on advancing our brand elevation initiatives supported by disciplined execution and continued investment in our platform. With that, I'll pass it over to Andrew for closing remarks. Andrew Lutfy: Thank you, both Stacie and JP. Well, enough of us. Let's turn it back to the operator as we are ready to take questions from the financial analysts. Operator: Thank you, Sir. [Operator Instructions] First question will be from Irene Nattel at RBC. Irene Nattel: Congratulations on a very strong end and a very strong beginning. So -- and leveraging sort of jumping off of that, we seem to be at yet another period of heightened uncertainty and a lot of discussion around deterioration potentially in the macro backdrop. Andrew, in your opening remarks, you talked about proactively mitigating risks, Stacie talked about adaptability. Can you walk us through how you're thinking about F '26? And as you frame the guidance for this year, how you're thinking about potential scenarios around consumer spending and economic activity? Andrew Lutfy: Thanks for the question. Listen, I mean, we can only control what we control. And I'll take a step back and as we think about what we're -- the segment we're in, we're in the consumer discretionary segment. Consumer discretionary is a big catchall. And at one extreme, you've got consumer discretionary that requires debt like a motor home or a car or a basement renovation or something like that, and furniture. And then at the other end of the spectrum, it's things that kind of like make you happy, instant gratification, whether it's the red lipstick effect or whether it is a martini or whatever, a cute top at GARAGE or Dynamite, it falls within that realm. So fortunately, we are in the easier, I guess, department, if you will, within consumer discretionary, where really our job and what we ultimately control is emotion. And so to the extent that we keep doubling down on delivering amazing emotion through the brand, through the marketing, through the product, through the collections, through the social engagement, then ultimately, I think we're going to fare well altogether. So again, so I mean, long answer, short question, but I think ultimately, that's what it comes down to. Operator: Next question will be from Stephen MacLeod at BMO Capital Markets. Stephen MacLeod: Just looking at the store network, you're sort of increasing or you're bumping up the net new store adds in 2026. So I'm just wondering if you can give some color around just maybe the thought process behind the acceleration and the timing of store openings through the year, including the U.K. Jean-Philippe Lachance: Steve, thank you for the question. More than happy to do so. So if we break that down a little bit, let's start with North America. So our guidance for North American store openings is 19 to 21 stores in fiscal 2026, which is quite consistent with what we've delivered in fiscal 2025. Please do note that all 19 to 21 stores, those leases are actually signed. Happy to report they're all Tier 1, 2 and 3 locations, and the vast majority are GARAGE locations in the U.S. So we feel really good about that. And then in addition, which might explain the year-over-year increase in the number, to your point, is 5 U.K. store openings that are planned and included in the fiscal 2026 guidance. Those 5 leases are also all signed, and they're all Tier 1 and Tier 2 locations. So we are certainly very excited about the pipeline here, and that's why you're seeing a year-over-year increase. And when it comes to the pacing part of your question, I would continue to expect the bulk of store openings to be delivered between Q2 and Q3, although there will be some in Q1 and Q4. Operator: Next question will be from Martin Landry at Stifel. Martin Landry: Congrats on your results. I would like to dig into your comparable sales guidance of 11% to 14% growth for this year. It is impressive given you're lapping a strong year. So 2-part question. First, what is your assumption for price increases this year? Is it still twice inflation? And if that's the case, then it implies pretty strong volume growth. So just trying to get a little bit of an understanding of what's -- what kind of growth comes from your relocated stores in that guidance? Jean-Philippe Lachance: Thank you, Martin, for the question. So you are right. Our outlook for comps this year is a range of 11% to 14%. So a few things I would say around that. First of all, and that's aligned with Andrew's opening remarks, 8 weeks into Q1, we're currently sitting at plus 28% on same-store sales. So we certainly need to account for that in the outlook for the full year. And then to answer the price component of your question, we continue to see AURs raising at approximately twice the rate of inflation. So that certainly explains part of the guidance of 11% to 14%. And then on the last piece, we continue to believe in positive transaction growth, positive traffic growth year-over-year as a result of the optimization of our real estate network as we continue to open high-quality locations and close certain locations that are, yes, profitable, but not profitable enough. This premiumization of our network really does attract and concentrate footfall, which has to translate into positive comps. So when you add all of these buckets together, that leads us to a guidance for the full year between 11% and 14%. Operator: Next question will be from Mauricio Serna at UBS. Mauricio Serna Vega: Just on the online business. Seemed pretty strong and it kind of the guidance continues to call out for outperformance versus brick-and-mortar. What is the company doing here to really drive an acceleration of that business? Like what should continue to be the drivers as we look into '26? And just quickly on the Middle East situation, I mean, I know you don't have exposure to that region. But just in terms of like how could that impact things like your supply chain agility and the margin front, given the rise of oil impacting freight and some of your other costs that are depending on that? Andrew Lutfy: Listen, I'll take the second part, which is, let's say, the Middle East part. Listen, so far, we're seeing certain costs going up, namely at this point, really transport more than anything else as the price of fuel has gone up and also shipping routes have been kind of like dislodged as a result of what's happening in Strait of Hormuz and through the Middle East. So really, it's one big global network shipping. So there's an impact there as well. Listen, at this point, it's really nominal, and we're totally in a position to address it. And I'm not saying absorb it. I'm saying address it. And insofar -- but listen, I mean, the longer this Middle East situation, war, I'll call it a war, the longer this Middle East war persists, obviously, the greater the impact is going to be. But at this point, again, we're agile. I think you kind of lived our saga through Liberation Day and tariffs and so on and so forth last year, and we were quite resilient. So this is actually far more manageable situation. And I'm very confident in leadership team -- leadership team in being able to mitigate and deal with it. Regarding e-commerce, Stacie, do you want to take that? Stacie Beaver: Yes. Thank you, Mauricio, and we want to thank you for initiating coverage on us. So I guess we'll let you have 2 questions. But the first one on e-com is, yes, e-com is outpacing brick-and-mortar. That is our expectation go forward. We have put a lot of investment in around the platform capabilities that we've included headless in our architects on the app. We've refreshed the navigation in the web, and we're working on personalization across all touch points. All of our efforts are focused on improving speed, flexibility and most importantly, the customer experience. So we're excited to go into '26 to really leverage AI and see what we can do with that customer with our long term, as we've mentioned to you guys to try to get to that 25% penetration. As strong as the comps are, we should expect and we do continue to see e-comm outpace that brick-and-mortar number. Operator: Next question will be from Brian Morrison at TD Cowen. Brian Morrison: Can you hear me? Andrew Lutfy: Yes. Brian Morrison: Andrew, I'm standing right in front of 321 Oxford right now. And the store traffic, it looks incredible. It looks like a potential fire hazard. Can you just walk through the steps that you took to seed this market? And I know it's early days, but what that might suggest to you about other European markets? Andrew Lutfy: That's hysterical. And having just been there over the weekend or last weekend for the opening, I could well imagine what you're seeing. Yes, it's -- listen, the store open -- well, I mean, we opened 2 stores, as you guys know, in the U.K., we opened Bluewater Mall, which is a suburban -- great suburban asset, I would say, slightly northeast from Piccadilly Circus in London as well as 321 Oxford, which is between New Bond Street and Regent, a fantastic location. Listen, these 2 stores are the 2 best store openings in GRGD's history. Like that's a lot of stores that we've opened and closed and opened. I mean, I could probably count a 1,000 store openings over time. These 2 are the 2 best. So really, really excited about that. Both Oxford and Bluewater, similar yet different kind of customer. One is more urban, one is more suburban. We've always said that, that customer reminds us of a Northeast U.S.A. customer, but just happens to be in the U.K. And I think we've been proven right. The demand is really, really, really strong for the brand, for our products. Reception has been amazing. And I think it's a great proxy for the U.K. I'm not used to, I would say, instant success. Usually, we suffer in all our endeavors. We're just tenacious, and we grind our way through and achieve success. Ultimately, this one feels a little unexpected. And -- but listen, I think it's great for the U.K. But listen, there's a lot of other markets that are similar to the U.K., and the world is a much smaller place today. Everyone is getting their information, their fashion cues and whatnot from similar communities and perhaps even people. And so yes, the world is a really small place. So it will be -- for sure, this is a great proxy for further global growth. But I think it's early days to figure out where we go. And the nice thing about an Oxford Street is it is a bit of a melting pot of the world, and we're going to come to appreciate where we over-index and with what customers we will over-index with and it might be a good little proxy. And thanks for visiting. I am sure there's a lineup for the fitting rooms going all the way up to stairs. I could almost see it. Operator: Next question will be from Vishal Shreedhar at National Bank. Vishal Shreedhar: Following on along a question that's been asked earlier, just on the economic backdrop and the difficulty on setting guidance given all the uncertainty. I was wondering if you could just walk us through