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QI Research CEO Danielle DiMartino Booth discusses the Federal Reserve's stance amid receding inflation fears and declining bond yields on ‘Making Money.' #fox #media #breakingnews #us #usa #new #news #breaking #foxbusiness #makingmoney #economy #federalreserve #fed #inflation #bonds #interestrates #finance #markets #business #smallbusiness #economic #policy #government #politics #political #politicalnews #danielledimartinobooth #money #investing
Markets rallied behind a fragile cease-fire announcement with Iran. Plus, private credit remains a lurking risk.
'Mad Money' host Jim Cramer talks the impact of Wednesday's market rally.
Americans, already unhappy with the cost of living, want relief from rising fuel costs and climbing mortgage rates. Economists caution that the war's economic fallout won't be undone overnight.
CNBC's Jim Cramer said Wednesday's rally revealed to investors what companies are worth buying and which to avoid. Cramer pointed to Sherwin-Williams, Caterpillar, Home Depot and Goldman Sachs as some of the Dow's biggest gainers in Wednesday's session.
One of the strongest single-session gains by the stock market in months arrived Wednesday. Investors clearly showed relief that the U.S. would take at least two weeks to consider a peace plan with decades-long enemy Iran.
Mike Schumacher, Wells Fargo Securities Head of Macro Strategy, joins 'Fast Money' to talk the day's market rally and why bonds did not see the same reaction as equities and oil.
Eric Rosengren, Fmr. Boston Fed President, joins 'Closing Bell Overtime' to talk the ripple effects of the energy shock, what is on the Federal Reserve's plate right now, and more.
Iran's plans to impose tolls on tankers passing through the Strait of Hormuz is turning the key waterway into a financial battlefield.
Tom Lee, Fundstrat, joins 'Closing Bell' to discuss what's next for equity markets, if the Iran war changed market predictions and much more.
Bloomberg's Caroline Hyde and Ed Ludlow discuss the rally in tech stocks and fall in energy prices as markets react to a two-week ceasefire deal between the US and Iran. Plus, Anthropic is giving tech firms early access to its new Mythos model to get ahead of possible cyberattacks that could wreak havoc.
Sam Vadas and Alex Coffey offer a closer look into headlines that slipped under the main development on the U.S.-Iran ceasefire. Among Sam and Alex's picks: a South Korean-led tech rally and Wall Street gearing up for the true start to a new earnings season.
Today's Executive Summary — April 8, 2026: Market and Industry Outlook Geopolitics and Oil Volatility The US-Iran ceasefire is considered "fragile," as kinetic action continues in the Gulf, keeping the crucial Strait of Hormuz closed. Overnight, oil prices (Brent and WTI) dropped 16%, suggesting potential short-term relief at the gas pump for consumers.
A last-minute ceasefire pulls us back from the brink
Treasury bond trading surged to record daily volumes in March, averaging $1.4 trillion amid heightened geopolitical risks and shifting rate expectations. Primary Dealers now hold a record $510 billion in Treasuries, expanding positions as new SLR standards enable greater balance sheet flexibility.
US stocks surged on Wednesday, capping a powerful global rally after a last-minute ceasefire agreement between the United States and Iran eased geopolitical tensions and triggered a sharp drop in oil prices. The two-week truce, announced by US President Donald Trump just hours before a self-imposed deadline for escalation, helped restore investor confidence after weeks of volatility driven by conflict in the Middle East.
Stocks are surging on a 2-week Iran ceasefire, but is this the all-clear or just a relief rally? What's safe to buy right now?
Comprehensive cross-platform coverage of the U.S. market close on Bloomberg Television, Bloomberg Radio, and YouTube with Romaine Bostick, Katie Greifeld, Carol Massar and Tim Stenovec.
Operator: Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Kura Sushi USA, Inc. Fiscal Second Quarter 2026 Earnings Conference Call. [Operator Instructions]. Please note that this call is being recorded. On the call today, we have Hajime Jimmy Uba, President and Chief Executive Officer; Jeff Uttz, Chief Financial Officer; and Benjamin Porten, Senior Vice President, Investor Relations and System Development. And now I would like to turn the call over to Mr. Porten. Please go ahead. Benjamin Porten: Thank you, operator. Good afternoon, everyone, and thank you all for joining. By now, everyone should have access to our fiscal second quarter 2026 earnings release. It can be found at www.kurasushi.com in the Investor Relations section. A copy of the earnings release has also been included in the 8-K we submitted to the SEC. Before we begin our formal remarks, I need to remind everyone that part of our discussion today will include forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance, and therefore, you should not put undue reliance on them. These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. We refer all of you to our SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition. Also during today's call, we will discuss certain non-GAAP financial measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation nor as a substitute for results prepared in accordance with GAAP, and the reconciliations to comparable GAAP measures are available in our earnings release. With that out of the way, I'd like to turn the call over to Jimmy. Hajime Uba: Thanks, Ben, and thank you to everyone for joining us on our call today. Entering this fiscal year, we knew that the second fiscal quarter will be critical regarding our ability to accomplish our stated goals, expectations and full year guidance. As some of you may have seen in this afternoon's release, our fiscal second quarter was quite strong. We have a lot of good news to share today, including better-than-expected comparable sales and record-breaking labor leverage. So let's jump right in. Total sales for the fiscal second quarter were $80 million, representing comparable sales growth of 8.6% with 4.3% positive traffic and 4.3% of price on the mix. To provide an update on our goal of flat to slightly positive full year comparable sales. Our year-to-date comparable sales growth as of the end of the first half of fiscal 2026 is now 3%. While Q2 is the most favorable quarter in the fiscal year from a comparative perspective, considering our performance to date, we now expect modestly positive full year comps. Cost of goods as a percentage of sales were 30.4% as compared to the prior year quarter 28.7%. The tariff situation remains largely unchanged for us and the [ minorities ] due to the changes in tariff types have been offset by commodity inflation. We continue to expect full-year COGS to be approximately 30%, ever as a percent of sales improved by a remarkable 410 basis points from last year's 34.8% to 30.7%, driven by operational initiatives and better sales leverage. Opportunity from labor initiatives scale alongside seasonal leverage, and it's unusual to see this level of impact in the first half of the fiscal year. Given our progress to date, our initial goal of improving labor as a percentage of sales by 100 basis points has proven to be conservative. Moving on to unit development. In the second quarter, we opened one new restaurant in [indiscernible]. Subsequent to quarter end, we opened four more restaurants, Orange and Union City, California, Goodyear, Arizona and Wellington, Florida. The openings from fiscal '26 are shaping up to be just as strong as fiscal 2025, which was the strongest vintage in recent memory. We currently have 8 units under construction. As some of these have very recently broken ground, our expectation for new openings in fiscal '26 remains at 16 units. On marketing, it's clear that our strategy of reemphasizing our IP collaborations is working. Our [ Kirbi ] collaboration was just as successful as we had hoped and Nintendo is an excellent partner. [indiscernible] evergreen popularity was one of the reasons for our strong performance in February. Our current [ IV ] collaboration [indiscernible] coinciding with the release of the third season. Our next collaboration is with Tamagotchi as part of its 30th anniversary celebration followed by [indiscernible]. They are making meaning introduction of [indiscernible] in our reward program. This is the most meaningful evolution in the reward program since its introduction, and we have to work to create something that will delight both new guests and long time [indiscernible]. Turning to the reservation system. I'm pleased to report that -- it was members using the reservation system, a much higher visitation rate than [indiscernible]. Our two running [indiscernible] under the accuracy of our wait times estimates. And we feel the reservation system has succeeded in addressing the biggest pain point for our guests. We believe that there is further opportunity by raising awareness of the ability to place reservations and [indiscernible] completely. To this end, after opening up reservation to non-reward members, we were able to grow the number of reservations paced by over 30%. On these robots, we continue to expect to retrofit the majority of the 50 restaurants that have the space to accommodate them by the end of the fiscal year. If they have mentioned that our expectation to improve labor by 100 basis points for fiscal '26 does not contemplate the impact of the [indiscernible] robots. We expect the robot to deliver an incremental 50 basis points benefit in fiscal '27 over wherever we land at the end of this fiscal year. It's my pleasure to be able to report such a strong quarter, and I would like to thank our team members at our restaurants and support center for making this possible. Before I turn the call over to Jeff, I want to take a moment to address our announcement today and recognize and thank him personally. It has been an invaluable partner to me and to Kura Sushi over the past 4 years. His strategic insight and financial leadership have been instrumental in our growth journey as a public company. While we will miss his expertise on the partnership, we are grateful for everything he has contributed to our success. This, on behalf of everyone at Kura, we would like to wish you the best of luck and success in your future endeavors. Jeff Uttz: Thank you, Jimmy, for those kind words. It's been an honor and a privilege to serve as CFO of Kura Sushi over the past 4 years. I'm incredibly proud of what we've accomplished together as a team, and I'd like to thank Jimmy, the Board and every member of the Kura family for their partnership and their trust. Now let me walk you through our fiscal second quarter financial results. For the second quarter, total sales were $80 million as compared to $64.9 million in the prior year period. Comparable restaurant sales growth compared to the prior year period was 8.6%, with 