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Artur Wiza: Good afternoon, ladies and gentlemen. I'd like to welcome you very cordially to the conference dedicated to the results of the Asseco Group for 2025 today. At today's conference, we will summarize our operations for the previous year, for last year, and we'll also convey information pertaining to the backlog for the upcoming year, for the current year. During the first portion of the conference, we will have the presentation. The latter portion we will invite you for a Q&A session. We have the CEO, Mr. Adam Goral, and we also have Rzonca-Bajorek, who is the CFO of the group; as well as Marek Panek, who is the Vice President of the group. I'll go ahead and give the floor right now to Adam Goral. Adam Góral: [Interpreted] I would like to welcome you very cordially. I'm pleased that we're all here together. And above all, I see in the first row, we see people who decided to be here physically in attendance. And of course, with full respect for all those persons who are participating remotely. So I'd like to welcome everybody very cordially. So Artur didn't emphasize that this is a special meeting because in a year, we Rafal Kozlowski will have to be here. And for me, this is going to be a totally new situation, of course, with the hope and looking to the future because I'm going to move into the Supervisory Board where I should be the Chairman of the Supervisory Board. And so Asseco will always be with me, and this is my entire life, of course, outside of my family, but I treat this company as a member of my family. I'm going to have to be vigilant because I want Rafal to be a leader with his attributes. He's a little bit different. We're different from another. Of course, I have a guarantee of one thing that he represents espouses the same values and that he's perfectly well prepared to run this company -- and I'm sorry for saying that saying that I believe that it was well run. But I think the company was in good hands and was well run. And having in mind that I have a good hand towards other people and is managed by really great people. And so we come here in great sentiments. And these sentiments, of course, are somewhat toned down because I would like for the world to look a little bit differently. And there's a lot of bad people heading up some company -- countries. And even though you have wonderful results, people are aware of their responsibilities, their liabilities, and it's a shame that the world is -- has much turmoil, but we don't have any impact over that. Today, up until now, the various wars have not obstructed us. I don't really want to talk about it. So we have our leader on Friday, I was talking quite a bit with [ son ]. And when we hear that 12 times during the day that you had to go into like the bomb shelter, then you become aware of what it means to think about a war. It doesn't matter who started the war. It doesn't matter who's at fault, who's the guilty party. We have to think about these people who are suffering in Ukraine and those people who are suffering war at the hands of war. And so these wars, I'm not going to say they are helping us or acting as a boost, I'm sorry, during the pandemic period, I had hoped that these times would teach us something that the leaders of -- the global leaders would understand, would grasp the concept that there's not that much that needs to be done in order for us to be totally disappear. They have to understand that human life is of importance. And so that's all the more reason to be disenchanted. But thanks to the wonderful work of tens of thousands of people in the Asseco Group. I'm able to come here today in convey wonderful information. And the previous year was a great year. It was a record-breaking year. And the net profit of PLN 1.139 billion. We have the successful sales. We were able to sell at a good price. And so we had basically 119% growth. And so we made these decisions because we thought that Sapiens should have a new impulse. And today, jointly with Advent, we want to make sure that this impulse will continue to drive us forward. And we hope that, that 18% will have a huge loss of roughly PLN 500 million of that EUR 1.139 billion is due to Sapiens. The rest, which is also record-breaking is linked to the organic growth that we have achieved. And so I'm pleased that we are well positioned in Poland and Central Europe, and you've been able to look at that, and we had a more difficult period. And I'm, of course, under a great impression that as we've been having seen the organization being run by Jozef Klein, our leader. And so for me, the test of his person as a manager is an exceptional year. This was the difficult time when those countries and we are dependent on government projects. It didn't seem that it wasn't spending money on IT and it seemed that some of the substantial EU funds that were being allocated to the energy sector and then Jozef's ambitions led to a situation. Well, it was a very difficult point in time for him. So I'm pleased that they were able to survive and this very difficult period, they were able to draw conclusions, and they were able to perceive the weaknesses of the organization, and they utilize that time in order to eliminate those weaknesses. And today, they have a wonderful 2025. And today, we believe very strongly that they will continue to prosper in 2026. So that group in terms of what's linked to Asseco International, we have reasons to be proud. And in these difficult and challenging times, our teams in Israel. This is a global company, of course, has done very well has coped very well. And so we've known for years that we have exceptional wonderful people there. I remember because I'm going to have a request when we talk about our stock exchange. I don't entirely understand this that we're not able to vote on that 1.5% for my team. So take a look at this. I was a person who was looking at the interest of the investors, the management and the people working for this company. And if I'm going to be in the [indiscernible] I'm going to be in the Supervisory Board, I'm not going to be able to -- operationally, I'm not going to be able to scrutinize these things. Ralph is going to do it, but these 95 people, for us, for the investors, this is the safety in terms of people fighting for the value of this company. And this is the time to encourage you to look at this vote. Once again, it's really worth looking at closely. Do you know why we've been able to achieve such a great success in Israel, the first thing that I did was I met with guy and I gave him a certain number of shares. Of course, in the voting, I wasn't afraid that he's going to be -- he's going to be the richest person in the world. Of course, I wish that to him. Look at the business we've been able to do there. Of course, those equities might not have been the deciding factor, but he had an incredible amount of motivation to run the company in such a way because we say that we're controlling some company. But in our area, there's no bonafide control as a leader, I'm dependent on thousands of people. In terms of how they're operating. And if that later would want to do something, it would be possible to do that legally. And doing this simple maneuver, we were able to achieve a very simple and straightforward objective. And so the $143 million has paid back quickly. And I'm pleased that our investment in Israel is the largest Polish investment. And so we've only got good experience under our belt here. And some of you had given us heatings, warnings, but they're going to try to, let's say, maneuver you and somehow do something. We have a wonderful success there. Take a look at this case and think about my people, please. Think about them who are totally deserving. Of course, they've created this beautiful history of Asseco. And this is not a salary for the history. There is a portion of that is remuneration for -- but this is also remuneration for what they're going to do in the future. So I'd be grateful if you were to follow and embrace my thinking, I'll give the floor to Marek, and we'll drill down into some of the details, and we'll talk about the individual results. And then at the end, I'll take the floor -- I go ahead and bore you a little bit more because I continue to think about the future of this company, and I'm going to tell you a little bit about how I see the future. So I'll give the floor to Marek. Marek Panek: [Interpreted] Thank you very much. So having in mind what Adam said that we still have the final section of the meeting during which Adam is going to want to speak to the future. I today will try to speak more succinctly and I'll take less time than usual, especially since the trends we've observed over the last 3 quarters were sustained and nothing happened, nothing extraordinary happened in Q4. And I think this -- so it wouldn't be necessary to talk about. Let's talk about the profits. So Adam mentioned the net profit, which is PLN 1 billion nearly PLN 140 million. But look at some of the other 2 numbers. So we have revenue at nearly 16.7 -- so it's PLN 16.780 billion, and this is a 12% increase year-on-year. And then we have operating profit, which is in excess of PLN 1.6 billion, and the increase here was 11%. As a matter of tradition, I will show you the split of our revenue by operating segments in terms of geographies. And you can see this is not a mistake. That all 3 of our segments were growing at exactly the same pace of 12% year-on-year. And if you start on the right side, Formula Group, which is the largest, and this is some 60% of our revenue, we've been able to achieve nearly the PLN 10 billion watermark. And then we have international, which is some 27% of total revenue in the group. So we have PLN 4.6 billion. And then we have the Polish segment, which is the Asseco Poland segment, and we have nearly PLN 2.3 billion in revenue. As I mentioned everywhere, we have across the board a 12% pace of growth year-on-year. We'll also show you the revenue by product groups. Here, I will not discuss this in great detail. You can see that all of our segments across the board are basically growing. In some cases, we're growing more quickly. In some cases, we're growing less quickly. All of the solutions that we have for public institutions, which represent 25%, so 1/4 of the total revenue of the group, we have very dynamic growth of some 15%. We're pleased with what's happening in banking sector from the very outset of our operations as Asseco. This is a very important and significant bulk of products or segment of products that we've been offering. So we have nearly PLN 4.7 billion. So it's more than 8% increase. And so all these things are pleasing to us. We're pleased with the diversification of our business. So the top 10 customers in the revenue of the overall group is a mere 12% of the total revenue of the group. And so -- so the largest customer represents 2% of total group revenues. So we're not dependent on any single customers or clients. And let me say a few words about our solutions for finance. We'll talk about the other segments as well. So we have across the group, some PLN 3.7 billion. We have in revenue, an increase of nearly 5% year-on-year. And so you can see in the Formula Group up until now, it was always the leader and was the major contributor of revenue in the financial segment. Now it's #2. And that is a result of the fact that Sapiens has been extracted because it was sold as was stated previously. And of course, this formula system segment is still doing very well. So it's nearly PLN 1.5 billion at 11% growth. Then we have Asseco International, which came in at PLN 1.6 billion, which is 4% growth. And we have Southeastern Europe and PST, which is our company in Portugal, which is operating in the Portuguese market. And then we have Asseco Central Europe. So all of these businesses are growing well. Then we have on top of that, Asseco Poland. So this segment, Asseco Poland segment has a 10% uptick in growth. And here, we're the market leader in terms of banking and lease companies as well as brokerage houses. And so we're very pleased because this business for many, many years has developed nicely. If we think about our public institutions, the growth is much more dynamic than in the financial sector. So we have a 15% increase year-on-year. So it's more than PLN 4.15 billion. And so we have the International segment. Well, for a couple of reasons, that's grown so fast because it's the Czech and the Slovakian markets. And as you recall, we had a stagnation there in previous years. We've been able to rebuild our position. And so the revenue is substantially higher. And the same is true in Southeastern Europe. In the Balkan Group, and so 2024 was clearly a softer year. And so we have experienced dynamic growth on this revenue. In Poland, our growth is nearly 20%. So we came in at PLN 1.2 billion in revenue. So in Poland, we are the leader in terms of our solutions for public institutions. We're a major player in terms of public administration for the health service as well as for the power sector, where our position is a leadership position. And so we're very pleased that the business has grown at such a fast clip. And then we have Formula Systems, which you can see is the major contributor to the revenue. In public institutions, it's seen 11% growth with revenue coming in at PLN 2. billion -- nearly PLN 4 billion. And the final segment that I would like to cover today is ERP solutions. So these are our businesses within Asseco International. So as a matter of fact, it's Asseco Enterprise Solution, ERP solution in Poland, Germany, Slovakia, Czech Republic, we see 8% growth and revenue over PLN 1 billion. You might have noticed that another line disappeared Asseco Poland segment. But this is the reason -- the reason is that DahliaMatic that used to be reporting to Asseco Poland was transferred to Asseco Business Solutions and now is part of the Asseco International segment. Therefore, it made no further sense to show Asseco Poland segment. In Formula Systems, we also have our ERP solutions at a lower scale, but we are very happy to see a 14% increase and revenue over PLN 6 million. We continue our acquisitions 2 slides to cover this story. We are showing all the acquisitions completed last year, Asseco Poland segment and Asseco International segment and Formula Systems segment likewise. That was the greatest bunch. Altogether, we had 13 new entries joining the group last year. So we were keeping the pace from the previous years. Every year, we have a dozen or so new companies joining the group. And we continue our efforts as we speak. We are scanning the market. We are speaking to [ content ] companies, and we are looking for the best match. We have definitely more selective approach. We don't want to just build our mass, but we want to have entities that have specific features in terms of products and competence that they bring to the table. And obviously, we have to look at the price that we need to pay and the return that we can get on each deal. Now when we look at the formula, I have to emphasize that it was a special year for formula systems acquisitions and corporate governance involvement. In addition to the acquisitions that they made, you may recall because we've mentioned that already in Q1, this year, we reached the sort of final line. However, we've been working on it since 2024, namely the combination and Matrix and Magic were joined as one company. So today, they are the largest company in Israel and one of the top 10 IT service providers globally. That was a major project, and it turned out to be very successful. We've already heard that Sapiens sale was a long project, a difficult project, but at the end of the year, very successful. And another sort of tier that we are building here, Michpal, that's the new company that was listed on the Israeli Stock Exchange last year. This is mostly HR and payroll solutions, software companies and service providers. So we are happy to embrace that because we see a lot of growth potential here. So we see a lot of good prospects for the future. Guy has a lot of ideas. He has a healthy and sound pipeline of M&A projects, and I believe that he will be delivering that step-by- step. Thank you for your attention. Over to Karolina. Karolina Rzonca-Bajorek: [Interpreted] I will briefly cover the financials. On the first slide, you see the key numbers. Marek mentioned revenue. We are almost at PLN 17 billion. And we remember that Sapiens was sold in December last year. So it was already excluded from the individual items of our P&L. So it was shown in one line as a discontinued business. Therefore, this is all comparable when you look at these numbers. It's comparable to the prior periods. So over PLN 16 billion of sales. Our own proprietary services PLN 12.6 billion and a nice growth of 7% in both items. And Non-IFRS EBITDA and Non-IFRS EBIT, 8% and 9% up, respectively, and it's PLN 2.5 billion for EBITDA and over PLN 2 billion for Non-IFRS EBIT. And Non-IFRS net profit is PLN 742 million and CAGR, the best of the past 5 years, 9% up. And for some time, we've been showing P&L items between the years. And here, we are sharing this information again. You may see that there is less negative impact of the currency exchange compared to the prior years. It is still a negative impact, but not major, PLN 48 million in terms of revenue and PLN 4 million in terms of operating business and Non-IFRS. We are truly happy about our organic results, PLN 1.3 billion it's ours organic sales. Across the group. And that was translated into PLN 300 additional million operating profit, non-IFRS. And acquisitions is PLN 452 million at the revenue line and PLN 46 million at the operating income, Non-IFRS. Net profit, Non-IFRS, we show which segments were the greatest delta contributors on an annual basis. And we can tell that Asseco Poland is doing very well. The Marek company is showing exquisite performance, but you may scrutinize in the stand-alone financial statement, minus [ PLN 11 million]. So it's a [ interior ] contribution from Formula Systems segment. The main reason is that Sapiens was consolidated over the course of 12 months. But in Q4, we had a first restructuring processes and the cost of that charged the result for the Q4. And Asseco International contribution was PLN 49 million more compared to the prior year. When you look at the entire P&L statement, and we are happy about the dynamics, 11% growth year-to-year revenue and proprietary software and services, over 15% Non-IFRS EBITDA goes up and 20% nonoperating profit, Non-IFRS and 11% the standard operating profit. And here, there is a slight decline when it comes to profitability year-to-year. But please note that it was just Q4. And the reason is in the line that you will find below and namely M&A. This is all one-off events. PLN 67 million is the write-off at Formula Systems for ZAP company. Well, they were not doing as well as we were projecting at the moment of the acquisition. So we decided to actually write off that asset. Some costs were generated by the transaction that Marek referred to. So the merger of Magic and Matrix is PLN 67 million. And then we also have some write-offs from other companies and PLN 15 million was our own project, our own investment, goodwill and assets in Nextbank company. Now what is happening below the operating profit line? Well, you can tell that we are efficiently managing our debt. We were decreasing debt year-to-year. Interest income, the cost of interest is less year-to-year. And the currency line, it's mostly the formula. Formula is reporting in [indiscernible], but they were paid for the Sapiens deal in US dollars. And the translation of the currency balance, even with a small exchange rate decrease generated major foreign exchange impact. Well, we may say that this is just an accounting impact. M&A, I've already covered. And for some time, we've been affected by hyperinflation, and that is Turkish business. And the share in profit of associates looks very nice, but this is formula who is the main contributor. We had the indexation of the revaluation of the -- our investment in the company that was doing SPO, but this year. And therefore, we have the step-up and therefore, we are showing better numbers. In addition to that, we have profit on the discontinued business or discontinued operations. So this is the accounting result that we show on sale of Sapiens, PLN 500 million. This is what we show in the current report, and this is distributed to the shareholder of the dominating company. Now the Sapiens Group. I think that we need to align our projections when we look at the operating revenue and operating profit, well, the Sapiens was a major contributor to these lines. Therefore, for 2026, because of the sale of Sapiens Group, we will be probably PLN 2 billion short in terms of revenue on our operating business and probably around PLN 350 million profit on our operating activities. So Q4 was really charged with the cost of the sale transactions at the cost of restructuring. Therefore, I would rather look at prior year instead of Q4 2025. So that was the explanatory note to Sapiens. Now what is happening across different companies. As I said, we are truly happy to see the performance of the Marek company. In terms of the dynamics and profitability, both were very, very decent. Your notes, analytical notes, expressed some surprise about the net profit contribution. Let me just explain. But when we speak about deals like the sale of Sapiens, the taxes such as CFC are actually booked to Asseco Poland line. And therefore, it is really a charge to our net result. And this is a one-off effect. In case of the Sapiens sale, the Marek company had to pay -- or had to show almost PLN 24 million of additional tax, namely CFC. So the effective tax rate for the Marek company seems to be surprisingly high, but this is the one-off effect of that transaction. In terms of other operations in Poland, Asseco Data Systems is improving their performance, and I think that they are doing quite well and other major companies seem to be in good shape likewise. Now Formula. Here, we decided to show Matrix and Magic together in one line. And as Marek explained, in February, the merger was completed. Right now, they are going to operate as one company. Magic was taken off the stock exchange. It is actually the subsidiary of Matrix. Therefore, you need to look at them as one group. And in terms of other companies, we have consolidated Michpal that was listed on the Israeli Stock Exchange this year. And we have a new subgroup under Formula. The working name or actually the formal name is Formula Infrastructure. Now Asseco International segment, we are truly thrilled with the improvement that Slovakia demonstrated. Adam highlighted that. This is both true for the core business, the public sector business, our health segment in Slovakia. It seems that they really rebounded and they improved substantially. But it needs to be highlighted that in this line, we have our ERPs. So excellent performance of Asseco Business Solutions. We also have major improvement in profitability in Germany. So that's another reason to be happy. And now the Southeastern Europe -- so great performance in dedicated solutions, major improvement year-to-year, very good result in the banking sector. And the payment segment, very decent, too. We need to remember that they are actually charged with the write-offs in India. I believe that [ Piotr ] mentioned that during the conference earlier. And there are some risks that emerged in that segment because of the loss of one of the Turkish customer and the potential loss of another customer in Turkey. Both of them are actually switching to in-sourcing. Therefore, they will drop from our customer portfolio. If we look at cash, I think this is something that has been observed. We have very robust cash flow across the year in Q4 as well. And this is true across the board, across the group. So it's 122%. And if we look at EBITDA, this is something that we've been displaying for years. And Asseco Poland this is 124% it's 109% in international and Formula Systems, 128%. So we had specially good cash flow in the Matrix ID company. And let's take a look at the balance sheet. And you can see that the header is more up to date than previously. And you can see the amount of cash. So it's more than PLN 7 billion on the bank accounts of the companies in the group. and Asseco Poland, which is the mother company and from the sale of treasury shares, it's more than $1.5 billion. Then you have Formula Systems. Here, we need to remember that more than $750 million was obtained from the sale of Sapiens. And this is also on the accounts of the company or in the segment at the end of last year. If we look at the proportional recognition, as is the case in the full recognition, we have certain reconciliations year-on-year. And so we can look at the contribution of the organic businesses and so PLN 734 million and then EUR 110 million from acquisitions. And then if we look at the operating profit Non-IFRS and so we have 3 from acquisitions, PLN 216 million from organic results. We have to remember about some of those impairments. I talked about them previously, the M&A adjustments. And so they're in this proportional recognition. What's also important here, as I've mentioned, that some of these impairments are through Formula, but we also have the Asseco Poland as well. And if we look at the proportional results, we can see that the growth rate is better and the profitability and the improvement in profitability is better. And this is a result of the fact that the Polish segment and Asseco International saw market improvement. And we also show the main companies. I don't think I will discuss that because we've already discussed that. And if we think about the proportional recognition of cash flow generated, it seems that it's very decent, 27%. And so we have 124% in Asseco Poland and 114% in International and 127% in Formula Systems. And so then we have the balance sheet set up on proportional recognition. So the cash available to the shareholders or the holders of the parent company. And so it's PLN 3.3 billion, then EUR 1.5 billion in Asseco Poland and then Formula and Asseco International. So this information has been indicated that a portion of this will be paid out in the form of dividends of some $200 million has been communicated and that this will be paid out in the formal resolution of the shareholder meeting. Well, of the Board of Directors will be made after the -- this will probably be in May once the financial statements of Formula Systems are approved. Then if we look at the backlog, I think we've got a satisfactory growth rate. This information coming from your releases. And so -- if we look at own proprietary services and software and 19% in Asseco Poland is like 17%. And so it's more or less equally divided on public systems and financial sector. So hence, we've got 9% for Asseco International and 14% in Formula Systems. And if we look at this on a proportional basis, we have 16% in Asseco Poland and 10% in Asseco International and 14% in Formula Systems. And then I mentioned the dividend. I said that we have very decent cash flow, and we have a very stable position -- cash position if we look at our balance sheet. And these robust results give us the ability and the wherewithal to pay out a dividend of PLN 1.051 billion, which translates into PLN 13.05 as a dividend per share. Of course, treasury stock doesn't participate in that and 3% of our shares are in the form of treasury stock. And so the PLN 13 per share as dividend per share. And if we look at the consensus opinion here, it's probably around PLN 11 was, I think, the figure that was stated in the consensus. Why did we make the decision to pay out PLN 1.51 billion. The first tranche would be paid out in terms of the cash proceeds from the sale of treasury stock. So we had received more than PLN 1 billion. And so PLN 500 million with plus would be a little bit -- that would be half of that would be from the sale of treasury stock and the rest. And so we took a look at the free cash flow. We factored in on our balance sheet. We looked at the results, and we came to the conclusion that all of this taken together would give us the ability to pay a higher dividend from our current results and cash flow, and that's what fed into this defining the specific figure or calculating the specific figures. Adam Góral: [Interpreted] So thank you very much, Karolina and Marek and my friend who's been listening to us that these are wonderful results, and you guys are even smiling, so I'd like to apologize. It's because of my gravity because I was talking about the world itself. And let's forget about the world for a little bit. Because we have enormous reasons to be joyful and satisfied because these results are wonderful, and they're linked to our efficacy, to our wisdom and to the cogent execution of our strategy. These are things that have happened. I've never lived in the past. So only future is of interest to me. And so of course, we're living in interesting times. So there's the AI battle, which is not easy to monetize in terms of what -- it's not having an easy go at monetizing what is achieved up until now. So this world is giving us wonderful opportunities, and new hopes. We have this battle for the world in terms of AI with us. Of course, this world isn't monetizing things because they're thinking that we're operating too slowly and informing the world, quite the contrary, that we do appreciate what AI is doing because we've reconciled ourselves that this is happening with the tools, but there's a large number of our people who are following this world or tracking that world that we're going to utilize that in a wise fashion. And Asseco's strategy is unchanging. [ Rafal ] is something that will continue along with my new wonderful partners, and we agreed that at the outset, we will continue to make sure that we're going to specialize in the producing software and services related to the software we're going to write. And this is going to be the predominant or prevalent portion of our revenue. And where it's sensible, we won't, of course, resign from integration. We want to make sure there are several regions where we are very strong. We don't want to lose those footholds. We will continue to build and make sure that we're building our sector position, sectoral position. This is something that I'm very proud of. In the near future, I'll have a meeting with my teams responsible for the various sectors and each sector is coming in with its vision for the upcoming 3 years. Of course, our strength is [ individually ] our knowledge of our customers, our customer knowledge and our customer knowledge is something that's been proving its position, its importance in Asseco for some 35 years. So I've been the leader for some 35 years. So this year, we're celebrating the 35th anniversary. We're not going to make a major celebration as a result, isn't that true? But it's a wonderful Jubilee celebration. And the fidelity in terms of our education, the awareness processes that customers utilize. This is our greatest value in the marketplace. And having in mind these new times, well, our fortune is predicated upon the following that we are present in many institutions. Well, these are nonstandard solutions. So AI trying to learn those types of solutions is something that will take a lot more time for that to be replaced or for that to be done. And so this knowledge that we mentioned on the first slide in terms of the teams of people, we talk about our human intelligence. This is going to drive the future of the company. And here, we have an advantage. And I'll show you another slide in a moment. We talk about our experience in a given area is also a great source of value. On top of that, we are utilizing and we are utilizing AI. I will show you where we are because we've made enormous inroads for many years, we've allowed ourselves to be dispersed. We've been a little bit chaotic. So 1.5 years with [ Garrick Brown ] who was -- has been running business intelligence for many years in a wonderful way and in our business division. And so we've appointed him to be a leader in terms of AI. And then I'll show you what we've achieved thus far. Our goal, we want to utilize these tools to enhance the quality of our operations, our activities. We want to be more efficient. We won't use them to restructure. We want to do more with the exact same team. That's our concept. And I'll give you some evidence that we are far along the path in terms of implementing this concept. So in some cases, we have a little bit more time as opposed to those areas where the standard plain vanilla solution is the name of the game. So when we talk about the learning process, that standard, that plain vanilla approach for those companies that are selling the plain vanilla approach, this is going to be something that's going to be precarious for them because those companies will have greater problems. We -- by utilizing our tools wisely, we're going to speed up the pace at which we're utilizing those tools. So our sectoral knowledge, which is a type of capital, this is an edge that we hold. So we have more than 30,000 employees I don't like the word employees, but that's what we wrote on the slide because these are my business partners in some more than 50 countries, the knowledge about the banking sector, about the health care sector, about the government sector. And we have people from various countries. No country has been capable of creating a solution for the government that would be a plain vanilla solution that one size fits all. This gives us some time to learn these AI tools and utilize them at the right point in time. So 12 years is the average seniority in Asseco Poland, somebody could say, well, you guys are old. Well, take a look at the last item, more than 8,000 people applying to participate in our internship programs in 2025. So in the on-boardings, we need these young people, and I convey that to them. I impart that knowledge to them. We can be -- I've never lived by success. I only see problems, and I'm interested in solving problems because I know that we're going to be better as a result. But if people are, let's say, somehow have -- they're just quite. So we're bringing on board these young people. So 12, 15 years ago, I delivered a lecture at the Warsaw University where we're being promoted and touted and Artur hadn't yet joined us. And I was showing thousands of articles, lots of publications about us that everybody knows everything about us. And I was asking the most outstanding IT experts at the University of Warsaw Do you know something about Asseco? And they didn't know anything about Asseco. So I'd like to thank Artur here. From that point in time, we've made huge inroads because our brand recognition that the young people want to join us. And we have young people. Sometimes I'm surprised they want to learn COBOL because we have solutions at PKO BP, which is a COBOL solution. And so I'm pleased to see that young people want to learn COBOL. So you should learn it, but you should make sure that you're diversified in terms of your knowledge business. You can't lose from sight those tools that are timely today. And you have to have that knowledge about other types of tools. And so you should take pains to ensure that you have those things mastered. So that's why I'm calm at ease that this company is going to be healthy, but somehow not entirely quite, not calm. We're #1 in Poland and Europe, many countries. We always talk -- say one thing about that, but the other talk -- the other things we talked about in 10 years, we want to continue being a wonderful company. We want to be a competitive company. Of course, I fully believe that we will be such a company, and that's clearly the case. Why am I trying to be reasonable about AI? As a businessman and entrepreneur, I've been through a time when IT was about distributed architecture. We were one of the very first Polish companies that were centralizing IT systems. And some people were saying, "Oh, you will get lost, the Polish system will never survive." but we made it. We were able to centralize whatever had to be centralized. And then there was a moment of the Internet frenzy. Unfortunately, we were not the main players in that field because we didn't offer the tools. But please note that we were able to grab quite a place for ourselves and build it up. And then the cloud came up. And from the very beginning, I was cautious about it because cloud mean when you have a public cloud, it means that you give single individuals huge power over everyone else. And today, I'm really happy to see the Polish government taking measures and looking at the local content. This is what we are really trying to do. Other countries have done it earlier. I've been fighting for it over 30 years because I've always been of the opinion that Polish people should depend on themselves or [indiscernible]. Let's do it the same way other nations do it. Today when we look at our Diplomatic Corp and our economic diplomacy in different countries. I also noted a major progress. You can actually rely on the Polish ambassadors. They really want to help you. And it started back when we had the first government of Civic Platform and land justice was keeping it up. And now the coalition is doing it again. We have great ambassadors for our beautiful growth and development. I'm really proud that Artur is actually setting up the meetings and people show up. People want to help us sell because they show that we were able to grow. And I know for a fact, but if we take good care of all these things that I mentioned, we will not get lost in the new world where the AI becomes a major player. Now look at [ Adam Goral ] and his team. In June last year, they made a promise, Adam, in December, we will cover your entire internal production process with AI solution. It's been covered. We have been implementing it internally. No not much is going to change with our customers because when we approach our customers, we want to solve their core problems. We don't talk about the products. We say, okay, we help you increase your sales with IT solutions. A we enhance your security or we help you control and curb your costs. So we sell that. The tools are secondary. Why am I saying that we are cautious and we try to be wise about it. The only value that we truly have is our customers and the value that we are able to bring to them. If the customers are disappointed with the solutions that will be driven by AI, we will be doomed. And some AI-based solutions are not stable, are not mature. So this cautious approach, but I'm advocating here. Is something that is not appreciated by the evangelist of the new tools. They think that we should take a different approach. You may have noticed, but there are other peer companies that are similar to us, and they've been dropping in value 20%. This is like pressure on us to get our act together and act faster here. But I have a message to everyone who wants to make money on AI. No worries here. We are going to do it in a smart way. We are going to take advantage of everything that you have developed there, but we will do it in a way that brings the real and true value to our customers, and we are not going to experiment on our customers. So the entire AI process is somewhat atypical for our organization. That's the way we do it. We opted for the federated model, and this is how we do our business. We really wanted to enhance enterprise in all our locations. We didn't want to kill the local spirit. So 3, 4 years ago, we worked everywhere on these themes. Today, we are trying to integrate that and centralize that, not to overlap and double the costs. We are trying to develop the model where Slovaks do not feel fully dependent on Poles. We want to make sure that Balkans curb some room for themselves. And I believe in that model. So the advantage over the companies that have holdings is such that they have to actually scrutinize each of their group companies. They didn't integrate it. But we are pretty well integrated across different sectors. And therefore, once we have AI solutions, it will be much easier for us to implement that than for those who have completely distributed and dispersed business. Therefore, I do have faith. I think that this is my new passion, and that's something that we are going to deliver. I don't want to bore you with the stories of all the sectors that we support and cover. I'm proud of the leaders we are disruptive, but in a healthy way and our ambitions run high. But there are 2 things where my ambitions have not been met. One is cybersecurity. We have a small company concept, and we are not yet happy with them. They are not efficient. Despite the fact that they have smart people on board, they can do a lot, but we are honest about it. We haven't been able to develop the business model that would be fully aligned with Asseco philosophy. And another area is solutions for defense and armed forces. And we have very strong references because we are supporting Frontex. But nevertheless, something is missing here. I believe in my leaders, and I believe that we will see some progress in these areas. Right now, we have a great project in Togo on the radar. You may remember the project that we successfully completed during the pandemic in Togo. We have a Togo company shared with the government. Togo is a very pro-European country, and the leaders are very well educated. And I'm really thrilled because we signed a contract for the development of the system for the Togo Armed Forces for their army. So that also has to do with the cybersecurity and solutions that address the needs of the armed forces. But now we are also trying to find a good partner for cybersecurity business. We are looking for a company that would be better than our current capabilities. Today, we are talking to a company that is of great interest to us. But at the end of the day, there is a price. You pay for the history, but you are buying the future. So we have to be reasonable about it. So this is something that I'm going to really look at and take good care. I think that in our countries in Eastern Europe, these areas have not been truly developed yet in terms of business. I believe that if we find the right leader, we would be able to build a very strong regional position. So that's what I have in my screen. Okay. So once when I am going to be on the Supervisory Board, I'm