your thinking on when you set the guidance and what would be the difference between, call it, the top end and the low end? And what would the major factors be in your mind? Andrew Lutfy: Yes. Listen, thanks for the question. Always wonderful chatting with you. I would say you opened with like given the difficulties in the macro environment and how that connects to providing guidance, actually, there is no connected tissue between those 2. I'll be just very frank. Again, we're within that consumer discretionary realm where as long as interest rates are slightly higher where they are today and inflation seems to be reasonably real and there's angst in this world, we actually do better. So I mean, that's actually a good tailwind for us. And so I mean, that's kind of like the way we see it. And we don't -- so -- and we don't -- and again, these are things that are really beyond our control. So we don't even -- we really don't weigh on that as we think of our plan. And listen, I'll pass it to JP to get a little deeper in this. Jean-Philippe Lachance: Yes. Thanks, Andrew. Vishal. So further to what Andrew just said, obviously, if you're referring to the EBITDA margin guidance, there is a range of, say, 150 basis points, but we need to appreciate that a full year is a long period of time, 12 months. And also, obviously, the sales are a very important factor. So as we start with this initial guidance for fiscal '26, I think it's reasonable to have a bit of a range, especially on comps and total revenue growth, and that will certainly impact your range for adjusted EBITDA margin. So that's nothing different than the approach we would have taken last year. And with passage of time this year, you can expect us to refine our guidance as we know more when Q1 and Q2 become actuals and so on and so forth. Operator: Next question is from Michael Glen at Raymond James. Michael Glen: I'm just hoping that you can maybe parse the expansion you're expecting on both your gross margin line and SG&A leverage. Obviously, last year was a massive year for SG&A leverage. Are you expecting that to slow down this year? I'm just trying to figure out what you're contemplating for the guide. Jean-Philippe Lachance: Mike, thanks for the question. So starting illustratively with the midpoint of the range, which would be for an EBITDA -- adjusted EBITDA margin of 38.5%, that effectively means a 200 basis points year-over-year improvement as we've landed at 36.5% this year. So if you take the midpoint, that again, gives you an increase of 200 basis points. I would say high level and illustratively, I would probably split that half and half between gross margin and SG&A. So let's look at those 2 in details. On the gross margin side for that "100 basis points improvement," I think we continue to see a path for healthier IMUs year-over-year. Certainly, the high tariffs early last year, that is tailwind for us this year as that is no longer the case. And of course, there's also the whole supply chain and USDC ramping up. And those 3 benefits are somewhat offset by the whole oil and freight situation. So for us, those are the key drivers. The biggest 2, again, probably room for IMU expansion and the lack of significant tariffs this year versus last year. On the SG&A side of things, so call that the other 100 basis points improvement or so, there's really a lot of opportunity for operating leverage. When you guide towards revenue growth of 22% to 25%, that is very healthy. And I think there's a very real path for us to leverage on some of these fixed costs. So yes, of course, we do have productivity initiatives, but the bulk of that, say, 100 basis points is really operating leverage. I hope that answers the question properly. Operator: Next question is from Chris Li at Desjardins. Christopher Li: Congrats on a strong quarter. I know you already have a very strong inventory system -- management system already, but can you share with us what other initiatives you might be working on to further enhance the inventory productivity to continue to support your strong comp store sales outlook? Stacie Beaver: I mean, Chris, we turned it 10x last year, so I think we're pretty efficient on that. But I would say the teams are very agile and all the conversations coming up of we control what we can control. I think you guys should feel comfort in that we are working with as much diligence as we have to deliver the results in 2025. And because of our operating model and how close we are in, even if we hit a hiccup, be it the tariff, be it the war, be it transportation, it's very near and dear. So it's very close. So typically, by the time we're placing the order, we know what we're up against. Meaning right now, I haven't placed all of my goods for even Q2, but I know if there's going to be a freight delay or an increase due to oil, all the questions that you've asked, I'm not -- probably like most of my peers, already sitting on order that is going to be hit with the extra cost. I'm going to face it like right at the beginning when I'm still negotiating. So I think even hiccups or hurdles that we have because of our operating model and because of our chase structure, we're buying so close in, we hit those things right away, and we're able to adjust with the strategy probably better than our peers. But as far as more inventory efficiency, I'm going to try to hold this at the 10. I would question -- Andrew hates inventory, which is how we get here. But at some point, you're missing opportunity of sales if we're turning too much faster than that 10. Andrew Lutfy: I would just add to that, Chris. I would add to that. Part of it is also just math, right? As we keep closing Tier 5 stores or, let's say, low productivity stores and keep opening and investing in high productivity stores, just mathematically, the numbers kind of get better. And that's part of the bridge. I can't tell you what part of the bridge, but that's part of the bridge as to how we move from where we were last year in terms of turns to this year's 9.985 or something like that or 9.85. So part of it is just, honestly, extrapolation in the math. And I made that comment in my comments, in my remarks that, listen, we're closing -- I'd say like call me a liar for a store or to, but all stores that we close are profitable, but they're just not profitable enough, and they're not -- they're hoarding assets, inventory assets, right? Like those -- the stock turns in those stores are much worse than what we're investing into. So just pure mathematical extrapolation supports the higher -- directionally supports the higher stock turns, the better stock turns. Operator: Next question will be from Adrienne Yih at Barclays. Adrienne Yih-Tennant: Absolutely stellar performance. So I want to just say great start to the year. My question is on brand awareness. As you open stores often, we see sort of the digital lift in the kind of 5-mile radius, 10-mile radius. So can you talk to us about the progression from a year ago or more than a year ago at IPO? What do brand awareness look like in the U.S.? And as you've opened these store assets, how much better has that gotten? And then when you launched in U.K., what do you do to seed the market, if anything? Or is it sort of you're just in this very virtuous cycle of opening stores, generate brand awareness and then drive the comp? Stacie Beaver: Yes. Thank you for the question. A loaded one there, so I'll just make sure I cover all of it. But I'll actually start with the U.K. because your latest part of the question was seeding. And as we've called out, those were our 2 best store openings ever. There was a lot of focus on how we're entering that market. I will shoutout our PR firm and our landlords for such support in our entry into the market. Also, our marketing team did an excellent job. I think we know who we were specifically targeting and giving the right girls in each location from nano influencers all the way up to macro influencers. We started in the country about a month before Bluewater opened, which was like mid-Feb. We had our first in-real life moment where the consumer could come in and have a feel of the brand. We had what we were calling a refresh station on London Fashion Week. So they could come in, get a power shot, get an IV drip, whatever, but more importantly, it was around coming in to interact with the contents, the fabrics, see the brand in real life, meet some of our ambassadors and our marketing team, and it was open to the press. So it was very strong. And then that built up over the month with a heavy seeding of product. We are very proud of a TikTok that went viral. The girl literally was like all I keep seeing is GARAGE, which was kind of our mandate to that team. So we're excited when we opened Bluewater, which is a mall, as Andrew mentioned, in suburb. We had people in line the night before at 7 p.m. to shop the opening the next day at 10 a.m. So you might ask why wouldn't you just go online, but it was the brand excitement and it was great to be a part of. It was an electric environment, and it lasted all weekend. We had a line in both stores the full weekend that we were open from Friday to Sunday. So we know the brand excitement is there, and we're hoping to capitalize on it. We're also going to hindsight what we did there because true to form, we don't actually do that much of an intensive deep dive into a U.S. store opening. I think we take for granted that we're down there. So is there opportunity there. But both the U.K. and U.S. openings are led by social first. Our social team is really doing a great job of getting the word out there. And when we ask people online how have you heard about the brand, it's typically social leaning heavy into TikTok there. So excited about what we have in both 3 more openings in the U.K. and the U.S. openings to come this year. I think there's some strong brand heat to drive the momentum of those openings to try to see if we can emulate what we just did at Bluewater and Oxford. I hope that answers your question. Operator: Next question will be from Mark Petrie at CIBC. Mark Petrie: I actually wanted to continue on that same topic of marketing, and you guys have talked about some of the investments and adjustments that you made in 2025. And obviously, you're getting extraordinary payoffs from those. And clearly, the U.K. is off to an excellent start. I'm just curious how you're sort of thinking about that into '26? Adjustments, tweaks, if you think you're still at the right level? Again, obviously, you're getting excellent returns. So is there an opportunity to even potentially accelerate the marketing investment further in order to support the stellar top line? Stacie Beaver: Yes. I think our challenge, first and foremost, is typically to optimize. So we still have some opportunity to shift buckets. As I just said, social is working really well, influencer really working very well, our ambassador program is working very well. So some of the traditional like paid formats are slowing