4.3% from traffic and 4.3% from price and mix. Comparable sales growth in our West Coast market was 7.2% and 9.7% in our Southwest market. Effective pricing for the quarter was 4.5%. As a reminder, beginning in the first quarter of fiscal 2027, we will no longer provide regional breakdowns for comparable sales as regional comps are largely determined by the timing of infills, and we do not believe they are indicative of overall company trends. Turning now to costs. Food and beverage costs as a percentage of sales were 30.4% compared to 28.7% in the prior year quarter due to tariffs on imported ingredients. Labor and related costs as a percentage of sales were 30.7% as compared to 34.8% in the prior year quarter due to operational efficiencies, pricing and better sales leverage, partially offset by low single-digit wage inflation. Occupancy and related expenses as a percentage of sales were 8.1% compared to the prior year quarter's 7.9%. Depreciation and amortization expense as a percentage of sales were 5.2% as compared to the prior year quarter's 5.1%. Other costs as a percentage of sales were 14.5% as compared to the prior year quarter's 13.5% due to higher promotional and utility costs. General and administrative expenses as a percentage of sales were 13.7% as compared to 16.9% in the prior year quarter. Fiscal second quarter 2026 includes $1.2 million of litigation expenses as compared to $2.1 million of litigation expenses in the prior year. Operating loss was $2.2 million compared to an operating loss of $4.6 million in the prior year quarter. Income tax expense was $51,000 as compared to $38,000 in the prior year quarter and net loss was $1.7 million or negative $0.14 per share compared to a net loss of $3.8 million or negative $0.31 per share in the prior year quarter. Adjusted net loss, which excludes the litigation expense, was $502,000 or negative $0.04 a share as compared to adjusted net loss of $1.7 million or negative $0.14 per share in the prior year quarter. Restaurant level operating profit as a percentage of sales was 18.2% compared to 17.3% in the prior year quarter. Adjusted EBITDA was $5.5 million as compared to $2.7 million in the prior year quarter. And at the end of the fiscal second quarter, we had $69.7 million in cash, cash equivalents and investments and no debt. And lastly, I'd like to update and reiterate the following guidance for fiscal year 2026. We now expect total sales to be between $333 million and $335 million. We expect to open 16 new units, maintaining an annual unit growth rate above 20% with average net capital expenditures per unit continuing to approximately $2.5 million. And we now expect G&A expenses as a percentage of sales to be approximately 12%, excluding litigation expense. And we now expect full year restaurant-level operating profit margins to be between 18% and 18.5%. And with that, I'd like to turn it back over to Jim. Hajime Uba: Thank you, Jeff. This concludes our prepared remarks. We are now happy to answer any questions you have. Operator, please open the line for questions. As a reminder, during the Q&A session, I may answer in Japanese before my response is translated into English. Operator: [Operator Instructions]. And the first question comes from the line of Andrew Charles with TD Cowen. Andrew Charles: I was a bit surprised following the big 2Q same-store sales beat that revenue guidance was inched up. You're looking at consensus forecast, it looks like you're blessing the back half at the midpoint. So does that reflect conservatism in the back half of the year? Or perhaps you can comment on what you're seeing with the new store productivity as well? Hajime Uba: Thank you, Andy, for your first question. But please allow me speaking Japanese. [Foreign Language]. Benjamin Porten: [Interpreted] Charles or Andrew Charles, my grandfather's name is Charles. Andrew, this is Ben. In terms of the guidance that we provided, it really -- it incorporates the better-than-expected performance of Q2. But just given there's a war going on and we don't know how it's going to play out. We felt it was prudent in terms of our guidance just to add the upside from Q2, but not to extrapolate further from that. It doesn't reflect conservatism or pessimism. It's just prudence. Andrew Charles: Okay. Fair enough. And then curious, what drove the improvement in mix to roughly flat? What are you seeing there in terms of attachments or beverages, et cetera, that helped improve that performance? Hajime Uba: [Foreign Language]. Benjamin Porten: [Interpreted]. The biggest factor would be our guests are eating more plates per person. Our interpretation is that this is a reflection of the success of the IPs. When we have compelling IPs, people are that much more incentivized to go for that 15th plate or to hit the spending threshold for our giveaways. Andrew Charles: And Jeff, all the best in your new role. Operator: The next question comes from the line of Todd Brooks with Benchmark StoneX. Todd Brooks: Congrats on a really great quarter. And Jeff, best of luck in your next stop here. So 2 questions, if I may. One, you talked about the margin leverage in this business and kind of the ability to claw your way back towards a 20% restaurant level operating margin without any sort of tariff relief. I think at a recent conference, Jimmy, you talked about some successful negotiations with some suppliers. We saw outsized labor leverage here. I guess, where are we in that journey? And when would you kind of think Kura has the ability to get back to that 20% level? Hajime Uba: [Foreign Language]. Benjamin Porten: [Interpreted]. Todd, this is Ben. So we're very pleased with how the negotiations between [ Jinny ] and our suppliers went. Unfortunately, we've seen higher-than-expected inflation in some of our seafood inputs separately from tariffs. And so the upside to Jimmy's negotiations have largely have been offset. We're thinking of it in terms of thanks to the negotiations, we're able to continue to maintain our expectation of, give or take, 30% COGS for the full year. And so we don't expect that to be accretive to a margin opportunity. The biggest would be, as we look to next year, as Jimmy mentioned in his prepared remarks, the [ DISH ] robots, we expect an incremental 50 basis points in terms of leverage -- or I'm sorry, in terms of labor improvement. And next year, we have a -- previously, we've been saying a 50-50 split between new and existing markets that's actually shifted even more in our favor to 55-45. These -- the new markets have no impact to cannibalization. And so that will be a tailwind for fiscal '27. And all things equal, new markets outperform. And so between those things, we feel very confident in our ability to get back to that 20% without tariff relief. Todd Brooks: In the near future. Benjamin Porten: In the near future, correct. Todd Brooks: Perfect. And then my follow-up question, I'll jump back in queue. If -- and I think, Jimmy, when you were kind of rolling through it, you talked about some future IP partnerships. Can we just review those again so that we pick up the detail behind the upcoming partnerships? And as we're starting to think about, I think at the end of April, this window of IP versus no IP in the prior year and so as we're looking forward into Q3 here, can you remind us what we're comparing against? I just want to -- and just give us a qualitative sense of the strength of the partnerships that you see coming up in the future versus what Kura ran last year. Benjamin Porten: Got it. Todd, this is Ben. So the ones that we have lined up after Jujutsu Kaisen or [ Tamagachi ], which is coinciding with its 30th anniversary. And then we have a partnership with a video game called Honkai Star Rail. In terms of your question, yes, at the end of April, we'll be ending the lapping of the lack of IPs. Starting from the last week of April through May, we had peanuts. And then actually through June, we had peanuts as well. Those months were pretty strong. And then we had hololive, which was a strong performer as well. So that sort of goes back to Jimmy's earlier comment about Q2 being the easiest point of comparison. Please do not model 8% comps on a go-forward basis. Operator: The next question comes from the line of Jeremy Hamblin with Craig-Hallum. Jeremy Hamblin: Congrats on the strong results. I want to revisit just the tariff ruling and in terms of thinking about, obviously, some volatility on sourcing potential for freight costs to be passed through as well given the war. But just in terms of understanding the tariff aspect of your food cost that's embedded here, what's the timing where you would expect, given your kind of forward contracts to potentially have some benefit, all else being equal, are we looking at kind of the June time frame, just given the change in the global tariff rate? Hajime Uba: So I'm happy to answer this question. [Foreign Language]. Benjamin Porten: [Interpreted] Jeremy, this is Ben. So to your point earlier, we do make forward contracts for some of our proteins. Because our basket is so wide, we have the contracts don't expire on the same date, so to speak. They're all sort of overlapping. And so there wouldn't be a moment where we would expect a really meaningful shift. The other thing that [ bears ] mentioning is with the tariffs, while the [ IFA ] tariffs were taken down, they were replaced by other tariffs. And so the relief was really quite minor for us, and this has been offset by fuel costs and just protein inflationary basket. Jeremy Hamblin: Got it. So with that, I wanted to talk about kind of technology investments that you guys have been making, which have had nice success, the reservation system, robotic dishwashing. In terms of other labor initiatives because it looks like you guys have made some really nice progress, tremendous progress on the labor front. Can you talk about with so many tools now available and you guys have really been an industry leader in making technology investments to help make your business operations more efficient. Can you just talk about some of these tools that are available, whether they're kind of AI generative tools to help with labor scheduling or otherwise that provide some opportunity on a go-forward basis, whether it's in FY '26, but more likely in the future, just to potentially really refine the business model. Hajime Uba: [Foreign Language]. Benjamin Porten: [Interpreted] Jeremy, so to give you an update on the robotic dishwashers, we expect to finish the installation of our first 10 or tranche of the first 10 by the end of this month. And so we're very happy with the progress. Very happy to announce that we've actually gotten an approval for American use for technology that we've mentioned in past calls, the Sushi slider. And so this will be limited to new store openings, and we don't expect a straight headcount reduction in the way that we'd expect with the robotic dishwashers, but this will be a margin opportunity, especially