really going to harass -- sorry for my word, but everyone who will be responsible for these areas that I have just mentioned. But they know how I handle that. I have a lot of patience and -- but I believe that we will be able to build a new position for our business. And the time comes when we have to assess our partnership with our friends from the Netherlands. I'm saying that they are our friends. It hasn't been a long time, but I have to say that we are really pleased I am grateful. Probably the transaction would have never occurred if we were not able to keep the Polish control, so to speak, in terms of the power and being able to decide about the strategy. They come from the background that has a different strategy. When we were buying companies, we were integrating and building our integrated position. Their philosophy is that each company that they acquire, they have as a separate company within the group, and they actually have a separate settlement for each investment. This is a different approach. But now they are looking at the way we are doing it because they truly appreciate the fact that we are in a very special point in time. AI is definitely affecting or impacting our world and our companies have to respond adequately. And I would like to really acknowledge our gratitude to them. I would like to thank them for their openness, for being so generous with their knowledge, the expertise that they have with acquisitions and with handling of the companies once they are acquired. They also have a lot of expertise in finance management. So I have to say that they were really open about it. We were actually borrowing some of their solutions and methods. Some KPIs that they have been using. This is not very surprising to us because they were looking at cash flow, and we were also very mindful of our cash flow. For them, cash was #1 and so has been for us. But they also have other KPIs that really help, but they keep people motivated. They also have KPIs for software companies that are able to identify certain weaknesses. We've been also looking at that, but I'm really happy that we were able to tap into the expertise of these KPIs because to be honest, we were relying more on our intuition here. And based on that knowledge, I think that Rafal can claim the greatest contribution here. Asseco growth. And this is the project that started a lot of commotion within the group because everyone thinks, okay, we've been doing it for years. We know everything about software. But suddenly, it turned out that others approach the same thing from a completely different perspective. So I have to say that it was a very informative and educational experience. And I really wish that we would have this 1.5% approved. I don't feel sorry about the 3% that I didn't get, although they told me openly that Adam, you have to get the 3%. But I say, okay, I can go about it because otherwise, it's like not appreciating the succession that you need. There is a change in generations, right? If you've been doing business with someone and they always deliver and never failed you, you really want to continue doing business with them. So in my generation is still there and is still quite efficient. Rafal has his own peers of his own generation, and he's navigating that very well. But my role is to make sure that we have proper continuity with this succession. So they came to us and they said, well, 3% is the right way to go. I told them, look, our market is not really ready for that. So they were disappointed that we were not able to take a good vote on that. So they don't understand our mindset and our investors. But they continue to respect our country and our market and our capital market. And we believe that together, we were able to vote in the favor of this 1.5%. Once we finally close 2025. Now 2026 makes us optimistic. I always say that it's great. I always say that we are good. And Artur was saying that we are phenomenal. We were great. We were phenomenal. I've already said that on several occasions when I was speaking about our company and our business. So I've been learning too. So very optimistic. Today, journalists were asking questions. They were saying, Adam, we would like to meet you again. I said, look, now Rafal is the key man. I am a very open person. I think that Rafal is more restrained. But if he's more restrained make sure that he's more down to earth, because media has never failed us. And even if I was saying way too much, they didn't publish everything when I said afterwards that, well, perhaps that shouldn't be published. It's not very much shame of that, but we are just humans. And to rank people who are onboarded in the company, I always tell them, look, we don't have a single individual in this company who has never made any mistake. The shame is to repeat the same mistakes again and then to lie about it. If you made a mistake and if you lie about it, then as a result, 100% can get sacked because of it. If you don't lie, if you're open about it, everyone will help you repair and remedy your mistake. That's the way we need to keep it at a [ side]. We have to be positive. You may say, okay, it's hard, but you have to multiply it by 10, saying what you can do to make it better. We are critical, but not in terms of complaining, but we are critical in terms of, okay, that needs to be improved. This is what has to be done about it. It's not about just complaining and saying, I don't know what to do about it. And we are not afraid to make mistakes. And we believe that customers are definitely sacred. They pay our bills. So if something prevents us from providing good service to the customers, we have to fight with that. You have to show it to us, but this is wrong and young people are coming full of power and energy. I love the onboarding experience. I always tell them that they have to address me as Adam. I have a great assistant and she's 24 years, and she's addressing me Mr. President. And I say, look, one order that I always give, I'm Adam. Look, I'm not saying farewell. I'm not really leaving for good, but I'm -- it will be tough because I've always loved meeting you. So I don't know. I will have to learn what to do not to get into Rafal's way. Rafal is definitely sharing and representing the same values. I know that he's prepared. He knows everything how to do the job, but he's a different person. I want him to be himself. I just cannot get in his way. And I know that things will be fine. And I would like to thank all of you for still coming to our meetings because we've been together on so many occasions, but probably you don't find me surprising. I said at the beginning that there are wars out there, and this is not a reason to be happy. But then there is another aspect. It's important to actually speak to people face-to-face. The more the people we have in the room, the merrier it is. It's easier to smile when you have real people sitting in front of you. I know that we have 100 people who are watching us online, but those who came here and are with us in person, it's really nice. Well, perhaps for those 100 that are just watching us online, we were not top performers. If there is anything we need to improve, please let us know. Operator: [Interpreted] So after this wonderful presentation and summary, we have the opportunity to move on to the Q&A session because there are questions coming to the forefront from some of our participants, our online participants. And so the idea is we'd like to move on now to the Q&A session. And at the end, we'll wrap up by bidding ado. So let's begin with the first question in terms of this year's recommendation for the dividend. Should we treat that as an extraordinary dividend? What is the dividend policy for the upcoming years? And in subsequent years, should we anticipate that there would be a higher amount or quantum of transfers to the shareholders? Unknown Executive: [Interpreted] If we will not acquisitions are still our passion. It's more difficult to buy things. There's an enormous amount of competition. We have certain boundaries. The only limit, I think I mentioned that in terms of relations with our new partners that the decisions, acquisition decisions, we make those decisions together. This is a limitation for Marek. This is something we wanted. We wanted to buy things at the optimum price. So we've had major success even if we were a little more intuitive than our new business partners. We've been very effective. I would like for Marek's team to have access to knowledge about how others do that. And I'm pleased that we have that access. So Marek has several potential acquisition targets. We're working on that now. But in Asseco, we always want to buy for organic growth. That's our obsession. One of the very kind journalists, Adam, you know you had Balkans, other areas, but those were different times. At that point in time, we were buying companies at normal prices. So today, if somebody is coming forward to us and we have tens of people, business owners talking with me per annum. And so Marek, of course, is talking with them because Marek, of course, introduces me as well. And so somebody is coming forward and what they've created, which is far away from our standard is pricing that at a multiple of tens over the profit, but they don't want to buy the brand. And I'm not interested in that because we have -- we can pay a lot for the past, for the history. But the fact that we're going to build the future together, well, because if you're using a very high multiple, let's say, 30 or 20 or 40, whatever, then we all understand what that means. And since there's a lot of competition, there are funds out there that have a pressure to spend money and Asseco is not going to participate in that type of battle. We want to attract business owners who understand that based on what you've created in Poland, you can create a wonderful European position because we've proven that we're capable. Our model has proven itself. We know how to attract business owners from other countries. And so if we can find partners like -- and we're looking for those types of partners and hypothetically, we have them, -- but of course, we can always haggle a little bit about price multiples. We are buying -- not to buy. We want it to be effective to generate a return. And jointly with our leaders, we want -- we're going to give them a lot of authority to build things. So if we don't have those type of projects, you can always count on a hefty dividend. And of course, if we have those type of M&A projects, then we won't have that cash. And so the dividend will be a little lower. And so this is a question to our colleagues from Business Solutions. In Asseco Business Solutions is the biggest impact of the national inventory system KSeF was it exerted in Q4 2025? Or will we see it in subsequent quarters? So perhaps I'll field that question because I'm in the Supervisory Board. And I think I might not be entirely precise. I think we can count on KSeF, this national invoicing system. I don't think I'm apologize for saying perhaps I don't know the figures. I don't think it was the biggest quarter for us, Q4 2025. So at the beginning of 2025, we were counting on the national invoicing system. The results were phenomenal because all of you in ABS are proud of what we have done. What Rafal did on an international basis, that integration of our teams with Germany, and Germany is doing very well and competing with Poland, trying to catch up. And of course, this will take a little bit of time. And so we're working strongly on Slovakia and Czech Republic because we want to have integration, I believe in that strongly. So I think in ABS, we will continue to deliver results through the national invoicing system,. And if we talk about recurring revenue, and this is something that's been prepared that we're going to have increase in recurring revenue. For people who might not know the Polish market, today, we have the opening the next wave of companies that will utilize the national invoicing system called KSeF. And so those companies, there's going to be many more companies starting to use that. And so this is coming down. It's going to be applicable to medium-sized companies and smaller companies. What are the problems with implementing or adopting the share system? And what are the obstacles to implementing this program? So based -- this is a little bit of gossip. Basically, what I'm hearing is as follows: the open-end pension funds, we can't give anything away free of charge because we're paying for the past, so we can't vote in favor. So I can embrace that -- I can accept that opinion. But I'm asking these OFEs for them to think about this because even if something is so highly regulated, that's against the development of the Polish capital market, and I'm always going to be an advocate because had it not been for the Polish Stock Exchange, we would not have moved for it because in 2024, nobody would have lended money to Adam Goral for his -- to build his fantasies because I wouldn't be able to prove to any bank in 2004 that I was going to be capable of doing something had it not been for the Polish Stock Exchange. There would be no Asseco. I'm sorry to say, I regret that we don't have a sufficiently large number of IPOs and business owners have started to stop seeing that there's opportunities linked to being on the exchange. So like PKO BP, baby was waiting for us with a credit to when we wanted to buy back shares. Well, the times are different nowadays. And we have to remember that times do change. So of course, I understand the regulations. Well, let's change things that are illogical. My friends from the Netherlands and Canada linked to Constellation, they don't really understand what's behind this because for them, the fact that we will vote this through, well, it's not a guarantee because we're making decisions together in fact. The fact that we voted through gives greater certainty to all of us as investors. So I would precede those. We understand those who can't do it because of the laws, but I hope that we'll have people, if we looked at the results of voting, I was nearly satisfied. We were only missing some 700,000 shares. So that's not very many. So maybe somebody want to come to the shareholder meeting, we're going to vote on that. And then we could vote it through. Let me tell you, honestly, I don't understand why they're behaving this way. We, as investors, why don't we want for one group of Poles that have worked hard and toiled hard for them 95 people for them to receive a total of 1.5% of the company. Of course, 1.5% PLN 200 million. Of course, it's PLN 200 million. That's 95 people that will be the recipients. We haven't -- we're not creating [ oligarchs ]. We want people to have interests aligned and be participating in the risk we have. And if we want to be active on the Polish Stock Exchange, if you want to have more IPOs, we have to have and utilize mechanisms that are utilized on mature stock exchange. I'm not sure if this is of importance, if it will have import. We've been -- we've received rewards or awards by like, for example, the Parkiet newspaper that gave us an award for the growth we've been able to achieve in terms of our market cap and so on and so forth. But I also asked and perhaps these words will exert an impression on somebody and they will vote through proposal through. Well, people are for those person, we want to take care of the stock exchange. The people who are taking care of our business interest, we want more and more of these people to think about the interest of the investors for them to buy for the value of the company and the shareholder value. Operator: [Interpreted] The next question, is it possible to think about the sales of the -- remaining 18% shareholder -- share stake in Sapiens? Well, you remember that after the sale of Sapiens, this is a strange case. We lost control because we sold almost all of the shares. We hope that we have an 18% minority stake, which we hold indirectly in Sapiens. Unknown Executive: [Interpreted] And so this is a good position to think about how to earn thinking about the new shareholder, what the new shareholder is doing in Sapiens, what the restructuring processes are in telling, and we surmise that advent because that's a new investor, if it makes the decision in a couple of years to sell Sapiens, then of course, we will, of course, join forces with them in that sale. Operator: [Interpreted] The next question, what will you earmark the money -- the proceeds from the sale of Sapiens in terms of -- because only a portion is going to the dividends. Unknown Executive: [Interpreted] But well, we don't have the right. You know Guy, even though he was started as a manager, we gave him shares. He's an investor. He's a business owner. He's an entrepreneur. And please note that everything that he did was with our consent and he's nearly made no mistakes over the last 16 years. He was buying at the right prices. We've all forgotten because you were -- perhaps you were right. We were buying shares in the holding, which was running a company that was slightly lost. This is not the Sapiens that was sold just recently. This was not the Magic. This was not the Matrix company. All of that was growing and expanding, not talking even forgetting about the new purchases. So in terms of investing in running these type of companies, he knows and he's very cognizant of. He knows it very well, and he talked -- he didn't give me much time sometimes for some decisions. That's true. But I always had that time to make a decision. I received the materials that were needed and so on and so forth. I continue to believe in him, and we're going to pay out a very hefty dividend. I think we can officially say -- so it was already announced at $200 million. And so we're also counting on a dividend. Well, Guy is working how to neutralize this fact, the sale of the majority stake. He has ideas. We won't talk about those ideas because I analyze this is a new topic in terms of building a position in a given area is still within the framework of IT. He's not running into other areas. And initially, this is something that really appeals to me in Israel. So we wish peace to that corner of the world. We hope that peace will be achieved. And major investments are in the works, infrastructural investments. And we would like to have a company, a group of companies prepared to participate in these projects because we have a very strong position there. We haven't agreed on this, but if there were no interesting targets on the marketplace to purchase, well, then we can always buy back some shares in formulas, we can increase our shareholding. We have some opportunities. I'm not saying that we as Asseco, but utilizing that money that's there. So we can have different types of ideas. Today, we're not being precise on that subject. But I wanted for this decision to be a joint decision about Sapiens because we were of the opinion that we were coming close to a wall that we might not have better ideas. And looking at Advent we're learning a new approach to these type of situations. We believe strongly that Advent is going to be effective and that our 18% stake will have the same value of what we sold. And -- this is something that we wish to those people who are now managing. We wish that from the bottom of our hearts. Operator: [Interpreted] The next question is about TSS and Constellation as your potential competitor in M&A in terms of consulting on M&A. Is that something that's beneficial to Asseco? Unknown Executive: [Interpreted] So Marek, he likes to argue. So this is my area. And of course, we're competing with TSA in Constellation and M&A. And that's not changing after the transaction, but we have written down what we're going to do together and how we're going to behave if we identify a conflict of interest. And so betraying what it looks like from the kitchen. So if we identify that there is a conflict of interest that we're competing on a given project, then we won't engage in these type of consultations in that case. So even members of the investment committee from the TSS that would not participate in these meetings. They would not have any role to consult on those projects. And so we can do that according to our own recognition, according to our best knowledge and our experience. But this is an area where there is competition. Well, this is high business culture. somebody might think about it whether or not you needed that. But take a look, had we not been together. We wouldn't know anything about it. We would compete with one another anyway. Today, I wouldn't preclude a situation, in fact, that we will not want to buy something and we'll inform them of that fact. And we'll give them that target for them to think because it's perhaps the case they might want to buy it because this could be aligned to a concept they harbor. This is something we're going to be able to master. Marek, there are some individual examples and we've developed -- we've cultivated them. There are some cases. It's hard to be surprised because TSS and Constellation are highly active players and the market of potential targets is finite in size, that universe is finite in size. So in many cases, in 5 cases, we had conflicts of interest. And if this is something that we can live with out of a number under 20. Operator: [Interpreted] The next question is to Marek. In terms of potential targets in cybersecurity, are there any Polish companies in that universe? Marek Panek: And the answer is brief, yes. And this is where I would stop. Operator: [Interpreted] And the final question that we have from remote participants, are you thinking about developing a motivation program where the strike price would be closer to the market price as opposed to, let's say, PLN 1. Unknown Executive: [Interpreted] Well, yes, in our concept, I don't know if somebody has noticed, we have 1.5% stake. Those are shares linked to my -- to me. I've selected some 95 persons who, in my opinion, will clearly drive the future. I would like to give shares to 33,000 people. There is no person in our company, in our group who will not drive the future. But just as such, that we had to make some choices. And so for group consists of 95 people. And I believe that these people have earned and deserve to take a role in the future. This is one program. And in that program, these objectives, we can discuss what those objectives should be. But this is going to be PLN 1 because we need these people as investors, but there is a program PLN 0.25. That is a program to change or slightly new bonus program and the bonus program this is experience that I've known from Constellation for years, and this is from [ Topicos]. And so Rafal Kozlowski is today coming forward to each one of our leaders in people who are heading up businesses. And the proposal is that a portion of their bonus would be paid out in shares, in equities, and they will be purchased at the market price. And so these shares would be purchased at market price. And so we'll have a program of that sort as well. I don't know the details, but [indiscernible] who set up Constellation in that overall concept. This is a person from the financial market. He himself with his family. I don't want to -- it was a 7% or 9% over 30 years. These were shares. These were these bonuses. That's how he was able to compile that position that were purchased at various points in time. We want -- our team doesn't have an obligation to follow that program, but we would also like to implement that program. And this will be an additional portion because the 95 people, this will give us a guarantee if you assist me in making sure that we can vote this through at the shareholder meeting, and then we'll make sure that, that other program is going to be available and that we want to remunerate people in the form of shares, of course, at the market price. So we'd like to thank you. Are there any other questions here in the room? Would anybody else like to we don't have a question from the room. So we'll wrap up the Q&A session. And we'd like to thank you very much. And so we've started this year very well. So it portends well. In the near future, we'll come back, but they won't take me to participate in the quarterly conferences. So I think Rafal will be Okay. You can -- so you can take him. I'd like to thank all of you, all those people who are participating remotely, the people here physically in attendance. And so I would like to thank you enormously because we are a very close-nit group, and we've lived many years together in a beautiful way, and you've all had a very positive contribution to the development of our capital market. You've never disappointed me. So I didn't have the 95% share. You've never disappointed me and the votes were always consistent with what I was thinking or what I came forward to propose. And so I'm very grateful because you have a real participation in what we as Asseco have achieved this great achievement. Let me tell you, this is a commercially viable approach. It's worthwhile to turn over that 1.5% equity stake to 95% [indiscernible]. So let's continue vying for our position for there to be peace across the world because then it will be very easier -- much easier for us than to smile then. So thank you once again, then Bye-bye. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Operator: Good day, and thank you for standing by. Welcome to the Second Quarter 2026 Franklin Covey Earnings Conference Call. [Operator Instructions] Please be advised that today's call is being recorded. I would now like to hand it over to our first speaker, Boyd Roberts, Head of Investor Relations. Please go ahead. Boyd Roberts: Good afternoon, everyone, and thank you for joining us today on Franklin Covey's Second Quarter 2026 Earnings Call. We appreciate having the opportunity to connect with you. Before we begin, please remember that today's remarks contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995, including, without limitation, statements that may predict, forecast, indicate or imply future results, performance or achievements and may contain words such as believe, anticipate, expect, estimate, project or words or phrases of similar meaning. These statements reflect management's current judgment and analysis and are subject to a variety of risks and uncertainties that could cause actual results to differ material -- materially from current expectations, including, but not limited to, risks relating to macroeconomic conditions, tariffs and other risk factors described in our most recent Form 10-K and other filings made with the SEC. We undertake no obligation to update or revise any forward-looking statements, except as required by law. Now with that out of the way, I'd like to turn it over to Mr. Paul Walker, our CEO. Paul Walker: Thanks, Boyd. Good afternoon, everyone, and thank you for joining us. It's great to be with you and to have the opportunity to share our results for the second quarter and provide an update on the business and our outlook for the remainder of the year. We're pleased with our results in Q2. Revenue and adjusted EBITDA grew year-over-year, met our expectations and were above consensus. As we've shared previously, fiscal 2026 is a year of execution and a return to growth. And we're encouraged by the continued progress and momentum we saw in the second quarter and throughout the first half of the year. Invoice amounts in the quarter grew 5%, driven by 7% growth in Enterprise North America, or 10% when excluding our government business, which was impacted by the disruption caused by a reduction in federal spending. Invoiced growth overall was also driven by a 7% growth in Enterprise International. We expect invoice growth to remain strong through the balance of the year. Because a significant portion of invoice growth is recognized over time, this positions us for accelerating reported revenue, adjusted EBITDA and cash flow in fiscal '27. In Enterprise North America, growth was broad-based. We saw strong sales of subscription and services to new logos, continued strong retention and meaningful client expansion, resulting in one of our highest revenue retention levels in recent periods. Services bookings also continue to be strong and are up 9% for the year as of this week, reinforcing the importance clients place on the business outcomes we help them achieve. In addition, deferred subscription revenue grew 16% year-over-year and the percentage of revenue under multiyear contracts increased to 62%, reflecting both client confidence and the long-term nature of our partnerships. In an environment where leaders are working to accelerate results while navigating uncertainty and disruption, Franklin Covey continues to be sought out as a key partner in addressing the human side of strategy, execution, change management including related to clients' implementation of AI and achieving measurable performance transformation. We expect the momentum we've experienced in the first half to continue to be strong through the second half of the fiscal year. Turning to our business outside of North America. Our International business delivered strong performance, partially benefiting from foreign exchange with invoiced amounts growing 7% and particularly strong performance in our direct offices where invoiced amounts grew a strong 14%. And in our Education business, reported revenue grew 16% in the quarter, driven by strong demand for Leader in Me services and materials. We feel very good about the momentum in Education and the business is positioned well for a strong second half and full year performance. Overall, we remain confident in achieving our full year revenue and adjusted EBITDA guidance and in the strength of the foundation we're building for accelerated growth in fiscal '27. Jessi will provide more detail on our specific segments in her remarks in a few moments. I'm going to focus the remainder of my remarks today, first, on Enterprise North America, which makes up more than 50% of total company sales and the area in which we have invested for accelerated growth. And second, I'll talk briefly about the strategic importance of what we do and why a growing number of organizations are partnering with Franklin Covey to drive the human side of strategy and transformation, particularly as a simultaneously leveraged AI to transform. So first, as it relates to Enterprise North America. Enterprise North America, which represents more than half of our total revenue, is at an important inflection point. The growth we're seeing reflects both the increasing strategic importance of what we do for our clients, and the traction from the go-to-market transformation we implemented last year. We're now seeing clear evidence that these investments are driving stronger new client acquisition, deeper client relationships, and greater expansion within key accounts. Key results embedded in the second quarter's overall 7% increase in invoiced amounts in Enterprise North America include the following: First, we had strong sales to new clients or to new logos, reflecting a combination of both subscription sales and services. Second, our balance of deferred subscription revenue grew a very strong 16% year-over-year to $59 million, building on the 8% growth in deferred subscription revenue last quarter. Third, we again had a strong logo or client retention quarter. Fourth, we achieved strong existing client expansion where expansion drove one of the highest overall revenue retention percentages we've achieved. Fifth, the percentage of our revenue, which is contracted for multiyear periods increased to 62%. With our sales engine accelerating as planned, I'd like to focus the remainder of my remarks on the strategic importance of what we do and the growing need organizations have for a partner who can help them unleash their organizations to achieve breakthrough results, and why we believe our position has strengthened in the current environment. Artificial intelligence is creating extraordinary new possibilities for organizations. But before addressing that directly, it's helpful to step back and consider a broader pattern we've seen over time. Franklin Covey has been a trusted partner to leaders and organizations through multiple periods of significant disruption, from the digitization of business processes to the global financial crisis to rapid shifts in how and where we work and where work gets done like during the pandemic. In each case, one principle has remained consistent. In times of disruption and transformation, the need for strong leadership, trust and disciplined execution increases. It doesn't decrease. We believe AI follows the same pattern. And as a result, there are 3 things that are important to understand about how AI interplays with our business. The first of these, as I noted, is that AI is actually increasing the premium on human leadership and execution. AI is accelerating change inside organizations. It has the potential to raise productivity, expand spans of control and increase the pace and complexity of decision-making. As routine work is automated and access to information becomes more widely distributed, the differentiators for organizations increasingly become judgment, trust, collaboration, alignment and disciplined execution. At the same time, we're seeing how AI has the potential to reduce the amount of routine and analytical work organizations do, we also see how AI is increasing opportunities that can result from strong leadership, high trust, winning cultures and great execution. The second area and the second interplay is that our model is built around behavior change and collective action tied to real measurable performance outcomes. Our model is not about just delivering content or software digitally. Our role is to help organizations strengthen the people side of execution, helping leaders clarify priorities, align teams, build capability and create accountability systems that translates strategy into measurable results. For many of our clients, Franklin Covey functions as a long-term performance partner to their leadership teams and their organizations overall. While a significant portion of our revenue is subscription-based, our model is fundamentally different from SaaS. Our subscriptions are related and related services are tied to enterprise-wide performance outcomes and long-term partnerships, not simply software usage. This positions us as a performance and advisory partner rather than a software provider. For example, this is reflected in our work with health care systems, where we partner directly with Chief Nursing Officers to strengthen leadership capability, trust and execution across care-providing teams. This drives higher employee engagement, lower nurse turnover and improved patient satisfaction and outcomes, which also directly impacts hospital reimbursement. This reflects the core of our model, the integrated combination of content, technology, services and advisory applied together to drive sustained behavior change and collective action across organizations. That capability and the measurable outcomes it produces is not something AI can replicate at scale. We also saw this in the second quarter with a large technology company that selected Franklin Covey to support the CEO's strategy to transform the organization to an AI-enabled operating model. While the strategy is technical in nature, successful execution of this transformation shift in their business will depend heavily on strong leadership, successful change management and high-trust fast-moving culture, all areas where we're a key partner. This work that we're involved in is about changing collective behavior across teams and organizations, something fundamentally different from simply providing access to ideas or content. The significant impact our engagement and solutions have is exactly what is behind the fact that even in and perhaps especially in times of significant change, we continue to retain a high percentage of clients and they continue to extend both the duration and size of their contracts with us. The third interplay with AI is that we have significant room for growth within our existing client base. Today, our solutions typically reach only a small portion of the employee population within our client organizations, generally in the range of 5% to 10%, which provides substantial room for growth over time, even in a more efficient or AI-enabled workforce. We saw this clearly in the second quarter where we delivered one of our strongest expansion quarters in recent periods, driven by increasing demand for enterprise-wide transformation and leadership capability. Taken together, these dynamics position us well in an AI-driven environment. At the same time, we're continuing to evolve our solutions to incorporate AI in ways that increase the value we provide to our clients. We're embedding AI-enabled coaching and execution tools into our platforms and we're helping organizations lead the human side of AI adoption. We're seeing this play out directly in our business through strong client expansion, increasing multiyear commitments and growing demand for enterprise-wide transformation engagements. These trends reinforce our conviction that as organizations navigate increasing technological change and complexity, the need for strong leadership, trust-based cultures and disciplined execution will continue to grow. Stepping back from all of that, as I conclude my remarks here today, I just would say that we're pleased with the momentum we're seeing in the Enterprise North America portion of our business and across the business as a whole. Driven by this momentum and the expected strength in Education, we believe we're well positioned to deliver meaningful invoice growth this year, and to establish the foundation for significant growth in reported revenue, adjusted EBITDA and cash flow in fiscal '27 and beyond. I'd now like to turn time to Jessi to share more detail on our second quarter results. Jessica Betjemann: Thanks, Paul, and good afternoon, everyone. Franklin Covey continued to see strong demand for our solutions in the second quarter, and as Paul discussed, the strategic investments we've undertaken to transform our Enterprise North America go-to-market strategy are continuing to gain traction. We expect fiscal 2026 to be a year of execution where our adjusted EBITDA and free cash flow will return to growth and where our meaningful growth in invoiced amounts will set us up for accelerated growth in fiscal 2027. In my remarks today, I'll start by providing some details of our second quarter financial performance, then I'll turn to our balance sheet and capital allocation priorities. And finally, I will provide additional context around our reaffirmed fiscal year '26 financial guidance. Total second quarter reported revenue was $59.6 million. Revenue, which was in line with our expectations for the quarter, was flat to the prior year as a 4% decline in reported revenue in the Enterprise division was offset by a 16% improvement in the Education division. Foreign exchange rates had a $0.7 million favorable impact on our consolidated revenue in the quarter. Importantly, our consolidated invoiced amounts grew by 5%, resulting in a 7% increase in deferred revenue at the end of the second quarter, establishing the foundation for accelerated growth in reported revenue in fiscal 2027. A summary of our consolidated financial results is on Slide 3 in the earnings presentation. Consolidated subscription and subscription services revenue recognized for the second quarter increased 3% to $50.9 million. We are especially pleased that consolidated subscription and committed services invoiced amounts for the quarter was up 16% to $39.3 million, continuing the growth we saw in the first quarter for the Enterprise North America and now including growth in Enterprise International. The total value of contracts signed in the second quarter grew 8% to $53.7 million, and was led by the Enterprise division, which raised the value of contracts signed by 12%. The foundation for increased future growth remains solid and is evidenced by the 7% year-over-year increase in our consolidated deferred revenue balance to $101.5 million, which will be recognized as reported revenue in the coming quarters. The total amount of unbilled deferred revenue contracted for the second quarter was also strong, increasing 9% to $10.6 million, with the total balance increasing 1% over the prior year to $64.9 million, which will convert to invoiced amounts and deferred revenue in the future. Gross margin for the second quarter was 75.9% compared to 76.7% in the prior year due to increased amortization of capitalized curriculum expenses and a shift in mix of services delivered and products sold during the quarter. Operating selling, general and administrative expenses for the second quarter were $41.2 million, which was 6% lower than the $43.7 million in the prior year, reflecting reduced associate costs and other cost reduction efforts taken in fiscal 2025 and in the first quarter of this year. Adjusted EBITDA for the second quarter was $4.1 million, an increase of 99% or $2 million compared to last year's second quarter, reflecting the stable revenue, gross margin and lower SG&A expenses I just mentioned. Foreign exchange rates had a $0.2 million favorable impact on our adjusted EBITDA in the quarter. During the second quarter, we continued to streamline our business in certain areas of our operations. We incurred $1.5 million in expense for this restructuring activity, which consisted of severance and related costs. We realized a net loss of $2 million compared to a net loss of $1.1 million in the prior year, reflecting the $1.5 million increase in restructuring costs, a $1.3 million increase in share-based compensation expense and $0.5 million increase in building exit costs, which primarily consists of legal expenses. These increases were partially offset by decreased SG&A expenses. Cash flow from operating activities for the first 2 quarters of fiscal '26 increased 28% to $16.4 million, reflecting the strength of second quarter operating cash flows of $16.3 million versus a negative $1.4 million of cash used in the second quarter last year. This was driven by improved receivables collections and higher invoiced amounts. These improvements offset lower operating income and increased capitalized development costs in the second quarter of fiscal '26 compared with the prior year. Free cash flow for the second quarter was $13.2 million compared to a negative $3.6 million of cash used last year. I'll turn now