down for us. So shifting and optimizing buckets, we're trying to maintain a healthy budgeted percent of sales, and we're looking at every ROAS that comes in across everything we're doing and being agile in shifting those buckets just as close in as we do the product. So I would say the win for marketing going into 2026 is it's even tighter aligned to the product teams. So showing up with a more 360 storytelling and launch, that will give us more creams and a stronger ROAS into '26, but excited about the future of the marketing team. Mark Petrie: Does that adjust at all just based on the content that comes from the stores? Like do you expect that to be a bigger part of what you're doing or smaller? Sorry, I'm squeaking in a follow-up. Stacie Beaver: I caught that. It's okay. I would say probably growing. But in general, I think our biggest excitement for '26 is how we're going to use that customer journey and start personalizing more. So if we can get AI up and running on more fronts, get the UGC customer content more useful, that's where we're trying to leverage. But I will, since you snuck in a question, I'll give you another stat, that frequency is up, and our AOV is up. So just know that she's shopping more, and the AUR, we could say, is being driven in the AOV, but our UPT is flat. So overall, we're driving a very healthy lifetime value customer. So that's our initiative from the product team, the marketing team is to keep the heat on and keep her wanting to come back for more. Operator: Next question will be from Luke Hannan at Canaccord Genuity. Luke Hannan: I wanted to ask a question just on longer-term square footage growth. I appreciate it's very, very, very early days in the U.K., but it sounds like everything is very much tracking ahead of expectations there, and you're on track to open 5 more stores this year. What can you share, if anything, on the pipeline for fiscal '27 and how that's filling out? And then secondarily, when we think about Dynamite, it sounds like the conversions are going well there. When should we expect to hear a little bit more on what the strategy could look like there? Andrew Lutfy: Listen, so regarding the U.K. in '27, I don't want to -- I'd rather not get into it. I mean, listen, suffice it to say, we look at the U.K. as a really wonderful opportunity. It's larger than Canada, feels like Canada, smells like Canada, smells like the Northeast U.S.A. in a good way, maybe better. So there's lots of opportunity, and we're -- listen, we're talking to a lot of people, but there's nothing, I think, that we're prepared to talk to really disclose of and on at this point. And insofar as Dynamite, I would say the same thing. I mean, listen, we're -- the vast majority of the business is GARAGE, right? Like we got to keep our eyes on this one, right? And so I would say there is a -- I won't say disproportionate, but there is a commensurate amount of energy, emphasis and if you will, going into GARAGE right here right now because that's where we're getting the better bang for the buck. That much being said, we're very happy with the Dynamite performance. It is up. We don't segment, but it's growing. And yes, I mean, we're still bullish on it. The stores look great. I think the stores look great. The marketing is looking better than ever. The customer seems to be really happy, but we're not really prepared to talk about anything in '27 and beyond. Operator: Next question is from Jon Keypour at Goldman Sachs. Jonathan Keypour: Mine is on the '26 comp guide being 11% to 14%. I think after 3Q, you guys gave us a kind of rough sketch of what '26 -- 2026 might look like. I think you guys, correct me if I'm wrong, guided to a comp of high single digit. So obviously, that's a step-up to some degree. I'm just wondering, is that improvement in the guide driven by what you've seen quarter-to-date in 1Q? Is it driven by expectations for the back half? Or I guess, just exactly what is generating that upside? Jean-Philippe Lachance: Sure. Thank you for the question. Certainly, the vast majority of the difference has to do with the Q1 to-date performance at plus 28%. When we provided the high single-digit color back in December, truthfully, we were not expecting to do 28% comp for Feb and March or at least the first 8 weeks into Q1. So that definitely had an impact, which is the bulk of the increase from the high single digit to the current range of 11% to 14%. And I don't know that we've changed anything massively for the rest of the year. So that really is the bulk of it. Operator: Next question will be from John Zamparo at Scotiabank. John Zamparo: I wanted to ask about the real estate side of the business. And as you see continued strength in same-store sales and higher average volumes from recent openings, is the quality of opportunities in the pipeline roughly the same as what it's been? And are some sites that maybe were even previously unattainable, are those now becoming potential stores you could open? Andrew Lutfy: I would say, listen, it's -- the macro trends, right, that we've observed for the last 8 years still persist, meaning flight to quality. So you're really seeing those better assets, what we call in "GRGD language, investment-grade assets," which represents maybe 10% of the shopping center universe. We're seeing these assets still growing, still taking market share, gaining revenue and so on and so forth, and we still are very long in that. And so we're still investing in those assets. Listen, I mean, we're not the only ones who figured that one out. So there is a lot of competition, a lot of competition on any opportunity that ever becomes available. So rarely are we the only player out there knocking on that landlord's door for that particular premises. There's probably 10 or 20 other players knocking on our door. Now -- so it's as challenging as ever before. One of the big benefits, I guess, of GRGD where we are here today is our sales performance is such that we are what the landlords often call a top quartile performer. And if they've got a piece of -- if they've got a location that is currently being occupied by a bottom quartile performer and their lease is up and they can remerchandise or they can take the premises back, well, their preference would be to actually lease it to a top quartile. So there might be 20 people knocking on their door. Not all of them are top quartile performers. As a matter of fact, not that many are. So that certainly is a big advantage, right, for us. So our -- so despite the fact that times are really challenging, our performance and our brand heat and the traffic that we drive into their asset make it such that we become a desirable option for that landlord. So we're still seeing opportunities. We're still seeing deals being public and having public -- it's so funny. We -- now we're dealing with a new landlord community that we don't really know. In Europe, for example, in the U.K., so many of them don't really know us. And so we provided a one-page cheat sheet. And we benchmark ourselves in some of the key critical metrics. I mentioned that actually in my opening remarks, whether it's revenue, adjusted EBITDA, ROA or inventory turns, we are literally the best performer in each of those 4 metrics of all our peers. And so much so that I said -- because we keep saying we've got a luxury business operating model. I said, well, why don't we benchmark ourselves to the luxury players. And we're literally -- we beat all the luxury players, saving except for Hermes, in adjusted EBITDA. So with that information, those landlords -- that really is meaningful for those landlords, and that helps us often enough get across the finish line and secure that real estate. I hope that answers your question, but... John Zamparo: It does. Operator: At this time, we have no other questions registered. Please proceed. Andrew Lutfy: Perfect. Well, thank you so much, everyone, and I wish you all a wonderful day, and we're super excited for the year to come. The brand is hot. There's great enthusiasm. The teams -- I mean, we didn't really talk about people and teams so much, but let me tell you, our teams are all fired up. As you know, they are all shareholders. We're all rolling in the same direction. It makes JP, Stacie and my life a little bit easier. And that's it. Thank you, and have a wonderful week. Jean-Philippe Lachance: Thank you. Stacie Beaver: Thank you, everyone. Andrew Lutfy: Happy Easter for those of you who are Passover. Operator: Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we ask that you please disconnect your lines. Enjoy the rest of your day.
Operator: Welcome, everyone, to SmartFinancial, Inc. First Quarter 2026 Earnings Release and Conference Call. We will begin shortly. In the meantime, if you would like to preregister to ask a question, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two. Hello, everyone, and thank you for joining the SmartFinancial, Inc. First Quarter 2026 Earnings Release and Conference Call. My name is Claire, and I will be coordinating your call today. During the presentation, you can register a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two on your telephone keypad. I will now hand over to Nathan Strall, Director of Investor Relations, to begin. Please go ahead. Nathan Strall: Thanks, Claire, and good morning, everyone, and thank you for joining us for SmartFinancial, Inc.’s First Quarter 2026 Earnings Call. During today's call, we will reference the slides and press release that are available in the Investor Relations section on our website, smartbank.com. William Carroll, our President and Chief Executive Officer, will begin our call, followed by Ronald Gorczynski, Chief Financial Officer, who will provide some additional commentary. We will be available to answer your questions at the end of our call. Our comments include forward-looking statements. These statements are subject to risks and uncertainties, and actual results could vary materially. We list the factors that might cause these results to differ materially in our press release and in our SEC filings, which are available on our website. We do not assume any obligation to update any forward-looking statements because of new information, early developments, or otherwise, except as may be required by law. During the call, we will reference non-GAAP financial measures related to the company's performance. You may see the reconciliation of these measures in the appendices of the earnings release and investor presentation filed on April 20, 2026 with the SEC. I will now turn it over to William Carroll to open our call. William Carroll: Thanks, Nate, and good morning, everyone. Great to be with you, and thank you for joining us today and for your interest in SmartFinancial, Inc. As usual, I will open up our call with some commentary and hand it over to Ron to walk through some numbers in greater detail. After our prepared comments, we will open it up with Ron, Nate, Brett Miller, and myself available for Q&A. It was a great