for higher volume restaurants on weekends. In terms of the tech things that we're looking at, we're focused a lot on using technology to improve food quality and food consistency. And we're also starting to explore more guest-facing technologies as well that are as focused on efficiency as much as they are focused on fun, which we see as a meaningful opportunity in terms of driving traffic as well going forward. In terms of AI, we're using a couple -- we're using the social media listening tool right now. But I've been assigned AI broadly. I'm the Chair of our new AI committee and this is large -- this is eating most of my time. And so I hope to have exciting updates for you guys in the future. Hajime Uba: [Foreign Language]. Benjamin Porten: [Interpreted]. Yes. Really, it's kind of shocking how meaningful the strides have been and in terms of like the ease of making specialized tools for your business. And so we see a lot of really, really exciting things we can do. One obvious application would be to try to hone in on the batting average of our IP collaborations. That would be something that we'd be really excited about. Jeremy Hamblin: Great. And best wishes to the team and Jeff on his next endeavor. Operator: The next question comes from the line of Jeff Bernstein with Barclays. Anisha Datt: This is Anisha on for Jeff Bernstein. Before my question, I wanted to thank Jeff for 4 years of collaboration and wish him all the best going forward. As you think about bringing a new CFO, what key capabilities or prior experience are most important given Kura's next phase of growth, particularly around unit development, capital allocation or systems as the business continues to scale. Hajime Uba: [Foreign Language] Benjamin Porten: Yes. Anisha, this is Ben. Guest has been such a great partner to us. We really -- we set high expectations for the role, and we're looking for somebody who can satisfy that. And so that's something that our Nominating Committee is working on right now. All those qualifications that you've mentioned. Personally, I would love somebody as charming and charismatic as Mr. Uttz. It's been a lot of fun working with him. And so we're not in a rush to fill the spot for the sake of filling the spot. We know it's a very, very important role, and we're going to give it the appropriate attention. Unknown Analyst: Great. And as a follow-up, you've guided to around 20% unit growth for fiscal '26. So looking beyond that, what gives you confidence that a similar growth rate is sustainable into fiscal '27? And what key guardrails are most important to preserve as the system scales? Hajime Uba: [Foreign Language] Benjamin Porten: [Interpreted] So as it relates to fiscal '27, we already have our pipeline built. And so we feel very confident about our ability to hit that 20% unit growth for fiscal '27. In terms of the gating factors, the way that we've always thought about it would be if our new units are not meeting our expectations, if they're coming in below the average -- the system average for unit economics, that would seriously -- that would cause us to seriously reconsider how quickly we're growing. But as Jimmy mentioned earlier, fiscal '25 is one of the strongest years we've opened in recent memory and fiscal '26 is shaping up very strong as well. And so we're really pleased with that. And we'd like to sustain that 20% unit growth for as long as possible. At the same time, we don't want that 20% to become the tail that wags the dog. And so if it ever -- we would -- we're always looking at it critically. It's not a blind chase of a number. And should circumstances change, we'd like to maintain our flexibility. But for where we have visibility as it stands today, we feel good about that 20%. Operator: The next question comes from the line of Sharon Zackfia with William Blair. Sharon Zackfia: I guess I have 2. The first is kind of going back to one of the initial questions on -- I guess, Jimmy, you said slightly positive comps for the year, and you can kind of get there with no comps for the rest of the year. And I get that there's geopolitical uncertainty and all of that. But are you seeing anything in the business that would suggest that you can't maintain positive comps for the rest of the year? Hajime Uba: [Foreign Language]. Benjamin Porten: [Interpreted] So Sharon, I'm sure you recall the traumatic and unfortunate experience a couple of years ago where we raised guidance. And then in a number of weeks, we had to lower guidance below the initial guidance. And that sort of informed a level of conservatism in the way that we provide guidance ever since. But having had that lesson and knowing today that the President has like a deadline and we don't know what's going to happen, it just seems irresponsible to get ahead of our skis. And so the guidance reflects what we're seeing to date and what we're confident that we can hit. Hajime Uba: [Foreign Language]. Benjamin Porten: [Interpreted] And we're pleased with how the quarter is going so far. Hajime Uba: [Foreign Language]. Benjamin Porten: [Interpreted] Just looking at how the environment is, we're pleased with how things are proceeding. Sharon Zackfia: Okay. Second question is it may have been causal or may have been coincidental, but it certainly felt like the company got a lot more disciplined around G&A when Jeff joined the company. And I guess I'm curious, like do you think now that's part of the muscle memory of the company and ingrained that you will seek G&A leverage on an ongoing basis even as Jeff departs. And again, sorry, I see you go, Jeff. Jeff Uttz: Thanks, Sharon. I mean I'll let Jimmy and Ben address going forward. But we made a lot of strides. I'm proud of the team. I was fortunate to be in the driver's seat for the G&A reduction and kind of lead the charge, but the team really stepped up and over 400 basis points in just over 3 years is quite a bit when you kind of multiply that by the trading multiples and all that is quite a bit to our valuation that I'm quite proud of. Going forward, as Jimmy said earlier, as they search for a new CFO, they're not going to rush it. And it humbles me and makes me feel proud that the company thinks of me the way that they do. And I wish them the best, and I'll be on the sideline continuing to watch what they do. And I hope that the new CFO continues to lead this to a single-digit G&A at some point, as I have promised in the past. Hajime Uba: [Foreign Language]. Benjamin Porten: [Interpreted]. Jeff has carved such a clear and sustainable path forward for us that we absolutely expect to continue to leverage G&A, and that's going to be one of the primary mandates for whoever becomes the next CFO as much as I would love to double my salary, we know that there are more prudent ways to spend our money. It's just -- it's one of the things that our investors have come to expect. It's part of our guidance. And so it's just -- it's part of our report card at this point. And so Jeff meeting doesn't change that. Operator: The next question comes from the line of Mark Smith with Lake Street Capital Markets. Mark Smith: I wanted to dig into the comp just a little bit. I'm sorry if I missed any update on this. But can you guys speak at all to March? And maybe as we saw gas prices rise, any changes in consumer behavior and potentially in the past, if gas prices have had a significant impact on your consumer, whether it be the plates that they eat or traffic trends? Hajime Uba: [Foreign Language]. Benjamin Porten: [Interpreted] So as Jimmy mentioned earlier, we're happy with how the quarter-to-date is going. As it relates to gas prices, [indiscernible] And I were in California, gas prices were $6. Whether we're talking about Kura or any other company, it would be bullish to think that this would not have an impact on the consumer. That being said, we are pleased with performance. And yes, that's where we are. Mark Smith: Okay. Last question for me is just around cadence of openings as we look at the back half of the year, the remaining restaurants to open, will these be more heavily? I know you've got 4 open, but should we look for the rest of those kind of in Q4? Or can you squeeze more in here in Q3 or even early in Q4? Hajime Uba: [Foreign Language]. Benjamin Porten: [Interpreted] There are a number of stores that we're hoping to open up in Q3, but it's -- for modeling purposes, it's -- we think it's safe to assume back half weighting relative -- Q3 relative to Q4. Operator: The next question comes from the line of Jim Sanderson with Northcoast Research. James Sanderson: Jeff, best of luck in your new opportunity. I wanted to go back to seafood inflation and more broadly food costs. Is there any concern that we're going to start seeing or hearing about fuel surcharges or incremental invoice impacts from aviation fuel increases or diesel fuel in the next couple of quarters? Jeff Uttz: Jim, it's Jeff. I've been really deep into this as I finish up here really watching this. That is a possibility. Fuel surcharges are something that the delivery companies like to impose. I did ask our supply chain team. We haven't seen a lot of it lately, just a handful, but that is a possibility. It does happen, obviously, when fuel goes up. We push back on those. And I see I've had these before at other companies, and I don't just accept them. I push back and say, look, that's the cost of doing business. If you want to adjust your prices, go ahead, but they typically don't. And they will usually allow you to cross out those line items on the invoice. And I've been pretty successful with that in the past. That being said, as Jimmy mentioned earlier, there's just a lot of puts and takes in food cost right now with what's going on in the world. And that's why we've kept our guidance at the 30%-ish number for the year. And we think with all the negotiations, minus anything that's going on with fuel and delivery costs and all that, we remain pretty confident in that 30% number as to where we sit right now for the year. Hajime Uba: [Foreign Language]. Benjamin Porten: [Interpreted] So just to add on to Jeff's comment, we're very, very proud that we've been able to keep our cost of goods sold at 30%, all things considering. When you look at our Q2 comps, half of that being driven by traffic. We see this as vindication of our strategies. The 4.5% effective pricing that we're running as of November translates to roughly $1 per person. And we know that our direct competitors, the individually owned sushi restaurants, there's just no way that they're able to keep the doors open by charging just one extra dollar per person. And that value delta has become clearer and clearer to our guests. And so this dynamic isn't fun, but it works in our favor. And as incremental pressures arise, again, it won't be fun, but it will work in our favor. Hajime Uba: [Foreign Language]. Benjamin Porten: [Interpreted] And we're really happy that we -- as we see the year now, we feel that we have no need to take