to a discussion of our business divisions. For the second quarter of fiscal '26, our Enterprise division generated 70% of the company's overall revenue, with the Education division generating 29% of the company's revenue. Second quarter Enterprise division invoiced amounts grew 7% to $52 million. Second quarter Enterprise Division's reported revenue was $41.6 million or 4% lower when compared to $43.6 million in the prior year. As shown on Slide 4, the North America segment invoiced amounts grew a consecutive 7% this quarter to $42.7 million, and excluding government contracts, it grew 10%. We are encouraged by the continued progress this quarter in invoiced amounts, which reflects the positive momentum coming from our investments to transform our Enterprise North America go-to-market organization, and we expect this to translate into increased reported revenue in future quarters. Last quarter, I highlighted an important change aligned with our strategic focus on solution selling, whereby clients now may contractually commit upfront for services, which will be delivered over time as we bundle content and predefined services together. In the second quarter, approximately $3.5 million in invoiced amounts was for such contractually committed predefined services. And while we continue to recognize the revenue upon delivery, because these services have been contractually committed upfront, any unused fees are guaranteed and will be recognized at the end of the contract term. On Slide 10 in the appendix to our earnings presentation, our roll-forward analysis of deferred revenue includes both subscription and committed services amounts and the timing for revenue recognition for committed services will depend on the delivery schedule of our clients. The North America segment's reported revenue of $32.5 million accounted for 78% of our Enterprise division sales in the second quarter of fiscal '26, and was 6% or $2 million lower than prior year, primarily due to lower subscription revenue recognized as a result of a lower invoiced amount and deferred revenues last fiscal year. Adjusted EBITDA for the North America segment increased $1.1 million to $5.9 million for the second quarter of fiscal '26 compared to $4.8 million last year, primarily due to lower SG&A costs resulting from the restructuring activities in recent quarters. Our balance of billed deferred revenue in North America was $59.3 million at the end of the second quarter, an increase of 16% from the prior year and unbilled deferred revenue was $61.1 million, an increase of 3% from the prior year. Importantly, the number of North America's All Access Passes contracted for multiyear periods increased to 59% in the second quarter compared to 55% last year, and the contracted amounts represented by multiyear contracts increased to 62% compared to 61% in the prior year. As shown on Slide 5, second quarter revenue from our Enterprise International segment, which is the combination of our International Licensee revenue and our International Direct Office revenue was $9.2 million. This accounts for 22% of our total Enterprise Division revenue and represented a 1% increase over the prior year of $9 million. International Direct Office revenue, which accounts for approximately 70% of total international revenue increased 7%, driven primarily by improved year-over-year revenues in France and China due to a foreign exchange currency benefit, while International Licensee revenue, which accounts for approximately 30% of total international revenue decreased 10% from the prior year. Invoiced amounts for our International Direct Offices grew 14% year-over-year. And while 6 points of this growth is due to foreign exchange, we are encouraged by the overall growth trend this quarter. Adjusted EBITDA in the second quarter of fiscal '26 for the International segment was $1 million compared with $0.5 million in the prior year, driven by increased revenue and lower operating costs, including lower bad debt expense compared with the prior year. Now turning to our Education division. As shown on Slide 6, revenue in the second quarter increased 16% to $17.5 million. This primarily reflects increased training and switching revenue from the delivery of more than 300 additional training and coaching days compared to last year as well as an additional symposium event and increased purchases of classroom and training materials by schools. Invoiced amounts in the second quarter of fiscal '26 of $8.5 million decreased slightly from the $8.6 million generated in the prior year, partially due to the timing of a large statewide deal, whose revenue began in the first quarter of fiscal 2025, but which is expected to fall into this year's third and fourth quarters. Education subscription-related revenue increased 19% in the second quarter to $12 million compared to $10.1 million in the prior year. Adjusted EBITDA for the Education division in the second quarter was $0.4 million compared to a loss of $0.3 million in the prior year due to increased revenue. Education's balance of billed deferred revenue decreased 4% to $36.1 million as a result of the strong increase in the number of as days associated with the Leader in Me subscriptions that were delivered in the quarter. We currently expect Education to have a strong year in fiscal 2026, with the pattern of large, invoiced amounts and recognized revenue to come in the back half of the year and especially in the fourth quarter. I would like to now spend a few minutes discussing our balance sheet and capital allocation priorities. We continue to pursue a balanced capital allocation strategy focused on 3 primary areas that are aligned with our strategic goals. First, maintaining adequate liquidity and flexibility. Our total liquidity remains strong at over $76 million at the end of the second quarter, with $13.7 million of cash on hand, even after having repurchased $17 million of our stock, combined with the company's $62.5 million credit facility, which is fully available. Second, investing for growth. We will continue to invest in strategic opportunities to drive improved market positioning, accelerated profitable growth and financial value, such as our continued investments in product innovation, business transformation initiatives and opportunistic acquisitions when available. And finally, continuing to return capital to shareholders as appropriate. In the second quarter, we purchased approximately 922,000 shares in the open market at a cost of $16.5 million. And in January '26, completed the $20 million 10b5-1 purchase plan we initiated in November of 2025. The company also acquired approximately 25,000 shares to cover income taxes on stock-based compensation awards issued during the second quarter for a value of $0.4 million. Year-to-date, the company has purchased nearly 1.6 million shares of its stock for $28.1 million. During the last 12 quarters, the company has used 130% of free cash flow to buy back shares. We have a $50 million share repurchase authorization from the Board of Directors with $20 million remaining after the 2 10b5-1 plans we had in place have now been completed. We remain committed to being disciplined stewards of capital whilst being focused on driving long-term value creation. Now turning to our guidance for fiscal 2026. We continue to affirm the revenue and adjusted EBITDA guidance for the year, as shown on Slide 7. Our projections reflect the positive momentum we are seeing and expecting in both the Enterprise and Education divisions, balanced with a disciplined view of the risks and opportunities ahead as we continue to execute in an uncertain macro environment. We continue to expect to achieve solid growth in invoiced amounts this year as demonstrated by the progress in Enterprise North America and the International segments this quarter. Our revenue guidance of $265 million to $275 million is after reflecting the lower deferred revenue generated in fiscal 2025 and the conversion lag of invoiced to reported revenue in the year as a portion of the invoiced growth will go on to the balance sheet as deferred revenue. We continue to expect fiscal '26 adjusted EBITDA in the range of $28 million to $33 million, capturing the benefit of our cost reduction efforts including additional restructuring actions taken this quarter while maintaining flexibility to manage through continued macro uncertainty. We expect revenue to be slightly higher in Q4 compared to Q3, with approximately 50% to 55% of back half revenue in Q4, reflecting normal seasonality, especially in the Education division and the timing of delivery of client services. For adjusted EBITDA, we expect approximately 60% to 65% to be generated in the fourth quarter, driven by the strong contributions from the Education division along with expected overall margin expansion as cost savings and operating leverage build through the back half of the year. With our transformation investments behind us and the expected increase in operating leverage, we believe the company would deliver EBITDA and free cash flow growth, with improved margins and free cash flow conversion in fiscal 2027 and thereafter. Grounded in strong client retention, expanding demand for our services and the resilience of our business model, we remain fully committed in creating long-term value for our shareholders and clients. Before I pass it back to Paul, I would like to thank the entire Franklin Covey team for their hard work and dedication to our business and for providing the unparalleled service to our clients. With that, Paul, I now turn it back to you. Paul Walker: Thank you, Jessi. That was great. And as we prepare to open the line for questions, I'll just reiterate what Jessi said in thanking our teams for their hard work. We're pleased with the momentum that we're seeing right now across the business and look forward to a great second half of our year. And with that, we'll ask the operator to open up the line for questions. Operator: [Operator Instructions] Our first question will come from the line of Alex Paris from Barrington Research. Alexander Paris: Congrats on the better-than-expected results in the first quarter. Now we have 2 consecutive quarters of growth in invoiced amounts in North America and Enterprise. So it's not simply a data point. We have 2 data points so we can draw a line. And I think you said that you expect that to continue to be the case through the balance of the year. Is that correct? Paul Walker: Yes. We did. Yes. Jessica Betjemann: Right. Alexander Paris: Good. And then just one quick point of clarification. Jessi, you said that revenue is slightly higher in the fourth quarter than the third quarter, 55% and 45%. Is that how we look at the second half of the year? Jessica Betjemann: That's right. Alexander Paris: Yes. And then adjusted EBITDA, it will be $60 million to $65 million in the fourth quarter. So I guess what is that... Jessica Betjemann: A little bit more on EBITDA as we talk about our restructuring and some of the cost operating leverage will increase towards the back half of the year, but more heavily weighted towards Q4, but then also because of the contributions of EBITDA coming from Education in Q4. Alexander Paris: Yes, makes sense. And it's a typical seasonal pattern anyway, right? Jessica Betjemann: That's right. Very similar to what we normally have. Alexander Paris: Good. The -- next question is really a question about the macro environment, Paul. I think in response to a question last quarter, you sort of said it was neutral. There's some both positives and negatives. I wonder if you could just kind of freshen up that response for us. Paul Walker: Yes. I'd say it's largely unchanged from what we saw a quarter ago. And but -- and so neutral in the current environment better than it was a year ago at this time. I remember we were reporting Q2 a year ago and there was quite a bit of uncertainty for lots of reasons. And while there's still uncertainty out there, I think our clients have adjusted to that, the current environment, and it feels a little bit more stable for us, certainly now than it did a year ago and largely unchanged from what we saw a quarter ago. Alexander Paris: Great. And then again, with this ramping up of invoiced amounts, we would expect growth in revenue, EBITDA and free cash flow in fiscal 2027 and beyond. And then to that point, I think the last time you gave longer-term guidance was on the Q4 '24 conference call, after making the announcement about the sales force transformation. Obviously, with tariffs and government shutdowns and war, that's -- it kind of changed it a little bit. I'm wondering, number one, when will you update that longer-term guidance with -- is that potentially a fall 2026 event? And then second -- answer that first, and then I have a follow-up. Paul Walker: Yes. Okay. Jessica Betjemann: Let me start with -- in the fall and our Q4 call is when we're going to provide the guidance for our fiscal year 2027. We'll be going through our planning cycle in the summer. And as we work through that, we'll be updating our 5-year plan at that time. And we'll make a call as to whether or not we provide some direction with the longer term. Alexander Paris: So obviously, you'll do one for yourselves. The question is what will you share with us this fall, right? Jessica Betjemann: Well, we'll work through that, Alex. Alexander Paris: Okay. No problem. And then -- but in the meantime, adjusted EBITDA margins in fiscal 2024 kind of peaked at 19.2%. And 2025 is significantly lower, 10.8%. And I think based on your guidance, we're expecting a little margin expansion in 2026 and then more in 2027. Is 20% adjusted EBITDA margin still a reasonable target? It's only slightly above the fiscal 2024 level over the next several years. And will you get there by 100 or 200 basis points a year sort of thing? Jessica Betjemann: Yes. I mean so we are planning to increase and improve our operating leverage. I think our goal is to have around 1 point improvement a year. And whether or not that can be accelerated or not, we'll determine that as we work through our long-term planning. But I think that is roughly what seems reasonable to me. Paul Walker: And we do believe that, that 20% that we nearly got to is still a good number out there. And all these investments were meant to permanently reset the cost structure of the company. We were -- it was to accelerate growth and certainly get us back up to that level. And who knows if we could ever get above that level, maybe. Operator: Our next question will come from the line of Jeff Martin from ROTH Capital Partners. Jeff Martin: I was curious if you could go into a little bit more on the Education side of the business, had a very good quarter. What you're seeing as states and districts and obviously, you're having some success there. So maybe an update there would be helpful. Paul Walker: Yes. Great question. Sean is here next to me. I'll ask him to make a comment, but it was a good quarter. And congratulations, Sean, on the great quarter. Go ahead and share a few thoughts. Michael Covey: Yes. So a few things on Education. We're feeling really good about the year and where it's headed for a few reasons. We have a really good pipeline of new opportunities, probably the best we've ever had in terms of large opportunities. We have 3 state-level opportunities. These are very large multimillion, multiyear deals. We've got large district opportunities larger than we've had before. So that's really positive. We've got really strong funding partners out there, and this is in the range of $20 million a year in help from partners that help schools get off the ground. And those partnerships remain in place right now. We feel good about -- we're aligned well with market needs. There's a lot of big issues right now after COVID, getting test scores up is like the #1 thing. The U.S. is still struggling with that, and we are aligned well and we've got great data around how we can increase math and reading scores. Teacher retention, a lot of teacher burnout. We're really good at that. And we've got great data that shows that we retain -- Leader in Me schools are 600% more likely to retain their teachers than non-Leader in Me schools. And then mental wellness continues to be a big factor, and we're well aligned to address those issues. So just given the pipeline we have, the large opportunities we have in place that we need to close, of course, in the third and fourth quarters, we're feeling really good about the year. Some of the headwinds are still there. The Department of Education, there's still some uncertainty with what the Trump administration is going to do, but it's better than last year, much better. And so that helps. The ESSER funds, expired COVID relief funds are gone. So that's a factor 2. And there's some declining enrollment in the public sector, they're moving to a lot of people -- a lot of kids are moving to charter schools, private schools and home schools, and we're well equipped to help with a lot of the -- I mean to deliver on those other channels as well. But I just feel like the tailwinds are stronger than the headwinds, especially the funding partners. We've got a great reputation in the marketplace. This is how we get state bills as we start with a single school then a district goes really well, leads to state confidence and then they get behind us. So all things considered, we're feeling good about the second half of the year and where we're headed overall. Jeff Martin: That's great color. Thank you, Sean. Paul, could you go into some detail with respect to -- I mean invoice growth is 7%, so obviously a positive inflection. How does that compare with what you were thinking internally maybe? And then what, if anything, do you see in the near future accelerating that growth from here? Paul Walker: Yes. Great. Yes, 7%. So 5% overall for the company invoice growth in Q2, which we felt good about that. And then as you mentioned, 7% kind of the engine pulling that as we alluded to last quarter and as we went through the transition of our sales force was Enterprise North America. So 2 quarters in a row, 7%. We feel good about that and feel that, that will continue to generate good invoice growth this year in the back half and for the full year at both the Enterprise division level, specifically but also for the company. And as we mentioned that, that invoice growth out ahead of our reported revenue growth will help us next year in generating more substantial reported revenue growth. So I do feel good about the continued momentum there on the invoice growth side. Operator: The next question will come from the line of Nehal Chokshi from Northland Capital Markets. Nehal Chokshi: Congratulations on this really strong free cash flow. And just a comment here real quickly before I get into my question. But with more than free cash flow deployed in share buybacks and given Franklin Covey shares are trading at basically 6x free cash flow, 4x fiscal year '24 free cash flow, really happy to see the bold move to aggressively buy back shares at this incredibly attractive valuation. So just applaud of that. Now I do have some questions. Excluding government, invoice value is up 10% year-over-year on Enterprise North America. It's a really nice core number that I'd like to focus on. Can you help break up that invoice value growth between, say, new customers and existing customers? Jessica Betjemann: I mean we have not been disclosing that level of detail now. But we did have -- I mean, overall, the new customers in North America combined, we had very strong performance this quarter that we continue to -- that we had in Q1 as well, but we don't provide the details of the invoiced amounts. Paul Walker: I'd maybe point you, Nehal, just -- agree what Jessi said, point you to 2 things, and I mentioned this in my remarks. But to Jessi's point, yes, we continue to see another good quarter with new customers and the overall invoice growth from new customers, we're pleased with that again in Q2 after a really good quarter in Q1. And then with our existing customer base, we actually had quite a strong expansion quarter. As you know, when we initiated our go-to-market transformation, there were 2 core bets in that move. One was that we could win more strategic, larger new customers and that we could move our way into the expansion opportunity that existed within our existing customers, where, on average, we're kind of 5% to 10% of the way penetrated into what we think is the addressable population inside the vast majority of our existing clients. And in Q2, we saw a really good expansion. And so really both sides of the house had good quarters as we think about that 7% or 10% without government overall invoice growth. Nehal Chokshi: Okay. Great. And presumably, you're expecting both new customers and ongoing expansion of existing customers to continue to power the year-over-year growth. It's not one -- exclusively one. Paul Walker: Holly Procter is here by the way, too. Holly, any thoughts on that? Holly Procter: Nehal, yes, we expect both the new logos to continue to grow and for us to make continued improvements on both retention and expansion. I'll call it just a couple of areas that we're seeing some great growth that will contribute on both sides of the house. The first is the specialization in health care. We've seen -- we made a big investment in the current customer base that we have around health care. There's real organic use cases that we can make a real impact around patient staff and nurse retention. So we've seen real lift there. The second is a new horizon for us, but we're also starting to gain great traction is around helping companies through their AI transformation. Both of those, we think, will fuel growth on both the new logo side of the house and the customer side. Nehal Chokshi: Got it. And then Paul, you mentioned that, on average, 5% to 10% penetrated of the addressable opportunity. That's on a user basis within an existing customer. Is that correct? Paul Walker: That's right. That's right. And then there's really -- yes, significant upside for us in attaching services on top of that. But yes, that's specifically referencing kind of the user base. Nehal Chokshi: Okay. And then that user base that you're referencing, is that just leaders? Or is that also knowledge workers? Or is that the whole labor force is given organization? Paul Walker: Yes. Yes, great question. So we have kind of a little formula, if you will, that adjusts for certain portions of populations that we aren't really well suited to address. So you get into factories and things like that, that's not exactly where we play. So depending on the industry, so it's leaders, it's knowledge workers. And in some organizations like tech, it's -- that's almost everybody in the company. And for other organizations that might have a massive manufacturing footprint, we may not be working with everybody all the way down the front line, although we do quite a bit of work in manufacturing with our 4 disciplines of execution solutions. So -- but yes, it's kind of a formulaic-based approach that we have. It's not the entire population of a company. Nehal Chokshi: Great. Okay. A couple more questions from me. So what was the driver of this strong free cash flow, $13 million, $9 million above your $4 million adjusted EBITDA. Can you help us understand that? Jessica Betjemann: Yes. We had a very strong positive swing in the net working capital. So a lot of it was with regards to the collections on AR. As you can see in the balance sheet, the AR balance went down. So that was a huge contributor to the improvement in our free cash flow. And we continue to expect that our free cash flow will be -- I know last quarter, we had negative free cash flow. We expect going forward, we'll continue to have positive free cash flow and especially be strong in Q4 when we have the strong net income and EBITDA in Q4 coming through. Nehal Chokshi: Okay. Great. So you kind of already answered my follow-on question, but just to be clear, I think historically, you guys have talked about free cash flow roughly matching EBITDA on a trailing 12-month or forward 12-month basis? Is that the way that we should continue to think about this? Or is there some deviation from that? Jessica Betjemann: Well, so I'm not particularly sure of the exact comment. I mean I think that we do have -- 2025, we had lower EBITDA to free cash flow conversion. We expect our free cash flow conversion to increase over time because we're not a heavy capital-intensive business. And the amount that we spend on CapEx and capitalized development is relatively steady going forward. So as our operating leverage and our EBITDA increases, we expect that we should have stronger conversion over time. Nehal Chokshi: Okay. But you're not expecting to get back to close to 100% conversion that you were reflecting in fiscal year '24? Jessica Betjemann: No. I mean I -- no. I mean definitely an improvement from the 42% level that we had in 2025, but it wouldn't be 100%. So there will be some strong. Nehal Chokshi: Yes. Understood. Understood. And then you talked about your fiscal year '26 guidance unchanged. And the way to think about parsing out that effective next 2 quarters of guidance in terms of typical seasonality. Can you just remind us what is actually typical seasonality for 2Q to 3Q and 3Q to 4Q? Jessica Betjemann: So what we are projecting in terms of the revenue and EBITDA for Q3 and Q4, that's basically -- that has been the normal seasonality. When you look at last year, we were pretty much in that same range of what we're expecting now as well. So it's been similar. Nehal Chokshi: Right, right. So like last year, it was about a $7 million Q-o-Q increase from the second quarter, third quarter, and then $4 million from third quarter to fourth quarter? Jessica Betjemann: Yes. Last year, if you were to look at Q3 revenue, for example, it was around 49% in Q3 and EBITDA was around 38%. So roughly within the same range of what we're seeing now. Operator: Our next question will come from the line of Dave Storms from Stonegate. David Storms: Just wanted to start with maybe some commentary around the new logo sales. I know in the past, right, new logos tend to come on as either pilot based first or maybe a specific project that the company is looking to accomplish. Could you maybe spend a little time talking about what you're seeing in the current marketplace and maybe tailored to the AI trends if you're having clients come on with a specific goal in mind or if they are maybe a little more highly oriented to start? Jessica Betjemann: Yes. And just to make sure I understood, Dave, the question is around how much of our new logos are pilots and then some examples on the use cases? David Storms: Exactly. Jessica Betjemann: Perfect. Very few of our new logos are pilots. It's really hard to pilot a solution like ours. You either want to drive behavior change and make a big impact in your org or you don't. And so we really don't see any pilots. On the AI solution, it's a great question. There's a ton of interest around this right now. There is not an org that we're partnering with or that we're interested in partnering with that isn't trying to figure this out. And one of the unique things about an AI transformation is it's both top-down and bottoms-up. So the question earlier around who does it touch inside the org, it touches everyone and nobody has figured out exactly how to get this right. And there's so much around the way that you deploy your leaders to navigate this type of large-scale transformation that's critical to get right. And so we're excited to help a lot of companies with this transformation. David Storms: That's great commentary. I really appreciate that. I also want to maybe spend a little bit of time, Paul, you mentioned that you had a really strong expansion quarter. And just thinking about how -- you also mentioned you had maybe 2 quarters of a neutral macro environment. Can we apply that same kind of mentality to maybe a logo recapture rate? Do you have any thoughts around maybe what you're seeing in the market about clients coming back now that the dust has settled a little bit? Paul Walker: Yes. I'll just make a quick point and then ask Holly to comment on that as well. That is actually a metric we do track. We have a mantra around here and its client for life. And when we lose a client, we agonize over that. And so it is actually a metric that we track internally. We don't disclose it. But we are intent on trying to get those clients back regardless of the reason they needed to leave or -- and so Holly, any commentary on or thoughts about what we're seeing there, what you and the team are driving? Holly Procter: Yes. We absolutely see a really healthy win back rate as Paul referenced. So as needs inside their organization shift, they go from trying to drive a high-trust workforce to try to prepare our workforce for AI transformation, then needs evolve over time, and there might be gaps between one deployment and the next deployment. So if we do a good job on the first round, we're excited to welcome them back on the second round. And then I think just a point on the environment, one of the things I don't think we talk about enough and a structural advantage that we have is the breadth of the market that we serve. Our addressable market is enormous, not just in the company type that we pursue, but it's across segments, across buyer types, across use cases, there's virtually no company that isn't trying to solve the issues that we attach to. And so in a world where there's a sector that's down, we can quickly pivot to go after a sector that's up with enormous upside for us. So we move very fast when the market has highs and lows. David Storms: That's great. If I could just sneak one more, and I would love to spend a little time on the International sector. I know it's not as big for you guys, but it does seem like it's having some strong growth even after accounting for foreign exchange. I guess is there anything to highlight here as to what's working? Is this just general tailwinds and you're catching it right? Maybe any thoughts there would be great. Paul Walker: Yes. One thought is -- it's just a couple of thoughts. So we are porting over into International much of the learnings and the strategies that Holly and team have been deploying inside Enterprise North America, that was always the plan. And so we -- now that we've got Enterprise North America, the structure up and running and through that change, where International has been fast followers there. And so I think we'll continue to benefit from that. Second, in the second quarter, China didn't continue to decline for us and was actually flattish. And so that helps from a year-over-year standpoint as well. And... Jessica Betjemann: Also France. Paul Walker: And then we brought France on as a direct office, i.e. a little over a year ago. And we're seeing good growth in France. We continue to see good growth from our German operation that we brought over from a licensee to a direct office a few years ago. And so there's some good performance across international directs in particular, in the second quarter. And we look forward to seeing as we -- as they embrace more and more of what we've been doing in Enterprise North America, I think there'll be good quarters out ahead of us as well. David Storms: That's great. Thank you for the commentary and good luck on the next quarter. Paul Walker: Yes. Thanks, Dave. Operator: Thank you. I'm not showing any further questions at this time. I would now like to turn it back over to Paul Walker for any closing remarks. Paul Walker: Thank you very much. Thanks, everyone, for joining us today. Thanks for your great questions, and we appreciate you and all that you do to understand our story and where we're headed as a company. We feel great about our momentum. Big thanks to the overall Franklin Covey team as well for their hard work, and we wish you a great evening. Thanks. Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.
Operator: Welcome to the earnings call of SUSS Micro SE following the figures of 2025. I would like to welcome the company's CEO, Burkhardt Frick; the CFO, Dr. Cornelia Ballwießer; the COO, Dr. Thomas Rohe; and IR, Sven Kopsel, who will guide us through the presentation in a moment, followed by a Q&A session via audio line and chat. And with that, I hand over to you, Mr. Kopsel. Sven Kopsel: Thank you so much, and welcome to our full year conference call after today's release of our annual report 2025, including our outlook for the new financial year. First of all, one personal note from myself after 3.5 years with SUSS in total, 4 annual reports, 2 Capital Market Days and yes, countless investor and analyst interactions, today marks my final conference call with SUSS. While I truly love the company, I have decided to take on an exciting new role in a different listed German company as of May. So April 24 will be my last day at SUSS, and my colleague, Florian Mangold, will continue to be available to you as your point of contact. Now back to the official part. As you probably know from earlier calls, this call is being recorded and considered as copyright material. It cannot be recorded or rebroadcast without permission and participating in this call implies your consent to this procedure. Please be aware of our safe harbor statement on Page 2 of the slide deck. It applies throughout the conference call. And now I hand over to Burkhardt, our CEO, for some opening remarks, followed by our CFO, presenting the financial development. Burkhardt, please? Burkhardt Frick: Sven, many thanks, and also thanks for your great contribution over the past 3.5 years. We really enjoyed you having on board, and I'm sure you will have an exciting future ahead of you. So thanks a lot from my side. Let's now start with an overview on the key financials for 2025. Our order intake ultimately came in at EUR 354 million, more on this shortly with a particular focus on the fourth quarter. Revenue recorded at EUR 503 million, once again, a double-digit growth and exceeding EUR 0.5 billion for the first time. Profitability with a gross profit margin of 35.7% and an EBIT margin of 13.1%, we came short of our initial margin expectations. However, we did meet our most recent guidance. Now a few more words on revenue. EUR 503 million marks another record revenue figure and an all-time high for SUSS. Even more important, we have increased revenue over the past 2 years from around EUR 300 million to EUR 500 million, an increase of EUR 200 million. SUSS is now a significantly larger and more capable company. We are a growth company, and we intend to resume this growth in the midterm. Regarding order intake, in November, I stated that we could achieve EUR 100 million in order intake in the fourth quarter. We now can confirm an order intake of EUR 117.5 million. The book-to-bill ratio was thus around 1. Both segments contributed to the improved order situation with AI being the dominant driver, both in terms of HBM and CoWoS. Further good news, this positive momentum has continued into the first quarter of 2026. Now on profitability. We explained the deviation from our original plans during the Q3 conference call. And as we said in the Capital Markets Day in mid-November, we introduced the new product generations and innovative solutions to achieve a substantial improvement in margins. That's why we are very much looking forward to the next 2 to 3 years and the multiple launches we have lined up. Now let's take a look at the performance of our 2 segments. First, Advanced Backend Solutions. Order intake was approximately EUR 25 million lower than in the previous year and was distributed fairly evenly across the 3 product lines: imaging, coating and bonding. Demand for our imaging systems, specifically for UV projection scanner used in CoWoS process remains strong. Demand for bonding solutions was lower than in previous year, but has improved since the fourth quarter. Revenue grew by 10.7% to around EUR 350 million, while bonding was below 2024. Imaging and Coating Systems contributed the most significant growth, each posting an increase of more than 50% compared to the previous year. Profitability was significantly lower than in previous year, primarily due to weaker product and customer mix, strong growth in Imaging and coating and the frequently mentioned increased temporary ramp-up support provided to our customers for already installed tools as well as the establishment of our new production facility in Taiwan. Now to Photomask Solutions. Order intake of approximately EUR 80 million was significantly down by EUR 43.5 million from the previous year. Out of this number, EUR 31 million was due to lower orders from Chinese customers. However, Q4 showed an improved trend versus Q2 and Q3. Revenue growth of 17.3% to over EUR 150 million is very encouraging. Thanks to our improved operational capabilities, we have further significantly reduced our backlog and accelerated the completion of customer projects. Higher sales volume and an improved product and customer mix also led to a 5% point increase in the gross profit margin and an 8% point increase in the EBIT margin. Now let's zoom in on the fourth quarter of 2025. I already mentioned the positive order intake of EUR 117.5 million, reversing the negative trend of the first 3 quarters. Of this amount, EUR 92 million was attributable, difficult word, to the advanced back-end solutions and EUR 25.5 million to Photomask Solutions. We once again received several orders for our UV projection scanner for CoWoS process as well as for HBM-related follow-up orders, particularly for one of our memory customers. Orders for our mask aligner from customers in mainstream applications have also improved significantly. It may still be too early to speak of a turnaround in this business, but this was certainly a strong intake quarter. Revenue of EUR 119 million was almost unchanged from the third quarter of EUR 118 million. This demonstrates our significantly greater stability when it comes to executing customer projects. Gross profit margin remained low at 34.9%, though it improved slightly compared to the third quarter, where we had 33.1%. EBIT margin was 9.8%, which was slightly lower than Q3, but still better than we originally had expected. To wrap up the first part, here's a look at our new production facility in Zhubei, Taiwan, which is already fully operational. Following the opening ceremony at the end of October, all relocation work has since been completed. As planned, we returned all existing locations to our landlords by the end of February. We delivered the first tool made in Zhubei, a UV projection scanner to our customer already in February. Production is now in full swing, as you see on this picture, about 10 tools were built in Zhubei during the first quarter in 2026. Further capacity increase is under preparation. Q1 '26 is, therefore, also the last quarter in which the P&L will be impacted by the implementation of the new site. And with that, I hand over to Cornelia for some details on our financial development. Cornelia Ballwießer: Thank you, Burkhardt, and also a warm welcome from my side to all of you. Here, you see our key financial figures. First of all, I would like to point out that the previous year figures have been adjusted due to accounting changes made in the connection of the preparation of the 2025 consolidated financial statements. These changes are explained in detail in the notes in our annual report, which has been published today. The adjustments for fiscal year 2024 in short are a sales adjustment amounted to plus EUR 0.5 million. Gross profit was adjusted by minus EUR 1.5 million and EBIT by minus EUR 0.5 million, and net income was adjusted by EUR 0.4 million. In a nutshell, the main changes are based on a more detailed approach to revenue recognition. In particular, installation service following the delivery of our tools and upgrades are no longer recognized on a point-in-time basis, but rather on a period basis. This is from shipment to final acceptance by the customer. The second significant change was made to the provision for the equity-based compensation, which is now recognized on a pro rata temporary basis over the entire 4-year period, the vesting period rather than at the time of the grant of the virtual shares at their estimated value. This resulted in an adjustment of plus EUR 1.2 million in EBIT. And now let's have a look on our financials here on the screen. The order book was EUR 266.8 million at the end of 2025. The vast majority of these orders will be produced, delivered and recognized as revenue throughout 2026. Expenses for selling, administration and R&D increased from roughly EUR 100 million to EUR 118 million in 2025. The main reasons were an increase in R&D, plus EUR 7 million spending to support several product and technology development projects and for IT and digitalization projects, such as the mitigation of our ERP system. But that's not all. There are some other systems we introduce. And the full cost impact of new hires made in 2024 has an impact or the full impact in 2025. Net profit amounted to EUR 46.1 million in 2025, down from EUR 110 million in 2024 when the sale of the MicroOptics business had resulted in a significant onetime gain. Cash and cash equivalents were at EUR 98.7 million and compared to 2024, reduced by EUR 33.5 million. And this mainly because of a significant lower prepayments from our customers and of course due to our CapEx in 2025. Net cash amounted to EUR 49.1 million in 2025. And this is because of the deduction of the leasing liability from the lease agreement for our new Zhubei site which caused this decline. Free cash flow from continuing operations was EUR 20.6 million (sic) [ EUR 22.6 million ] in 2025 and in total at minus EUR 26 million. The fourth quarter was cash flow positive at EUR 5.6 million, but that was not enough to bring the figure back to 0. As our dividend policy is based on free cash flow and is designed for a payout of 20% to 40% of this figure, a dividend of EUR 0.04 per share will be proposed to the Annual General Meeting in June. CapEx increased to EUR 23.2 million in 2025, driven in particular by our new site in Zhubei. Now let's move to the development of our main financial KPIs over the fiscal year. Please be aware of that the '25 quarterly figures are as reported. This means they are not restated. In our reporting, in 2026, all prior year figures will be restated. Burkhardt has already mentioned the significant improvement in order intake in the