start to the year for our company with another very busy quarter as we continue to execute on our strategy of leveraging the great foundation we have built over the last several years. Our team's focus on this execution continues to be outstanding, and 2026 was yet another example of that. So let me jump right into some of our highlights. First, and in my opinion, one of the most important metrics, we continue to increase the tangible book value of our company, which is now up to $27.33 per share, up from $26.86 at year-end. For the quarter, we posted operating earnings of $13.7 million, or $0.81 per diluted share, with total operating revenue coming in at $53.8 million, higher than the $53.3 million in the prior quarter even with two fewer days. We continue to execute on outstanding growth on both sides of the sheet, posting 14% annualized growth in loans and 7% annualized growth in core deposits. Our history of strong credit continues with only 25 basis points in nonperforming assets. I am very pleased with our credit performance and our extremely low level of NPAs. Operating noninterest expenses also came in on target at $32.9 million as we continue to exhibit expense discipline. Looking at the first few pages in the deck, you will see our continuation of some very nice trends. We are building our return metrics and, most importantly, growing total revenue, EPS, and tangible book value. All of those charts are great graphics to illustrate our execution. I am looking forward to and expecting these trends to continue. A couple of additional high level comments from me on growth: Our balance sheet expansion is a direct result of the focus of our sales teams. Our continued evolution as an outstanding organic growth company is one of the things I have been most proud of and I believe something that sets us apart from many other banks. We have hired well, and we have built an outstanding process on prospecting and bringing in new clients. I would argue that we are in a small top-of-class group when it comes to pure organic growth. As I stated, we grew our loan book 14% annualized quarter over quarter as sales momentum stayed strong and balanced across all of our regions. Our average portfolio yield, including fees and accretion, held up well at 6.02%. Regarding deposits, core deposits were up 7% annualized excluding brokered CD payoffs. Plus we absorbed a large seasonal withdrawal early in the year, so all in all, a very nice deposit quarter. It is important to recognize how we are building this bank with core relationships, as we have intense focus on both sides of the balance sheet. A couple of other highlights noted in our release included an allowance for credit loss model change that bumped provisioning during the quarter. So we accomplished these results while adding an outsized provision adjustment with the new ACL model that better suits our company. Ron is going to discuss this a little bit more in a moment. We also had a senior team addition with a new director of private banking and wealth management from an in-market regional bank that I believe is going to elevate the work that we are doing in this area even further. We do not talk a lot about our wealth and investments platform, but this business line has steadily grown over the last several years as we have added some outstanding private bankers and new financial advisers. This focus on assisting high net worth clientele is becoming a great business driver for us, and with our strategy, we can go toe to toe with any regional or national player. So all in all, a very nice way to start 2026. I am going to stop there, hand it over to Ron, and let him dive into some details. Ron? Ronald Gorczynski: Thanks, Billy, and good morning, everyone. I will start by highlighting some key deposit results. During the quarter, our momentum remained strong, with nonbrokered deposits increasing by $95 million, driven by two factors: new deposit generation at a cost of 2.82%, which was 22 basis points higher than the previous quarter, and seasonal inflows. Given the strength in core funding, we took the opportunity to pay down the remaining $52 million in brokered deposits, which carried an average rate of 4.35%. As we noted on the last call, our year-end totals included some transitory noninterest-bearing deposits. As those deposits rolled off and clients put some excess liquidity to work, noninterest-bearing deposits were over 18% of total deposits at quarter end. Overall, interest-bearing deposits declined by 19 basis points to 2.60% and were 2.58% in March. We continue to maintain a robust liquidity profile demonstrated by our loan-to-deposit ratio of 87%. Net interest income for the quarter was $45.9 million, which was $782,000 higher than the previous quarter, even though this quarter had two fewer days. Our net interest margin also improved by 10 basis points to 3.48%. This increase was mainly driven by an 18 basis point reduction in funding costs, which more than offset a three basis point decline in asset yields. The reduction in funding costs resulted from the full-quarter effects of the prior quarter’s federal rate cuts, the previously mentioned paydowns of higher-cost brokered funding, and new deposit generation and CD renewals at lower rates. The decline in asset yields was caused by a six basis point reduction in loan yields mainly due to the impact of the rate cuts mentioned above and the paydowns and payoffs of higher-rate loans. This reduction was slightly offset by our strategic utilization of balance sheet cash. The rate-average yield on new loan production for the quarter was 6.4%, and 6.45% for March. Looking forward, we anticipate that our margin will stabilize and remain relatively flat for the second quarter before increasing slightly in the second half of the year. Turning to credit, our provision expense for the quarter was $4.1 million, which includes $926,000 attributable to an increase in our unfunded commitments liability. As mentioned during the last earnings call, we have updated our CECL allowance model, enabling broader capabilities such as economic forecasting tailored to loan segments and stronger qualitative adjustments. Details about this model update will be included in our first quarter 10-Q filing. Due to the changes in our modeling approach and quarterly activities, the allowance for credit losses increased to $44 million, representing 0.97% of total loans compared to 0.94% in the previous quarter, and our liability for unfunded commitments totaled $4.5 million, up from $3.6 million. Looking forward, we anticipate that the allowance will remain within the 97 to 98 basis point range, contingent on prevailing market credit conditions. Furthermore, our asset quality metrics remain robust, with nonperforming assets accounting for just 0.25% of total assets, and net charge-offs were limited to two basis points. Operating noninterest income was $7.9 million, down slightly from the last quarter but exceeding expectations. Higher investment services fees offset lower mortgage banking and capital markets revenue, which was lower primarily due to seasonality. Other income sources met or modestly surpassed expectations. Operating noninterest expenses for the quarter increased slightly to $32.9 million, which was modestly below our guidance. Salary and benefit expenses were higher mainly due to variable compensation on stronger-than-anticipated production as well as our annual merit increase adjustments that started in March. We also reduced our FDIC insurance accrual $275,000 this quarter but expect this expense to return to normal levels in future periods. Our operating efficiency ratio for the first quarter remained around the 60% plus level, showing our continued focus on improving margins and controlling costs. For the second quarter, noninterest income is projected to be approximately $7.8 million and noninterest expense is expected to be in the range of $34 million to $34.5 million. Salary and benefit expenses are anticipated to range from $20.5 million to [inaudible] million, slightly elevated from the prior quarter due to the full-quarter effects of our merit increases and new hires. Our accruals for incentive-based compensation will fluctuate based on performance and may vary throughout the year. I will conclude with capital. The company's consolidated TCE ratio increased to 8%, and our total risk-based capital ratio remained well above regulatory well-capitalized standards at 12.7%. Overall, I believe our capital levels remain optimally balanced to continue to support growth while maximizing returns on equity. With that said, I will turn it back over to Billy. William Carroll: Thanks, Ron. As you can tell from Ron's comments, our trends continue to have a nice trajectory. We are successfully executing on the leveraging phase of growth for our company. And on our return metrics, we feel very confident in our ability now to move through the 112% ROA and ROE thresholds as we look into 2026. I mentioned on our last quarter call an internal four-by-four challenge of hitting a $4 EPS run rate by 2026. So, basically, hitting $1 per share in EPS by Q4 of this year. We rolled that initiative out internally during the quarter, and our team embraced it. We have got a little bit of work to do, but we have had a nice start to the year, and we are going to continue to push to hit that EPS target. I like our chances on accomplishing this goal. We believe we are one of the brightest banking stories in the Southeast—outstanding growth markets paired with strong, experienced bankers and a very focused executive team. Our primary effort will be on generating more operating leverage throughout 2026 with our focus on doubling down on our organic strategy and getting deeper in our markets. As I mentioned, pipelines are solid, and I think we can continue growing at this high single-digits-plus pace. Talent acquisition continues to be a high priority for our company. I really like what I have seen during the first part of this year. We have continued to add select revenue producers in several markets and have several more committed to come on board soon. We are constant recruiters, and I like our position as we continue seeing market disruption in the South. Just an anecdotal comment on that: I was at a client event in Alabama last week and had a new SmartFinancial, Inc. client that one of our new bankers had brought over to us come up to me and say how much he enjoyed working with us, saying you guys could do everything the regionals can do, but you are better and more nimble. That sums up our business strategy and our recruiting, and we are having great success with both. So we will continue to look for these organic growth opportunities and remain very focused on recruiting. To summarize, we kicked off a very solid 2026, and we are positioned very well. Operator: We will now open the call for questions. Brett Rabatin: Hey. Good morning, everyone. Hey, good morning. I wanted to start on the growth outlook from here. Obviously, you