further prices. James Sanderson: Okay. And that assumes about 4%, 4.5% for the fiscal year for price? Hajime Uba: [Foreign Language]. Benjamin Porten: [Interpreted] It will be a little bit below 4% on a full year basis. James Sanderson: Last question for me. I think last year, you reported about a 500 basis point negative impact because of wildfires and other issues. If we peel that off the 8.5% the comp you reported, is that a good run rate for where you think you are trending March, April to date? Hajime Uba: [Foreign Language]. Benjamin Porten: [Interpreted] Ben, unfortunately, we had weather as well this year. And so the comps are so good that it doesn't seem obvious, but we did have pretty significant winter weather that impacted our sales. And so the 400 to 500 basis points, while that was -- that's not a 400 to 500 basis point tailwind this year, it's more like a 200 basis point tailwind. James Sanderson: Okay. Okay. So again, maybe I can ask it one last. How should we think about the performance in the back half relative to the guidance, low single digits, just kind of bridging that gap? Hajime Uba: [Foreign Language]. Benjamin Porten: [Interpreted] We don't like to make it a practice of giving quarterly guidance. And just given all the moving parts, we feel it's especially not a good time to try to give quarterly guidance. But we did provide a guidance update at the beginning of this call and all that incorporates everything that we've seen to date. Hajime Uba: [Foreign Language] Benjamin Porten: [Interpreted] And to reiterate, we're happy with how Q3 has performed so far. Operator: The next question comes from the line of George Kelly with ROTH Capital Partners. George Kelly: First, Ben, in response to one of the earlier questions, you mentioned there being opportunity for tech enhancements around food quality and consistency. I don't know how much you're going to want to say on today's call, but can you provide a little more detail just on where you think there could be opportunity there? Hajime Uba: [Foreign Language] Benjamin Porten: [Interpreted] So the 2 that are on the docket right now, one is managing our broth. And so we make all of our broth, all of our stock from scratch every morning. During my trading period, I was responsible for doing this. So this is near and dear to my heart. But you make the broth in the morning. And if you're keeping it warm, it evaporates. And so it gets progressively more concentrated and bitter. And so we have this technology that we use in Japan that allows it to stay fresh all day long. And so we're really excited to bring that over and make sure that we have very consistent quality on what we see as one of the most important things about our restaurants being our broth. The other that we're working on is -- so we have a sear station for like the seared mayo salmon, for instance. We do that by hand right now, but we're working on automating that. And so that will give us much greater consistency, probably a little bit in labor savings, but that's mostly a food quality effort. George Kelly: Okay. Okay. Helpful. And then 2 other quick ones. litigation expense, what are your expectations for that in the coming quarters? Should it stay kind of consistent with what you just did? I think it was $1.2 million in the quarter? And then second question on labor. I may have missed it, but did you provide more specific like an updated guide for the year on labor? And that's all I had. Hajime Uba: [Foreign Language] Jeff Uttz: Sorry. I'll address the litigation one, George, and then Jimmy can jump into the labor side. On the litigation, I mean, unfortunately, this is just a negative byproduct of doing business in California. And any of the restaurant companies that you follow or anybody else follows, you get sued in California for just wage and hour stuff regardless of how buttoned up your system is. So what are my expectations? My expectations are to never be sued because I think we're very buttoned up. But it just happens in California, and it's an unfortunate thing. So I would like to tell you that they're done, but we just don't know. But I will assure you that our employment -- the practices that we employ in terms of employment and wage and hour law are some of the best that I've ever seen, but you just can't get away from it in California. So that's where I'd leave it. I'm hopeful that we won't see any more, but you just never know. Hajime Uba: [Foreign Language] Benjamin Porten: [Interpreted] George, as it relates to labor, we're not expecting 400 basis points in leverage in the coming quarters. There were a lot of idiosyncrasies to Q2 that led to that 400 basis points. But we do think that for Q3 and Q4, we can improve labor year-over-year by about 150 basis points. And so we're looking forward to giving you guys updates on that. Operator: The next question comes from the line of Matt Curtis with D.A. Davidson. Matthew Curtis: I just had another one on the reservation system. Jimmy, in your comments, I think you mentioned that it was driving a much higher visitation rate. So just wondering if you've seen any sales lift from increased usage of the reservation system. I mean I think you guys previously said you've not been explicitly baking in any sales upside from this. I just wanted to see if this is still the case or not. Jeff Uttz: Yes. Our internal estimate is that the reservation system has contributed about 1%. And so we're very pleased, especially given the headcount reduction's already delivered. Matthew Curtis: Okay. Great. And one last one for me. I think you had a gap in your IP collaborations in -- for the first 2 weeks of March due to some inspection issues, I believe it was. Could you maybe just provide a little more detail around this and whether you think it's more of a one-off or something that could potentially reoccur? Jeff Uttz: This has actually never happened before in our history of being in the United States. And so we really had no reason to expect it. We don't expect it to happen again. We're not sure why it happened this time, but we think it's one-off. Hajime Uba: [Foreign Language] Benjamin Porten: [Interpreted] So while we weren't happy that this happened, we don't really see it as a meaningful headwind just given that the overwhelming upside and response opportunity for the IP collaborations tends to be the first 2 weeks. And so it's not like we lost those first 2 weeks. We just pushed them back by 2 weeks. And so if we lost anything, it would been the last 2 weeks of the campaign, which tailwind comparison to the first 2 weeks. And so it's unfortunate, but it's not as much of a headwind as it might sound like. And to reiterate, we're happy with Q3. Operator: The next question comes from the line of Jon Tower with Citi. Jon Tower: Just curious, I noticed that you guys during the quarter did a sushi lunch combo. I think it was $13.99. And it wasn't something that's seen before, but I think it's something you've done in the past, just not in recent memory. So I'm curious, one, how consumers responded to it? Two, did it end up impacting your mix at all or traffic during that lunch period? And is this also a sign of something that you feel comfortable with using again in the future? Hajime Uba: [Foreign Language] Benjamin Porten: [Interpreted] So this is something that we've done every winter. We usually do some sort of combo with our soups and our noodle dishes. We think they're really good, and we just -- we want to give people opportunities to -- for reasons to try them. And so that's something that we've done every year. It has an impact, but it's not really a big needle mover. We'll probably do something similar in the summer as well, not for soups, but we don't expect it to be a big needle mover. Hajime Uba: [Foreign Language] Benjamin Porten: [Interpreted] [indiscernible] And Jon, it's really -- it's great to see how successful the IPs have been working. But we don't want to be entirely reliant on IPs. And so to that end, we've been working on a lot of LTOs even going above and beyond the core reserve. For instance, in March, we had a campaign called Wagyu of the Seas. It's very high-quality Toro. And yes, we just -- we've got a pretty good calendar in terms of reasons to come in. Jon Tower: Got it. I appreciate that. And I got to the stores more frequently to make sure I can understand what's new and what's not. But I guess you had mentioned earlier, obviously, that this year, you've been pretty disciplined on pricing and that the competitive set is likely going to have to pass along a lot more pricing than what you guys are planning to do for the year. One, have you seen that happen anecdotally based on your own work that you've done? And then two, have you seen any signals that because of the price increases or potential price increases from the competitive set that consumers are pushing back and/or like there's risk that these other chain -- these other stores might have to close their doors because traffic is just not showing up the way that it should? Jeff Uttz: It's possible. I mean this is a dynamic that's played out twice before, at least with my time at the company, once during the pandemic and once during the post-pandemic supply chain issues. It's always been a traffic boon to us. The reason that we are interpreting -- the reason for this interpretation would really be -- we took 3.5% price on November, but our traffic accelerated. And so we don't think there'd be a reason for that if it weren't clear that the value is amazing. And anecdotally, yes, we are seeing it. You'll be able to confirm the same thing just by looking at Yelp menus and going back historically and seeing their current menus. And I think you might be surprised. Jon Tower: Got it. And are you guys highlighting that in any of the social or digital marketing that like how can you communicate that to guests without... Jeff Uttz: That's a tricky message. Everybody is raising price but us. It's not a good slogan. Hajime Uba: [Foreign Language] Benjamin Porten: [Interpreted] One thing that we do is target marketing, especially if we're able to see that the competitive set in that local market has taken price pretty aggressively. We can spend incremental advertising dollars there just to get eyeballs, and that's always -- that's worked pretty well. Another tool, we just talked about the Wagyu of the Seas, but that makes it easier for guests to make a direct comparison with higher-end sushi as well. And if they're not impressed by the salmon, getting the Bluefin Toro for $4 is impressive. And so it serves the dual purposes, these LTOs. Operator: Thank you. This concludes today's question-and-answer session, and this will also conclude the conference as well. You may all now disconnect your lines at this time, and we thank you for your participation. Have a great day, everyone. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]