fourth quarter of 2025. While this can certainly be attributed to seasonal factors and a traditionally strong fourth quarter, it is all the more important that we are able to confirm this improved demand in the coming months. We have already discussed profitability in the past. This overview clearly shows that profitability came under pressure particularly in the second half of the year. The decline in the second half of the year is not unexpected. The weak order intake in the first 2 quarters and the shift in its composition as well as some nonrecurring items and extra costs are clearly evident here. To achieve a significant improvement, we are working on new higher-margin product solutions, which will only begin to gradually impact the P&L starting in 2027. In both segments, we have an order intake trend reversal with strong bookings in both divisions versus previous quarters, and this trend continues in the first quarter. Photomask Solutions benefited in the fourth quarter from product and customer mix, also in connection with upgrade and service business and from some currency gains. The fourth quarter of Advanced Backend Solutions, a lower top line in the fourth quarter than in the third in combination with very negative product mix affected gross profit margin and EBIT margin. There were a lot of UV scanner, but we had the lowest amount of bonus in the fourth quarter. As you know, the double rental costs for the new fab in Zhubei affected the result. And in addition, write-offs for clean room equipment in our old Hsinchu site, which cannot be used in our new fab in Zhubei. This impacted the result in the fourth quarter. And also R&D expenses rise in the fourth quarter to support future growth projects. The R&D expenses also left the mark on the fourth quarter, especially projects for left chamber improvements and for a CoPoS project. On this side, we see our order intake by segments and regions. The order intake by region shows a familiar pattern. The APAC region once again accounted for the largest share of new orders at around 77%, with Taiwan as a dominant contributor. The remainder was distributed relatively evenly between EMEA and Americas. Now I would like to present the main balance sheet developments. Total assets increased by EUR 7.6 million. For the noncurrent assets, the main driver was the Taiwan expansion with the right-of-use asset and CapEx for the interior layout of the building in Zhubei. And as well, there were some CapEx in Europe, around EUR 8 million, mainly in Germany. In current assets, we have a decrease by EUR 54 million to a total volume of EUR 386.7 million. Inventory declined by EUR 39.1 million on a year-on-year basis and amounted to EUR 171.6 million at the end of '25. Contract assets and trade receivables in total increased by EUR 20.6 million. Cash and cash equivalents decreased, as I said, by EUR 37.5 million and of course, due to free cash flow of minus EUR 26 million. And of course, of the dividend payments in the last year and some repayments of our financial debt together in the amount of around EUR 10 million. On the liability side, the main changes already happened in the second quarter with the inclusion of the leasing liabilities from the Taiwan site. In noncurrent liabilities, the main driver was this lease liability for the Zhubei site. Current liabilities decreased at the same time, minus EUR 60.2 million. Here, the major drivers were lower prepayments from our customers who supported last year's steep ramp. And now we have less orders from customers, which usually accept prepayments. Equity increased by EUR 32.5 million, and equity ratio was at 62.2% at the end of December '25, which means that we have improved the equity ratio by 5.6 percentage points. Net income contributed with EUR 46 million and other comprehensive income and dividend payments amounted to minus EUR 13.7 million. And finally, I would like to give you a brief overview of the new syndicated loan, which we announced back in mid-February. Despite the current healthy liquidity position, it is very important for us as a company to increase our financial flexibility to finance further growth and to maintain sufficient reserves to cover industry typical fluctuations. We achieved this with the new syndicated loan agreement and the volume has roughly doubled to EUR 115 million, thereof EUR 85 million for revolving credit facility and EUR 30 million for guarantees. The new contract has a term of 5 years with 2 optional 1-year extension periods. We are now even better positioned to support our growth plan and we have sufficient buffer against industry-specific fluctuations as well as against a general deterioration in economic conditions and economic cycles. Finally, we had significantly reduced the liquidity risk. And now I gave back to Burkhardt, who will present the outlook for 2026. Burkhardt Frick: Thanks, Cornelia. As you said, I now would like to come to the guidance overview. As said before, 2026 will be a transition year. After that, we expect to resume our growth path. Forecasted sales range of EUR 425 million to EUR 485 million, indicating a decline of 9.6% at the midpoint of the range. We see a broadly stable gross profit margin of 35% to 37%, but a declining EBIT margin of 8% to 10%. On the next 3 pages, I will provide a bit more color on all 3 KPIs. First, on the sales guidance of EUR 425 million to EUR 485 million. When we compare the starting points for 2024, 2025 and 2026, obviously, we are beginning the year with a significantly lower order book. You see a detailed comparison on the right side. As a result, visibility at the start of the year is lower. Therefore, we decided to expand the guidance corridor from previously EUR 40 million to EUR 60 million. The extent of the revenue decline compared to 2025 will highly depend on the volume of orders we will receive in the first half of 2026. Thanks to our improved operational flexibility and shorter lead times, we will be able to execute the majority of the orders between January and June within the same year and recognize them as revenue. On gross profit margin, we forecast 35% to 37%, and thus are broadly stable in our expectation. As said before, in the financial year 2026, we will be offering more or less the same portfolio as in 2025. For portfolio-driven substantial improvements, we will launch and ship our new product solutions in the next 2 years. A change in the product and customer mix could still affect margins during the year, depending on the order intake from the first half of the year and beyond. For example, higher demand for Bonding solutions would generally be beneficial for us. Then there are various effects that are likely to neutralize each other. On the positive side, fewer one-off events such as the establishment of a new site in Taiwan and a more normalized ramp-up support for our customers for already installed tools. On the negative side, the impact of the expected decline in revenue on the fixed cost coverage. Finally, our EBIT margin, which is forecasted to a range of 8% to 10%. We had already explained in the Capital Markets Day that the expected decline in revenue is likely to impact the EBIT margin development. In that regard, I don't think the guidance came as much of a surprise. A few analysts had already placed their estimates within that range. So here is what we do expect to happen. First, lower sales volume, combined with a broadly stable gross profit margin will weigh on profitability. We have made a conscious decision not to reduce the R&D budget despite the lower revenue forecast. On the contrary, we actually expect an increase in this area as we are setting the base for future growth in the coming years. At the same time, we expect only a slight increase in sales and administrative expenses, and I can assure you that we will continue to strictly manage those budgets. Now some words on the expected development in our 2 segments. First, Advanced Backend Solutions. Expected sales decline of roughly 10% versus '25 is expected. Slight increase in gross profit margin and a broadly stable EBIT margin as lower business volume will have an impact on profitability. We anticipate the following trends in the market demand. Imaging Systems, there we see a stabilization of the strong 2025 level provided there is continued CoWoS-related demand for additional UV projection scanners. Coating, we see a slight improvement expected provided that the mainstream business picks up alongside a continued strong packaging and OSAT business. And on Bonding, significant improvements versus 2025 are expected as HBM customers commit to add more capacity again after a temporary digestion period which we experienced last year. Secondly, on Photomask Solutions, we have similar sales expectations as in the backend unit with roughly 10% versus 2025. Profitability is expected to decline as a result of the lower sales volume. On the market outlook, I can comment that we expect an improved order situation as high demand for semiconductors, again, driven by AI requires additional front-end equipment, see also the strong ASML order trend and consequently, also additional mask cleaning equipment. Preparation of customers for the introduction of High-NA also can play a role. Potential for additional momentum from the launch of 3 new solutions like the high-end mask cleaner, the mid-end mask cleaner and the first wafer cleaner addressing the 200-millimeter market can also give us a boost. When looking at our guidance for 2026, some might think that this year represents a step backwards for SUSS. I personally don't see it that way. As said, 2026 is a transitional year or rather a year of preparation for further growth and a substantial improvement in margins by 2030. These goals, which we presented in November Capital Markets Day, remain unchanged and recently are even getting tailwinds. Thanks to a strong focus on R&D and the development of new innovative solutions and next-generation products for selected faster-growing markets, 2026 is an important year and a necessary stepping stone into our bright future. And with that, we are opening the floor to your questions. Operator: [Operator Instructions] We have already received some risen hands, for example, by Mr. Menon. Janardan Menon: Burkhardt, I just want to check whether you can give us any indication on how you would expect your sales and gross margin to trend through the year? Is it possible that Q1 is your low point for both sales and gross margin and then you will see a gradual improvement from there? Would that be a reasonable assumption? Or any other color how you see the first half versus the second half develop would be great. And I have a small follow-up. Burkhardt Frick: Janardan, that's a really good question. And of course, you are spot on. We see really us hitting in Q1 as a low point of the effects we saw last year. Remember, we had a 3-quarter declining order intake, and it started showing, of course, in the last quarter of last year, and it will extend into the first quarter. However, this is offset, of course, with a reverse trend in order intakes, which, of course, will take a couple of quarters to materialize in an improved situation. So we think we are approaching the bottom here and will climb up from there. Janardan Menon: Understood. And then I was in Taiwan recently, and there is some talk in the Taiwan market about TSMC looking to localize their equipment, especially on the backend where possible and working with some of the local companies. I was just wondering whether you have any thoughts on that. Do you see this as a potential threat? Or is this mainly in areas where SUSS is not involved right now? Burkhardt Frick: I see that as an opportunity because we are local at the doorstep of Taiwan with our main production site. That's, by the way, also where we are developing our next-generation EUV scanner also in Taiwan. So in that sense, you could even call us a local company. But at least on those products we are designed in, I think we have a fairly solid position. Janardan Menon: Understood. And last one, a short one. Is the prepayments that have fallen, is it mainly Chinese customers that give you prepayments? And is the cash impact because of lower China orders? Cornelia Ballwießer: Yes. Yes, it's the Chinese customers and Chinese demand is not that strong. But there are some other institutes like R&D institutes who make prepayments, but mainly from China customers. Operator: We have another question from Madeleine Jenkins. Madeleine Jenkins: I have a few. Just the first is on a slide you just showed on the different segments. And if I understand it correctly, you're saying that Imaging is going to be kind of roughly flat so as Coating and then Bonding is significantly higher than 2025. But then you've got your sales expectation down 10%. So I'm just trying to understand where exactly that weakness is coming from for that sales forecast. Burkhardt Frick: Madeleine, also good question. Of course, the lower expectations, they stem from the accumulated order intake we collected in the last quarters. So from this, we can, of course, pre-calculate what we have already in our books. The rest, of course, are orders which we have to collect in the running year, mainly in Q1 and Q2 and '26. And both together will, of course, create a forecast which we picked. We picked there a decline of 10% for both units because we see various effects, as I think detailed out in our presentation. For Photomask, it's the decline we saw from Chinese customers. And for the backend, it's really the combined effect of the low intake we have received so far. Now this trend, we see partially being now offsetted, but we need to know and, of course, experience how strong this new high order intake trend will last. Madeleine Jenkins: Perfect. Makes sense. And then my second question is just on HBM. I think you mentioned in your opening remarks that only one of the customers was really in the Q4 order book. Do you have any indication of when the second customer might come in? And also at your Investor Day, you mentioned the potential qualification of SK Hynix. Is that -- could you provide an update on that as well, please? Burkhardt Frick: Yes. As you know, the other Korean customer still sits on a lot of underutilized equipment. So we carefully planned in some kind of demand resuming in the second half of this year. But of course, that has to materialize. But I have some good news on the other -- the second Korean memory maker. There, we did receive some HBM-related orders. So basically, we can now claim that we are in all 3 major memory makers. Madeleine Jenkins: That's great. And just a final question quickly. On the wafer-to-wafer hybrid bonding side, there's a lot of talk recently on its kind of application in 4 F-squared in DRAM. I just wondered if you're kind of in any early conversations here. Do you expect to be inserted in supplier for this in the next few years as that transition is made? Burkhardt Frick: Yes. Hybrid bonding, as you know, Madeleine, is moving a bit sideways, a little bit away from die-to-wafer application because runways are extended for TCB bonding equipment and also some customers, they are struggling with the process. Therefore, wafer-to-wafer hybrid bonding also comes in because you can bond the wafers first and then do the die stacking. I think there's some momentum going on there. But I think it's still in a, I would say, more experimental phase where we do see some interest, but we haven't seen it materializing yet. As you also know, we are not at the forefront with wafer-to-wafer hybrid bonders. I mean there are 2 other customers -- sorry, 2 other suppliers ahead of us. But we have our systems at IMEC, where we are running tests, and we can provide very good data. So I also expect more momentum picking up on that side also where we can benefit from. Operator: We have another question by Michael Kuhn. Michael Kuhn: Firstly, on the transition year again, maybe you could provide us with an update on, let's say, which of the products, the renewed products or the all new products you expect to contribute to sales first? What kind of ramp-up costs you expect and whether you see, let's say, some cost portion that you incurred this year as kind of nonrecurring and also for the context of R&D, is that mostly on medium-term projects? Or is there also a bigger portion, maybe including some external providers for, let's say, final engineering steps ahead of the product launches? Burkhardt Frick: Michael, yes, that's quite a mixed bag there. So let me start with the R&D side. So yes, we have external and internal R&D. And I think we made very clear in our call here that we have not reduced our spend in R&D. In reverse, we increased the spending to make sure that we can stick to the launch timing of those products we have in our pipeline. The first products are coming out this year, and there are notably 3 Photomask products. One is the high-end mask cleaning, the MaskTrack Smart. There we received the first order also in the first quarter of a large memory customer. And so that's the first shipment we are preparing for the second half of the year. The mid-end mask cleaners, we also there, are working on the first systems because we have more than a handful of firm orders for that mid-end cleaner, which will replace also our aging mid-end platform, which we then take from the market. And the wafer cleaner, that's the third product, we also received first hardware, and we are doing our internal commissioning and evaluation before we send it to a launching customer. So there are 3 projects which are really in the final stage for rollout this year. And then there's a backend product, which is our EUV scanner, which is panel capable, 310 x 310 projection scanner, which will be launched in Q3, also, of course, with a large Taiwanese target customer who already has set up a pilot line to evaluate the panel application. So in that sense, 4 products, which are launching this year. Maybe we can squeeze in the fifth, but we have to see to get all these projects on the road. And that's also the reason why we deliberately in that sense, bit the bullet in high continued spend in R&D because we want to make sure we are not letting down the customers. And we anticipate, therefore, this gap or this drop in EBIT. But this is, in our view, just very short term until we can reverse the trend. Michael Kuhn: Understood. And then maybe a follow-up in that context on wafer cleaning. At the CMD, you mentioned you're obviously starting with 200 millimeter, but saw pretty strong demand also for 300 millimeter and also accelerate that project. Where do we stand here in the time line? Burkhardt Frick: Yes. I mean, as you rightly said, the launching product is a 200-millimeter product. We want to, of course, get some feedback first, a, from our internal evaluation and then, of course, also from the first customer feedback, which is then also an input for the design. But we are preparing the design phase for the 300-millimeter tool in combination with an external partner. And we probably will kick off that design in the second half of this year, and we should see first hardware in the first half of 2027. Michael Kuhn: And then last one on the new EUV scanner. My understanding is that the current product comes with a relatively low gross margin. So should we expect the new product to be launched in Q3 to have a, let's say, sizable effect on the gross margin then because it's probably a relatively big part of your top line right now? Burkhardt Frick: Yes. That was the point in also redesigning this platform, which really came to age. Unfortunately, of course, the current CoWoS run, I couldn't wait for that. That's why we have to ship the old version, and we probably have to keep doing so because the first product we are launching is the panel version, which goes into a pilot line and panel production is not going into volume until '28-'29 time frame. So -- but very shortly after this panel version, of course, also our wafer version of the UV scanner, the next generation is coming. But that launches in 2027. And that, of course, depending on the conversion rate will then also improve this very low margin for the current DC. Operator: We have another question from Mr. Schaumann. Malte Schaumann: First one is on timing for potential Photomask uptake in demand for Photomask orders. We have seen quite a strong Q4 order intake at ASML, obviously, with shipments mostly scheduled for 2027. Is that kind of supporting the assumption that you would expect an uptake in demand in the second half of this year for the Photomask cleaning business? Burkhardt Frick: Yes, Malte, that's a good assumption. Of course, we are loosely connected because lead times and cycle times are very different if you compare us with an EUV system of ASML. But ultimately, we should see these effects. And as a matter of fact, we already see those effects because despite our expected decline in China, we currently see Chinese customers speeding up again, especially for photomask tools. But we also see international customers considering to pull in orders. So we are in the middle of evaluating the impact of that, but that is a trend which started late in Q4 last year, and we see it continuing in this quarter -- in the running quarter. Malte Schaumann: Okay. And for the Chinese demand you alluded to, is that then linked to the new mid-end cleaner? Or would these customers still order the current equipment? Burkhardt Frick: Actually, both. Of course, due to the equipment in use in China, the mid-end cleaner is more suitable for that market. But we see still a fairly high amount of high-end cleaning demand picking up again in China, which we didn't anticipate. Malte Schaumann: Okay. A quick one on Hynix. Do you see or do you expect kind of more or less regular follow-up business when production lines get extended with the product you have placed at Hynix? Burkhardt Frick: No, we are only interested in one-off sales, Malte. No, sorry, but I make a joke here. So obviously, yes, that's the intent to see follow-up business. But I think for us, it was important to get back into the door. So we are not talking volume orders here, but at least we have our hardware place now in the most recent HBM R&D line, which we can then, of course, exploit and hope fully get follow-up business. Malte Schaumann: Okay. Then on the guidance, I mean, given the current strength in orders that has continued into the first quarter of the year, the low end of the guidance at the sales level, actually appears a bit low. Is that reflecting uncertainty at customer level you're recognizing? Or is that rather linked to the overall global situation, which is not that stable at the moment? Burkhardt Frick: Yes. We -- of course, one good quarter doesn't make a full year, as we all know. And although we really have a very strong expectation because the quarter is almost over for the first quarter in intake. We have to see how long this strong push remains. When we created the guidance and also set our budgets, we had quite some expectations, and there was also a certain concentration in the second half of the year. But now we got strong demand already in the first quarter. And we have to see if this is a continued trend because if the second half also remains strong, then of course, we can come up with better results. Also the mix will have an important contribution here. So -- it's too early to just base it on one strong first quarter in order intake, I must say, because in sales, we will not see a strong first quarter. Malte Schaumann: Yes sure. Okay. Last one on double costs or one-offs, which are baked into the earnings guidance for this year. So are you able to quantify an amount, which is linked to double rent ramp-up costs and the like? Cornelia Ballwießer: There are some one-offs regarding Taiwan, as you know, because in the first quarter, we have some double rent double cost. And yes, that's more or less what we included in our guidance. Malte Schaumann: And that is a low single-digit amount. Cornelia Ballwießer: Yes, it's 0.4, something like this. Operator: We're moving on to Mr. Ries. Johannes Ries: Also a couple of questions from my side. Maybe let's first start with Taiwan, a short recap. How high was this payment you had made for the leasing which reduced the cash significantly? Remind us, please, how high this impact was? And how high is -- how much capacity you have now finally in Taiwan only to a reminder because it gets more and more important. Thomas Rohe: So Thomas speaking. The investment in Taiwan was a low 2-digit million euro budget, which we invested into the clean rooms and all these kind of stuff. And the leasing contract is now for 20 years and about EUR 40 million of leasing agreement, which we have there. But the cash out is really only on a yearly base for sure, but the leasing has to be accounted in our books already for the complete period. And the capacity only to really make this clear, we are really fully loading the factory as much -- as soon as possible. Right now, we have a load of around, let's say, about 70% with the old sites, which moved all into the new sites. So we are really heavily working to fill it up completely by at least the end of the year. Cornelia Ballwießer: Sorry, I just want to add, as Thomas explained, of course, the leasing liability is booked. It's around EUR 40 million. But you asked for cash out, and cash out is around EUR 2 million to EUR 2.5 million this year. Johannes Ries: Okay. The reduction in last year, but you mentioned partly was the leasing reason that the net cash or the cash has come down heavily. So that's a booking effect. Cornelia Ballwießer: Yes. It's KPI net cash figure, but it's not -- yes, it does not really says something about the duration of the liability in this case. So it's just net cash. But cash out is over the 20 years. Johannes Ries: Clear. On the capacity, from a revenue, how much revenue you can handle with the capacity you have now in Taiwan? Is it -- I have something of EUR 150 million, EUR 200 million in my head. Is that right? Thomas Rohe: That's a really good question, but it heavily depends on the product mix. As you know, we are introducing scanners there, coaters and bonders. And so from that point of view, it's really hard to say how much really revenue we can generate with this. But in general, I would say right now because we have half-half between Germany and Taiwan. So from that point of view, it's roughly perhaps the right order of magnitude, probably a little bit higher. Johannes Ries: Okay. Half of the total revenue came already from Taiwan? Thomas Rohe: Not yet completely, but we are targeting for this. Johannes Ries: Super. On the OSAT business, we hear from the OSAT that they are Amkor and ASE that they definitely heavily increased their budget. How much you have already seen in your own order income is much more -- it's more to come in the coming quarters from this side? Burkhardt Frick: Johannes, it's Burkhardt here. We already saw it last year, and I think I also mentioned that we saw this strong uptick for our Coating and Imaging business, which was mainly on the coating side contributed by additional demand from OSATs. They are expanding in their existing sites in Asia, but also they are planning to expand in the U.S. as also some other companies are. So there also, we expect a continued strong demand. Johannes Ries: And you mentioned that the Coating and Imaging business, there's also scanner in, which is low margin, but there's one reason for the lower margin. I always in my head that the coating -- at least coating had a quite good margin. Has it changed? Or is it only that maybe the scanner has brought down this average margin of Imaging and Coating? Burkhardt Frick: Coating is kind of pretty in the center of our margin distribution. So it is not as good as the bonders, but by far not as bad as the EUV scanners. Johannes Ries: Okay. I expected this. And also for your forecast, you're expecting a stronger business with temporary bonding for this year, but the margin in Advanced Backend Solutions will nearly stay flat. What is the reason? Because last year, it was a pressure coming partly from the temporary bonding came down, we expect an increase. Why is not maybe -- why we couldn't see a little bit stronger margin development in Advanced Backend? Burkhardt Frick: It depends how many more orders we see, especially from the bonding side. When we set out these corridors, we assumed a certain mix. We now see strong intake also on the bonder side. But we have to see how sustainable this is, Johannes. As I said, one good quarter doesn't make a full year. If the other Korean HBM maker doesn't place orders in the second half of this year, then I think we did everything right in our prognosis. But a lot of things can be happening. And as we saw last year, where we had to go in and correct twice our guidance. This is something we don't want to repeat. Johannes Ries: It's clear. But the bonding business is still above average at the margin side. Burkhardt Frick: Yes, well above average. Johannes Ries: Last question, R&D, will it further increase this year and only feeling how much it could increase? It will further increase but how much? Thomas Rohe: So it will increase only slightly. There are no big change really planned for this year. That's much more than EUR 2 million or EUR 3 million in total in absolute values. But we try to keep the headcount stable and also the investment in R&D. Burkhardt Frick: Maybe to add, Johannes, since the top line reduces, so the R&D ratio increases even faster. Johannes Ries: That's a fair point. Very fair point. But finally now, because I will meet him in person in the weeks, but I think it's the last call maybe of Sven as IR. And I think maybe even in the name of all other participants, all colleagues, I really want to say thank a lot for his work and great support, and it was a pleasure to work with him. Sven Kopsel: Thank you so much, Johannes. It was my pleasure. Operator: We're moving on to Mr. Devos. Ruben Devos: I had one follow-up on the EUV projection scanner. I think you've provided already quite some indications, but I was looking or whether you were able to maybe quantify what the EUV scanners actually contributed to the top line last year and whether you could give us a sense of the 2026 order funnel because I mean, there's many growth parameters out there. I think in itself, the products could be quite sizable for you, not only this year, but in the next 5 years. So it would be very helpful if we know a bit where you are currently. Burkhardt Frick: Yes. It's, I think, fair to say that the revenue contribution of the EUV scanner alone was between EUR 30 million and EUR 40 million last year. And this year, this number will be larger. Ruben Devos: Okay. All right. That's very helpful. I think on the -- and then just thinking about your other, let's say, younger products out there, thinking about the hybrid bonders, but also the inkjet printers, like on a combined basis, are we thinking this is about 5% of sales in '26? Or how should we think about that? Burkhardt Frick: Yes, that is really a low contribution because we sold single units to customers who are evaluating those systems. So this is not what I call a volume state. We are at the very beginning of that. So we had last year 2, 3 systems we sold. This year, we probably also have a couple of systems, but it's in the very single-digit percentage range. Ruben Devos: Okay. Okay. And then just for the temporary bonder business, looking a bit further out, with HBM4E and HBM5 sort of requiring thinner dies and even more bonding complexity. Are the existing platforms already compatible with those, let's say, next-generational stack requirements? Or will there be a meaningful upgrade or new tool generation needed? Burkhardt Frick: Well, our current generation of temporary bonders is, as we speak, qualified for HBM4. Otherwise, we wouldn't have received those orders. But of course, we are continuously improving those -- our products and also listening to our customers, what else they need. So we have, in parallel, a flanking program to improve bond chamber performance to meet also future needs because we are working both with the volume side of those customers, but also with the R&D centers who already work on the next N+1, N+2 generation of HBM stacks. So we stay tuned. And then we work with our customers when are we phasing in which improvements. It can be a running change. It can also be introduced in the next-generation platform. So we do both. I hope that helps. Ruben Devos: Okay. Great. And then just a final question on, I think co-packaged optics, you also talked about in the CMD, specifically on co-packaged optics on the interposer as a potential future opportunity. I mean, in the last few months, excitement on co-packaged optics has quite strongly accelerated. So my question is like within that further integration complexity, do I understand it well that basically your EUV scanner and coating portfolio map well on to this? And what is generally the last -- the traction you've been seeing in the last 3 to 6 months on Photonics in general? Burkhardt Frick: Yes, you're absolutely right. There's a lot of hype there, and we are kind of positioned with our existing portfolio. But of course, we need to enhance or upgrade our portfolio to also serve the co-packaged optics market well. So -- but it's from our side, more kind of technical feasibility, what additional features are needed, which can be added to our existing portfolio to also play a role there. But it's too early to really turn this into concrete products. So right now, it's on our side in an R&D development stage. And as soon as we have something noteworthy to report, we will do so. Operator: I think Mr. Schaumann has a follow-up question. Malte Schaumann: One follow-up question on the orders in the first quarter of the year. I mean the environment is pretty dynamic. So a continuation of the trend can have several meanings. So maybe some more color on what does that actually mean? I mean, typically, Q1 is not the strongest quarter in terms of order intake. So despite that fact, should we expect kind of more or less stable order development from the fourth quarter and the first quarter, which would be already good? Or do you see even an acceleration? So some additional color would be appreciated. Burkhardt Frick: Yes. I was almost fearing that this question will come, but it comes late now. So the -- I mean, first of all, I can confirm that we are breaking with that trend that in terms of order intake, this first quarter in '26 is a really very good quarter since we are in the last 2 days of the quarter. Of course, we already know what's coming. We know most of it. And I can say that much that we will be well above the Q4 number of last year in terms of order intake. Operator: We have another question by Mr. Jarad. Hello. Can you hear us? I can see that you're unmuted, but I cannot hear you. Abed Jarad: Yes, sorry. I have a question regarding -- a follow-up question regarding the sales forecast. So maybe you can help me understand it better. But based on your order book of EUR 267 million and assuming like 18% of aftersales, your implied order intake needed in H1 to reach the midpoint is very, very modest. And you are saying that in Q1, order momentum was strong. Burkhardt Frick: Yes. Of course, we need to have 2 strong quarters to complete the year because only what we have an intake in the first 2 quarters, the majority of that, we can still turn around in products assembled, shipped and recognized. So the first quarter, if that is strong, definitely helps to secure the guidance we provided. If we have a second quarter, which is also strong, that pretty much gives us some assurance that we are safe with that guidance. But again, this is speculation, so I don't want to speculate. I can only see a strong order momentum carried over from last quarter into the first quarter. And based on these 2 quarters, we have made our sales projection. Abed Jarad: Okay. Maybe correct me if I'm wrong, did you just mention that Q1 order intake is above Q4? Burkhardt Frick: Yes, I did. Abed Jarad: Okay. Wouldn't this already put you on the midpoint of guidance? So EUR 267 million plus EUR 117 million, let's say, and 15% after -- even assuming conservative 15% aftersales, you are above guidance? Or am I -- like midpoint of guidance? Burkhardt Frick: Well, first of all, the EUR 117 million of Q4 already included in the order book. So I cannot follow your math there completely. But yes, of course, the first -- if we have a strong first quarter, that relieves some of the concerns because it's a continued reversal of the trend at a very high run rate. And if we can also get a decent second quarter in, then I would start agreeing with you, but we are not yet in the second quarter. Sven Kopsel: Maybe, Abed, if I may add one sentence, the order book number of our annual report also always includes service business. So if we get service business, for example, a contract for 2 years, the entire period, this 2 years period is included in the total order book number. So service is not getting on top completely. It's partially already included in order book. Operator: We have one more question in our chat box by Mr. [ Dion ]. He's asking, do you see competition of ASML in the scanner business? And do you think there could be a competitor in hybrid bonding as well? Burkhardt Frick: Yes. I think ASML was late to the party to also join the backend business with the recent announcements and also their focus in that arena. I mean they already have a scanner out there targeted for backend. But this one, we don't see as a competition in the CoWoS process we are currently involved in. However, that is, of course, competition for other markets, our real competition, which is Canon is facing. So that I don't see us as a threat. The other activities, I think it's too early to gauge where this is heading. But of course, I mean, there are other companies, whether it's AMAT or Lam and already TEL who is already active in this domain. So with ASML, this is just the last party -- the last company joining the party. And I think this ultimately will just help the ecosystem to get on common ground here. So I see this rather as an opportunity to collaborate than anything else. Operator: I guess we have one last question by Mr. Jarad. He is raising his hand again. Abed Jarad: Yes, my bad. That was a mistake. Operator: Okay. Thank you so much. Well, with no further questions, we have come to the end of today's earnings call. Thank you very much for your interest in SUSS MicroTec SE. And a big thank you also to you, Mr. Frick, Mrs. Ballwießer, Mr. Rohe and Mr. Kopsel for your presentation and your time. If any further questions arise at a later time, please feel free to contact Investor Relations at SUSS MicroTec SE. I wish you all a successful day, and I'm handing over to Mr. Kopsel once again for your closing remarks. Sven Kopsel: Yes. Thank you so much and nothing really to add. So take care and yes, get in touch if you have any more questions. Thank you. Take care.