guys continue to execute really well on growth, and there have been rumblings of some competitors in Tennessee in particular being very aggressive with rate. I just wanted to see if you were seeing any of that and then the pace of growth in 1Q—if that is sustainable, particularly on loan growth for the rest of the year. William Carroll: Yeah, Brett, I will start, and Rhett, you chime in from what you are seeing in pipelines as well. We had a really solid first quarter. Our pipeline is still good. As I have said in my comments, I think we can continue at or around that 10% plus/minus. Might be a little more, might be a little bit less, but I like our pace. Competition is—I'll tell you, we were talking about this the other day—we could have had a lot more. We are turning away some deals, some good deals, just because we are seeing some unreasonable rate competition, and that is okay. One of the things that I think you have heard me comment on in past calls is we have really got a nice disciplined approach around our pricing model. Growing both sides of the balance sheet is really important for us. Not that we will not make an exception here or there for the right types of situations, but for the most part, we really hold to making sure that we are hitting our return on risk-adjusted capital targets. We are seeing some competition that is a little bit crazier. We are letting some of those deals go. We are involved in them; sometimes we just think the pricing is too thin. Rhett, you might talk a little bit about pipelines and how you feel about this high single-digits-plus pace. Rhett Jordan: No, Billy, you kind of stole my thunder because I was going to say the same thing—that, despite the growth we saw a while ago, we actually could have produced more had we not been as disciplined as we were on our return profile. The pipeline itself continues to backfill at a pretty consistent pace. As we have monitored this growth cycle we have had for the past several quarters, we have seen the pipeline just continue to backfill at each quarter-end. We look at what we have got coming for the balance of the next couple or three quarters. All indicators are that the market pace is still good. There is a lot of opportunity out there, and we are certainly getting our pressure. Brett, I would also add it is not just Tennessee. It is all across our footprint. Alabama and the Panhandle have been very strong as well. Brett Rabatin: That is very clear, guys. Appreciate all that. And then I just wanted to ask on the balance sheet management. Your loan-to-deposit ratio increased last year, and you talked about paying down some brokered CDs this quarter. I just wanted to hear your thoughts on managing the balance sheet and the loan-to-deposit ratio—if there is an upper limit that you might have on that—and then just funding the growth, where you think that comes from in terms of product and how you are going to do that. William Carroll: Ron, you want to take that? Ronald Gorczynski: Sure. We have been hovering around the 86% to 87% loan-to-deposit ratio. We are not afraid to go up to 90%, 90% plus, but at this point we do not see the need. Our deposit generation has been strong throughout our footprint. As you can see for Q1, a lot of it has been money market generated. We are weaning off on the CD side. We feel the relationship building of that money market category has been pretty special for us going forward. Other than that, relationship building, and we have a lot of positive opportunities in our footprint. Brett Rabatin: Great. Appreciate the color, guys. Rhett Jordan: Thank you. Operator: Our next question comes from Russell Gunther from Stephens. Please go ahead. Russell Gunther: Good morning. I wanted to ask on deposit costs. You did a great job dropping those this quarter. Within the margin update you guys provided, how are you thinking about the ability to lower deposit costs from here if the Fed does remain on pause? Do you have some incremental room, or should we be thinking about potentially some upward pressure on deposit costs going forward? William Carroll: Ron, do you want to take that? I think from what Russ was saying, with rates being up a little bit, we probably have a little bit more pressure on that, but do you want to discuss thoughts around deposit costs moving forward? Ronald Gorczynski: Yeah, I am pretty neutral at this point in time. Our flatness is really due to—we have seen some mix shift in our deposit portfolio. Our team has done a great job of expanding our margin over the last several quarters, but we are coming into a period of seasonality. Second quarter for us is traditionally a heavy cash quarter for clients for tax payments and other uses. Even though we have seen competition through our footprint—as we will probably get a question on that—our team has done a great job of bringing in deposits and keeping the rates down. In essence, I think we will still see a little bit of rate movement upward, but we are only looking at very few basis points quarter over quarter from here on, so pretty neutral at this point. Russell Gunther: That is very helpful. And then, you led the witness here a little bit; let me follow up on your deposit cost competition, and it is also a follow-up to Brett's very good question. The Southeast is always a competitive place to operate. Maybe just high level, how would you describe the environment this quarter—has that high level of competition increased? It sounds like on the loan side, but perhaps the deposit side too. William Carroll: I will grab that one, Russell. It has. I think competition is ramping up. I do not think there is any doubt about that. You have a lot of banks that are out there looking for growth. We have been fortunate. Again, I go back to our process; it has really been good, and I think that is what has allowed us to drive growth and continue to do it at rate levels that we are comfortable at. But it is on both sides. Brett talked about loan pricing; it is the same on deposit pricing. Especially with thoughts around maybe a flatter rate environment in 2026, I think it is fueling a little bit of fire to keep deposit rates higher. We will contend with that. But again, our deposit growth is not always rate sensitive. I know I have talked about it on prior calls: the treasury management team that we have in our company, and they are doing such a great job with their commercial bankers. We are bringing in some really good core operating business outside of just where prevailing money market rates are. I like the way we are growing the deposit side. I think we can continue to do it. Like Ron said, we will probably have a little bit of mix shift this quarter that might give us a little bit of short-term pressure, but all in all, I still think we can continue to do it at the same levels that we have been doing. Russell Gunther: Great. Thanks, Billy. And then, last one for me: follow-up in terms of—very helpful to get production yields for the quarter, the 6.40% and the 6.45% in March, and I always go right to that repricing slide on number 14. How are those kinds of yields holding relative to what is coming on in the pipeline? Is that at similar levels, or do you see some pressure there? William Carroll: I think it is close to the same. Maybe a little bit of additional pressure on those, Russell. But all in all, we are getting some nice yield pickup. We are trying to be strategic and trying to be out in front of these rate resets and maturities well in advance. We are watching it closely. Maybe a little bit of additional pressure, just like new production today, but still to the positive. Ron, anything to add? Ronald Gorczynski: Yeah. The renewals and the repricing have been a tailwind for us. We are renewing 88% of the loans that are coming up for repricing or renewal, and they are coming in about 120 basis points higher. They are very similar to rates for today, maybe 10 basis points lighter, but still very strong in that area. Russell Gunther: That is great color, guys. Thanks for taking all my questions. William Carroll: Thanks, Russell. Operator: Our next question comes from Catherine Mealor from KBW. Please go ahead. Catherine Mealor: Good morning. One follow-up on the margin: In your guidance for the margin to be flat this quarter and then expand slightly in the back half of the year, what are your rate forecasts under that scenario? William Carroll: We are flat—not assuming up or down at this point in time. Catherine Mealor: Okay, so no more rate cuts. We are just in a flat rate environment; we are kind of stable to maybe up as we get better loan repricing in the back half of the year. William Carroll: Correct. Even if deposit costs had a chance to trend up a little bit. Catherine Mealor: Correct. That is great. Thank you for that clarification. And then on the expense guide, it is helpful to see next quarter's expense guide, which is still kind of shaking out to about that 5% annual growth rate. But just curious if you still feel like that 5% full-year expense growth guide is appropriate. Is there anything with the recruiting you have talked about or anything else that you think we should be aware of to model in the back half of the year? William Carroll: High level for me, Catherine: The recruiting side—we think we can handle it. We do not go out and do really, really large adds; we are just selectively adding the right producing team members when they come on board. We should be able to absorb that with the increased production. Ron can talk about guidance, but I do not think we have a lot of really heavy expense lift in the forecast going forward. Most of that is already built in. Ron, any color on that? Ronald Gorczynski: Yeah, Catherine. We are projecting pretty much for the rest of the year, quarter over quarter, to stay within a tight band between $34.5 million to $35 million—not expecting any creep unless something strategic comes along. We are still looking to get our efficiency ratio to trend down to that target 60% level by year-end. The only other item is the variable comp piece that could change some of this if we do get extended production, and then variable comp will kick in. But no, we look like we can keep within that band. Catherine Mealor: Okay, great. Very helpful. Great quarter, guys. Thank you. William Carroll: Thanks, Catherine. Operator: Our next question comes from Stephen Scouten from Piper Sandler. Please go ahead. Stephen Scouten: Thanks, guys. Going back to NIM for one second, I am kind of curious what you see as the biggest risk to the continued positive trajectory on the NIM in that back half of 2026. What could cause that to be different than expected currently? William Carroll: Ron, I will let you take a stab at it. Mine is going to be competitive pressure on money market rates and funding rates—probably a big driver in the second half is just not knowing exactly where rates are going to be or what kind of pressures we are going to get. Stephen, I still think, if rates hold steady, we can do a pretty