Operator: Ladies and gentlemen, welcome to the Fourth Quarter and Full Year 2025 Financial Results. My name is Joseph, the Chorus Call operator. [Operator Instructions] This conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or for broadcast. At this time, it's my pleasure to hand over to Sarah Fakih, Head of Global Communications and Investor Relations. Please go ahead. Sarah Fakih: Thank you, Joseph. Good morning, good afternoon, and welcome to today's webcast and conference call. My name is Sarah Fakih, and I'm the Head of Global Communications and Investor Relations at Evotec. Please allow me to introduce today's speakers. Joining me on the call are Christian Wojczewski, Chief Executive Officer of Evotec; Paul Hitchin, our Chief Financial Officer; and our Chief Scientific Officer, Cord Dohrmann, will be available for the Q&A session. Please note that this call is being webcast live and will be archived in the events calendar on our website. Before we begin, a few forward-looking statements. The discussion and responses to your questions on this call reflect management's views as of today, Wednesday, April 8, 2026. During this call, we will make statements and provide responses that state our intentions, beliefs, expectations or projections regarding the future. These statements constitute forward-looking statements within the meaning of applicable securities laws. They are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied. Evotec disclaims any intention or obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances. For further information regarding these risks and uncertainties, please refer to our public filings and disclosures. With this, let me hand over the call to Christian. Christian Wojczewski: Thank you, Sarah. Good morning, and good afternoon to everyone. Thank you for joining today's call. Let me start with the headline results for 2025 and the first months of 2026. '25 was a year of significant progress for Evotec as we laid critical groundwork for the company's next chapter of sustainable and profitable growth. Throughout a persistently challenging market environment, we remained anchored in the strength of our science and the dedication of our teams, which continue to be the foundation of our performance. Building on these fundamentals, we introduced a new company strategy in 2025 that defined our priorities and now guide the transformation work underway in 2026 and beyond. Our four levers of midterm value creation, scientific leadership, operational excellence, better monetization of Just-Evotec Biologics and capturing pipeline value have already translated strategy into targeted action. As a result of this work in 2025, we have delivered more than EUR 60 million in annualized cost savings, streamlined our asset pipeline and reduced our capital expenditure by around 60%, important steps that have strengthened our balance sheet and our financial resilience. Against the challenging market backdrop of 2025, financial results were at the high end of our guidance range and Paul will go into more detail on that later in this presentation. Both segments of Evotec business have contributed to our progress in the past year. Discovery and Preclinical Development continued clinical advancement across partner programs, delivered milestones and underscored the productivity of our platforms despite continued softness in early-stage biotech funding. Just-Evotec Biologics delivered a breakthrough year supported by the landmark agreement with Sandoz and continued progress across global health programs. And last month, we kicked off our Horizon initiative, a comprehensive transformation of our operating model. We are already making substantial progress across the three Horizon pillars of operations, science and commercial execution. The last of which recently saw the appointment of a new Chief Commercial Officer, reinforcing our commitment to building a more agile, customer-focused organization. As Horizon implementation continues, we expect to see the first structural and financial benefits in the second half of 2026. Turning to the progress in our Discovery and Preclinical Development segment on Slide 5. We saw robust clinical and scientific advancement over the past 12 to 18 months, across key therapeutic areas, including oncology, neurodegeneration and kidney disease, as well as exciting developments in emerging modalities such as condensate modulation. During this period, and as already reported during our Q3 results in November 2025, two partnered assets moved into Phase II clinical studies. Since then, a partnered preclinical asset advanced to a first in human Phase I study, bringing our partnered clinical portfolio to a total of 2 programs in Phase II and 5 programs in Phase I. Let me briefly highlight the progress within some of our key alliances. In our cancer protein degradation collaboration with Bristol Myers Squibb, we are jointly developing a broad pipeline of next-generation molecular glue degraders, a revolutionary modality with a potential to target previously undruggable disease-causing proteins and an area in which BMS is the clear industry leader. The first candidate progressed from IND acceptance in November 2025 into a Phase I clinical study in March 2026 in advanced clear cell renal cell carcinoma, the most common form of kidney cancer. These advancements, which validate the strength of our screening and AI-supported analytical platforms resulted in milestone payments of $5 million and $10 million, respectively. In our neuroscience partnership with BMS, we achieved continued progress across a jointly developed preclinical pipeline focused on therapies for neurodegenerative disorders, triggering a $25 million milestone payment in October 2025. Lastly, in our kidney disease partnership with Bayer, a Phase II clinical study in Alport syndrome, a rare genetic kidney disease was initiated in December 2025, underscoring our discovery and translational capabilities in renal conditions. The momentum across these collaborations highlights our ability to translate our outstanding science into a successful clinical [indiscernible]. It validates our platforms and carries through on our fourth strategic lever, capturing pipeline value as assets advance to generate meaningful financial upside. Looking ahead, we expect the total number of assets in Phase II to have grown from 2 to 4 during 2026. Turning from our small molecule business to biologics, let me give you an overview of our Just-Evotec Biologics segment on Slide 6. 2025 was a breakthrough year for JEB defined by a strategic pivot away from a capacity-constrained manufacturing model toward an asset-lighter technology-focused partner enablement model. This evolution centered on our highly differentiated continuous manufacturing platform is reflected in the news flow throughout the year, featuring technology-enabled partnerships and significant progress in global health programs. However, the defining milestone for JEB was the completion of our strategic agreement with Sandoz, which closed in December 2025. The agreement is valued at $650 million with additional royalty potential for 10 biosimilars, the sixth most advanced of which have an originated value of about $92 billion. Further recent developments include a multi-year BioMaP-Consortium award of up to $10 million from the U.S. government, Biomedical Advanced Research and Development Authority. The program aims to optimize the biomanufacturing of monoclonal antibodies against Ebola and Sudan viruses, strengthening preparedness for hemorrhagic fever outbreaks. In January 2026, we also expanded our long-standing collaboration with the Gates Foundation, receiving a new grant supporting 10 new molecule design projects over the next 3 years. These projects apply our AI and computation-driven J.MD platform to improve antibody developability and advanced access to affordable biologics. Taken together, these advances show how JEB is evolving into a high-margin, technology-driven business with durable long-term value creation potential firmly validating JEB as a core pillar of future growth ambitions. Let me now hand over the call to Paul to walk you through our financial results. Paul Hitchin: Thank you, Christian, and a warm welcome from my side as well. On Slide 7, you can see our condensed income statement is in line with the preliminary unaudited financial results we provided as part of the Horizon Communication on March 10, 2026. For the fourth quarter of 2025, group revenues increased by EUR 32.1 million or 14.5% to EUR 253.3 million. And for the full year 2025 decreased by EUR 8.6 million or 1.1% to EUR 788.4 million compared to the same period in 2024. On a constant currency basis, Q4 revenues grew by 21% and full year revenues grew by 1.7% compared to 2024. While the broader CRO market showed early signs of recovery in 2025, the environment for early-stage drug discovery remained challenging. As a result, the full year revenue decline was primarily driven by lower revenues in our D&PD segment, where revenues declined by EUR 27.3 million or 16.6% to EUR 137.1 million for the fourth quarter and by EUR 82.5 million or 13.5% to EUR 528.9 million for the full year compared to the prior period. Unfavorable foreign exchange movements represented an additional headwind to full year revenues of 2.8%, driven by the U.S. dollar and British pound. However, those effects were largely offset by strong performance in Just-Evotec Biologics segment, including the positive contribution from the Sandoz transaction in the fourth quarter of 2025. Revenues within Just-Evotec increased by EUR 59.4 million or 104.2% in quarter 4 and by EUR 73.8 million or 39.8% and to EUR 259.4 million for the full year 2025 compared to 2024. This growth was driven by the continued progress in the Sandoz partnership, including an incremental contribution from a license payment of approximately EUR 65 million in the fourth quarter. While revenues from the U.S. Department of War-related activities declined in the second half of 2025, following announced budget cuts, revenues of our non-Sandoz and non-DoW customers continue to grow by more than 60% in the full year. Fourth quarter costs in Just-Evotec were temporarily elevated versus the underlying run rate driven by additional expenses associated with the Sandoz transaction and temporarily higher material costs, both of which are expected to normalize early 2026. In line with our guidance, R&D spending decreased further and amounted to EUR 37.5 million or 4.8% of total revenue for the full year 2025 compared to EUR 50.9 million or 6.4% of total revenue in 2024. Investing in our technologies and platforms remains a core part of the strategy and we will continue to allocate capital to scientific capabilities and technology leadership while maintaining a balanced investment approach in a challenging macroeconomic environment. Adjusted group EBITDA increased by EUR 29.5 million or 103.6% to EUR 58 million in the fourth quarter and by EUR 18.5 million or 81.9% to EUR 41.1 million for the full year of 2025 compared to