Operator: Greetings. Welcome to Terrestrial Energy's Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Tom Cook, Managing Director at ICR. Thank you. You may begin. Thomas Cook: Thank you, and good morning, everyone. Welcome to Terrestrial Energy's Fourth Quarter and Full Year 2025 Earnings Conference Call. With me today are Simon Irish, CEO; and Brian Thrasher, CFO. Alongside today's call, you can find our earnings release as well as the accompanying presentation on our website at ir.terrestrialenergy.com. An audio replay of this call will also be made available, which you can access on our website or by phone. The phone number for the audio replay is included in the press release announcing this call. As a reminder, some of the statements made during this call, including those relating to our outlook, expected company performance or business strategy may constitute forward-looking statements. Please note the cautionary language about forward-looking statements contained in our press release and earnings presentation, which also applies to this call. With that, I would now like to turn the call over to Simon Irish. Simon Irish: Good morning, everyone, and thank you for joining us today. It's a pleasure to welcome you to Terrestrial Energy's first earnings call as a publicly traded company. 2025 was an important year for the company. We made significant progress across the 3 key elements of business plan execution. We delivered important regulatory developments, secured federal support for swift licensing and operation of reactor and fuel supply pilot projects. We announced expansion of supply chain activities, progress with commercial deployments, and we strengthened our balance sheet through our business combination with HCM II. Before discussing developments in more detail, I'd like to briefly step back and frame the important context in which we're now operating. For industrial, innovation requires market context and for innovation -- for nuclear innovation, there is no more powerful context to what we see today and stretching far ahead. Referring now to Slide 3 of the slide deck posted to our website that accompanies today's call. Global energy markets have clearly entered a period of generational and transformative change. Electricity demand is accelerating at a pace not seen in decades, driven by demand growth from multiple sources, energy-intensive industrial innovations, artificial intelligence infrastructure, automation and electrification and the reshoring of manufacturing capacity. Furthermore, energy policy today clearly prioritizes national energy security, grid reliability and affordability. Energy security has become a dominant theme across many advanced economies, a shift that accelerated with the start of the war in Ukraine and its associated impact on European natural gas supplies and has moved to a new level today with recent insecurity of Gulf-based LNG and oil supplies. It is now clear that only nuclear energy has the potential to meet these huge demand deficiencies and policy objectives for secure, clean, reliable energy supply. We see these powerful fundamentals driving nuclear energy demand to continue to strengthen, and they create today's extraordinary context for nuclear innovation that is without parallel. Contemplating this opportunity, one quickly realizes there are many methods to supply nuclear energy from different sized plants ranging from the tiny to the enormous and a wide range of fission reactor technologies that cover the conventional -- the long conventional fission technologies of light and heavy water reactors to the generation class of advanced reactor technologies of the future to which our technology belongs. Here lies the secular opportunity today for the innovator. If nuclear energy supply is to meet these extraordinary demand expectations, it supply must be from nuclear plants, operating with different commercial profiles, ones that are smaller and more affordable to build, ones that are much, much more capital efficient for low-cost energy supply, and ones that are modular for quick construction and deployment at scale. This next generation of nuclear plants must be more flexible in operation and capable of providing heat for industry as well as electric power. They must be easier to site near point of demand, close to data center, chemical or petrochemical plant. Their colocation capacity delivers a new energy supply paradigm. Hundreds of megawatts of clean firm energy from a small parcel of land located close to demand and free from pipeline and transmission constraints, only innovation to deliver small and modular nuclear plants operating with next generation of nuclear technology has the potential to deliver these requirements. Turning to Slide 4. Terrestrial Energy was founded over 13 years ago, precisely with this paradigm in mind. We have been diligently moving forward with development of our IMSR plant design, anticipating the arrival of today's extraordinary market and policy circumstances. With this clear innovation focus, our IMSR plant is now heavily differentiated from other smaller modular nuclear plants in the advanced reactor sector in important, competitive and compelling ways. I will discuss some of these differentiators now. Turning to Slides 5 and 6. First, affordability and capital efficiency. The IMSR plant is smaller, 1/6 the size of conventional nuclear plant, modular in design, and it captures the fundamental and deeply compelling techno-economic benefits of molten salt reactor technology. IMSR plant generates power from steam turbines operating with a near 50% greater efficiency than those driven by light-water reactor technology. Its nuclear systems operate at low pressure and with high inherent safety, again, powerful economic virtues that reduce costs further as well as virtues that secure strong social license for deployment. We believe that competitive affordability will be a primary driver of success. Second, flexibility in operations. The IMSR plant is capable of high-temperature thermal energy supply for industrial process heat applications and can strongly load follow. Its output can be customized to a required precise mix of heat and power, and it can be integrated with other energy supply systems, including natural gas for customized resilience and speed to first commercial operations. We believe that this flexibility in operations contributes to an opportunity for a service addressable market for our company that we estimate to exceed $1.4 trillion. Third, scalability for fast fleet deployment. As supply chain factors heavily determine speed to fleet to fleet scale, our supply chain objective has been to source to the greatest extent possible, material and components available from today's nuclear supply chain. This strategy has delivered important competitive and strategic advantages, particularly with steam turbine and fuel supply. While some Generation IV nuclear plants showed some of the characteristics required for next-generation nuclear energy supply, only the IMSR plant uses standard nuclear fuel, uranium enriched to less than 5%. Ten years ago, we strategically chose to avoid HALEU fuel use, that is uranium enriched to between 15% and 20%, the bracket required by other Generation IV reactors in our sector. In today's enrichment constrained environment, this decision has removed from our deployment plans the considerable challenges and uncertainty of uranium fuel supply at commercial scale. In doing so, this decision has improved our market position, reduced regulatory complexity and cost the first plant as well as for fleet. We believe our supply chain strategy is delivering sector competitive advantages to fleet fast deployment at scale. Molten salt reactor technology is not new. It was first demonstrated over 6 decades ago and most recently in 2023, when China began operating its first molten salt reactor based on the technology demonstrated at Oak Ridge National Lab in Tennessee. The technology's long history of research and development yields a considerable understanding of performance and operation. Our strategic design objective was to use this existing and extensive body of knowledge to create the strong technical foundation of the IMSR plant design that exists today. Let me spend a minute talking about regulation. A core objective of Terrestrial Energy since inception has been to retire project risk through early and focused engagement with world-leading nuclear regulators. We were the North American sector trailblazer when in 2016, we applied the Canadian Nuclear Safety Commission to undertake its formal programmatic vendor design review of our IMSR plant design. In 2023, the Canadian Nuclear Safety Commission completed that formal review and concluded publicly that there were no fundamental barriers to licensing the IMSR plant design for commercial use. The work completed in Canada has matured our safety case. It bounds regulatory uncertainty and strengthens our regulatory engagement with the NRC in the United States, which started in 2017. Our business strategy is to deploy IMSR plants with competitive scale and speed and in a capital-efficient manner. To achieve this, Terrestrial Energy invites others to build, own and operate IMSR plant as is industry's convention today. We will, however, remain the key project partner supporting project licensing and plant construction with revenue-generative engineering services and working with established engineering, procurement and construction partners to deliver commissioned and operating plant. We will also provide IMSR core units, fuel, fueling services and full life cycle operational support. This approach leverages the capability of experienced industrial partners, providing speed to deployment at fleet scale. It also allows us to focus on our core capabilities and primary business objectives. With this business strategy in mind, I'd like to present the framework to assess progress. It has 3 pillars. The first drives IMSR engineering and regulatory developments, including our key project engagements with the Department of Energy. The second drives supply chain developments. And the third drives IMSR plant projects advancing to deployment. I'd now like to review 2025 developments, demonstrating our progress across these 3 pillars. Please refer to Slide 7. In 2025, we announced the NRC's completion and acceptance of our Topical Report on the IMSR Principal Design Criteria. This was a foundational ruling, representing an important step forward to IMSR operating license submission and demonstrating progress with our pre-application engagement with the regulator. Our regulatory program operates in parallel with our engineering and testing programs. In 2025, we received welcome support from 2 new strategic programs administered by the Department of Energy. These were established following presidential executive orders in May 2025 to accelerate advanced reactor development. We received 2 OTA awards, one from each program. The first from the Department of Energy's Advanced Reactor Pilot Program. This supports quick execution of Project TETRA, the Terrestrial Energy Test Reactor Assembly project, which assists with data collection required for future IMSR license application. The second was from the Department of Energy's Fuel Line Pilot Program, which supports our schedule for completion of our Fuel Line Assembly project, TEFLA, which is a pilot scale fuel production process, the antecedent to our commercial plant for IMSR plant fuel supply. On further supply chain matters, we continue to build on previously established relationships with leading industrial nuclear suppliers such as Westinghouse, Siemens Energy, BWXT as well as other experienced component manufacturers. These supplier relationships support fabrication of reactor components, development of fuel supply infrastructure and long-term project capabilities. In 2025, we announced further contracts with Westinghouse to support our IMSR fuel supply program. In the past year, we advanced important materials testing, selection and qualification work. We announced our graphite irradiation testing had entered its concluding phase at the NRG PALLAS' High Flux Reactor in the Netherlands. This is one of the West's most powerful test reactors. We would like to draw attention to the importance of such in-core testing for Generation IV reactor materials. These are activities essential for reactor materials qualification, supplier selection and licensing readiness for Generation IV reactor technology. Now turning to IMSR plant project developments. Early in 2025, Texas A&M University, supported by expertise in its nuclear engineering faculty, announced its selection of Terrestrial Energy to site a full-scale commercial IMSR plant at its RELLIS campus, following a competitive sector-wide evaluation process. This selection positions an IMSR plant on ERCOT, one of the fastest-growing electricity markets in North America and places the project in a leading engineering research and workforce development ecosystem. In 2025, we announced collaboration with Ameresco to partner with IMSR plant site identification and project development. Ameresco brings deep project development expertise and extensive experience with federal energy programs. This relationship expands our capacity to identify IMSR plant project opportunities across multiple industrial and data center markets and to develop them. As we move into 2026, our focus is again on disciplined execution against a series of clearly defined and planned steps, each advancing across the 3-pillar framework discussed earlier. With this framework in mind, I would like to provide guidance on further developments in 2026. Turning to Slide 8. We expect to announce the following developments in 2026. First, announce further agreements with Texas A&M for the deployment of an IMSR plant at RELLIS and for testing and development of key IMSR components and processes. These agreements will support the siting and development of the proposed IMSR plant. Second, and following the announcement of the RELLIS IMSR plant project in 2025, we expect to disclose details of between 1 and 3 additional commercial projects to deploy IMSR plants. Third, we expect to submit to the NRC for review at least 3 additional Topical Reports covering key and consequential areas to increase readiness for NRC license submissions to construct and operate IMSR plant. Finally, following the 2 Department of Energy OTA awards in 2025, we expect to provide project development details disclosing sites for both the TETRA and TEFLA projects. We expect to identify key engineering partners and organizations supporting regulatory readiness for these important projects. In closing, 2025 was a transformational year for the company. We were successful with our strategy to respond swiftly to the remarkable and generational change in demand for nuclear energy supply. We strengthened our capital position, advanced regulatory readiness and secured support from the DOE's federal programs in key areas. We advanced commercial and supply chain partnerships always aiming for fleet scale solutions and initiated projects and relationships to deploy IMSR plants. Terrestrial Energy's founding belief was that nuclear technology must evolve to meet the remarkable energy market requirements of this modern era. As a private sector innovator, we declared over a decade ago that the ruling objective for nuclear innovation is affordability, cost competitiveness and speed to market at scale. Design and technology decisions have profound and fundamental consequence. On returning from CERAWeek and reflecting on this objective, as we repeatedly do, we remain as convinced of this objective as on the day we founded the company. And over the last decade, we have consistently programmatically and diligently advanced our IMSR plant design. Today, our long commitment and conviction in this ruling objective of nuclear innovation positions the IMSR plant as powerfully and competitively differentiated in a nuclear tech sector pursuing a $1 trillion market opportunity. We are moving forward from this position, looking past the deployment of a single IMSR plant to a fleet of IMSR plants in the 2030s and the establishment of a standardized and scalable platform for IMSR plant delivery across multiple industrial and grid applications and across international markets. With that, I will now turn the call over to Brian Thrasher, our Chief Financial Officer, to review the financial results in more detail. Brian Thrasher: Thank you, Simon, and good morning, everyone. I will briefly review our financial results, liquidity and capital position for the year, and then we will open the call for questions. Let me begin though with the transaction that positioned Terrestrial Energy to enter this next phase of development. On October 28, 2025, Terrestrial Energy completed its business combination with HCM II Acquisition Corp. and began trading on NASDAQ under the ticker IMSR on October 29, 2025. The transaction resulted in trust redemptions of less than 1% and combined with the $50 million PIPE, secured more than $292 million in gross proceeds. We believe this outcome reflects strong support from investors for both our small and modular nuclear plant design as well as our business strategy in the context of the market opportunity today for nuclear innovation. Following the listing, we also announced developments with our fuel services agreement with Westinghouse, strengthening our supply chain readiness for IMSR plant commercial operation. In addition, we enhanced our senior leadership team during the fourth quarter to support U.S. commercialization efforts and deepen engagement with federal stakeholders. Turning now to our financial results as summarized on Slide 9. Terrestrial Energy reported a net loss of $28 million for 2025, an increase of $17 million on the prior year. This increase reflects growing expenses from our IMSR engineering program with its component testing, regulatory activities from our TETRA and TEFLA projects with the DOE from supply chain development as well as from organizational expansion as we resource for public company readiness for key technical capabilities and for projects. Research and development expenses, those expenses incurred for design and engineering of the IMSR plant increased to $10 million in 2025, an increase of $5 million from the prior year as we expanded materials testing and progressed graphite qualification work. General and administrative expenses increased to $14 million in 2025, an increase of $10 million from the prior year, primarily reflecting expansion in personnel, corporate infrastructure and professional services to accelerate our commercialization activities and support public company readiness. Within general and administrative expenses, legal, accounting and other professional fees increased to $5 million in 2025, an increase of $4 million over the prior year and excluding $22 million of transaction-related costs associated with the business combination, which are presented as an increase to additional paid-in capital. Also, personnel-related expenses increased as we move forward with our commercial development, grew our staff to support IMSR engineering, finance, supply chain development, management of IMSR plant commercial projects and public company reporting requirements. Additionally, stock-based compensation increased to approximately $3 million, an increase of $2 million over the prior year as management capabilities expanded during the year. Finally, we incurred approximately $1 million in additional costs in 2025 to advance public company readiness and scaling of our operations. These included directors and officers insurance, investor engagement activities, conference participation, travel and expanded software and operational systems. Interest expense, net of interest income of $3 million in 2025 increased by $2 million from the prior year, reflecting increased debt balances, partially offset by higher interest income. More specifically, interest expense of $4 million in 2025 compared to $1 million in 2024 is attributable to larger average debt balances in 2025, combined with the amortization of the debt discount on the legacy Terrestrial Energy convertible notes. The company earned $1 million of interest income in 2025 on the cash balance received from the closing of the business combination. Turning now to liquidity. At year-end, we held approximately $298 million in cash and short-term investments. This balance reflects the proceeds from the business combination with a $50 million PIPE investment completed in October, two financing rounds completed earlier in the year and the cash exercise of legacy Terrestrial Energy private warrants. This capital position provides the financial resources for a period of strong business growth and to deliver consequential progress with important milestones. These include milestones from progress with our IMSR engineering program and its regulatory and R&D elements that include the TETRA and TEFLA R&D projects with the DOE, from supply chain development and from progress with IMSR plant commercial projects. At year-end, summarized on Slide 10, the company's issued and outstanding share count was 105.8 million shares consisting of 81.8 million common shares outstanding and 24 million exchangeable shares outstanding. The exchangeable shares are exchangeable into common shares on a one-for-one basis at any time at the election of the holders. That concludes our prepared remarks. Operator, please open the line for questions. Operator: [Operator Instructions] our first question is from Jeff Grampp with Northland Capital Markets. Jeffrey Grampp: I was curious to start on the '26 kind of expectation milestone slide, you guys talked about announcing 1 to 3 additional commercial projects. I know you can't provide too many details on kind of future announcements, but to the extent you can provide a little more detail, do you expect those to be more kind of MOU, LOI type announcements, definitive deployments at identified sites or something else? Just, I guess, trying to level set, I guess, the maturity of some of the conversations you're having with prospective customers. Simon Irish: Well, Jeff, yes, we will reserve detail to the moment in which we disclose these developments, but sort of perhaps more generally, for an IMSR project is first defined by the location. It's got a ZIP code. And it's also defined by a process, which starts with the declared intention of the parties involved to proceed with that process ultimately to the commissioning of an IMSR power plant. So maybe I'll just leave it there in terms of providing additional detail on what that means. Jeffrey Grampp: Understood. Appreciate that. My follow-up, there was a recent announcement from the NRC regarding Part 53 licensing as kind of an emerging pathway, which I think would have some applicability to Terrestrial's design. Is that something you guys are considering pursuing? And if so, what kind of benefit could you see to that having to your commercialization pathway? Simon Irish: Well, it's certainly an option for us to consider in terms of what is the most efficient pathway to commercializing to life getting to operation of first plant. We are very familiar with that type of the Part 52 framework. It's graduated, it's risk informed, it's principles based, all the elements of the Canadian process, by the way. The Canadian process has been defined for a long time as graduated risk informed principles based. So it's certainly an option for us and many others in the industry. Our central case at this point in time for those first couple of plants is going to be a Part 50 strategy. So the 2 step, the construction permit moving on to the operating license. Operator: [Operator Instructions] With no further questions, I would like to hand the conference back over to Simon for closing remarks. Simon Irish: I'd like to thank everyone for joining us today on our first earnings call as a public company. Thank you for attention, and we look forward to providing you with further updates in the future. Thank you. Operator: Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.
Operator: Good afternoon, and welcome to the Innovative Food Holdings Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. On today's call for Innovative Food Holdings is Gary Schubert, our Chief Executive Officer. Throughout the conference, we will be presenting both GAAP and non-GAAP financial measures, including, among others, adjusted EBITDA and adjusted fully diluted earnings per share. These measures are not calculated in accordance with GAAP. Quantitative reconciliations of certain of our non-GAAP financial measures to their most directly comparable GAAP financial measures appear in today's press release. I would also like to remind everyone that today's call will contain forward-looking statements from our management made within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities and Exchange Act of 1934 as amended, concerning future events. Words such as aim, may, could, should, projects, expects, intends, plans, believes, anticipates, hopes, estimates, goal and variations of such words and similar expressions are intended to identify forward-looking statements. These statements involve significant known and unknown risks and are based upon a number of assumptions and estimates, which are inherently subject to significant risks, uncertainties and contingencies, many of which are beyond the company's control. Actual results, including without limitation, the results of our company's growth strategies, operational plans as well as future potential results of operations or operating metrics may differ materially and adversely from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, the risk factors described and other disclosures contained in our filings with the Securities and Exchange Commission, including the risk factors and other disclosures in our Form 10-K and our other filings with the SEC, all of which are accessible on www.sec.gov. Except to the extent required by law, we assume no obligation to update statements as circumstances change. Unless otherwise noted, all results discussed today reflect continuing operations only. With that, I would like to turn the call over to Gary Schubert, Chief Executive Officer. Please go ahead. Gary Schubert: Thank you, and good afternoon, everyone. I appreciate you joining us. This is my second earnings call as CEO, and I want to approach today the same way I approached the last call with candor, precision and a clear view for what matters most. 2025 was an important learning year for IVFH. As we push to grow across multiple channels and operating initiatives, it became increasingly clear that parts of our operating model, our systems, our applications and our integrations were not where they needed to be to support that growth with consistency, speed and visibility we expect. That reality showed up most clearly in the fourth quarter. At the same time, the opportunity in front of us remains real. We have meaningful customer relationships. We have a differentiated platform across digital channels, national distribution and local distribution, and we have a much clearer understanding of what must be fixed, normalized and institutionalized in order to convert the platform into more reliable, more scalable and more profitable performance. So my message today is straightforward. We are not managing the business for a quick headline turnaround. We are rebuilding the foundation the right way. That means stabilization, modernization, disciplined execution and cash preservation. Let me start with the numbers. Unless otherwise noted, all figures I discuss today refer to continuing operations. For fiscal year 2025, revenue increased 2.1% to $60.7 million compared to $59.4 million in 2024. Gross margin improved to 25.8% from 25.3% in the prior year. GAAP net income from continuing operations was $2.5 million or $0.046 per fully diluted share, and adjusted EBITDA was $2.4 million. In the fourth quarter, revenue declined 18.1% versus the prior year quarter. Digital channels declined 13.4%, national distribution declined 14.1% and local distribution declined 32.3%. Fourth quarter GAAP net income from continuing operations was $797,000 versus $685,000 in the prior year quarter, while adjusted EBITDA declined to $718,000 from $1.3 million. We ended the year with approximately $927,000 of unrestricted cash. That level of liquidity reinforces why disciplined execution and cash preservation are central priorities for 2026. Subsequent to year-end, on March 6, 2026, -- we completed the sale of our Mountain Top, Pennsylvania facility for $9.225 million. The proceeds were used to repay MapleMark loan and interest in full. Restricted cash tied to the property was released and the balance sheet was further simplified. Net proceeds after transaction costs and debt repayment were modest, but strategically, the transaction was important. It removed a noncore asset, improved financial flexibility and sharpened our focus on continuing operations we are building going forward. The most important point behind the fourth quarter is that the pressure we experienced was not isolated to one customer, one facility or one business line. It reflected broader reality. The complexity of the enterprise outpaced the operating architecture supporting it. We saw that in digital, where the transition of our largest legacy customer, US Foods, from its older marketplace environment to its newer direct environment created disruption, but that was not the whole story. We also had other customer side ERP and integration changes that required rework and reconfiguration on our side. When those changes are being absorbed into an older and more fragmented technology stack, the work becomes slower, more manual and less scalable than it should be. We saw that national distribution, where the relocation of airline-related activity from Pennsylvania to Chicago created temporary inefficiencies in order intake, billing, item setup, vendor setup and service execution. And we saw it in local distribution, where operational inconsistencies, forecasting gaps, procurement issues and ongoing integration work created strain on both Chicago and Denver. These are different symptoms, but they all share the same root cause. We are still operating too much of the business through fragmented systems, aging applications and integrations that require too much manual intervention, too much rework and too much institutional knowledge to perform at the speed and precision the business now requires. That is the issue we are addressing. Let me speak to each channel briefly. In digital, I want to be clear. I do not view the opportunity as impaired. I view the architecture around it as incomplete. Digital's pressures in the quarter was most visible through the US Foods transition, but it also reflected broader integration slowdown, maintenance friction and technology backbone that makes changes harder than they should be. Our issue is not simply getting items started. Our issue is moving items through the maturity curve with greater speed and consistency. When I refer to the maturity curve, I mean the time it takes to move an item from intake to setup to transactability to broad discoverability across all relevant points of distribution. Today, that curve is too long. Separately, we also have to manage what happens after an item is live. We need items to remain accurate, competitive, available, visible and commercially healthy over time. We need to improve both. Our priorities in digital are clear: improve item setup quality, improve vendor onboarding, shorten the maturity curve, expand points of distribution, increase the percentage of items that become fully transactable and broadly discoverable and strengthen the discipline required to keep items competitive once they are live. Our focus is not just on adding items, but on increasing the number of transacting items across all eligible points of distribution and improving selling frequency over time. We are also using our AI-enabled hub to improve workflow speed and first-time accuracy at the front end of the process. But the last mile remains the critical constraint, and that is where much of our focus now sits. I do want to acknowledge one important point for investors. We are seeing encouraging directional signs in upstream item setup, vendor onboarding and points of distribution work. But I'm not yet at a point where I want to provide formal public operating metrics on those leading indicators until I have complete confidence that those are being measured consistently and tied clearly to commercial outcomes. What matters is not gross activity for its own sake. We are not managing the business by simply counting how many items were added. Items are also lost, degrade or lose competitiveness over time. What matters is portfolio quality, how quickly items mature, how broadly they are distributed, how many become core and whether the catalog as a whole is getting healthier. In National Distribution, revenue declined 14.1% in the quarter. The decline reflects meaningful execution work still underway beneath the surface. The relocation from Pennsylvania to Chicago simplified the footprint and aligned us around continuing operations, but it also created temporary disruption across order intake, billing, item setup, vendor setup and service execution, while exposing how much of our execution still depends on clean integration across systems, workflows and teams. We also knew that certain legacy Pennsylvania capabilities would not continue after the move, including specialty cheese cutting activity tied to the discontinued Pennsylvania operations. That was part of the strategic reset, and it was understood. On top of that, airline-related business became more competitive in the quarter. Importantly, we do not view this as deterioration in the underlying relevance of the channel. We view this as a combination of transition friction, capability changes tied to the Pennsylvania exit and competitive dynamics that we now need to address with tighter execution, better cost positioning and stronger service reliability. So the operating imperative now is straightforward: improve reliability, tighten execution and make sure the platform supporting national distribution is getting better integrated, better controlled and easier to scale from Chicago. In local distribution, both Chicago and Denver remained under pressure. In Chicago, the key issues were service consistency, forecasting discipline, procurement execution and the strain of integrating transition-related work into the core operating model. In Denver, we saw the effect of customer losses and margin pressure, but we also continue to work through the integration path that should ultimately create more synergy across the enterprise. I do want to note one important point on Denver. Denver is beginning to participate in the broader digital model. That is still early, and I do not want to overstate it, but it matters. If we can continue enabling Denver-sourced inventory to move through digital channels, we can improve working capital velocity, expand digital assortment and leverage an existing fulfillment footprint without adding unnecessary overhead. That is exactly the type of low capital cross-platform synergy we should be building. That brings me to our most important strategic action, modernization, beginning with the ERP and the operating architecture around it. For clarity, when I talk about modernization, I'm talking about more than one system. I'm talking about the full technology stack, our core systems, our operating applications and our integrations that connect them. Great Plains is our current ERP and remains a core system of record, but ERP is only one part of the picture. We also have surrounding applications, workflow tools and integration layers that have become too fragmented, too manual and too dependent on a small number of people and legacy process workarounds. That is why ERP is our lead action, but not the only action. ERP is the foundation. But we also have to simplify and redesign the processes, applications and integrations that feed into and depend on it. This is not simply a technology project. It is an operating model project. It is about simplifying data structures, standardizing workflows, improving item and vendor governance, reducing integration friction, increasing visibility and enabling the business to move with greater speed and intelligence. It also is about creating a stronger foundation for automation and AI over time. Today, too much of our data and too many of our workflows are not yet structured in a way that allows us to take full advantage of those capabilities. The risk of not doing this is straightforward. If we do not modernize the foundation, we will remain slower than we need to be in onboarding items, reacting to customer side changes, supporting vendors, managing exceptions, improving discoverability and making informed sourcing and pricing decisions. That means more manual work, more rework, slower cycle times, weaker visibility, lower competitiveness and less ability to operate proactively instead of reactively. That is not the path we are going to take. In the fourth quarter of 2025, we committed to a modernization path that begins with ERP evaluation and extends into pricing governance, item setup, vendor onboarding, maturity curve acceleration, ongoing item maintenance and end-to-end order flow. This will be a multi-quarter effort. We intend to move with urgency, but we also intend to do it correctly. While that work progresses, we are going to remain disciplined in how we operate the business. We will continue to improve item and vendor setup. We will continue to strengthen digital throughput and reliability. We will continue working to restore service consistency and customer trust in local distribution. We will continue supporting national distribution opportunities that fit the operating model we are building, but we are not going to add complexity faster than the platform can absorb it. We are not focused on pursuing new acquisitions at this time. And we are not focused on taking on additional debt at this time. And we are not focused on expanding it into entirely new channels before the core foundation is ready. Right now, the highest return work is to simplify execution, strengthen liquidity, preserve cash, modernize the operating engine and build a business that can absorb growth rather than be disrupted by it. So to summarize, 2025 exposed the gap between the complexity of the enterprise and the architecture supporting it. Q4 reflected that reality, but it also clarified exactly where we need to focus -- our priorities are stabilization, modernization, disciplined execution and cash preservation. Success in 2026 will not be defined only by revenue growth. It will also be defined by stronger operating discipline, better systems alignment, improved liquidity and measurable progress against the modernization road map. Our objective is not simply to grow. Our objective is to build a more scalable, more disciplined and more resilient IVFH. If we do that well, better financial outcomes will follow. Thank you for your time and continued interest in IVFH. We will now begin the question-and-answer session. Gary Schubert: How should investors think about 2026? I would frame 2026 as a year of stabilization, modernization, disciplined execution and commercial growth. We are focused on strengthening the operating foundation of the business, but that does not mean we are stepping away from growth opportunities. It means we intend to pursue commercial growth in a way that is operationally supportable, strategically aligned and profitable. Our objective is to improve reliability, strengthen liquidity, modernize the operating engine and at the same time, continue advancing the commercial opportunities that fit the platform we are building. What is happening with digital? The issue in digital is not that our customers are the problem. The issue is that when change is introduced, whether through platform changes, integration updates or broader operating requirements, we have not been able to absorb and integrate those changes with speed and consistency we need. That makes it harder to stay focused on the commercial and operational actions that help us grow. The opportunity in digital remains real. Our work is centered on improving how quickly and consistently we can onboard vendors, set up items, maintain item health, expand points of distribution and convert those efforts into more transacting items and stronger selling frequency over time. What operating indicators are you watching in digital? Internally, we look at metrics tied to vendor onboarding, item setup, transactability, points of distribution, selling frequency and broader item health over time. These measures are important on how we assess the health and direction of the business. They help us understand where we need to focus and where the process is improving or breaking down. Why are you not publishing those digital KPIs yet? Part of the challenge is that many of these metrics are managerial in nature and the consistency of the underlying data depends on the consistency of how that data is managed. I understand how important these metrics can be in helping investors follow the health of the company, but it is equally important that any metric we release publicly be clearly defined, consistently measured and not open to misinterpretation. At this stage, I cannot say with certainty when they will be ready for public disclosure. Until then, we will continue using them for directional guidance internally to determine where we focus while we work toward a more definitive and consistent reporting framework. What changed in national distribution after the Pennsylvania move? I would not frame it as though the business fundamentally changed. In many ways, the move improved important aspects of the model. We now have better fulfillment visibility, stronger customer reliability and better ability to manage working capital effectively. We also no longer have the debt associated with the prior facility. The biggest opportunity ahead of us in national distribution is making sure we maintain a competitive edge through disciplined execution, reliable service and an operating model that supports profitable growth. How should investors think about the profitability of the core business? The most important point is that after stripping out discontinued operations and those associated losses, we still have a profitable operating model in continuing operations. The decision to focus on the core and stabilize the business should be viewed positively. It demonstrates discipline. Our objective is to show how we can grow profitably and sustainably before taking on greater complexity. That is the right sequencing for this company and in my view, the right way to create long-term shareholder value. What are you seeing in local distribution? The priority in local distribution is to improve the commercial footprint and grow sales. That starts with better service execution, stronger reliability and rebuilding trust with customers, but it also means reestablishing commercial momentum in the market. We want to improve execution and use the stronger operating base to support customer retention, win back business where appropriate and create new sales opportunities. The focus is not just stabilization for its own sake. The focus is building a stronger local platform that can grow. What are you seeing in Denver? Denver remains early in its recovery path, but we do see strategic value in its role within the broader platform. As Denver becomes more integrated into our digital and operating model, it can help improve working capital velocity, expand assortment and support broader commercial opportunities without requiring unnecessary fixed cost expansion. That remains an important part of the long-term opportunity. Why is modernization such a major priority? Because modernization is what allows us to pursue growth with more speed, consistency and profitability. This is not just about systems for their own sake. It is about reducing friction, improving visibility, strengthening governance around pricing, item setup, vendor onboarding, order flow and building an operating foundation that can support the business we have today and the growth we want tomorrow. What did the Mountain Top sale accomplish? Strategically, it removed a noncore asset, simplified the balance sheet, improved financial flexibility and sharpened our focus on continued operations. The transaction also eliminated the related debt structure and helped further align the company around an operating model we intend to scale going forward. Are you still pursuing growth opportunities while doing all of this foundational work? Yes, we are absolutely still pursuing commercial growth opportunities. The distinction is that we want to pursue the right opportunities in the right way. Growth is important, but it also has to be supported by execution, reliability and the ability to do it profitably. Our approach in 2026 is to continue advancing growth opportunities while strengthening the operating foundation so that growth becomes more durable and scalable over time. What should investors watch over the next few quarters? I would watch for a combination of 2 things: stronger execution and healthy commercial progress. On the execution side, that means better reliability, better systems alignment and better operating discipline. On the commercial side, that means continued advancement of growth opportunities across the platform in a way that is supportable and profitable. Our goal is to show that IVFH can improve the foundation and grow from the stronger base at the same time. With that, that concludes our Q&A session. Thank you very much. Operator: Thank you. A replay of this call will be available on the company's website at www.Ivfh.com. This concludes today's conference call. You may now disconnect.