nice job on the loan yield front. I think it is going to be more funding cost pressures potentially. Ron, anything else you would add? Ronald Gorczynski: No, exactly. It is all going to be in the funding cost if we do have trending more of our mix shift out of noninterest-bearing. Those are the only other items. Stephen Scouten: Okay. And then I know you guys noted that more of the growth came from money market and savings. Were there any specials on the money market rates—anything unusual that led to that kind of material pickup there from a mix shift? William Carroll: I do not think so. I do not think we really did anything. No—we did it with hard work. We prefer selling money markets than CDs. We did not have any rate promos or anything out of the norm, Stephen. Stephen Scouten: Okay, great. And then just last for me, you noted the director of private banking and some wealth management hires there in Nashville. How do you feel about your Nashville presence today? Is that something we should continue to see you focus on expanding given the current opportunity set? And if so, what could that look like over the next couple of years? William Carroll: Yeah, it is. As I have said, we are really leaning into all of our zones. We have just got such great ability to grow share in so many of our markets. Obviously, Nashville is a big market. We are really starting to build some nice momentum. I was over there with some clients a couple of weeks ago, and we have got really good energy over there. We have got some nice team members that we have added over the course of the last couple of years, and we have got more that we want to add over there. I think that is a market that is going to be important to us as we go forward. We have a lot of other zones where we are growing share too, but Nashville is going to be one that I think has got a heck of an upside for us. Stephen Scouten: Great. Appreciate it. Congrats on all the continued progress here. Rhett Jordan: Thank you. Operator: Our next question comes from Steve Moss from Raymond James. Your line is now open. Please go ahead. Steve Moss: Good morning, guys. A nice quarter here. Most of my questions have been asked and answered. Just kind of curious in terms of the pipeline mix—is it focusing to be more construction, non-owner-occupied CRE, or how are you thinking about dealing with that underlying mix? William Carroll: I will let Rhett weigh in on the pipeline since he is seeing more of that. We have been able to keep it pretty balanced and pretty agnostic to whatever group. I still think we will be able to hold. Rhett, any additional color on how you see the loan composition looking over the next few quarters? Rhett Jordan: No, Billy. You nailed it with regard to our focus. I look at the graphic on page nine of the deck that outlines our loan composition. You might have a slight move here or there—one percentage point or two one quarter to the next—but overall, as you can see, it is maintaining a pretty steady pace as it relates to the mix of the portfolio. When you look at our first quarter production, it really ties in almost exactly to those same metrics for the quarter. It is a continued solid, strong mix across the different segments of the book. We are focused on doing that. We have our banker teams set where they have targets and specializations here and there, and each one of them—across the geographies and across our different markets—are carrying their own weight. So far, it has been a very consistent mix. Steve Moss: Appreciate that. And then maybe in terms of expansion—you just talked about the Nashville area. As you hire teams or people selectively, should we think about any de novo expansion around that market? And any thoughts on M&A these days? I know you are seeking to leverage your existing base, but just kind of update the thoughts there. William Carroll: On your first question on de novo expansion—no, not really. Last quarter, we talked about being excited to get Columbus, Georgia started. I am really excited about what our team is starting to build down there and building really quickly. I have been happy with that. Outside of that, nothing really. We will look to add another Nashville area office sometime here in the foreseeable future—maybe a couple of other small offices to support some of our markets as we look over the next couple of years. Nothing really big on that front, Steve. We will focus on that de novo Columbus zone and really focus on growing Nashville—maybe add a branch there and maybe another one in another market or two over the next couple of years. Miller Welborn: Do not feel the firm now, and just the company and the work ethic—it just, yeah. What we are doing now is working. William Carroll: On M&A—M&A, Miller and I start laughing. We have been successful in M&A over the years, but with the pivot we made a few years ago and the leadership we have put in on the sales side, the organic growth—and I think you see it in the results and what it has done to revenue growth and EPS growth—I said it would take a unicorn to probably get us to move. What we are doing now is working. So we are probably a little light on prioritizing that, Steve, but I love where we are sitting. Steve Moss: Appreciate that, and definitely appreciate all the color here. Thank you very much, guys. William Carroll: Thank you. Operator: As a reminder, if you would like to ask a question—We currently have no further questions and therefore conclude the Q&A session. I would now like to hand back to Miller Welborn, Chairman of the Board, for any closing remarks. Miller Welborn: Thanks, Claire, and I appreciate everybody joining us today. It is great to be with you all. As Billy said, it is an exciting time to be part of this bank. We are constant recruiters, and we have great team members all across the bank footprint and great clients. We just appreciate you all being part of it. Thank you, and have a great day. Operator: This now concludes today's call. You may now disconnect your line.
Operator: Good day, and welcome to the Dynex Capital, Inc. First Quarter Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Alison Griffin, Vice President of Investor Relations. Please go ahead. Alison Griffin: Thank you, operator, and good morning, everyone. The press release associated with today's call was issued and filed with the SEC this morning, April 20, 2026. You may view the press release on the homepage of the Dynex website at dynexcapital.com as well as on the SEC's website at sec.gov. Before we begin, we wish to remind you that this conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words believe, expect, forecast, anticipate, estimate, project, plan and similar expressions identify forward-looking statements that are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. The company's actual results and timing of certain events could differ considerably from those projected or contemplated by those forward-looking statements as a result of unforeseen external factors or risks. For additional information on these factors or risks, please refer to our disclosures filed with the SEC which may be found on the Dynex website under Investor, as well as on the SEC's website. This conference call is being broadcast live over the Internet with a streaming slide presentation, which can be found through the webcast link on the website. The slide presentation may also be referenced on the Investors page. Joining me on the call today are Smriti Popenoe, Co-Chief Executive Officer and President; Byron Boston, Chairman and Co-Chief Executive Officer; Mike Sartori, Chief Financial Officer; and T.J. Connelly, Chief Investment Officer. I now have the pleasure to turn the call over to Smriti. Smriti Popenoe: Thank you, Alison, and good morning, everyone. We continue to build our company at the intersection of two powerful demographic tailwinds: the need for income and the need for housing. Dynex Capital, Inc. continues to deliver differentiated, top-tier performance. Our track record, combined with the significant growth in our capital base over the last 15 months, propels value creation by delivering scale and resilience to our shareholders. The team is focused on methodically building durability across investments, finance, technology, risk, and operations. Growing an enduring platform reinforces the value of our business meaningfully beyond the valuation of our balance sheet, further driving long-term shareholder returns. Turning now to the global macroeconomic environment, government policy is squarely in the driver's seat, defining and driving outcomes. Scenario planning for us has evolved to mapping policy pathways: what policymakers could do next, how markets may transmit those decisions, and how we position ourselves for those moves. More than ever, mindset and preparedness are the key factors for successful decision-making because the policy paths are not always foreseeable. Flexibility and openness in our team's mindset—something we actively teach and practice—are now essential parts of navigating the investment landscape. In the first quarter, we added value by executing our plan. We managed the portfolio through a short burst of volatility, which we used to opportunistically raise and deploy capital. We grew the total capital base by 18%, deploying the funds during the quarter as MBS spreads widened. Since quarter end, MBS spreads have tightened and book value is higher. Mike and T.J. will now review the detailed quarterly results and our outlook. Mike Sartori: Thank you, and good morning, everyone joining us today. I would like to begin by welcoming Caitlin Mowicz, who joined Dynex Capital, Inc. today to lead capital markets and investor relations. Kate brings deep industry experience across both functions, and her background will support the continued growth of our capital and investor base while deepening the engagement with our existing investors. We are excited to add her capabilities to our strong and growing Dynex team. Turning now to our financial results for the quarter, book value ended the quarter at $12.60 per share, and economic return was negative 2.5% for the quarter, consisting of $0.51 per share of common dividends and an $0.85 per share decrease in book value. We ended the quarter with leverage at 8.6 times versus total equity. The majority of the increase was attributable to the growth in our investment portfolio of $6 billion, reflecting the deployment of capital raised during the quarter of $442 million. Our liquidity position remained very strong, with $1.3 billion in cash and unencumbered securities at the end of the quarter, representing over 46% of total equity. We continue to evaluate growth through the lens of market opportunity, investment returns, and long-term accretion to drive shareholder value. Net interest income for the quarter rose from $0.28 per share to $0.40 per share, primarily due to declining financing costs, which fell 33 basis points due to the impact of the Federal Reserve's rate cuts in the fourth