the same period in '24. Adjusted EBITDA in the D&PD segment decreased by EUR 12.6 million to EUR 6.8 million in the fourth quarter and by EUR 24.7 million to minus EUR 12 million in 2025 primarily driven by the aforementioned lower revenues, which contracted faster than the cost base, creating internal overcapacity and weighing on segment profitability, underscoring the need for the operational transformation program recently announced as part of Horizon. Adjusted EBITDA in the Just-Evotec segment increased significantly by EUR 42.1 million or 463% in the fourth quarter and by EUR 43.3 million or 443% to EUR 53.2 million in 2025 compared to the prior periods. This strong result reflects continued progress in the validation of our continuous manufacturing technology as well as favorable shift in revenue mix towards higher margins and an asset-lighter technology enablement model. Turning to liquidity and the balance sheet on Slide 8. We closed 2025 in a solid position. At year-end, cash liquidity stood at EUR 476 million, representing a strong balance sheet with a net cash position. The improvement in our cash liquidity reflects disciplined financial execution, including the monetization of technology leadership through Just-Evotec Biologics, the realization from maturing equity stakes including the upfront payment from the sale of our minority stake in Dark Blue Therapeutics and our continued shift toward a capital-efficient operating model with CapEx spend reducing 38% year-on-year. Importantly, we entered 2026 with no active financial covenants, providing us with a high degree of financial flexibility. Now let me hand back to Christian, who will provide an update on some of our key revenue impacts. Christian Wojczewski: Thank you, Paul. To further contextualize our 2025 results and frame the trajectory into 2026 and beyond, let me briefly address one of our key strategic levers, our long-standing partnership with Bristol Myers Squibb. From 2016 to the end of 2026, our two BMS collaborations in urology and oncology are expected to have generated close to EUR 800 million in cumulative revenues. At their peak, they accounted for more than 20% of group revenues making BMS one of the most significant and successful strategic relationships in Evotec's history. With this partnership, the oncology collaboration today represents a larger contributor to BMS-related revenues. As illustrated on Slide 9, it has evolved through distinct phases from platform built out to expansion and now into portfolio maturation. These phases are characterized by alternating periods of investment and harvest, which are naturally reflected in corresponding changes in revenue contribution. Since the peak in 2023, revenues from the oncology collaboration have declined by more than 1/3 over the 2023 to 2025 period. This reflects a shift into a renewed investment phase focused on molecular glues and areas of exceptionally high scientific and commercial potential. While this transition has temporarily increased cost intensity and weight on D&PD profitability, it does not signal a weakening of the collaboration. Rather, it reflects the cyclical nature of a large multi-program discovery alliance. Looking ahead, it's important to recognize that the collaboration is already creating value in its current phase with a focus on building scientific depth and portfolio quality. While this phase continues to require investment, the scientific value being created today is expected to translate into renewed revenue growth and improved margins. Importantly, this fluctuating profile is expected to evolve as programs progress through the clinic. With the first joint asset having recently entered Phase I, clinical stage programs are expected to progressively complement the base business from 2027 onwards. This clinical progression will have smooth revenue fluctuations, add new growth drivers and support the margin expansion underpinning our midterm framework, which Paul will discuss in more detail later in the presentation. Continuing on Slide 10, I would like to address the second factor that significantly impacted our '23 to '25 revenue profile, alongside our BMS collaboration, the evolution of our EVOequity strategy. Between 2016 and 2022, we invested approximately EUR 200 million to build up an investment portfolio of approximately 40 early-stage biotech companies. The objective was to gain early access to innovation while generating revenues to our role as an operational and scientific partner. At its peak, this portfolio generated close to EUR 100 million in annual revenues. As these companies advance into clinical development, their strategic relevance for Evotec naturally declined. This was accompanied by a reduction in our operational involvement and consequently lower revenue contribution. We've, therefore, moved decisively into the monetization phase of this strategy. Following the divestment of recursion, generating proceeds of nearly $70 million at the end of 2024 and additional access throughout 2025, we have significantly reduced our equity exposure. As of year-end 2025, 29 investments remain with our strategic focus shifting from revenue contribution to value realization. These divestments represent pure upside for Evotec. Recent transactions include the sale of our stake in Dark Blue Therapeutics following its acquisition by Amgen in a deal valued at approximately $840 million, generating an initial cash consideration for Evotec of around $13 million. In addition, the recently announced sale of Toulouse in a transaction valued at approximately $5 billion is expected to deliver cash proceeds of around $100 million to Evotec at closing. In both cases, the upfront amounts are complemented by meaningful contingent milestone payments of more than $150 million, providing additional future upside. EVOequity is transitioning from a cash out to a cash realization model. As operating involvement declines by design, the associate [indiscernible] will fade away in 2026 and beyond as we wind down the portfolio. On Slide 11, let me briefly remind you of Horizon, our major operating model transformation and a core element of Evotec's value-creating strategy. We introduced the Horizon transformation earlier this year to implement a new and focused operating model built across the three pillars of operational excellence, scientific leadership and commercial execution with the goal of creating a more agile, more focused and more competitive Evotec. Under the operational excellence pillar, we are streamlining our footprint from 14 to 10 sites in '26 and '27 with planned closures of sites in Abingdon, Munich, Lyon and Framingham. This continues our shift from a dispersed multisite structure to a focused network. The footprint optimization also anticipates a reduction of approximately 800 positions across affected locations and enabling functions, a necessary step to align capacity with demand and reinforce execution discipline. Under the scientific leadership pillar, Horizon will consolidate key capabilities into dedicated centers of excellence, each with clear mandate and end-to-end accountability, strengthening our ability to deliver integrated high-quality signs. And finally, under the commercial execution pillar, we're expanding our commercial organization and upgrading how we engage with customers under new leadership. Following the appointment of our new EVP and Chief Commercial Officer, we will accelerate growth, drive a more integrated go-to-market model and increase strategic partner engagement to improve our win rates across high-value mandates. We're now progressing at pace through the required legal and regulatory processes to deliver a structural run rate savings of approximately EUR 75 million by the end of 2027. These savings primarily reflect a structurally lower cost base resulting from targeted workforce reductions and reduced footprint related to overheads as we consolidate our global operations. We expect between 20% and 30% of the total savings to materialize in 2026, with the remaining majority becoming visible in 2027. Horizon is a defined time-bound realignment with a clear end state. We plan to execute swiftly and only once. Importantly, we do not expect material disruption to ongoing customer and partner programs. In the context of expanding our commercial organization under new leadership on Slide 12, we are very pleased to welcome Dr. Ashiq Khan as our new Chief Commercial Officer. Ashiq joined Evotec at the beginning of April, bringing more than 15 years of international leadership experience across biotech, COO and AI-driven discovery platform companies. He has closed multibillion-dollar agreements and led business expansion in markets around the world, including several years at Schrodinger where he helped advance AI-enabled drug discovery partnerships and closed major strategic pharma agreements. With a strong track record of driving growth and closing high-value deals worldwide, Ashiq will lead the build-out of a globally integrated fit-for-purpose commercial organization at Evotec. Let me now show you on Slide 13 how our leading commercial indicators are beginning to move in the right direction. It's a new commercial organization we're putting in place is gaining traction. The selected indicators shown here are ordered along the commercial funnel from early customer engagement through to net sales progression and provide us with an early view of business momentum ahead of reported revenues. Over the course of 2025, and into early 2026, we have seen a strong decrease in negative change orders. At the same time, the number of proposals submitted to customers in our Discovery segment has steadily increased reaching levels around 50% higher than at the start of 2025. While this reflects improved commercial outreach and a more systemic engagement with customers, activity in preclinical development has not yet achieved the same momentum, reflecting a low number of fully integrated discovery to development customer engagements. In parallel, the aggregated value of the proposals in the Discovery segment has increased. Streamlining our sales and delivery processes has further led to improvements in execution metrics. Proposal turnaround times have been significantly shortened. And these improvements are translating into better order dynamics and reinforce our assessment that the new commercial organization is operating more effectively. These leading commercial indicators are now feeding through to sales performance. D&PD sales orders declined in 2024 and reached a trough mid of 2025. They recovered towards the end of the second half of 2025 and have since stabilized above early 2025 levels. Today, we are seeing our deal pipeline growing with increasing interest from potential partners. Looking forward, our differentiated technology platforms are expected to enable a higher number of strategic technology-driven deals starting in the second half of 2026. While it is still early, we see initial