Operator: Good day, and welcome to the Lamb Weston Holdings, Inc. Third Quarter 2026 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Debbie Hancock, Vice President of Investor Relations. Please go ahead. Debbie Hancock: Good morning, and thank you for joining us for Lamb Weston Holdings, Inc.’s Third Quarter Fiscal 2026 Earnings Call. I am Debbie Hancock, Lamb Weston Holdings, Inc.’s Vice President of Investor Relations. Earlier today, we issued our press release and posted slides that we will use for our discussion today. You can find both on our website, lambweston.com. Please note that during our remarks, we will make forward-looking statements about the company's expected performance that are based on our current expectations. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in our SEC filings for more details on our forward-looking statements. Some of today's remarks include non-GAAP financial measures. These non-GAAP financial measures should not be considered a replacement for, and should be read together with, our GAAP results. You can find the GAAP to non-GAAP reconciliations in our earnings release and the appendix to our presentation. Joining me today are Mike Smith, our President and CEO, and Bernadette Madarieta, our Chief Financial Officer. Mike and Bernadette will provide prepared remarks, and then we will be available to take your questions. I will now turn the call over to Mike. Mike Smith: Thank you, Debbie. Good morning, and thank you for joining us today. I want to start by thanking the Lamb Weston Holdings, Inc. team around the world for their hard work in what continues to be a dynamic market. Their expertise, disciplined execution, and willingness to embrace change and act with urgency have been instrumental in the progress we are making. In the third quarter, we delivered another solid performance, the fifth quarter in a row of in-line or better results, demonstrating that we continue to do what we said we would do. This strength supports our updated fiscal 2026 outlook, including a tighter guidance range and a higher midpoint of net sales and EBITDA. This was led by ongoing momentum and a strong sales performance in our North America business, where customer wins, share gains, and strong retention delivered 12% volume growth and 5% net sales growth in the segment. Over the past year, we have made considerable progress in this business across our operations, and most importantly, with our customers. This has enabled us to grow while restaurant traffic and consumer sentiment have been soft. Overall, QSR traffic was up 1% in the third quarter. Bernadette will speak to this in more detail. In North America, our focus this year was on strengthening our customer partnerships and consistently executing. We finished our customer contracting season with a higher retention rate and solid new customer acquisition. At our production facilities, we have delivered improvement in our run rates and core operational KPIs. We are generating cost savings ahead of plan across our business. And our employee engagement scores have improved significantly. Our International business, as expected, was challenged by an evolving market environment resulting from a significant surplus in the European potato market due to expanded potato acreage and a robust crop of potatoes during the last growing season; local sourcing in developing regions such as the Middle East, China, and India, which is affecting exports from Europe to those markets; and persistently lower restaurant traffic in key countries. We are taking decisive actions to manage our business in the near term and protect profitability. During the third quarter, we announced the closure of our Monroe, Argentina plant, and consolidated production from the Latin America region in our new, modern Mar del Plata, Argentina facility. As we previously announced, we began temporarily curtailing a production line in the Netherlands at the beginning of the fourth quarter. Further, the company does not plan to resume production in one of our previously curtailed Australia locations. While we believe the competitive backdrop in certain international markets may result in less capacity expansion than was anticipated, we are focused on controlling what we can control, acting with urgency across the company, and being disciplined in our capital investments. It has been a year since I joined you for my first earnings call as CEO. Over that time, we have taken significant actions to improve our performance. We developed and in July began executing our Focus to Win strategy to drive targeted decision-making and actions. This strategy is a departure from Lamb Weston Holdings, Inc.’s previous focus on growth and scale. Instead, we are taking a more thoughtful approach to where we are, geographically and from a capability perspective, positioned to win long term, including where our customer proposition is strongest, and making sure any investments we make are evaluated through this customer- and return-centric framework. As we near a year working with this paradigm, the changes are significant and inform our decision-making and how we compete for business on a daily basis. As part of these efforts, we set a target of $250,000,000 in cost savings by fiscal year-end 2028. Our first goal was to achieve $100,000,000 in savings in fiscal 2026. As of the end of third quarter, we have already delivered on those full-year savings and are tracking ahead of our program target. These savings have afforded us the opportunity to make selective investments in support of our customers. We believe these targeted reinvestments have been the right long-term choice for our business. They have been particularly powerful as they are paired with the improvements we have made in execution to deliver higher consistency and quality for customers, and our continued commitment to product innovation. Altogether, these have combined to drive substantial improvement in our positioning with customers, which is reflected both in strength in retention and new customer acquisition. But to be clear, the actions we have taken and will continue to take on cost and capital deployment opportunities are structural. As we move forward, we believe they make us a more competitive organization while also positioning us for improved operating leverage in a more favorable price mix environment. We are also evaluating additional opportunities for improvement and savings across the organization, the details of which we will share in the future. Perhaps most importantly, we believe we are just getting started. Our new executive chair, Jan Props, brings extensive experience and an intense focus on operating execution from his time at AB InBev. Jan is highly focused on helping us evaluate opportunities to improve in international markets, where his experience in a leading global company is providing valuable perspective on how to navigate a dynamic environment. We will also soon welcome Jim Gray, our incoming CFO, who will bring an additional fresh perspective to our work. We also have a refreshed board, with seven new members since July, with expertise in food, consumer goods, agriculture, supply chain, and finance. This group is focused on improving performance, driving better returns on capital, and driving long-term shareholder value creation. As I have said before, business turnarounds are not linear. But nine months into Focus to Win, we are making clear progress against our key business objectives. We have significantly improved our position with customers, we are improving our North America operations, and are controlling the controllables internationally in a dynamic market, while we work to deliver on the cornerstone of our strategy, prioritizing markets and channels. With that, let me get to some specifics to illustrate the progress we are making. First, strengthening customer partnerships is central to executing our strategy. We have made meaningful progress in deepening and strengthening our relationships with customers this past year. As part of the analysis we did last year, we evaluated and streamlined our U.S. commercial go-to-market strategy and structure. Importantly, our direct sales team has positively impacted our selling on the street, including execution of pricing and working through challenges directly with customers. This is a key market differentiator and a core component of our customer partnership model. Our team is 100% focused on fries and the attractive financial role that they serve our customers. We have also augmented our direct team with a broker model in key channels where we saw this to be the most efficient way to immediately accelerate our near-term competitiveness. Second, in our Achieving Executional Excellence pillar, we are focused on continuing to build an agile and best-in-class supply chain that allows us to operate efficiently and consistently while balancing supply and demand. This includes curtailing production when needed, closing production facilities that do not meet our customer and efficiency standards, and restarting production seamlessly as we did in North America. Finally, within our efforts to set the pace for innovation, I want to highlight our Grown In Idaho brand. We invested in a landmark category study highlighting how consumers think, feel, and shop for frozen potatoes. This work led to a reinforcement of the Grown In Idaho brand essence. As a result, we are launching a new brand positioning that is rooted in “real,” and created for people who value where their food comes from. Shortly, you will begin to see this brand show up on shelf with new packaging and a new, clear message tied to “made with real Idaho potatoes.” Moving to slide eight, as you know, over the past several months, we were engaged in contract negotiations for the 2026 potato crop. In North America, contract negotiations are nearly complete. Overall, we expect a low- to mid-single-digit percent decline in raw potato price in the aggregate and have largely secured the targeted number of acres across our primary growing regions. Planting is on schedule for the early potato varieties. We expect planting for the main harvest to be completed by April. In Europe, fixed price contract negotiations for the 2026 crop are underway and progressing as planned. Based on our current indications, overall pricing is pointing toward a mid-teens decline in our contracted agreements from 2025. Fixed price contract planning across the European growing regions will continue through April. We will provide our customary update on the outlook for the North American and European potato crops when we report fourth quarter earnings in July. In addition, we do not currently anticipate a material impact from recent fuel and fertilizer inflation to impact our fiscal 2026. In closing, our Focus to Win strategy is taking hold. Our focus is solidly on our customers as we strive to strengthen our partnerships around the world. It is on executing exceptionally well, delivering on our cost savings work. We are identifying and driving opportunities created from heightened accountability around our goals and by building a culture of continuous improvement in cost and capital management, agility, and improving our capital efficiency. I will now turn the call over to Bernadette to review the quarter and our outlook. Bernadette Madarieta: Thank you, Mike, and good morning, everyone. I am starting on slide 11. Third quarter net sales increased 3%, including a $47,000,000 benefit from foreign currency translation. On a constant currency basis, net sales were essentially flat with last year. Volume increased 7%, led by solid execution in North America including customer wins, share gains, and strong retention. This more than offset softer demand in key markets in our International segment. Price mix declined 7% at constant currency, reflecting the targeted investments in our customers for price and trade support that Mike mentioned earlier; adverse product mix as consumers shift towards value-oriented channels and brands and chain restaurants, which typically carry lower prices; and softer industry demand in key international markets as well as increased competitive export dynamics, which most notably affected our EMEA business. Let me provide context on what we are seeing in traffic trends. In the U.S., QSR traffic turned positive for the first time since late fiscal 2024, up 1% for the quarter. QSR burger traffic grew in February, although it was down 1% for the full quarter. QSR chicken remained a bright spot with continued growth. Internationally, most markets saw low-single-digit declines in restaurant traffic. In the U.K., our largest international market, QSR traffic declined approximately 1%, showing improvement versus recent quarters. Looking at our segments, North America net sales increased 5%. Volume increased 12%, driven by recent customer contract wins, share gains, and strong retention across our customer base, as well as the relatively lower volume comparisons this quarter last year. Price mix declined 7%, with roughly half of the decline coming from price and trade support. The remaining half reflects mix, as growth with both new and legacy chain customers continues, and as consumers shift from branded to private label products. In our International segment, net sales declined 1%, including a $44,000,000 benefit from foreign currency. At constant currency, net sales declined 9%. Volume declined 2%, primarily due to softer demand in key markets and a more challenging comparison. Last year, third quarter volume grew 12%. Outside of EMEA, volume grew in China and Latin America, and year to date volume is up across every region outside of EMEA. Price mix declined 7% at constant currency, reflecting price and trade support for customers and unfavorable geographic and customer mix as lower-priced regions and customers are growing. We also expect some impact from the conflict in the Middle East, and excess international capacity remains a factor. We will continue managing these dynamics with a disciplined approach. On slide 12, adjusted EBITDA declined $101,000,000 compared to last year, to $272,000,000. Adjusted gross profit declined $93,000,000. The primary drivers were unfavorable price mix; a $33,000,000 net pretax charge to write off excess raw potatoes in the International segment due to lower-than-planned sales and a stronger-than-expected crop yield; and higher fixed factory absorption costs in Europe and Latin America, as underutilized production facilities carried higher costs. And finally, a year-over-year headwind. Last year, we realized the benefit of processing directly from the field in the third quarter. This quarter, given lower inventory levels, we realized the benefit beginning in the second quarter, which created a tougher comparison against last year's unusually strong third quarter gross margin. These headwinds were partially offset by higher sales volumes, benefits from our cost savings initiatives, and improved operating efficiencies in North America. Input costs excluding raw potato prices increased year over year, driven by tariffs; edible oils, notably canola oil; as well as increased fuel, power and water, labor, and transportation costs. As Mike mentioned, we expect potato input costs to decline in the upcoming crop year. Most of our tariff exposure relates to imported palm oil. Recent trade agreements eliminated that tariff, which is a positive development for our cost structure going forward. We will see some tariff expense in the fourth quarter, as we sell through existing inventory that was purchased before the change. In the third quarter, we recognized approximately $4,000,000 of tariff expenses, and unless the agreements change, we do not expect to incur this cost after the fourth quarter. Turning to SG&A, adjusted SG&A increased $9,000,000 versus last year. The cost savings we delivered in the quarter were more than offset by normalized compensation and benefit accruals tied to performance achievement, along with the write-off of $13,000,000 of capitalized costs from projects no longer under development. To help show these dynamics and the underlying drivers of SG&A performance, turn to slide 13, which outlines SG&A trends and the actions underway. In the last year, we reviewed our SG&A efficiency, including input from outside advisors. Building on that work, we developed targeted action plans to reduce SG&A through our cost savings program that will continue to drive improvement over time. As a reminder, adjusted SG&A includes several strategic items: revenue-linked advertising and promotion; royalties from growing our retail business; miscellaneous income and expense items such as asset write-downs; and noncash depreciation and amortization. Revenue-linked expenses have remained relatively flat as a percent of sales, while amortization has increased as we have implemented new cloud-based and ERP platforms. Adjusted SG&A as a percentage of sales peaked in fiscal 2023, driven largely by the European joint venture consolidation and ERP implementation costs that were incurred ahead of go-live. On a normalized basis, excluding amortization, asset impairments, and normalizing incentives at a one-time payout, fiscal 2023 SG&A as a percentage of sales was 8.5%. Since then, we have taken action to streamline our cost structure. SG&A now stands at 7.8%, a 70-basis-point improvement versus fiscal 2023, and about 70 basis points above the 7.1% level we saw in fiscal 2019, before COVID and our major global expansions. The increase relative to 2019 primarily reflects investments to enhance our IT capabilities. While we have made meaningful SG&A progress, we continue to identify and execute against additional SG&A efficiency opportunities within the framework of our cost savings program. We will provide an update on our plans and progress as we proceed. Turning to segment EBITDA on slide 14, in the North America segment, adjusted EBITDA declined 4%, or $13,000,000, to $290,000,000. This was fully driven by customer price trade support and mix, while the underlying fundamentals of the business—volume growth, lower manufacturing costs per pound, and lower segment SG&A—partially offset the increase in price mix. In our International segment, adjusted EBITDA declined $76,000,000 to $19,000,000, primarily reflecting lower sales, namely in Europe where restaurant traffic and softer exports from excess industry capacity remains challenging; higher manufacturing cost per pound, including the $33,000,000 net pretax charge to write off excess raw potatoes; higher fixed factory burden from underutilized production facilities in Europe and Latin America; and input cost inflation outside of raw potatoes. To mitigate these headwinds, we took the actions Mike spoke about, to temporarily curtail production of a line in the Netherlands and permanently close a production facility in Argentina. These impacts were also partially offset by our cost savings initiatives. Turning to the balance sheet and cash flow, slide 15 summarizes the strong cash flow that continues to support our strategic and financial priorities. Cash generation has improved meaningfully this year. Year to date, we generated $596,000,000 of cash from operations. That is up $110,000,000 versus last year. This improvement reflects strong working capital execution, driven primarily by lower inventories in North America and, to a lesser extent, the timing of accounts receivable collections. Our focus on execution and capital stewardship enabled us to deliver $339,000,000 year to date in free cash flow—an increase of $417,000,000 year over year. Capital expenditures were $257,000,000 year to date, down $37,000,000 from last year. We now estimate full-year cash spend to be approximately $400,000,000, aligned with our focus on maintenance, modernization, and environmental projects. Our liquidity remains strong. We ended the quarter with approximately $1,300,000,000 of liquidity. Net debt was $3,900,000,000, and our net debt to adjusted EBITDA leverage ratio was 3.4 times on a trailing twelve-month basis, consistent with last year's third quarter and aligned with our balance sheet priorities. Turning to slide 16, we remain committed to returning cash to our shareholders through our dividend and opportunistic share repurchases. During the first three quarters of the year, we returned $205,000,000 to shareholders, including $155,000,000 in cash dividends and $50,000,000 of stock repurchases. We did not repurchase shares during the third quarter. After the quarter ended, however, and through March 30, we have repurchased approximately $43,000,000 of stock, or 1,100,000 shares, at a weighted average price of $41.50 under a 10b5-1 trading plan. And earlier this week, the Board approved the next quarterly dividend of $0.38 per share, payable on June 5. Turning to our outlook on slide 17, we are raising the low end of our net sales guidance and increasing the midpoint. We currently expect net sales in the range of $6,450,000,000 to $6,550,000,000, including an approximate 1.8% foreign exchange benefit, or about $95,000,000 year to date. Adjusted EBITDA is now expected to be in the range of $1,080,000,000 to $1,140,000,000, which includes our current assessment of the additional risk associated with the ongoing Middle East conflict. In North America, we expect high-single-digit volume growth in the second half, which also includes the benefit of an additional week of sales in the fourth quarter. As I noted earlier, third quarter growth was elevated because we were lapping an unusually low quarter last year. In our International segment, full-year volumes are still expected to grow. However, we anticipate year-over-year declines in the second half, as we lap unusually strong performance last year and as the fourth quarter is further pressured by the evolving conflict in the Middle East. For reference, sales to the Middle East represent a high-single-digit percentage of the International segment's volume year to date. Price mix in the fourth quarter will remain unfavorable at constant currency. We expect the price declines to moderate slightly in the quarter, supported in part by the recent price increase we implemented in early March to offset inflation. The price increase affects our noncontracted North American business. On mix, we assume ongoing pressure to persist for now, reflecting continued growth with chain restaurant customers and a shift toward private label offerings with retail customers. In our International segment, we expect to continue to face headwinds from the dynamics we have discussed. Adjusted gross margin is expected to decline seasonally in the fourth quarter—down 250 to 300 basis points from the third quarter's 20.9%—including our current estimate of the potential impact from the conflict in the Middle East. Adjusted SG&A continues to benefit from our cost savings initiatives. In the fourth quarter, SG&A dollars are expected to increase slightly from the third quarter, due primarily to an extra week of expenses as well as incremental innovation and technology investments. We expect a full-year tax rate of approximately 28%, with fourth quarter in the mid-teens. The full-year tax rate includes approximately $20,000,000 of adjusted tax impact from losses in jurisdictions where we do not expect to receive tax benefits. We now anticipate full-year depreciation and amortization of approximately $395,000,000, compared with the prior estimate of $390,000,000. The team continues to execute well in what remains a dynamic environment. We are entering the final quarter with a strong balance sheet, disciplined cost management, and a sharp focus on operational performance. Before I hand it over, I do want to acknowledge the leadership transition. This is my final call as CFO, with Jim stepping into the role tomorrow. I am fully committed to ensuring a smooth transition, and I am incredibly proud of the work this team delivers every day. With that, I will turn it over to Mike. Mike Smith: Thank you, Bernadette. As we shared today, we are committed to doing what we say we will do, recognizing that the environment is evolving quickly. North America is executing well, and we continue to have room to grow that business. Internationally, we are taking actions to manage our costs and position us in a fluid market. Our international focus is fortified with Jan being on board. And finally, we are remaining disciplined in our capital investments and evolving Lamb Weston Holdings, Inc. into a business that can enjoy strong and growing returns on capital. Before we turn the call over to Q&A, I want to thank Bernadette. During her time with the company, she has been a dedicated partner and leader, including the past five years as CFO, during a period of tremendous change in our industry. We appreciate all she has contributed to Lamb Weston Holdings, Inc. and wish her continued success moving forward. We will now open for questions. Operator: If you would like to ask a question, if you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We will take our first question from Tom Palmer with JPMorgan. Tom Palmer: Good morning, and thanks for the question. Maybe you could just start out asking on utilization rates—I know you have done a lot of work in terms of your plant footprint here over the last several quarters, including the updates today internationally. So U.S., I think you had the new lines or the previously shuttered lines ramping back up. Where do you sit in terms of ideal rates there? And then with all the actions you are taking internationally, is that going to get you into kind of more of that targeted, you know, 90-plus percent range? Thanks. Mike Smith: Appreciate the question, Tom. Overall in North America, we are in the low 90s. With some of the adjustments that we have made, to your point, we are excited that we have been able to bring back online some of those previously curtailed lines. That allows us to be more flexible with our customers to make sure that we deliver for our customers at those high fill rates moving forward. I will tell you, though, it also allows us to be more thoughtful about the volume that we bring on board moving forward. When I look at the International business, we have curtailed some lines. We have closed the Monroe facility down in Argentina and moved that volume into the Mar del Plata facility. And we will continue to evaluate based on supply and demand and the outlook of the business. I will tell you, not all of our plants make the same items. They have different technologies and different capabilities, so it is not as easy as turning off one line and bringing another one back on. So we want to make sure that we are delivering the right capabilities to our customers as they expect from Lamb Weston Holdings, Inc. moving forward. Tom Palmer: Okay. Thank you. And then on the pricing environment in Europe, I know it is hard to be overly specific. I think there are kind of two nuances this year. One is just the competitive environment generally, but I think secondarily, spot potatoes, as I understand it, are really cheap, and that is causing some maybe heightened pressure given you guys contract in terms of margin. When we think about next year and the 15% decrease, if that is how the industry is buying, I am trying to think more, like, do you get more on an even scale with the industry next year as you look at it, and maybe we could see more of a margin recovery on that basis. Mike Smith: Yes. It is a combination of multiple factors. It is the capacity imbalance that we are seeing in Europe. It is slower demand, and it is that potato crop. So when you think about capacity in Europe, it is not only excess capacity in Europe, but also they typically would export to markets like the Middle East, China, and India, and there has been some new capacity that is there. There is also the restaurant traffic softness that we are seeing across Europe. But to your point, the third element of that is the crop. Now the great thing about our business is each year you have a reset on that crop. Typically in Europe, we will contract in that 70% to 80% range of fixed price contracts. The other kind of 20% to 25% range is in open price contracts. With the reset for this year, we are contracting less acres, and we believe that based on the demand in the market, the rest of the growers will be doing the same thing. Tom Palmer: Okay. Thank you. Operator: If you find that your question has been answered, you may remove yourself from the queue by pressing star two. We will go to our next question with Peter Galbo with Bank of America. Peter Galbo: Hey, Mike, Bernadette, good morning. Mike Smith: Hey. Hey. Good morning. Peter Galbo: Mike, my first question is on just North America price mix. There are a few moving pieces there, I think, as we get through Q4 and into next year. The mix headwind, I think, from more chain, but then you mentioned today, I think, a March price increase. And then with potato costs kind of being deflationary in North America for this summer. I just want to kind of gauge as we get through the first half of next fiscal year where pricing is kind of set, the risk that we continue to kind of see slippage in price mix maybe into the back half of 2027 and beyond, just given the factors that we are outlining today? Mike Smith: A few things, Peter, on that. Our expectation is that we are going to continue to have some price mix pressure into fiscal 2027. Obviously, with those decisions that we have made around pricing in the current fiscal year, we will have that lapping effect into fiscal 2027. We do see price mix moderating, including some of the benefits of the actions that you talked about. Keep in mind that we see inflation, and we have had inflation over the last several years outside of potatoes. We need to make sure that we do the best we can to cover that. We will provide guidance on fiscal 2027 like we normally do with our Q4 earnings, and we will be able to give more clarity on what that might look like for fiscal 2027 at that time. Peter Galbo: Okay. Thanks for that, Mike. And if I go to the reduced CapEx guidance, I think you talked a bit more about maintenance CapEx, and thinking back a few years ago, even to the Investor Day, there was discussion around not just capacity expansion, but some kind of elevated structural CapEx for things like wastewater treatment. Have you been able to mitigate a lot of maybe what some of those structural step-ups would be? Are those no longer kind of in play? I am just trying to understand the $100,000,000 decline with a quarter to go, and then maybe how we might think about that going forward. Mike Smith: I think just as a reminder, obviously, we were spending a lot on capital when we were doing the greenfield expansions. And, obviously, we have enough capacity in our footprint and do not need that spend. I would say what you are seeing right now is a reflection of that disciplined decision-making. We will continue to have those environmental wastewater capitals. We have to do that as regulations change in some of the states in which we operate. But we are really trying to manage our capital spending and make sure that we make the right decisions that have strong returns. That being said, there is some timing elements to some of the capital this year that will flow into next year. But we will come back next quarter and talk about what that fiscal 2027 looks like. Bernadette Madarieta: Yeah, and, Peter, just to confirm, we have spent the $100,000,000 that we anticipated spending on environmental expenditures this year. So we are on the path of spending those environmental expenditures over that five-year plan that we have laid out. Peter Galbo: Okay. Very clear. Thanks, guys. Operator: Once again, if you would like to ask a question, we will take our next question from Matt Smith with Stifel. Good morning. Mike, wanted to pick back up on the North America top line comments. Volumes are quite strong in the quarter and accelerated on a sequential basis. As you exit this year, can you talk about the volume trajectory based on recent business wins and share gains? And with the utilization rate back in the low 90s and QSR traffic sequentially improving, do you deemphasize going after volume to improve your leverage at this point and get more choiceful about volume? And just how does that play out as you look forward over the next year or so? Mike Smith: I appreciate the question, Matt. We have been focused on driving those customer partnerships, and that is really focused on the quality, the consistency, innovation, and value, and making sure that our customers are getting the product on time and in full when they need them. And the great thing that I am seeing across our organization is we are really creating a culture throughout our organization of putting that customer first, regardless of what function you are in. Obviously, we have made some great improvements with those customers, and we are seeing the volume flow through. As I mentioned earlier, as that volume continues to come through and we see our utilization rates in more of those normalized ranges, it does allow us to be more thoughtful about the business we pick up and about how we manage volume into the future, for sure. Matt Smith: Thank you for that. And a follow-up on the inflation and cost outlook. You talked about the fourth quarter seeing continued cost pressure. Are you expecting incremental potato write-offs? Or was this a full evaluation of the stock you have and you think you have cleared the decks at this point? Meaning the carry-in crop 2027, your inventory levels will be in a reasonable place. Thank you. Mike Smith: We do not anticipate additional raw write-offs. I think the third quarter write-off reflected current expectations of demand view and what we are seeing for this crop season. We continue to evaluate that based on what we see in the Middle East. But as of right now, we do not anticipate any additional write-offs based on where the demand is flowing and the best estimates of our business. Matt Smith: Appreciate that. I will pass it on. Operator: We will go next to Robert Moskow with TD Cowen. Robert Moskow: Thanks. Maybe just if you could give any kind of an update on what you are seeing in North America competitors' supply chain footprint. I think they are coming towards the end of some long-term expansion projects, some of them greenfield. Do you think that those are on track? Are they still ramping at this point, or did they fully ramp and we do not have to worry about further capacity coming online for the next twelve months? Mike Smith: I cannot speak to their production and what our competitors are doing. I know that their facilities are up and running. And I will tell you, based on the work that we are doing around our customers, we are winning, and our customers are continuing to choose Lamb Weston Holdings, Inc., and we are seeing that volume growth across our business. Overall, we are starting to see some of the price mix moderating, including some of the actions that North America recently took. But the teams are winning. I think our utilization rates are getting back to where they need to be in the low nineties, and that allows us to be very thoughtful about that volume that we take on in the future. Robert Moskow: K. K. Thank you. Operator: And we will take our next question from Alexia Howard with Bernstein. Good morning, everyone. Can I just ask to begin with about the potato write-off in Europe? Are there actions that you can take to avoid that happening again by better demand planning? Is that something that we should not anticipate going forward, or is it something that continues to be a question mark? Mike Smith: It is a good question. We have made some adjustments in how we are procuring raw in Europe for this next crop season that will, hopefully, allow us to be a little bit smarter and give us a little bit more flexibility in that moving forward. I think you have seen that this year in North America. We have procured the right amount of potatoes. We have stronger supply and demand signals and some capabilities internally that are making us stronger and allow us to do a better job of predicting what those demand signals will be in the future. Alexia Howard: Great. Thank you. And then just to hone back in on North America, obviously, the new customer wins recently have been lower-priced private label or chain customers on the restaurant side. Now that the capacity utilization is back up into the nineties, it sounds like you can be more selective in who you pick up going forward. Does that mean as we look out into fiscal 2027, we could see positive price mix trends, or is this the new normal? And what gives you the right to win in some of those more profitable accounts that might be out there? Mike Smith: I think we are probably a little bit too early. We are going through our annual operating plan right now, so we will come back at Q4 and share what that might look like for fiscal 2027. The one thing I do want to remind the group about is the new business that we have picked up with some of those large chain customers or even some of the private label business in retail in North America. Those have been new propositions to the industry. They were not currently purchasing frozen fries, and so it has created some mix headwind, but it is new business that just makes the industry stronger overall and fills the capacity that is out there in the marketplace. Alexia Howard: Thank you. I will pass it on. Operator: And we will go next to Scott Marks with Jefferies. Scott Marks: Hey. Good morning. Thanks very much. First thing I wanted to ask about, just within North America, if we think about the current 90% utilization rate, how much in the way of other curtailed lines do you currently have in North America? And how much incremental capacity do you have available to bring back online should conditions warrant such action? Mike Smith: For the most part, we have restarted most of our curtailed lines. And so this allows us to still have flexibility to meet customer demand, but also, as I have said earlier, just be more thoughtful about that business that we bring on in the future. Scott Marks: Okay. Clear on that. And then as we think about internationally and just some of the dynamics going on across the world, wondering what you can share with us in terms of what you are seeing from competitors in terms of their own capacity or where or how they are choosing business in a different fashion versus what they may have done historically. Mike Smith: I cannot speculate on what competitors are doing and so forth or others in the industry, but I can tell you the pace of announcements has slowed. We have heard of some short-term industry capacity curtailments, specifically in Europe, as they manage through the crop and the slower demand. But we think, or we believe, that the competitive backdrop in some of these international markets may result in less capacity being built than was maybe previously thought, just given the market or industry dynamics. Scott Marks: Appreciate it. I will pass it on. Operator: And we will go next to Marc Torrente with Wells Fargo Securities. Marc Torrente: Hi, good morning, and thank you for the questions. I guess, first, on the cost savings program, it now looks like you expect to exceed the prior $250,000,000 target. Maybe any more color on where the incremental savings are coming from—more on COGS or SG&A side? And where do you think you can get those expense levels to over time? Mike Smith: We are on track to exceed the plan, like we talked about, even here in fiscal 2026. I would say we are driving a cultural shift and a different mindset around costs in our organization, and we really have a strong focus on continuous improvement. A lot of that incremental cost savings that you are seeing is actually hitting the cost side—supply chain side of things—more so than any other areas. Obviously, we have identified some additional costs as Jan comes in and does his onboarding, as well as Jim, given Jim is going to be the one who is leading this for our organization. We will allow them to take a look at where the opportunities are, and at the right time, we will come back and share what any future cost savings plans might look like. Marc Torrente: Okay. Great. And then the topic of portfolio management has been brought up recently. Maybe just more on how you are thinking about your positioning, where to win and opportunities in certain regions, and, I guess, general strategic approach going forward? Thanks. Mike Smith: A big piece of our Focus to Win plan is prioritizing markets and channels. And we are doing that. As Jan comes in, he has a really strong background in those international markets. He has been the CEO and led organizations in a number of the markets in which we operate. He is going through his onboarding process right now. He is assessing our different businesses around the globe, and he will be on the call next quarter and be able to give his perspective and insights into what he is seeing. But we continue to look at our business overall and are really focused on what are the markets where we have the right to win long term and what adjustments we need to make within our markets to make sure we are successful and drive our business and meet our customers' expectations long term. Operator: And we will go to our last question, Carla Casella with JPMorgan. Carla Casella: Hi. Thanks for taking the question. Your tariff discussion was very helpful. I am just wondering if you can also talk to the Middle East conflict and the costs you could potentially see in higher transportation or key raw materials, and if you are seeing any disruption there on the cost side. Mike Smith: I think the impact in the Middle East is ultimately going to depend on the length and severity of the conflict. There are three areas of risk that I see in the Middle East. One is, obviously, lower volumes to the region. I think Bernadette shared in the prepared remarks that the Middle East makes up a high-single-digit percent of our International segment. And, obviously, if volumes—or if it becomes a prolonged conflict—that does potentially have some impacts on inventories. But for me, as I look at this, it is more around the increased volatility in some of the commodities—things like packaging, fuel, and so forth. And that impacts markets around the globe. Obviously, we are working through our annual operating plan right now. We will come back next quarter and talk about what the fiscal 2027 outlook looks like and communicate at that point what those risks could be. But we feel good about the opportunities and the abilities that we have in order to pass through some of those costs as they come through. Bernadette Madarieta: And, Mike, the only other thing I would add on the cost side is that as part of our broader risk management framework, we do hedge portions of our key inputs to reduce volatility. That does not eliminate all of the price risk, but the combination of our hedging program and diversified sourcing in our commercial agreements gives us that balanced level of protection. Carla Casella: Okay. Great. Thank you. Operator: That will conclude our Q&A session. I will turn the conference back to Debbie Hancock for any additional or closing remarks. Debbie Hancock: Thank you, Lisa, and thank you to everyone for joining us today. The replay of the call will be available on our website later this afternoon. I hope everyone has a good rest of your day. Operator: That concludes today's call. Thank you for your participation. You may now disconnect, and have a great day.