quarter. With respect to expenses, G&A increased quarter over quarter, driven primarily by one-time items. As we noted in the prior first quarter earnings, we expect overall expenses to normalize in the second quarter, with the full-year expense ratio anticipated to be flat or modestly lower versus year end as we grow our capital base. Importantly, we remain disciplined in managing costs and our expense structure. With that, I will turn it over to T.J. to provide additional detail on portfolio strategy and the outlook. T.J. Connelly: Thanks, Mike. We entered the quarter with policy attention focused squarely on housing affordability and the mortgage market, particularly housing and the availability of mortgage credit, a transition we believe could support tighter mortgage spreads over time. Early in the quarter, mortgage markets benefited from a strong technical tailwind. Government policy, long one of our most important inputs, had turned supportive, with policymakers emphasizing GSE mortgage buying to tighten spreads and improve affordability. As volatility rose later in the quarter, agency mortgages traded like much riskier assets, creating potential opportunities. Because we operate with strong liquidity, we navigated that volatility constructively and selectively added assets as spreads widened to more attractive levels. Fundamentals and technicals remain highly supportive, and we believe the long-term path toward tighter equilibrium spreads remains highly likely, boosted by policy, supply-demand dynamics, and yield carry. Net supply is light, and demand remains broad and robust across banks, REITs, money managers, and foreign investors. Last quarter, I noted that we expected net supply to be $200 billion this year. So far in 2026, it appears supply could come in even lower. Returning to the demand side, the potential bids from the Fannie Mae and Freddie Mac retained portfolios improves downside liquidity, stabilizes spreads during periods of volatility, and supports broader investor participation. The GSEs have been actively buying mortgages. They are selective on valuation. They regularly retain pools they have previously been selling through their cash window programs. And with respect to potential hedging, they are mostly hedging using interest rate swaps. In parallel, proposed changes tied to the Basel III endgame could lower the capital cost banks face to hold mortgages, both in loan and securitized form, and to intermediate financing more efficiently. Financing costs are declining amid the light regulatory regime. Repo markets functioned smoothly, spreads were stable, and funding was readily available even during periods of heightened volatility. MBS repo spread to SOFR remained in the 13 to 17 basis point range, three to five basis points below last year's averages. Structural improvements in the short-term funding markets alongside elevated money market balances, standing Fed backstops, and more efficient balance sheet intermediation continue to support financing for high-quality mortgage assets like those Dynex Capital, Inc. owns. We have seen agency MBS spreads to seven-year interest rate swaps begin to trend tighter again. After moving from the high 120s to nearly 170 basis points in March, spreads were in the low 160s at quarter end and moved back toward the 150 area late last week. As geopolitical events evolve and policymakers refocus on domestic issues like housing, we believe spreads can trade towards 120 again, with scope for long-term equilibrium spreads closer to 100 basis points. Static ROEs for current coupon mortgages hedged with interest rate swaps are in the mid- to high-teens, and the spread outlook I just outlined provides a further tailwind to forward returns. Moreover, the opportunity to add alpha through security selection is exceptional given the environment. Borrower prepayment behavior is increasingly heterogeneous and technology-driven, creating meaningful dispersion across pools. Over the last year, we have strategically reduced our exposure to the most callable agency MBS—those in what we call the TBA market—and we continued to do that in the first quarter. TBAs declined from over 16% of our portfolio at year end to approximately 7% at the end of the quarter. The first quarter reflects the strength of the Dynex model along two dimensions. First, disciplined risk management—supported by significant financing liquidity, strategic security selection, and a focus on market structure in the context of the macro headlines—allowed us to manage through elevated volatility. Second, that same volatility created the opportunity to raise and deploy capital at more attractive valuations, which we acted on during the quarter. Byron Boston: Thank you, T.J. We are now combining our demonstrated ability to earn solid returns with the benefits of scale. Growing our company in this attractive investment environment is an important element of value creation; it distributes fixed costs, deepens liquidity, and strengthens the company, especially in periods of volatility like we saw last quarter. Beyond the resilience that a bigger balance sheet provides, larger companies have also typically enjoyed higher, more stable valuations. We have grown rapidly to be the third-largest agency-focused mortgage REIT, and we believe the market has not yet fully recognized the value we are establishing through scale. As we continue to execute our plan with discipline, we are excited about the potential for shareholders to benefit from a more scalable platform, creating meaningful upside over the medium and long term. As we look ahead, we remain centered on opportunistic capital growth alongside disciplined management of our existing portfolio and building operating resilience. Our management team is invested alongside shareholders, our interests are aligned with yours, and we are committed to stewarding your capital with integrity, transparency, and care. We will now open the call for questions. Operator: Thank you. If you are dialed in via the telephone and would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal. If you are in the event via the web interface and would like to ask a question, simply type your question in the ask a question box and click send. Once again, press star 1 to ask a question. We will go first to Bose George with KBW. Bose George: Hey, everyone. Good morning. Can we get an update on book value quarter to date? Mike Sartori: Hi, Bose. Good morning. As of Friday's close, the estimated book value was $13.31 per share, net of the accrued common dividend, and that is up 5.6% versus quarter end. Bose George: Perfect. Great, thank you. And then you gave your outlook for spreads potentially going back down to 120 basis points. Is that across the curve or on a specific point on the curve? T.J. Connelly: We are quoting those spreads against the seven-year swap point, which is consistent with the chart we have in our presentation. Operator: We will take our next question from Trevor Cranston with Citizens JMP. Trevor Cranston: Morning. Follow-up on your commentary about spreads potentially tightening to 120 or even 100 basis points as a long-term equilibrium. Can you talk about how high you would be willing to take leverage given that outlook for tightening, and how much the potential for short-term bouts of volatility weighs against that? Thanks. T.J. Connelly: Thank you. There are several components to thinking about our leverage. Our leverage, as Mike mentioned, did increase to 8.6 times. Roughly two-thirds of that increase was actively positioning to own more mortgages given that backdrop. Mortgages really were kind of tail of the dog for several weeks in March. The yield spread, or mortgage basis as we refer to it, traded with risky assets. The basis was very correlated to things like the S&P 500. We are doing a lot of scenario analysis around that to think about just how much leverage we can comfortably manage, and it was a very comfortable position for us coming into the quarter-end period. Looking ahead, we will remain very opportunistic. We are resolute in our view on those spreads moving down to as much as 100 basis points. Given the GSE backdrop, we think we are on the verge of a significant regime change. So we are going to actively be opportunistic in keeping our exposures so investors can capitalize on this opportunity. Trevor Cranston: Got it. Okay. And then just looking at the portfolio this quarter, it looked like the allocation to TBAs went down. Can you talk about how you are thinking about the values of spec pools versus TBAs with incremental dollars? T.J. Connelly: The TBA market, by definition—the to-be-announced market—is the cheapest-to-deliver segment of the mortgage market. That is to say, the pools or the loans that are most callable and potentially have the most duration uncertainty typically will get delivered into a TBA transaction. We want to avoid those. We think those get cheaper and cheaper. They have a tremendous amount of uncertainty around their cash flows. They are very refinanceable, callable on even the slightest move in mortgage rates. So we are trying to avoid those. As I mentioned in my prepared remarks, we have been positioning for owning significantly more pools. We have a long history of security selection. This is a tremendous source of alpha for us, and it is unique to this model. It is very hard for investors to go out and find mortgage pools and do the deep dive that we do; you have to be in the institutional world. It is a great opportunity for retail investors, for instance, to be able to access security selection like we can offer them. Trevor Cranston: Makes sense. Thank you. Operator: We will go next to Jason Weaver with Jones Trading. Jason Weaver: Hi. Good morning, guys. I was wondering if you could speak to the phasing of capital deployment over the quarter and beyond. Byron Boston: In terms of the capital, and I will let Smriti comment a little bit, it is very opportunistic and methodical. We are thinking a lot about multiple components that go into that optimization for our shareholders. One of the things I think the market often misses is total shareholder return is driven by the portfolio returns and the valuation. One thing is very clear: larger companies receive a larger valuation in this sector, and that is a very important part of our calculus as we think about phasing up the capital raising. It was a significant quarter for us. I will turn it over to Smriti, who will comment a little bit more. Smriti Popenoe: Hi, Jason. One of the things that we think about actively is what the agency MBS market and the moves are telling us about the inherent risk in that particular sector. One of the things that happened in the first quarter is that agency MBS widened, but it was not because there was something wrong with agency MBS per se. It was not a fundamental reason. They widened because risk assets in general were weaker, and we view those types of opportunities to be really significant in terms of the ability to