indicators of recovery and the commercial transformation in D&PD being on track. Let me hand back to Paul to provide an overview of our path to sustainable growth in 2026 and beyond. Paul Hitchin: Thank you, Christian. On the next few slides, I'd like to take you through the building blocks of our 2026 outlook and how the measures we've discussed today translate into our medium-term framework. Let me begin with our full year 2026 outlook on Slide 14. As outlined in our Horizon communication on March 10, we view 2026 as a transition year with Horizon measures phasing in over the course of the year. For the full year, we guide toward the group revenues of approximately EUR 700 million to EUR 780 million and incurred foreign exchange rates and EUR 730 million to EUR 810 million at constant exchange rates. Adjusted group EBITDA is expected to fall within the range of approximately EUR 0 million to EUR 40 million of incurred foreign exchange rates and EUR 10 million to EUR 50 million at constant exchange rates. Turning to the phasing of the year. The first half of 2026 will reflect transformation actions already initiated under Horizon. While we see an improvement in our commercial indicators, we still expect a weaker first half driven by the continuation of early drug discovery market softness seen in 2025 and the nonrecurrence of the $25 million Sandoz license that contributed to the first quarter of 2025. In the second half of the year, we expect a strengthening profile, driven by an increasing number of strategic partnerships and a market recovery. Looking at the segments, Just-Evotec Biologics is expected to maintain a strong underlying growth, recognizing the nonrepeat of the EUR 65 million Sandoz license payment in the fourth quarter of 2025. Non-Sandoz and non-DoW activities are expected to grow by about 40% for the full year of 2026. This more than offset the expected continued decline in the DoW-related revenues following the announced budget cuts and foreign exchange headwinds. In D&PD, we expect soft stand-alone revenues in the first half of the year, with a recovery to low single-digit growth in the second half. In addition, we expect our strategic technology-driven partnerships, to contribute more visibly in the second half, creating incremental commercial opportunities supported by our differentiated platforms. Taken together, these effects are expected to bring full year D&PD revenues into the low to mid-single-digit growth range. For the full year 2026, foreign exchange is expected to represent approximately 3.5% headwind to group revenues. Beyond revenues, operational improvements resulting from the Horizon transformation are expected to become increasingly visible in the second half of 2026, with roughly 20% to 30% of the EUR 75 million in structural run rate savings expected to materialize in the second half of 2026. In addition, removal of the cost drag from the sale of the [ Just-Toulouse Site ] will benefit our Just-Evotec Biologics business contributing an estimated EUR 20 million year-on-year improvement in segment earnings. Having discussed our full year 2026 guidance, let me now broaden the time horizon. And on Slide 15, briefly remind you of our new midrange framework through to 2030, which we announced in March 2026. This framework reflects the phased trajectory from 2026 to 2030 and is designed to align the timing of Horizon transformation measures with the expected evolution of the revenue mix across our two business segments. Within our multi-stage horizon transformation journey, focusing on commercial excellence, operational simplification and technology leadership, we expect group revenues to grow to more than EUR 1 billion for 2030, with an adjusted EBITDA margin expected to reach 20% by 2028 and exceed that level by 2030. The midterm margin progression is supported by a combination of external recovery and internal structural improvements. Externally, we expect the early-stage discovery market to continue normalizing as industry innovations rebound. Internally, the trajectory is driven by the recurring structural savings from Horizon, a continued shift towards higher margin and more capital-efficient revenue streams and increasing operating leverage as growth and productivity resume. The key drivers and building blocks that underpin the anticipated midterm margin expansion are illustrated on Slide 16. We see the D&PD segment growing at high single digits from 2026. This reflects both the stabilization of early-stage drug discovery market and the transition into the realization phase of our BMS collaboration, which will contribute approximately 50% of the expected D&PD earnings growth between 2026 and 2028 as jointly developed assets progress into and through the clinic. The Horizon cost reductions across our operating capacity, footprint and SG&A are expected to contribute 9 percentage points of margin expansion. As previously noted, we expect to reach the full run rate effect of these savings by the end of 2027. In the Just business, the continued expansion of our customer base, together with new revenue streams from the proprietary platform components such as our cell line, cell culture media as well as license opportunities support ongoing margin expansion. These building blocks take us to the expected 20% adjusted EBITDA margin by 2028. Further margin expansion is then projected to come from improved levels of automation and productivity, notably in our D&PD operations, post 2028 margin expansion in the Just-Evotec business is additionally reflecting royalties for the commercialization of the 10 biosimilars under the recent Sandoz transaction. With this, let me hand the call back to Christian. Christian Wojczewski: Before we sum up today's presentation, I would like to share an important governance update. Evotec's Supervisory Board has proposed Dieter Weinand for election as new Chairman at our new Annual General Meeting on June 11, 2026. Dieter is a highly respected industry veteran with more than 3 decades of global pharmaceutical experience. He has held senior executive roles at companies including Bayer, Pfizer, Bristol Myers Squibb and Sanofi and most recently served as President, CEO and Chairman of Bayer Pharmaceuticals. He brings deep commercial expertise, a strong track record of driving performance and disciplined execution as well as extensive board and governance experience. This makes him very well positioned to support Evotec in its new phase, particularly as we sharpen our focus on [indiscernible] and profitability. At the same time, I would very much like to express our sincere gratitude to Professor Dr. Iris Low-Friedrich for outstanding leadership and long-standing commitment as Chairwoman of the Supervisory Board, and for the important role she has played in shaping Evotec's strategic development. Before we turn to your questions on Slide 18, let me briefly summarize the key takeaways from today's presentation. 2025 demonstrated that Evotec can deliver with discipline closing the year at the high end of guidance through strong execution, cost control and CapEx discipline even in a challenging environment. At the same time, Horizon provides a clear and actionable path towards sustainable profitable growth through 2030 with structural optimization and a more focused operating model. As part of this transformation, we have strengthened our commercial organization and will accelerate execution under new leadership. While the D&PD environment has remained challenging, the headwinds are actively managed and expected to fade. With improving market conditions, we see the basis for a recovery building into the second half of 2026. Taken together, we are actively transforming our business model towards higher quality, more capital-efficient growth with Just-Evotec Biologics playing an increasingly important role. These developments position Evotec to deliver profitable growth and sustainable value creation. With this, I would like to open the call for your questions. Thank you. Operator: [Operator Instructions] Our first question comes from Christian Ehmann, Berenberg. Christian Ehmann: I'll start with 3 and would like to get back into the queue. So first of all, I very much appreciate the 40% year-over-year growth figure for non-Sandoz, non-DoW business in the JEB segment. Could you give us a little bit more detail on the starting point in 2025? So how much of your revenues in the segment were from non-Sandoz, non-DoW sources? The second one would be in regards to the future nature of the BMS. So I think in the past, it was mainly FTE rates and also revenues for working packages that had to be finished. Can we assume going forward that this will now shift to more of a royalty milestone-based remuneration plan? And the third question for this time would be, can you remind us about the current clinical plans BMS has for the other asset in Phase I? I think it was called back in the day, Evotec or EVT8683. Christian Wojczewski: All right. Shall we start with the first one, the Sandoz topic, Paul? Paul Hitchin: So yes, you're correct, non-DoW, non-Sandoz revenue growing 40%. We would expect to see that by the end of '26 that the non-Sandoz, non-DoW revenue is about 50% of the overall Just business at this point in time. And that is a significant growth since 2024 when we were approximately 25%. And I believe in 2025, we're approximately 30%, to give you a little bit of a frame. Christian Wojczewski: And I will hand over the third question to Cord, although Christian manage a bit the expectations typically, it should not be us talking about the intentions of the clinical assets of BMS, but maybe Cord can shed some light on that. On the second topic, the whole program was always constructed in a way that at some point in time, there will be an increasing amount of milestones and ultimately also royalty payments through this collaboration. So yes, by design, you're right. Cord, is there anything you can add on the clinical plans? Cord Dohrmann: Not really, but maybe just to try and give a little color on this. I mean, we remain excited on the program. We cannot comment on exact plans from the BMS side to move this asset, EVT8683 forward. But as you can imagine, I mean, entering Phase II clinical trials in Alzheimer's, that's a very significant step. And so I think a more thorough Phase I is usually warranted in this regard. And I think that's currently what's going on. But we have every reason to believe that this will be moving forward. Operator: Our next question comes from Charles Weston, RBC. Charles Weston: Mine are all a little bit more near-term focused specifically on 2026. First of all, you've indicated for the second half that you're expecting a market recovery. And I was just wondering if you could help give us some color in terms of your assumptions or your confidence around market recovery versus your own sort of self-help from your new commercial efforts. Secondly, I wonder if I could ask for a bit of guidance on BMS