Operator: Good day, and welcome to the Conagra Brands Third Quarter Fiscal 2026 Earnings Q&A Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the call over to Matthew Neisius, Senior Director of Investor Relations for Conagra Brands. Please go ahead. Matthew Neisius: Good morning, everyone, and thank you for joining us. Once again, I'm joined this morning by Sean Connolly, our CEO; and Dave Marberger, our CFO. We may be making some forward-looking statements and discussing non-GAAP financial measures during this Q&A session. Please see our earnings release, prepared remarks, presentation materials and filings with the SEC in the Investor Relations section of our website for descriptions of our risk factors, GAAP to non-GAAP reconciliations and information on our comparability items. I'll now ask the operator to introduce the first question. Operator: Our first question comes from Andrew Lazar with Barclays. Andrew Lazar: Maybe, Sean, to start off, I really like your thoughts on if the industry does end up facing another round of broad-based inflation, I guess, whether you think Conagra and the industry at large would be able to count on pricing as but one lever to help offset it as it has in the past or if this time is different, just given consumers are particularly value conscious at this stage? And I ask it because I think some industry players clearly are needing to remain highly focused on debt paydown and protect profitability even if it prolongs sort of the volume recovery dynamic. Sean Connolly: Yes. Great question. Here's how I would tell you to think about that. First, as a reminder, believe it or not, it was all the way back at the beginning of our fiscal '24 when we pivoted to a focus on restoring volume growth in frozen and snacks, even if it meant eating some inflation and enduring some margin compression. Well, that strategy has proven to be quite effective because you've seen our volume trajectory improve every quarter since with the exception of that brief period last year where we had the temporary supply constraints. So we're very pleased and pleased to see our total portfolio growing again this quarter. As for what comes next, our plan at this point is to stay agile. If inflation is benign, you'll see us likely continue to focus on continued volume momentum. If for some reason, inflation was to go the other way, we'll keep our options open. After all, we are a company that is intensely focused on maximizing cash flow. And we've already proven that we can move the volume needle to growth in frozen and snacks when we need to. So net, we'll be agile. But right now, I would say it's too early to speculate on a particular course of action. There's 3.5 months to go before we guide for fiscal '27. And obviously, a lot can unfold by the hour these days, and certainly a lot can unfold in the next 3.5 months. One thing we can be sure of is that we will drive a lot of productivity while we optimize all our other levers to mitigate any inflation that might come our way. And remember, we did take pricing this year on a bunch of products, our canned foods and our cocoa-oriented products and the elasticities have been quite encouraging. So let's see how the dust settles, and then we'll take the smartest course of action to deal with whatever we're seeing at the time. But as I sit here today, I see a lot of positives. The business has strong momentum, especially in frozen and snacks. Shares are excellent. Cash flow is strong. Productivity is robust, and people are highly engaged in delivering some of the most exciting innovations we've had. So a lot to feel good about. Andrew Lazar: Great. And then just, Dave, real quickly, maybe I guess what sort of visibility do we have at this stage on costs going into fiscal '27, just based on where you might already have some hedges in place. I'm not asking, obviously, for your overall inflation estimate or whatever for next year. But just how much visibility do you think you have or based on where you already know what you've got in place? David Marberger: Yes, Andrew, let me give you a little color there. So for our fiscal '27, our material spend coverage is generally consistent with the prior years at this point. So we're roughly 60% covered, and this is total materials, 60% covered for Q1 and roughly 40% covered for the full fiscal year. Areas where we have a bit more coverage than historically would be steel, freight. Remember, we contract line haul. That's a big percentage of our freight. And so that's on contract. And then some of our crop-based ingredients, we have better coverage and then a little bit less coverage on diesel fuel. We're covered through the end of this fiscal year there, but not as covered as we've been in the past. And just as a reminder, proteins probably have the lowest coverage of anything. So for next year, we're only about 15% covered. We're more spot market when it gets to the animal proteins. So hopefully, that gives you a little bit of a feel. Operator: Our next question comes from David Palmer with Evercore ISI. David Palmer: Those were precisely my questions. So let me just follow up on that a little bit. When you look at your portfolio, you've obviously been prioritizing volume over the last fiscal year, and that has helped. And there are some other notable companies in the space that have been aggressive in this prioritizing volume first, just like you. I wonder where we are now in terms of where you think your pricing power is? Do you feel like you're in a better spot now with regard to relative price points to private label in some of your categories versus main competitors and others in terms of your just volume momentum overall? And I really am asking because in the past, you've said things like we'll be okay if inflation is not over 3% in terms of getting to our algo. And I just wonder if today, if we do go over 3%, if you'll be able to drive profitable growth going forward? Sean Connolly: David, it's Sean. First of all, private label, just since you brought that up, we underindexed in terms of private label development in our categories, particularly in our -- almost nonexistent in our biggest business, which is Frozen Meals. But our strategy has been what I've called the horses for courses strategy where our growth businesses have been focused on getting back to volume growth, that's frozen and snacks, and that is happening. Our Staples business is focused on cash maximization. That's a lot of things like our canned food business. And we have taken inflation-justified price on those categories, and we've seen good elasticity. So it's a surgical approach that we've taken historically. And -- but make no mistake about it because we've dealt with the most protracted inflation super cycle that I've certainly seen in my 35 years of doing this. And after a few years of every company taking justified pricing, investors said, "Look, you can't shrink your way to prosperity, show us that you can get the volumes moving again." And we have done that. And our portfolio responsiveness, I think, has outpaced our peers, which shows you we are delivering good value, and we are delivering exciting innovation. But as I mentioned to Andrew, as to what's to come, we'll see what the field gives us when we've got to snap the chalk line here. And if things settle down with the war and things like that and things look more benign, I think it makes sense to stay focused on keeping the momentum that we've got in volume. But if, for some reason, things broke the other way, and we're looking at a whole slog of new costs, we can pivot as well because to the degree you do take price and you sacrifice a little volume, it's more of a volume sabbatical than it is a permanent volume rebase, and you tend to see the volumes come back when inflation moves again and you see those prices get rolled back. So as I said, we've got to stay agile, but feel really good to see that we have a portfolio that is responsive to proper pricing and wise investments and strong innovation when we need it to be. But look, investors always want to see top line and bottom line growth. Sometimes the macro environment can make it challenging to do both at the same time. We'll stay agile, and we'll post you as we get to next quarter in terms of what we're seeing and what the exact plan is. Operator: Up next, we have Megan Clapp with Morgan Stanley. Megan Christine Alexander: I just wanted to start with maybe a question on the fourth quarter. As you look at the third quarter, you obviously had some nice momentum, a return to org sales. There were a lot of moving parts just with the retailer timing and some of the year-over-year dynamics. So as we think about the fourth quarter, maybe you can just help us with some of the building blocks as we think about top line and should shipments generally match consumption. And then on the op margin line, can you just help us kind of understand the building blocks to the sequential improvement that's embedded as well? Sean Connolly: Megan, it's Sean. Let me start by tackling the shipment versus consumption question because I saw a couple of early reports this morning that I think might have that wrong. I would not spend a lot of time overthinking shipments versus consumption because with our company, because of the supply interruption last year and then some merchandising timing shifts in frozen this year out of Q2 into Q3, our shipment patterns have moved around a bit compared to what they normally do. But over fiscal '25 and fiscal '26 combined, we are basically shipping almost exactly to consumption, which is what we always do as a company. It's just been a bit lumpier quarter-to-quarter because of those dynamics. And so with respect to this quarter, I wouldn't get overly exercised around there's an implication in Q4. It's actually more the reversal of Q2 which was where we had a bunch of holiday shipments last year, those -- and merchandising shipments this year moved to Q3. So not a lot of drama there, and that's the shipment versus consumption piece of the year to go. Dave, do you want to tackle anything else? David Marberger: Yes. And just to add to that, Megan, we do expect positive organic net sales growth in Q4. That's obviously implied with our full year guide to the kind of the midpoint of the range for organic. Consumption and shipments should be more in line in Q4, talking to what Sean just explained. And we have -- we're excited about our innovation slate and you start shipping some of that innovation, so you start to see some of that in Q4. So they're really the building blocks for the top line. As it relates to operating margin, yes, we expect an inflection from Q3 to Q4. Really, the big drivers of that A&P as a percentage of sales will not be as high in Q4 as it was in Q3. So it will be more in line with that kind of 2.5% average. The 53rd week actually gives some leverage in terms of overall operating margin. And then just some of the seasonality of trade, timing of productivity, timing of inflation, all those kind of things give us additional kind of benefit in op margin relative to Q3. So I would say they're the kind of the key building blocks. Megan Christine Alexander: Okay. That's helpful. And just as a follow-up, the op margin, you're now expecting at the high end of the guide. Could you maybe just talk about what's driving that? And as we look at the exit rate on the fourth quarter, I think it implies something above 12%. Understanding there's a lot of moving parts right now, but if inflation kind of stays in this low single-digit range as you would hope it moderates to and normalizes over time. Like, should we think about that exit rate as being informative of kind of a starting point going forward at this point? David Marberger: Yes. Regarding the last part of your question, I'm not going to comment on fiscal '27. What I can say is -- and if you just look at when we gave guidance at the beginning of the year, 11% to 11.5% operating margin when there were so many things going on at that time. And since then, there have been so many dynamics, I feel really good that we're actually now going to guide to the higher end of that range. And that all starts with our inflation call, which was core inflation and tariffs. We're pretty much on that call. Our productivity programs are really doing well. The investments we've made in our supply chain and technology and in process are really, really delivering. And so they're really the key. As Sean talked about, we have taken price increases, particularly in our canned products and the elasticities have been in line. And so when you kind of look at it, it's how we planned the year. There obviously have been some puts and takes. But generally speaking, we feel really good that we're coming in as we expected to on margin. And we expect that productivity to continue into next year. Obviously, we have more work to do on inflation. There's a lot of dynamics. Things are changing all the time. But I talked about the coverage we have. We are locked in on certain key areas, which is good for us. So we feel good that the building blocks for next year's plan are there, but we have to wait the next 3 months to give specific guidance, obviously. And then it's not operating margin. But on the free cash flow front, we continue to feel really good. We took our conversion up to 105% from 100%, and we took it up at CAGNY. And this is all from focus that we have in this company on free cash flow. It's part of the culture. It's part of the incentive plan for everybody in this company that's compensated, free cash flow is in their incentive. And so we're very focused on it in areas like cash tax efficiency, areas like Ardent Mills, where although our equity profit is off $0.10, our cash is on plan. So they're going to continue the dividend at plan despite the equity earnings being down. And then inventory. We build up inventory levels coming out of COVID, our safety stocks were high, and we've continued to ramp that down. And if you look at our balance sheet, we have $2 billion of inventory. And with Project Catalyst and us being able to leverage AI and other technology, we think we have a long runway to keep taking inventory out and be more competitive. So we're pretty bullish on that front. We'll talk more about that when we give guidance. But obviously, that has a cost impact as well. So I would say they're the building blocks and foundations how to think about margin kind of ending this year going into next year. Operator: Our next question comes from Peter Galbo with Bank of America. Peter Galbo: Dave, maybe if I could just start on Ardent Mills, the change or the revision to that line item, I think it's the second one of the year. And historically, in that business, when there has been a lot of wheat volatility, you've been able to take advantage. And I think in Q4, you're kind of calling that maybe it's the opposite. So I just want to understand kind of what's happening there, particularly in the fourth quarter. And then just any early read on kind of how we might start to think about the run rate of Ardent for '27? Sean Connolly: Sure, Peter. So just taking it from the top, as I've talked about, broadly speaking, Ardent has 2 sources of revenue and profit. They have their core business margin where they mill flour and sell that at a profit. That business is consistent and that business is tracking. And then they have what we call commodity trading revenue. And that's where there's a lot of activity, hedging and different arbitrage where Ardent can be in a position to make a lot of money. And what really drives the upside there are overall wheat prices and the volatility of the markets. And through the -- really through the first 3 quarters of this year, the wheat prices have been low and there's been less volatility in the wheat market. So not as much opportunity for Ardent to take advantage on the commodity trading side. Obviously, with the start of the war, wheat prices have gone up in the futures and volatility has increased. And so you don't see those benefits immediately. And so with our forecast for this year, we've called the number where we are now. But clearly, there is more volatility that the Ardent team is working through now. We will work through it as well to just determine what kind of impact that could have on next year. We don't have line of sight to that at this time. But there is more volatility at this point since the war. Peter Galbo: Okay. That's helpful. And Sean, I think on Dave's initial comments on inflation for next year, he mentioned a bit on contracting on certain crop-based ingredients. There's a lot of, I think, concern in the market just given where fertilizer costs have gone and you all are a pretty big procurer of vegetables. So just how you all are thinking through that, what the conversations are like with your growing partners and whether that's really an issue for this growth season or whether it's more of a '27 growth cycle event? Sean Connolly: Well, fertilizer, it would be more of an F '28 event than F '27. But I would say conversations are very productive. I think everybody is in the same boat, Pete. I mean, it's kind of like the news of the hour around here that we're responding to. And so it's just super dynamic. We got to stay on top of it. It changes day-to-day, and you got to be agile. That's why I started my comments today to Andrew in saying we will be responsive to the hand we are dealt, and we will choose the smartest course of action. And that's just kind of the nature of operating in incredibly dynamic times. Operator: Our next question comes from Tom Palmer with JPMorgan. Thomas Palmer: Maybe I could just start off with a clarification on some of the inflation and freight commentary. You noted that you're covered in terms of contracts. I think in the past, when we've seen rates run up, not totally dissimilar to now, we have seen spot running well above contracted rates and maybe contracted rates not holding in the way that you might think of a contract holding. I guess, to what extent you're seeing that now, especially when I look at some of that margin pressure in the refrigerated business this quarter? David Marberger: Yes. So spot was actually running low for a lot of our fiscal year. Spot has now spiked up and is above sort of contracted rates. A high percentage of our freight, as we kind of look into next year, is contracted line haul, so a high percentage. So a smaller percentage is spot. That market has spiked up like you just alluded to. But we've incorporated all that for our fiscal '26 guide. And then as I mentioned, next year, we're covered through a good part of next fiscal year with our freight contracts, and that's a high percentage. We do have some spot, but a high percentage is contracted. Thomas Palmer: Okay. And then following up on Ardent, you mentioned earlier on the strong free cash flow conversion, some of that was aided by not lowering the distributions from Ardent even as earnings have maybe not come in quite the way you expected. If we think about a potential rebound next year in Ardent's earnings, to what extent should we think about that flowing through to free cash flow generation, so essentially increasing the distributions versus more just fully covering the distributions in terms of the earnings? David Marberger: Yes. So Tom, we look at this on a kind of a year-by-year basis. We have a lot of discussion with our joint venture partners on capital allocation priorities. As a kind of a general rule, Ardent Mills does an outstanding job managing their balance sheet. They keep their leverage low, and they're really efficient with their cash flow. So this year, they were in a position to be able to hold to plan despite some of the volatility I described earlier on the commodity trading revenue. So as a general rule, we set -- we have a sort of a payout ratio level that we set going into the year. And then we look at how the year plays out and then we modify from there. But generally speaking, we feel very good about the cash generation of Ardent Mills and getting timely distributions. Operator: Our next question comes from Robert Moskow with TD Cowen. Robert Moskow: A couple of questions. One, Dave, can you remind us what the tariff component of your cost inflation is this year? I think it's like 2% or so. And how should we think about it for fiscal '27? Does it lap? Will it turn to a 0? And is that -- does that automatically get you some relief in your inflation for next year? David Marberger: Yes, Rob. So generally, kind of, going into the year, our overall inflation was 7%, 4% was core and 3% were gross tariffs before mitigation. And we track mitigation as part of productivity, and we estimated 1% in mitigation. And so as we look -- and that's pretty much played out. There's been some volatility, obviously, with the IEPA tariffs, but then we have the new tariffs that have come in. And so not a material change, I would say, to the original estimate, a little bit favorable, but then our core inflation has been a little unfavorable. So we're still at that kind of total 7%, call it. As we look to next year, because we had mitigation that we're going to wrap, there is going to be some headwind from a kind of wrap perspective in tariffs. And so we originally said 1% mitigation, which would imply $80 million of headwind. We don't think it's going to be that much. It might be more like half of that, but we are going to have some headwind with tariff just because we're wrapping on the mitigation that we had this year that now flows -- won't flow into next year. Thomas Palmer: Okay. I'll follow up on that. And then more broadly, I mean, the retail consumption data, Sean, looks really strong on a 2-year volume CAGR basis for frozen. But then when I just look at your shipments and I try to do that same 2-year CAGR just for Refrigerated & Frozen division, it's down on a 2-year basis, and that's trying to normalize for the supply chain disruption. Is that just because this division has, like, refrigerated brands that have been down over that 2-year period that are -- that you're not including in that Nielsen data? Sean Connolly: I'm not sure exactly what you're looking at, Rob, but that could be a piece of it. I mean, there are some of the refrigerated businesses that are nowhere near the strategic priority as our frozen business, as an example. So we -- those could be categories where as we follow our horses for courses approach that it's more of a value over volume. But I would say, in general, on the core frozen business, you've seen strength on a 1-year and you see strength on a 2-year, and staggering market share data around 88% of that business holding or gaining share, which I know was a central focus for investors last year when we had the supply interruption. It's like, will this bounce back? Will it bounce back strong? And it has bounced back. So our refrigerated businesses, some of those businesses are more about cash contribution. There are some particularly high-margin businesses in there. And so much -- some of those refrigerated businesses, we treat more like some of our center store businesses like cans, where we manage them for cash and not as much for volume growth. That's probably what you're seeing there. Dave, do you want to add to that? David Marberger: Yes. Just -- Rob, just -- and I'll let you kind of follow up checking numbers. But if I just look at my -- the Q3, obviously, this quarter for shipments for R&F volume was plus 3.9%. Q3 a year ago was minus 3%. So on a 2-year basis, volume is actually up in shipments. Robert Moskow: Yes. I was referring to overall dollars are down. So -- but yes, I agree with you, Dave. David Marberger: Thanks. Operator: Our next question comes from Chris Carey with Wells Fargo. Christopher Carey: I wanted to see if you maybe could just take sort of a 2-, 3-year view on the margin trajectory for your key U.S. businesses. The Grocery & Snacks business has seen pressure, but there's clearly been more pressure on the refrigerated and frozen side. When you kind of digest that past few years, what are the key challenges that have impacted the business? Obviously, there's been inflation, but I wonder if there are other things under the hood. And as you look out over the next several years, how tangible -- how is your ability to kind of claw back some of those margins? And maybe you can comment on your medium-term productivity initiatives as well. So I'd love any thoughts there. Sean Connolly: Yes. Chris, let me give you my thoughts on that. We are the biggest frozen food manufacturer in North America, if not the world. And we have, as a company, seen in this now 5-, 6-year deep inflation super cycle, we've seen a massive increase in the cost of goods that we've had to deal with. And after about 4 years of taking inflation-justified pricing in order to kind of protect margins, that's where we said on our growth business is you can't shrink your way to prosperity. And that's led by frozen. So we did pivot the strategy to stop taking at some point, all this inflation justified pricing in frozen to get volumes moving again. But that means we had to eat some of that higher cost. And as a result, that business, in particular, because it's so strategic to us, we got volumes moving. They're moving extremely well again this quarter, but we've had to eat some cost. And a lot of that cost has been in animal protein because, as you know, animal proteins have been up. So that is exactly what has driven the margin compression in the frozen business, and it was a choice we made to protect our leading market shares and protect our sales. And if you looked at even the velocities across our portfolio that came out yesterday, I think we've got the best velocities by a good chunk in the group. So now the question comes, what's next? Obviously, we've got the war curveball that we're dealing with. But as I said last quarter, we absolutely -- assuming we can get some element of normalcy, we absolutely expect margin expansion going forward, particularly in frozen. And the building blocks haven't changed. It starts with productivity. In fiscal '26 between core productivity and tariff mitigation, that number is just over 5%, which is very strong. Second, at some point, we're going to get inflation relief, hopefully back to our -- closer to our typical 2%. Certainly, getting the war behind us would help with that. Third, we've got the advancement of our supply chain resiliency investments, including the chicken plants, and that's going to enable us at some point to repatriate outsourced volume, which will be a good guy for margin. And then fourth, we are taking price, and we have taken price surgically, and we've seen encouraging elasticities. And then the fifth thing is, as you've heard me talk in the last couple of quarters, we've kicked off this Project Catalyst, which is an ambitious initiative to reengineer our core work processes, leveraging technology. And that's going to be a benefit to both the P&L and the balance sheet. In the P&L, it will be a benefit to sales. It will be a benefit to profit. In the balance sheet, we see opportunity there in terms of reducing working capital, increasing cash. And that's a real tangible and exciting opportunity. So yes, it's margin and it's more than margin in that particular project. So put those things together, and we feel very good about the margin outlook from here. Obviously, it wouldn't hurt if the world settled down a bit. But we'll deal with that because that's not something we control. We got to respond to that. Christopher Carey: Okay. All right. Great. And just, Dave, the free cash flow conversion has been a really good story. You upped that at CAGNY and a small increase again today. Are we run rating at a new level for free cash flow conversion? Do you see a level of sustainability up here over 100%? And then just it's kind of a confirmation of a prior question. The dividends are staying on Ardent or I think the cash component of Ardent has maintained despite the income statement component coming down. Does that get reset next year? Or can you maintain a level of dividends? And by the way, I know you're not guiding to Ardent and nor am I suggesting, but is there some sort of like mark-to-market that needs to happen there? So that's kind of just a quick follow-up, and same things on cash. David Marberger: Yes. Okay. Well, let me start with the free cash flow conversion. So we're not going to guide to that now. What I would say is we always target a 90% or better free cash flow conversion as the base. Given our earnings and our ability to convert that to cash just in the normal course, we feel 90% is the appropriate target. So to get above that, we need to find additional cash-generating ideas. We've done that with cash tax efficiency this year with different planning that we've done that's really helped us there. And the big thing has been working capital specific to inventory, and I talked about it earlier. We have a significant amount of inventory, and we believe we have great opportunity to really reduce that inventory in future years. We -- our inventory increased coming out of COVID because we had a lot of demand and we increased our safety stocks. And now we're methodically reducing it with our supply planning systems and our process. But when we leverage some of these new tools with AI now, we think that we can continue that acceleration of inventory reduction, and that's the kind of thing that's going to take you above 90%. So again, I'm not going to specifically guide on that today, but we're laser-focused on inventory. And a big part of that, too, I've done this a long time, to be able to take inventory down, you have to have alignment between supply chain, sales and finance. And it may sound simple, but sometimes that doesn't always happen. And we have great alignment here, and it starts at the top in terms of a commitment to taking inventory out. So we're investing and we feel pretty bullish on our ability to take that out. As it relates to Ardent Mills, I would just -- when we set equity earnings for Ardent, we always have a payout ratio on those earnings, and that's how we start the year. And that payout ratio is pretty high. It's not 100%, but it's pretty close. And then we go from there. And so this year, the earnings fell, but we kept the dividend to plan. So our payout ratio is above 100%. But you always reset it every year so that the dividend payment and the equity earnings to start the year are pretty much in sync, and then we evaluate their balance sheet as we go each quarter. Operator: Our next question comes from Scott Marks with Jefferies. Scott Marks: First thing I just wanted to get clarity on, in terms of the volume growth in the business, wondering if you can help us understand how much of that was driven by some of the retailer inventory adjustments? And how much of it would you attribute to just recovery from the supply chain disruptions a year ago? Sean Connolly: Well, we certainly undershipped last quarter, Scott, and we caught that back up because the merchandising events moved into Q3. And so the shipments associated with those moved into Q3. So we're -- on a 2-year basis, as I mentioned before, we basically shipped consumption, and there's not a material gap there at all. In terms of the takeaway portion of it, it's strong on a 1- and a 2-year basis. And if you look at the mix of TPDs versus velocities, the hero there has really been the velocity piece, and that's driven in large part by just the strength of the innovation we've seen. So very pleased with the consumer takeaway that we've seen, particularly in frozen and snacks, which is obviously you could see in -- some of the data has been quite strong. Scott Marks: Understood. Appreciate that. And then a follow-up just quickly. I know last quarter, you've been talking about the new big chicken facility, talking about bringing in-house some production and that had been on track. Just wondering if you can share an update on that, how that's progressing versus expectations. Sean Connolly: Yes. We sell a lot of chicken, and we use a lot of chicken in our products, and it's a combination of baked or roasted, whatever you want to call it, and fried. Both have been strong. Both projects are tracking right where we need them to be. We still do have production on the outside. That will continue for a little bit. But then at some point, when we're -- all our work is complete, we'll have an opportunity to bring that back in as a good guide to our margins. David Marberger: Yes. And just on the baked side, we did complete that project, and we're starting to bring that volume back this year. And so as we go into next year, that should be a tailwind in terms of having full year on that. And then the fried, we've made investments, and that's going to go out longer. Operator: Out next question comes from Carla Casella with JPMorgan. Carla, is it possible your line is muted? It's open on our end, but I'm still unable to hear you. Matthew Neisius: I think that might be the last question. So why don't we go ahead and wrap today? Operator: All right. This concludes our question-and-answer session. I would like to turn the call back over to Matthew Neisius for closing remarks. Matthew Neisius: Thank you, Bailey, and thank you all so much for joining us today. Please reach out to Investor Relations if you have any follow-up questions. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good morning, everyone, and welcome to the Cal-Maine Foods, Inc. third quarter fiscal 2026 earnings conference call. All participants are in a listen-only mode. To ask a question, please follow the operator instructions during the Q&A. Please note this call is being recorded. I will now turn the call over to Sherman Miller, President and Chief Executive Officer of Cal-Maine Foods, Inc. Please go ahead. Sherman Miller: Good morning. Thank you for joining us today. I want to remind everyone that today’s remarks may include forward-looking statements. These are based on management’s current expectations and are subject to risks and uncertainties described in our SEC filings. Let me start by sincerely thanking our teams across the organization whose execution, focus, and commitment to excellence drive the operational and financial performance that underpins everything we do. Their hard work and dedication continue to set us apart, and these results are a direct reflection of their efforts. In February, we shared the sad news of the passing of longtime board member Jim Poe. Over more than two decades, Jim made a lasting impact on the company, and we extend our heartfelt condolences to his family and loved ones. Today, we announced the appointment of Dudley Woolley to the board to fill the vacancy left by Jim. Dudley brings deep expertise in risk management and governance along with a strong track record of leading growth-oriented organizations and driving operational performance. We look forward to the perspective he will add as we continue to strengthen our business, enhance earnings visibility, and focus on long-term value creation. Before Max walks you through our results in detail and provides additional color on our financial performance, I would like to spend a few minutes discussing how we think about the long-term direction of the business and how the strategy we are executing is designed to create durable value over time. When investors evaluate Cal-Maine Foods, Inc., they often focus on the consistency of our execution. That reputation has been built over time, not in any single quarter. It reflects the accountability, operational excellence, and continuous improvement embedded across the organization. At Cal-Maine Foods, Inc., our objective is straightforward: to compound intrinsic value per share over time, through thoughtful portfolio evolution, efficient operations, and prudent capital allocation. While short-term earnings will naturally fluctuate in a cyclical industry, our focus remains on strengthening the long-term earnings power and resilience of the business. In practical terms, that strategy centers on several priorities. First, we continue to expand our specialty egg mix. Specialty eggs represent a larger portion of our portfolio; they support structurally stronger margins, more stable demand characteristics, and improved returns on invested capital. Second, we are continuing to evolve our pricing structures. Over time, we are increasing the share of our business that operates under structured pricing arrangements. We believe this helps improve the stability and predictability of realized pricing across the cycle. Third, we are expanding our prepared foods platform. Prepared foods broadens our addressable market, leverages our vertically integrated chilled egg inputs, and establishes a complementary long-term growth platform alongside our core shell egg business. At the same time, we continue to reinforce the operational strengths that have long defined the company. Investments in biosecurity, productivity, and vertical integration strengthen our cost leadership and support reliable operating performance across cycles. Together, we believe these actions will steadily improve the quality and durability of our normalized earnings power while strengthening the company’s long-term competitive position. Against that backdrop, let me highlight a few key developments from the third quarter and the first three quarters of our fiscal year that reflect how the strategy is translating into execution. Unless otherwise indicated, all comparisons are to the comparable period of fiscal 2025. In 2026Q3, specialty eggs drove a greater portion of shell egg sales, accounting for 50.5% of total shell egg sales compared to 24.4%. Prepared foods accounted for 9.5% of net sales compared to 0.8%. Specialty eggs and prepared foods combined accounted for 52.9% of net sales compared to 24.0%. In the first three quarters of 2026, specialty eggs drove a greater portion of shell egg sales, accounting for 42.7% of total shell egg sales compared to 29.2%. Prepared foods accounted for 9.3% of net sales compared to 1.0%. Specialty eggs and prepared foods combined accounted for 45.7% of net sales compared to 28.6%. Importantly, the egg market in 2026 provided a real-time test of our strategy. Periods of price softness can create noise around near-term performance, but they also provide an opportunity to demonstrate that our results are not simply a function of spot market conditions. Instead, our performance reflects how effectively we manage mix, pricing structures, cost, and capital across the cycle. What we are really seeing is a market that is still being impacted by high-path AI, but to a much lesser extent than last year. The disruption has not gone away; it is still a reality, but it is not driving the same level of supply shock or panic-driven purchasing. Supply has improved, and retailers and foodservice operators are not rushing to build inventory, which has put downward pressure on wholesale prices, with retail adjusting more gradually. The key data points for December to February make that clear. The average layer hen flock is up about 2.2% year-over-year and depopulations are down 70.6% year-over-year. While high-path AI is still present, the magnitude of disruption is meaningfully lower and that is what is showing up in pricing. On the demand side, consumption remains stable to improving, with a few timing dynamics influencing near-term trends. In retail, volumes are up about 3% year to date. What is important is that our market is broad-based. Growth is showing up across both value and premium segments. In foodservice, demand is beginning to recover, with increased traffic and egg servings increasing, particularly in quick service. More broadly, eggs continue to benefit from strong structural tailwinds. They align with high-protein and health-focused diets, fit well with convenience and portable meal formats, and remain a nondiscretionary item once a consumer is in the channel. So overall, demand is holding up well, and what we are seeing in the market today is much more about supply recovery and timing shifts than any fundamental change in consumption. You can see our strategic framework reflected in the acquisition of the shell egg, egg products, and prepared foods assets of Creighton Brothers and Crystal Lake that we announced during the quarter. This transaction expands the geographic scale of our shell egg platform and adds nearby liquid egg capacity that supports our internal sourcing strategy for egg-based ingredients. We believe that over time, integrating shell egg production, egg products, and prepared foods more tightly within our value chain will help strengthen supply security, improve operational efficiency, and reinforce the economics for our prepared foods platform. With that, let me turn the call over to Max to drill down into our financial results and discuss our capital allocation framework. Max? Max Bowman: Thanks, Sherman, and good morning, everyone. As a reminder, we published our third quarter earnings release and the 10-Q this morning. Additionally, we published a brief earnings presentation on our website. These documents contain detailed information on our financial results. I will touch on the highlights for 2026Q3. Unless otherwise indicated, all comparisons are to the comparable period of fiscal 2025. For 2026Q3, net sales were $667.0 million compared to $1.4 billion, down 53%. Conventional egg sales were $283.2 million compared to $1.0 billion, down 72.1%, with 70.1% lower selling prices and 6.7% lower sales volumes. Specialty egg