raise and deploy capital. So when we see that type of move, that is a signal to us to put accretive capital that we are raising to work. That is really the opportunistic nature of what we are talking about. In general, when we see those types of opportunities, you will see us probably raise bigger blocks of capital, put the money to work, and then over time, the criterion that we have always abided by—making sure that the cost of capital is lower than the return on the capital that we are deploying—remains the gold standard in terms of our willingness to raise and deploy capital over time. Jason Weaver: Got it. That is helpful. And just so I have this correct, obviously forward ROE is going to be the biggest consideration here. But is there a downside sort of multiple in valuation that you want to avoid, or you would underwrite to price above, like your book value multiple? Smriti Popenoe: We are always going to want the shares to trade at a premium to book value. I think as a business we have now proven two things. One is the ability to deliver strong returns in some of the more challenging environments that the market has had in the last 10 years. The second is this idea that as we grow, we are delivering significant benefits of scale to our shareholders. At this point, we feel like the markets have not necessarily taken that into account. Having now firmly placed ourselves as the third-largest company that is doing what we are doing, I think that part is not yet fully reflected in the share price. For us to continue to tell that story, that is the goal here. But all else being equal, not only do we think the shares deserve to trade above book, we actually believe they deserve to trade at a significant premium. Jason Weaver: Alright. I appreciate that. Thanks again for the answers, and congrats on the quarter. Smriti Popenoe: Thanks, Jason. Operator: We will go next to Analyst with UBS. Analyst: Good morning, and thank you for taking my questions today. Could you speak to swap spread dynamics over the quarter and how that impacted performance? And did you adjust the mix between Treasury futures and swaps during the stress period? T.J. Connelly: Thanks for the question, Marissa. Swap spreads—so the interest rate swap rate relative to Treasuries—is what most people are quoting there, and that does tend to correlate with risky assets, much as I mentioned about the basis. When stocks trade lower, for instance, the swap spread will trade more negative, and vice versa when risky assets are doing well, the swap spread will trade less negative. We have said for several quarters now—pushing up on two years—that we expect to be able to earn the additional yield spread that interest rate swap hedges offer relative to Treasuries. There is more yield spread available when hedging mortgages with interest rate swaps than there is when we hedge with Treasuries. As a result, I have mentioned on the last couple calls, we expected 60% to 80% of the portfolio hedged with interest rate swaps. We were right around 70% on a DV01 basis at quarter end, and I expect that to be roughly where we are comfortable in terms of the liquidity of hedges and being able to stay nimble with futures that trade practically 24/7, at least 24/6. There is a little bit of scope to get closer to 80% if the opportunity presents itself, but that is a really compelling spread for us to continue to earn over time, and it has worked fairly well. Analyst: Appreciate that. And just moving to the GSEs, you talked about the directive as resetting the spread regime tighter. How has the pace of their buying met your expectations? And did the March spread widening test that backstop thesis in a meaningful way? T.J. Connelly: Yes, it did to some extent test the backstop. They have proven to be very value-based, so I would not say it is time-based so much, which is really important for understanding the backstop. At wider spreads, they will be more aggressive, and all indications suggest they were more aggressive at wider spreads. They are fairly methodical in terms of their pool selection, so they are buying—or retaining rather—more pools than they have in the past relative to the cash windows. Overall, it is playing out roughly as we expected. There are periods of volatility; they wait, they put their hands up and say, “We will see where value shakes out,” and then they step in, much as they did when Smriti, Byron, and I sat at the Freddie Mac portfolios 25 years ago. They are operating in a very similar manner at this point. Analyst: Got it. Thanks so much for taking my questions. T.J. Connelly: Pleasure. Operator: We will take our next from Analyst with Compass Point. Analyst: Thank you. A follow-up on the previous question: how have your expectations for inflation influenced the tenor of your interest rate swaps, noting that you moved more into three- and five-year, and does that reflect your expectations for a steeper 2s/10s? T.J. Connelly: Great question. Over the course of the quarter, the market waffled a lot—especially with the war in Iran—the market narrative shifted very quickly at points from one focused on inflation to one focused on growth. We do not know the answer. We do not predict; we prepare. We are preparing and building this portfolio to be robust to both of those regimes. That is really important. You saw the swap book shorten up a little bit in that three- to five-year tenor. Most of that is just aging of the swap book. We are very comfortable with how this is positioned because the view we have here—and the risk exposures that we think are the most compelling for our shareholders to earn over time—is that mortgage spread relative to the interest rate curve. We are trying to position this to achieve the yield spread and hold our book value as steady as possible. Given the way the portfolio is constructed currently for this regime, it is appropriate. Our highest conviction is that mortgage yield spread is what we are here to earn, and we are hedging across the curve for that reason. Analyst: And to follow up on the asset side, it seems like you added more in the current and lower coupons and avoided higher coupons, assuming that follows on with CPR expectations? T.J. Connelly: It is a great question because there were some really good opportunities in the initial days. It feels like a long time ago now, but in mid-January, after the administration’s announcement that the GSEs would be more active in buying, certain coupons really outperformed. You will see in our press release that the 4% coupon is significantly lower than it was at year end, and that was because we took advantage of that alpha. There was significant outperformance in those coupons, and we moved away from those coupons as they outperformed to diversify the book up and down the stack. We added some Fannie 2s, even, and then some of the higher coupons. Again, this market is increasingly about pool selection even more than coupon selection. When you have these quick moves, we are watching very closely to say, “This is out of line.” The Fannie 4s, for instance, got significantly richer. We were able to sell into that and buy pools in other coupons that offered much more compelling cash flows for us. Analyst: That is a great answer. Thank you very much. Operator: We will take our next question from Eric Hagen with BTIG. Eric Hagen: Hey, thanks. Good morning, guys. Following up a little bit on this conversation around capital raising, looking at the timing of the capital raising and the broader philosophy around raising capital, is there anything fundamental that you would identify in the current environment which maybe changed the level at which you are prepared to raise capital relative to where you have raised in the past? And by level, I mean the level of your stock, your valuation. Smriti Popenoe: As you know, Eric, we disclosed that the bulk of the capital that was raised was raised early in the quarter, when valuations were more supportive toward issuing capital versus investing, and then the investing environment played itself out over the quarter as everyone saw with spreads wider as the war in Iran progressed. In general, I do not think the principles have changed. When it is a good idea for us to raise, we raise. When it is a good idea to invest, we invest. The raising and deploying do not necessarily have to be simultaneous in nature. Sometimes they are, and sometimes they are not. The real principle—I have said this for three-plus years—is this idea of whether the cost of capital is lower than the return that we can earn on that capital over time. That is what makes this investment environment so unique: (a) that it has lasted as long as it has, and (b) that the forward returns in agency MBS still continue to support active raising and deploying of capital because, over time, we believe the return on the capital we are raising right now is going to be higher than the marginal cost. That has always been our operating principle. As we see the share price go up relative to book—we talked about price-to-book a fair amount today—I think we are more conscious about the idea of delivering total shareholder return to our shareholders. T.J. talked about TSR being comprised of two things: the actual return on our portfolio and the price-to-book. We know those are two different components, and there is a trade-off between the two, but that also is a factor in how much we raise and how much we deploy. A lot of what we are thinking through right now is, number one, performance. Performance is the beginning, ending, and final arbiter of everything that we do. That is always number one. Number two is delivering value through these other ways. Those are all factors in how we think about the pace of capital raising and deploying. Eric Hagen: That is really helpful. Thank you. If I could sneak in one more here: what is your perspective on the prepayment environment as community banks are given more incentives to come back into the market? Do you see that driving a lot of competition among originators? T.J. Connelly: Certainly, competition drives refinanceability. That is a very important construct. More than anything, though, as we have talked about for many quarters now, it is all about the technology. That is making it easier and easier to refinance the marginal borrower, and I think that will be the dominant force over time. To the extent that you have certain incentives, you are bringing it back to something we have talked about for a long time—that is policy. To the extent policy shifts incentives for the players in the mortgage market, that is something we are watching very closely. Operator: At this time, there are no further questions. I would now like to turn the call back to Smriti Popenoe for any additional or closing remarks. Smriti Popenoe: I thank you all for your attention, and we look forward to updating you on our quarterly results in the second quarter. [inaudible] Operator: This does conclude today's conference. We thank you for your participation.