for 2026. You've indicated that 2026 will be a trough and I think the number was EUR 139 million in 2025. So how much of a headwind ballpark could we expect in 2026 from BMS? And I guess the same question for [ brand of defense ]. And then just last one, please. For 2026 milestone payments, I think in March, you've got a $10 million payment from BMS. In your Horizon presentation, it looked like up to EUR 150 million could theoretically be payable this year. And you've said that you're expecting two more assets to move into Phase II this year. So how much milestone should we be thinking about in total for 2026? Christian Wojczewski: All right. Charles, thanks for the questions. Near term 2026. Yes, obviously, two elements. One is our own doing. You're right. The other is the funding situation in biotech. Now in our view, the funding situation has mildly improved. Also when you look at the executed deals, this money will have to flow back into biotech. It's very difficult to split the increase in proposal and deal activities into what's market and what is our doing, Charles, as probably you will appreciate. We've seen the activities going up steeply. We don't believe it's just our doing. We also believe that it's -- part of that is the market. When it comes to the second question, 2026 trough and impact BMS. Cord Dohrmann: Yes. Charles, directionally on BMS, as you rightly say, we expect the trough to be in 2026. Relative to what you see in 2025, we would expect a high single-digit decline relative to 2025, solely for the BMS segment. I think your third question was assumptions around milestones related to BMS. And you're right, a couple of things here. Firstly, the $10 million that was noted in the recent press release will be recognized in the first quarter as income. And as we think about future milestones, income-related milestones, we would expect somewhere around the same in the second half. The EUR 100 million that you referred to, I think, also reflects the cash payment associated with deals rather than the income-related element associated with those deals as that cash is -- or the income is recognized over a period of time. Charles Weston: Okay. Sorry, can I just clarify, when you say high single digit, do you mean as a percentage or as a euro number? Cord Dohrmann: Sorry. Yes. It's as a percentage. Operator: Our next question comes from Swayampakula Ramakanth from H.C. Wainwright. Swayampakula Ramakanth: A couple of quick questions. One is on the Horizon implementation, with an expectation of 800 positions being cut and consolidation to 10 sites. Just trying to understand what could be the risk of customer disruption, especially from the talent loss? How are you managing some of the project continuity, especially with key partnerships like BMS. And the second question is, post the Toulouse site sale, can you help us quantify the expected development revenues, milestones and the timing of the royalty stream from the 10 biosimilar molecules? And when could we expect the first biosimilar to reach the market? Christian Wojczewski: Okay. All right. First topic, Horizon, you probably appreciate this was top of our minds and one of our most important criteria when we made decisions not to disrupt the business and particularly ensure that the customer relationships amongst the new partnerships will not be implemented -- will not be impacted. As I mentioned in my speech, we don't think that there is any material risk. We've been around that time and since then in constant dialogue with our customers. And I can tell you at this point in time, there was also no negative feedback from the customer side. So it's all well appreciated. By the way, one of the feedbacks that most people were actually telling us, look, the whole market has gone through a similar exercise. So we're not the only player in the market who is resetting. So we handled it with a lot of care. We spent a lot of time in preparing this move. We know exactly what we're doing. We think this is a contained risk. Paul, on the Toulouse site? Paul Hitchin: Yes, I think the question was around timing of the royalty streams post the sale and post the transaction with Sandoz. To give a little bit more context and color on that one, so we would see a ramp-up of both new products and licenses and new products, I mean, cell culture media, cell lines and indeed licenses between now and 2028. So by 2028, that's in the range of around 10% of the Just revenue and growing. And then beyond 2028 is when royalties kick in, and these are linked to the LOE dates of the drugs coming off patent that have been disclosed in our 9-month update, and I think on Sandoz' own update as well. Operator: The next question comes from Brendan Smith TD Cowen. Brendan Smith: Maybe just a bit higher level question for me, if I could. I appreciate all the color on kind of the near-term growth drivers for this year. We started to hear from some of your peers about pharma and biotech kind of deploying AI internally, actually driving some stronger order patterns for some tools companies as a lot of pharma and biotech are looking to validate their models and outsource new protein manufacturing and analysis. I just wanted to ask, if you started to see anything similar from your customers and partners and whether that might be an opportunity for the JEB business in any capacity moving forward? Just trying to kind of understand what some of the pushes and pulls there could be. Christian Wojczewski: Thanks, Brendan. AI and recognize maybe we have not been so vocal about that in the past, but it's an integral part of our drug discovery platforms. Cord in the Q3 call also explained that, for example, our BMS collaboration has extensively utilized those AI platforms. Moreover, it's not just pharma and biotech, Brendan, it's also the AI companies who make use of the services of Evotec. So we definitely see AI as an important tool in future when you look at toxicology, DMPK, ADME-Tox prediction, there's probably a view for the next 5, 6, 7, 8, maybe 10 years, there is a coexistence, which could even drive volume up. So we see that. We also hear that we not only see this from biopharma, but we also see it from AI companies coming to us. I hope that helps. Operator: Our next question comes from Alexa Chan, Bank of America. Michael Ryskin: This is Mike Ryskin today. I want to follow up on a couple of earlier questions -- earlier comments you made in terms of D&PD in 2026. You talked about second half low single-digit growth and sort of what's supporting that in the market. I just want to clarify, is that -- are you seeing orders already? The orders you're seeing, is that already sufficient to justify that? Or are you assuming further order improvement? The comments you have made about orders in the second half of '25 being a little bit firmer. Is that -- do you expect that to continue? Sort of if you could expand a little bit on what's underpinning that, if that's more biotech or pharma and sort of where that's coming from? And then a separate question is going to be on the pacing of Horizon going forward, looking at what you presented in Slide 11 in terms of that time line, site closures, workforce reductions taking off in 3Q, 4Q this year, whether there's any opportunity to move that up a little bit or accelerate that? Just sort of what are some of the constraints on that? You alluded to limitations of local law and things like that. Is that more tied to that or just the decisions haven't been made yet? Christian Wojczewski: Thank you for the question. Maybe I'll start with the second one. When you think about the usual processes around site closures in Europe, there's obviously legal and regulatory requirements. We expect the workers council negotiations which have actually started in the first quarter to continue through Q2 and Q3 with site closures then basically starting in the fourth quarter, workforce reductions starting in the third quarter, all of that subject to agreements with local workers councils. And yes, there is a [ phasing ] and wherever we can be faster, we are and we will be. One of the sites, obviously, is in the U.S. where there are different requirements. And that's also why it's on a different time horizon. But you're right, the limiting factor here is the consultation process. All the other work, the preparation work has been done. So we're not awaiting anything else. With regard to the D&PD business, second half, low single digit when you think about components of that, that's obviously the stand-alone business, the integrated business and strategic deals. We haven't seen a lot of traction on larger integrated deals that we expect, given that our funnel on strategic deals have significantly improved in the last couple of months that there will be an uptick also or a contribution -- a stronger contribution from new strategic deals. The prospects that increased in 2025 have led to better sales order trajectory compared to mid of last year. But I think it's fair to say that it's going to be a mix between this plus the strategic deals that we see coming. Paul, anything you would like to add? Paul Hitchin: No. I think Christian articulated it well. And again, I just refer to the slide where we see that strategic D&PD partnerships coming in, in the second half and cautious on this low single-digit growth in the second half, but we'd see first half remaining challenging for the stand-alone business. Operator: [Operator Instructions] Our next question is a follow-up question from Charles Weston, RBC. Charles Weston: The Tubulis upfront is obviously very considerable for Evotec. And I just wondered if you could comment whether you see other meaningful stakes in your portfolio of companies with clinical stage assets which we should keep an eye on that could lead to some upside in the future in particular. Christian Wojczewski: Charles, we've got about 29, 30 companies left as of December 2025. We definitely believe that there are a couple of really interesting assets. As always, when you have a portfolio, some are more progressed, some are less advanced that we clearly see some of them on a very good path. Now as you can imagine, those are digital events, right? Either you have a buyer, you don't have a buyer like what happened this week. It was fantastic. We do expect that there will be further opportunities in the future. But as I said, for us, this is upside. For us, this is a cash-generating upside going forward. So yes, our portfolio remains interesting. Yes, we believe that there is upside going forward. Quantifying it and timing it, don't ask me, please. Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Sarah Fakih for closing remarks. Sarah Fakih: Thank you. With this, we would like to conclude today's conference call. Thank you for your participation. And please feel free to reach out to the Investor Relations team should you have any further questions. Thank you, and goodbye. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.