sales were $289.1 million compared to $328.9 million, down 12.1%, with 16.9% lower selling prices and 5.8% higher sales volume. Our average breeder flocks grew 13%, total chicks hatched rose 41.7%, and the average number of layer hens expanded 2%. Prepared foods sales were $63.6 million compared to $11.8 million, up 441.2% year-over-year, and compared to $71.7 million, down 11.2% quarter-over-quarter. Our majority-owned subsidiary, Kupini Foods, delivered strong momentum with sales increasing by 283%, contributing positively to the overall prepared foods portfolio. In prepared foods, Q3 represents a trough driven by the timing of previously announced planned network optimization and expansion activities. The near-term margin pressure is largely volume-driven, reflecting temporary downtime and under-absorption of fixed cost, along with some mix headwinds as the network transitions and we increase the use of cost-type pricing arrangements that enhance stability. As capacity comes back online, we expect a progressive recovery beginning in Q4, with margins trending back toward baseline through fiscal 2027 and 2028 as scale and network efficiencies are realized. We expect prepared foods capacity to increase more than 30% over the next 18 to 24 months. Importantly, demand remains intact. This is a function of execution timing, not structural weakness, and these investments position prepared foods as a more durable, high-margin growth platform. Overall, gross profit was $119.3 million compared to $716.1 million, down 83.3%, primarily driven by 56.5% lower shell egg selling prices, partially offset by a decrease in the price and volume of outside egg purchases, as our percentage produced-to-sold increased 3.1 percentage points to 91.5%. Operating income was $35.9 million compared to $635.7 million, down 94.3%, an operating income margin of 5.4%. Net income attributable to Cal-Maine Foods, Inc. was $50.5 million, down 90.1%. Diluted earnings per share were $1.06 compared to $10.38, down 89.8%. Cost of sales decreased 21.9%. Lower costs associated with egg purchases and egg products more than offset the increase in prepared foods cost due to the acquisition of Echo Lake Foods as well as the increase in our farm production and processing, packaging, and warehouse costs. SG&A expenses increased 4.2% due to the addition of Echo Lake Foods and increased professional and legal fees. This was partially offset by lower employee-related costs. Net cash flow from operations was $103.6 million compared to $571.6 million, down 81.9%. We ended the quarter with cash and temporary cash investments of $1.152 billion, down 17.3%. We remain virtually debt free. We repurchased 329,830 shares of common stock under our current share repurchase authorization during the quarter for a total of $24.3 million. The repurchase program permits us to purchase up to $500.0 million, of which $350.8 million remains available. For 2026Q3, we will pay a cash dividend of approximately $0.36 per share to holders of our common stock pursuant to our variable dividend policy. The dividend is payable in May 2026 to holders of record on 04/29/2026. The final amount paid will be based on the number of outstanding shares on the record date. From a financial perspective, our priorities remain centered on strengthening the durability and predictability of Cal-Maine Foods, Inc.’s earnings profile while maintaining a structured and flexible capital structure. Our capital allocation framework is designed to support long-term per-share value creation while preserving the financial resilience necessary to navigate a cyclical industry. First, we will prioritize investment in high-return organic growth opportunities. This includes investments that expand specialty egg capacity, improve productivity and operational efficiency, and support the continued development of our egg products and prepared foods capabilities. To that end, our prepared foods expansion initiatives are progressing on schedule and in line with plans previously communicated. At Echo Lake Foods, the network optimization and capacity expansion project is underway and expected to add approximately 17 million pounds of annual scrambled egg production capacity throughout fiscal 2027. In addition, the previously announced high-speed pancake line continues to advance as planned, and it is expected to contribute an additional 12 million pounds over the course of fiscal 2027. Separately, our joint venture, Kupini Foods, is investing $7.0 million through fiscal 2028 to expand production capacity by approximately 18 million pounds through the installation of new equipment and production lines. Collectively, these initiatives remain on track and are expected to increase Cal-Maine Foods, Inc.’s prepared foods production capacity by more than 30% over the next 18 to 24 months as the projects are completed and ramp up as planned. Second, we pursue selective acquisitions that strengthen the company’s strategic positioning and meet stringent return thresholds. Our acquisition of certain assets of Creighton Brothers and Crystal Lake is a good example of this approach. The transaction expands the geographic scale of our shell egg platform while also adding nearby liquid egg capacity that we believe will strengthen our integrated value chain. Third, we return excess capital to shareholders through our variable dividend framework and, when appropriate, opportunistic share repurchases. Underlying this entire framework is a commitment to maintaining balance sheet strength. A strong liquidity position provides the flexibility to invest across the cycle, respond to strategic opportunities, and navigate industry volatility. This systematic approach allows us to balance growth, resilience, and shareholder returns while preserving the long-term optionality that is critical in our industry. Over time, we believe the combination of portfolio evolution, disciplined capital allocation, and balance sheet strength will continue to enhance the company’s normalized earnings power per share and support durable value creation for shareholders. That concludes my review of the financial results. I will now turn the call back to Sherman. Sherman Miller: Thanks, Max. Looking ahead, we believe Cal-Maine Foods, Inc. is well positioned to benefit from durable shifts shaping the egg category. By building on the structural strength of our core shell egg platform while expanding across specialty eggs, egg products, and prepared foods, we believe we are strengthening the resilience and quality of our business over time. This progression is expected to help enhance the durability of our earnings profile and position Cal-Maine Foods, Inc. to deliver sustainable growth and long-term value creation. With that, I will turn the call back over to the operator to begin the Q&A portion of today’s call. Operator: We will now begin the question-and-answer session. To ask a question, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. We ask that each participant limit themselves to one question and one follow-up. Once your questions have been answered, please reenter the queue if you would like to ask additional questions. We will pause for a moment while we compile our Q&A roster. Our first question comes from Heather Jones with Heather Jones Research LLC. Your line is open. Heather Jones: Good morning. Thanks for the question. Congratulations on the quarter. I want to start with specialty pricing. That was where much of the upside was relative to our estimate for the quarter. The California price had rallied nicely over the course of a few weeks, but it has recently begun to pull back, though still not back to the Q3 lows. Would you expect Q4 specialty price to be similar to Q3, or is there some other dynamic that we need to consider there? Sherman Miller: Good morning, Heather. Thank you for the question. Specialty eggs continue to be extremely exciting for us, and as we move into Q4 and beyond, we see that as a huge part of our differentiation and our ability to diversify. The specialty prices, as we have mentioned before, have a smaller piece of that category tied to the market, and if that market moves up and down, there is some flex. But for the most part, those prices are a lot more stable. Max, you might want to give a little bit more color on that. Max Bowman: Yes. As Sherman said, Heather, our specialty pricing does not fluctuate that much. We call out that the vast majority of our specialty pricing is either grain-based or a fixed-price type arrangement—cost-plus—so it stays pretty flat. There is a component that, as you call out, ties to the cage-free California market. It varies from quarter to quarter, but roughly I would say about 12% or in that range. Depending on how that price reacts this quarter and coming quarters, that will largely drive a lot of that movement, but we expect specialty price to stay pretty consistent. Heather Jones: Okay. Thank you for that. And then on my follow-up, it is just on the prepared foods business. I think I caught you saying that you expect the margin for that business to trend back to baseline through 2027 into 2028. Are you not expecting it to fully get back there until 2028? And when you say baseline, there were some quarters where it was north of 20%, but I believe your baseline is 19%. Is it unlikely to get back to where it was a few quarters ago, and how should we update our thinking on baseline? Max Bowman: I will take that one. We think Q3 represents a trough quarter. What you are seeing is anticipated impacts of some of the network expansion and capacity initiatives that we have mentioned. In the quarter, we saw lower volumes and then margin pressure as we go through these reconfigurations. When you have lower volumes, the first thing that happens is under-absorption of fixed cost, and that was one of the major headwinds for the quarter. As we roll into Q4 2026, we expect to see some of that rebound begin to come back online. It will be tempered a little bit, as sales mix tied to the end of the school year will partially offset some of that margin recovery, and that is just a normal seasonal dynamic. It is not an execution issue. We are currently, because of these reconfigurations, having a slightly less desirable product mix that is impacting our margins, but that will improve over time too. All these things are transitional and not reflective of underlying demand, which we still believe to be strong. We continue to migrate from market-based pricing towards grain-based and longer-term pricing arrangements. This moderates near-term pricing upside, but we are looking at the long-term durability and stability of our business, and we think it enhances that. As we begin to see this recovery in Q4 2026, we will see higher capacity and better utilization of that capacity. That margin recovery will really start showing up toward 2027 and into 2028, when the volumes we have talked about through the additional investment that we are making in Echo Lake as well as Kupini will be fully online. When you speak of the 19% to 20% margin, that was the margin we had called out at Echo Lake. Kupini is coming along, and the other elements of our prepared foods we continue to work on as well. We think we are taking some short-term pain now for better long-term positioning and gain in the future. We feel more positive as we go into 2027 and early 2028 that we will really see the fruits of that, along with the 30% growth that we had talked about from these investments. Sherman Miller: Thank you, Max. The only thing I will add, Heather, is just getting the nuts and bolts in the right place for long-term performance and growth and having streamlined operations and really strategically placing the four Echo Lake facilities in the right manner—to have our flour products to the northern two facilities and the egg-type products in the southern two facilities, which happen to be very close to Creighton Brothers, which can supply the eggs long term. So a lot of good progress there. Heather Jones: Okay. Thank you so much. Operator: One moment for our next question. Our next question comes from Pooran Sharma with Stephens Inc. Your line is open. Pooran Sharma: Thank you and congrats on the quarter here. I wanted to focus on pricing for the conventional eggs. It did come in a little bit higher than we were modeling, and you have stated in the past that your new hybrid pricing model gives you a better floor. Looking at the price ratio between your conventional egg pricing and what we track with the USDA, we just have not seen it this high in over a decade. Could you help us and the investment community understand how to think about your cost of production for your conventional eggs based on some of the disclosures you have in your filings, and then marry that with what kind of high-level rate of return you generally expect from these types of assets? Sherman Miller: Good morning, and thank you for the question. I will start off and then pass it to Max. I think you pegged it very well. You are seeing reduced volatility, and as we mentioned with hybrid pricing, there are trade-offs. On the top side there is an opportunity, but on the bottom side there is as well, and that is what you are seeing in this quarter. Market realization certainly benefits from this as well as, as we have mentioned before, having longer-term arrangements. So any top-side slippage is certainly balanced with downside uplift. That depends heavily upon the type of arrangement, and the real win here is us working with customers to not only benefit the type of eggs you are talking about, but also specialty eggs and prepared foods that we also value very highly. On the cost side, there is certainly a lot going on geopolitically around the world. Grain is one of the things that has come up in the news over the last few weeks, particularly tied to fertilizer, and our consultants assured us that probably 90% of the inputs have already been locked. So fertilizer costs for this planting season should not cause too much disruption, but fuel transporting not only grains but everything else is certainly in the news and is real. The reassuring piece is that we have been here many times before, and we navigate that not only by using our scale, but also by using things like our warehousing and our inventory and managing through situations like this. Max, what would you add? Max Bowman: Pooran, when you talk about hybrid pricing, you are talking primarily about our conventional eggs. As you know, we only report one segment today, so we do not give complete margin information and returns on conventional versus specialty. But hybrid pricing does exactly what you called out and what we have said before. What we hope to get is more stable and resilient, continuous profit. I am not saying it will always be a profit, but certainly we are taking some off the top for high returns from conventional and trading that for longer-term, more stable earnings. As we grow, that is a piece of the puzzle, and where we look for really good growth and even better returns would be from our specialty and our prepared foods business. We look at the conventional business as our baseline. It is important because of its size and scale that it is strong and operates profitably and consistently, and that is what the hybrid pricing does. Then we continue to invest in prepared foods and specialty where we hope to get higher returns. We do not disclose individual returns for conventional and specialty at this time, but we have said in the past that our return on invested capital is double digit, well above our cost of capital. We feel good about the returns as we sit today, not only from conventional, but the opportunities in specialty and prepared foods. Pooran Sharma: I appreciate the detail there, Sherman and Max. From a capital allocation front, you still have a strong balance sheet. In our recent conversations, you had called out liquids as an area of focus. As you are looking across the M&A landscape, does that remain an area that you want to continue to build, or are you looking at it more opportunistically in terms of what is out there in conventional, specialty, or more prepared foods assets? Sherman Miller: I will start by commenting on Creighton Brothers. As we pointed out, there is liquid egg capacity there, and it is very close to our prepared foods operations that ultimately will be producing egg products in the southern two plants. Our capital allocation hierarchy still remains intact to pursue selective, accretive M&A where returns are compelling. We believe that we have more ways to grow than ever before, including conventional eggs, specialty eggs, prepared foods, the ingredients that you mentioned, and also brands tied to prepared foods. On the ingredient piece, we want to, over time, closely align our needs within Echo Lake. As we mentioned before, there are some arrangements that we are working through that we inherited, but we think that Creighton Brothers is certainly a very strategic move in making that come to pass. Max Bowman: In the materials we published, we have an investor deck with a few slides that recap our capital allocation for the last twelve months ending at the end of our third quarter. There is a lot of balance there, and it shows that in a lot of ways, we are putting our money where our mouth is. It represents about $1.0 billion of capital that was allocated. About 38%, or $384.0 million, went to dividends to our shareholders. About $299.0 million, or 30%, went to acquisitions, including Echo Lake, Clean Egg, and Creighton Brothers that we just announced. Remember, we have been in a time when acquisitions are sometimes considered tougher because of the very good markets we have been in, yet we have been able to deploy capital toward these acquisitions that we believe really advance our goals for the long term. On the CapEx side, we allocated about $117.0 million, or 17%, including about $35.0 million of maintenance CapEx. Our share repurchases were about 15%, or over $150.0 million. That gives a good view of where we are spending our money. As Sherman says, our focus is really long-term shareholder value. We look at things opportunistically, and we want to do the things that we think clearly enhance our earnings quality and portfolio growth and resiliency. Pooran Sharma: Great. Thank you for the detail. Operator: One moment for our next question. Our next question comes from Leah Jordan with Goldman Sachs. Your line is open. Leah Jordan: Thank you. Good morning. I wanted to ask about demand. You talked about it being resilient in the quarter, but could you provide more color on the trends you are seeing within your branded portfolio specifically? What are the growth opportunities you still see there, including any potential opportunity to gain more contracts or exclusivity over time? Sherman Miller: Good morning, Leah. Thank you for that question, and I will certainly get to the branded. At a higher level, retail egg volumes are up about 3% year to date through late February. The incredible thing about that is it is broad across segments—from conventional, cage-free, free-range, and pasture-raised. Foodservice is also showing early signs of recovery, with January marking a clear inflection point—traffic up about 1% year-over-year with dollars up about 4%. Eggs continue to be well positioned with the long-term consumer shift toward high-protein diets, supported by their strong nutritional profile, and affordability is a huge plus for us right now as a tailwind. On our branded side, we continue to grow through establishing production to support it. As Max has mentioned, the projects that are coming online now and in the next few months set us up to be able to continue to grow that. We have seen growth this quarter and are planning future growth as well. Max, what would you add? Max Bowman: I would say that our specialty, not just branded but specialty, was up 6% for the quarter. That is higher than the overall market for specialty. As Sherman says, it is broad-based across cage-free, free-range, and pasture-raised. Importantly for us, from a volume perspective, it was a record specialty quarter, which I think is notable, particularly considering that lower conventional prices sometimes temper specialty growth because the consumer goes for the cheaper egg, yet we were still able to get some growth. I did not mention our nutrient-enhanced or our branded relationship with EB, but that is something we continue to work to grow and think there is opportunity for some more regional growth into the fourth quarter and beyond. The projects we have called out—the 1.1 million cage-free hens we are adding at five locations—are progressing. A couple were done; one will finish late in this fourth quarter, and another will finish in August of this year, after this fiscal year. We still see growth in our specialty business ahead and think there is great opportunity there. Leah Jordan: Thank you. That is very helpful detail. For a follow-up, switching over to feed, given the shift in grain markets in recent weeks, could you provide more color on how you are thinking about your feed costs over the coming quarters and as you start to plan into FY 2027? Any mitigation you have there should we see costs continue to rise? Sherman Miller: Yes. We continue to measure and mitigate risk, and that includes utilizing our grain warehousing, basis locks, or hedging strategies where applicable. These grain-based agreements help offset the effect of grain price changes. The planting intentions report yesterday was viewed by some as fairly neutral. Compared to last year’s predictions, it is very close to what actually got planted—corn down about 3.5 million acres and beans up about 3.5 million. We really focus on the carryout; a 14% stocks-to-use is bearish. Geopolitical effects can change things in a hurry—from the Middle East to fertilizer and fuel costs—but we have been through this many times and continue to utilize all of our tools to mitigate risk the best we can, and we will continue to do that. Max Bowman: I think you have covered it, Sherman. Leah Jordan: Great. Thank you. Operator: One moment for our next question. Our next question comes from Benjamin Mayhew with BMO Capital Markets. Your line is open. Benjamin Mayhew: Hi, good morning. Thanks for the questions. First, can you help us better frame up the current supply environment, particularly in the specialty egg category? Competition seems to have picked up there quite a bit year to date, with more promotional activity seen. What is your view on the sustainability of the supply growth rates we are seeing? Sherman Miller: Ben, good morning. Thank you for that question. As we mentioned a few minutes ago, specialty is an area we continue to grow. The first step is having supply, so as some of these projects come online, that certainly indicates that we are going to be prepared for that type of growth. The last few years have been very light on promotions—there was a shortage of eggs and promotions were not needed. Going forward, we promoted across all sets for the last few years, so we will continue to fall back into that routine and see good results coming from it. Max, anything to add on that question? Max Bowman: I think that pretty much covers it. Benjamin Mayhew: And thinking about your organic growth investments, how do you view the trade-offs between investing in productivity enhancements up and down your value chain versus adding more capacity at this point? Given the current market environment, how are you thinking about deploying your capital there? Sherman Miller: Back to capital allocation, capital is allocated to the opportunities that most clearly enhance our earnings quality, portfolio resilience, and long-term shareholder value. There are more ways than ever for us to consider that. We consider five buckets: conventional eggs—we continue to grow, and the Creighton Brothers acquisition had additional conventional eggs that fit very nicely, especially in the liquid piece; specialty eggs—those organic projects have been going on, as well as we have had M&A through Creighton, where we also picked up about 500,000 cage-free hens; prepared foods—we have $36.0 million of expansion projects going on there as well as continuing to look for M&A and opportunities; and ingredients—a big opportunity for us to make sure that our production is aligned. We do not just focus on specialty eggs, but we know we must have the supply needed to grow those, and I believe we are in the right position to do that. Max Bowman: You covered it. The only thing I will add about productivity is our culture with roughly 50 operating locations. We are always ranking those one against the other, trying to learn what one is doing that is really good, or if there is one underperforming, how we can get that underperformer to duplicate the results of the top third of our business. It is a constant analysis of productivity and looking for ways to bring our whole enterprise up as we identify things across it. Scale and the opportunity to look at 50 locations gives you a lot of opportunity for continuous improvement. That is always part of our focus. Benjamin Mayhew: Great. Thank you, guys. Have a great rest of your day. Operator: One moment for our next question. Our next question comes from Ben Klieve with Benchmark. Your line is open. Ben Klieve: Hi, thanks for taking my questions and congratulations on a nice quarter. My first question is a follow-up to the conversation around the hybrid pricing model in conventional eggs. Could you elaborate on the behavior of your retail partners as commodity egg prices came down intra-quarter—sub-$1.00 at various points? Have those retailers that moved to contract-based pricing over the past year or two reconsidered that move in the face of low commodity prices, or has the willingness to move from market-based to contract-based remained consistent? Sherman Miller: Good morning, Ben. Thank you for that question. This quarter was certainly a test for whatever strategy a retailer had, with the market ranging up to $2.69 all the way down to $0.85 within the same quarter in the Southeast market. Strategies were definitely tested. As we have mentioned, there is protection for our customers on the upside, and on the downside there is protection for us. Depending on their go-to-market strategy—whether it is high-low or everyday low price—different arrangements favor one retailer versus the next. Overall, the strategies performed exactly like they were designed to, and you are seeing some of that benefit in our market realization this quarter. Ben Klieve: Very good. My follow-up question pivots to prepared foods. You educated us on the state of this market, and after Echo Lake you announced another acquisition a few weeks ago. Can you educate us on the size of the addressable market and the degree of fragmentation within it? Are you looking to continue this acquisition pace, or have you reached a reasonable level of market share within this space? Sherman Miller: Ben, we certainly have not topped out here. Crystal Lake, which came with Creighton Brothers, as noted in our announcement, was more a distribution of Echo Lake products, so I would not really say it is doubling down at this point. We do continue to grow that both organically and through M&A as opportunities present themselves. We will be very strategic and make sure that we stay concentric while we do that in the breakfast channel. We will not get too far outside of our core competencies. Ben Klieve: Very good. I appreciate you taking my questions. Congratulations again on a nice quarter. I will get back in the queue. Sherman Miller: Thank you. Operator: I am not showing any further questions at this time. I would like to turn the call back over to Sherman. Sherman Miller: Thanks, everybody. It was an exciting quarter for us, and we are very grateful for everybody’s attendance today and your continued interest in Cal-Maine Foods, Inc. Operator, we are ready to conclude the call. Operator: This concludes the question-and-answer session. A replay of today’s call will be available via webcast in approximately two hours after this call. The webcast will be available on demand for a year. It can be accessed by going to the company’s website, Investor Relations section. In addition, a transcript of today’s call will also be posted on Cal-Maine Foods, Inc.’s website, Investor Relations section. Thank you for joining us today. You may now disconnect.
Operator: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to VolitionRx Limited Full Fiscal Year 2025 Earnings Call. [Operator Instructions] This conference call is being recorded today, April 1, 2026. I would now like to turn the call over to Louise Batchelor, Group Chief Marketing and Communications Officer. Please go ahead. Louise Batchelor Day: Thank you, and welcome, everyone, to today's earnings conference call for VolitionRx Limited. Before we begin, I'd like to remind everyone that some of the information discussed on this conference call will include forward-looking statements covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on our beliefs as well as assumptions we have used based upon information currently available to us. Because these statements reflect our current views concerning future events, these statements involve risks, uncertainties and assumptions. Actual future results may vary significantly based on a number of factors that may cause the actual results or events to be materially different from future results, performance or achievements expressed or implied by these statements. We have identified various risk factors associated with our operations in our most recent annual report on Form 10-K, quarterly reports on Form 10-Q and other filings with the Securities and Exchange Commission. We do not undertake an obligation to update any forward-looking statements made during the course of this call. Cameron Reynolds, Group Chief Executive Officer, will open the call, providing a summary of key achievements in 2025. Terig Hughes, Chief Financial Officer, will then provide a financial report, before handing over to doctors Retter and Micallef, who will present research highlights from across our product pillars. Cameron will close with a discussion of upcoming milestones. We will then open the conference call to a question-and-answer session. And with that, I'll turn the call over to Cameron. Cameron Reynolds: Thanks, Lou, and thank you, everyone, for joining Volition's full fiscal 2025 earnings call today. As always, we very much appreciate your time given the busy earnings call season. Before diving into detail, I would like to take a moment to reflect on our founding mission. We set off over 15 years ago to help save lives and improve outcomes for millions of patients worldwide. And I could not be prouder of the progress we have been making towards that goal. In the fourth quarter of 2025, we not only received our first order for the new Nu.Q Cancer assays for clinical certification ahead of routine clinical use in lung cancer, but we also announced the inclusion of our Nu.Q NETs assay in real-world interventional evaluation of early detection of sepsis in a government-backed, approximately $7.3 million, program in France. Our tests are about to be used in both these devastating diseases to help save lives in the real-world hospital settings, an extremely proud moment for our entire team. Cancer and sepsis are leading causes of death, accounting for approximately 1/3 of deaths worldwide. With the first clinical use now imminent, we're about to be part of the solution, through simple, easy-to-use, low-cost tests. I believe we will look back on 2025, this first quarter of '26 and even in time, the next few quarters, as transformational for the company. In 2025, efforts for Volition focused on commercializing our groundbreaking Nu.Q platform in the human diagnostic market. We're excited to start the implementation of our human licensing strategy with the signing of not 1, but 2 agreements. The first, with antiphospholipid syndrome, APS, with Werfen; and a co-marketing service agreement with Hologic. Both are multibillion dollar companies and worldwide leaders in their specialized fields, and we are delighted to be working with them. We have further strengthened our intellectual property portfolio and are continuing our licensing discussions with around 10 of the world's leading diagnostic and liquid biopsy companies. These discussions are at various stages of negotiation process across all our different pillars, and we anticipate announcing additional agreements throughout 2026. Our goal is to secure a wide range of licensing agreements in the human diagnostic space, mirroring our successful strategy in the vet market. And we anticipate diverse deal structures with potential for upfront and milestone payments and future recurring revenue. We have developed a truly remarkable, versatile platform and are working with governments and some of the biggest diagnostic and liquid biopsy companies to make our technology available worldwide as quickly as possible. Beyond licensing, we also achieved several significant commercial milestones in 2025. In the first quarter, we recorded our first revenue from sales of our CE-marked Nu.Q NETs automated assay, a regulated, clinically approved product. NETs, or more specifically NETosis, goes far beyond just sepsis and is implicated in a very wide range of diseases. Currently, 12 hospital networks across a number of countries are evaluating our Nu.Q NETs assay across 15 different clinical use cases and indications. We believe NETs testing will become a key part of routine blood testing. In February of 2025, we announced our first commercial sale of Volition's proprietary high-throughput NETs method that measures neutrophil extracellular traps, NETs, activation and inhibition in whole blood in real time, helping companies develop new therapeutics to combat sepsis and other NETs related disease. In March, we signed an agreement with a leading pharmaceutical company to utilize Volition's Nu.Q Discover biomarkers in a longitudinal Phase I/IIb study, the first human clinical study with a pharmaceutical company sponsor that our test supports. Through our Nu.Q Discover pillar, we are now serving close to 100 clients worldwide, including many top pharma and diagnostic companies, accelerating disease research and drug development across multiple therapeutic areas. Some of these pharmaceutical companies are progressing to late-stage clinical trials using our assays as pharmacodynamic biomarkers. We estimate the total addressable market for relevant companion diagnostics to be a little under $1 billion. In 2025, we delivered substantial revenue growth for Nu.Q Discover, which Terig will detail. And we anticipate a similar trajectory in 2026. The Nu.Q Vet Cancer Test is the #1 canine cancer screening blood test in the world, now available in over 20 countries. To further accelerate revenue growth and ensure consistent delivery, we focused on central lab automation. In March of 2025, Fujifilm Vet Systems extended their contract to implement a centralized automated platform for the Nu.Q Vet Cancer Test using IDS i10 made by Revvity. Subsequent to year-end, in March of this year, we announced the completion of all validation and verification of the chemiluminescent immunoassay, ChLIA, version of the Nu.Q Vet Cancer Test with Fuji Vet Systems in Japan, allowing use of full automation rather than menu plates in central labs. This is a world-first and will significantly enhance turnaround times and throughput to meet increasing demand. We believe that central lab automation is crucial for scaling of our vet business and integrating our tests into routine pet wellness panels. Importantly, this automation platform is the same technology utilized for our human diagnostic products Nu.Q Cancer, Nu.Q NETs and Nu.Q Discover, highlighting the inherent synergy and efficiency of our core Nu.Q platform. From a product expansion perspective, we made great progress with our research in the use of Nu.Q NETs in cats. In May of 2025, we announced the publication of our first clinical paper reporting the detection of nucleosomes in cats. And subsequent to year-end, in early January of this year, we reported results from a clinical study demonstrating the high accuracy of its Nu.Q Vet feline assay in detection of lymphoma in cats, the most common cancer in the species. At 100% specificity, meaning no false positives, the assay detected over 80% of feline lymphomas. This breakthrough marks the development of what we expect to be the world's first simple, affordable blood-based liquid biopsy test for feline cancer, a significant unmet need in veterinary medicine. This opens up the potential for cancer screening and monitoring in cats. There are more than 60 million cats in the U.S. alone, 25% of which are senior cats, and therefore, suitable for an annual check. This represents a tremendous commercial opportunity for Volition. The publication of this study in a peer-reviewed journal is expected subsequently to unlock a $5 million milestone contract payment. And we will also generate ongoing revenue in this large and growing market where our technology meets an unmet need, incredibly quick progress from a product development perspective and great to add a third species for Nu.Q. I will return at the end of this call to discuss some additional recent achievements and upcoming milestones, but now will pass over to Terig for a finance report. Terig Hughes: Thanks very much, Cameron, and hello, everyone. I'm now delighted to provide a full fiscal year financial report for the year to December 31, 2025. From a revenue perspective, we finished the year strongly with year-on-year growth for Q4 of 133%. For the full year 2025, we recorded $1.7 million in revenue, a growth of 40% over the full year 2024. And I'm delighted to report we received our first revenue from the CE-marked Nu.Q NETs product in Europe during 2025. We also received our first order for Nu.Q Cancer from Lyon for the certification of our cancer test in their hospital network, more of which from Andy later in the call. As we have stated previously, at this early stage of commercialization, revenues remain fairly lumpy and difficult to predict from 1 quarter to the next. So while I remain confident of continuing to see solid growth year-over-year, we will not be providing revenue guidance for 2026 at this point in time. From an expenditure perspective, we significantly reduced operating expenses, which were $4.8 million lower, a reduction of 17% compared to the full year 2024. And indeed, looking at the trend over the last 2 years, we are now operating at significantly lower levels of expenditure. Furthermore, we will continue to take measures to reduce costs further over the coming year. Net cash used in operating activities was $19.7 million in 2025. This compared with $25.9 million in 2024. Cash and cash equivalents at the end of the year totaled approximately $1.1 million. However, subsequent to year-end and through March 25, we received approximately $5.4 million in net proceeds from our at-the-market or ATM facility and $1.9 million in net proceeds from issuance of a convertible note to Lind Global Asset Management LLC. We continue to receive significant support from agencies of the Walloon Region in Belgium. And subsequent to year-end, we announced nondilutive funding of approximately $2.3 million. This takes the nondilutive funding support from all sources from inception to date to over $25 million. So to summarize the finance report, key indicators are trending positively. Revenue was up 40% year-on-year; operating expenses were down 17% on a full year 2025 basis; net cash used in operating activities was down 24% year-on-year. We continue to work on reducing our underlying operating expenses. We expect to secure a $5 million milestone payment from our existing agreement in the vet space. And last but not least, licensing discussions are progressing well, and I look forward to providing updates as they progress. Throughout 2025, and indeed subsequent to year-end, we have made significant scientific and clinical progress. And so with that, I will hand over to Andy and Jake. Andrew Retter: Thank you, Terig, and hello, everyone. I appreciate there is an incredible volume of information shared on these calls, so I will try and limit my comments to what I believe our recent important clinical achievements. I'll start with Nu.Q NETs. NETosis is an area of increasing scientific interest with a significant number of research articles published in recent years. In February, a review article entitled "The NET effect: Neutrophil extracellular traps, a potential key component of the dysregulated host immune response" was written by myself alongside 2 key opinion leaders in the sepsis arena, Professor Djillali Annane and Professor Mervyn Singer. This paper has already been accessed more than 11,000 times and cited in almost 60 peer-reviewed publications. From a clinical utility perspective, we have published 2 key papers. The first was with the team from UMC Amsterdam, looking at more than 1,700 critically-ill patients. Our paper is available free to download from Critical Care. The second paper, available on medRxiv, written with our colleagues in Jena, is another independent study looking at 971 patients with sepsis. Together, the data from these studies show that Nu.Q H3.1 accurately distinguishes sepsis from noninfectious systemic inflammation. It is strongly correlated with disease severity and provides excellent prognostic information for outcomes such as organ failure, specifically renal failure, and mortality. The prognostic power of H3.1 measured at ICU admission significantly exceeded existing severity scores, such as APACHE II and the SOFA Score. As a result of this convincing evidence, in December, we were delighted to announce the inclusion of our Nu.Q NETs test as the sole biomarker in the DETECSEPS study, a real-world evaluation using H3.1 in combination with the National Early Warning Score to promote the early detection of sepsis and try and promote the flow of patients for emergency rooms. This is a problem every health care system in the world faces. Not only is DETECSEPS led by prominent clinicians, it's also backed through financing from the French government. DETECSEPS aligns with Volition core purpose of operationalizing our understanding of epigenetics and, in particular, of H3.1 in clinical practice, to help identify and monitor the severity of disease. The DETECSEPS program provides an opportunity to receive individualized care adjusted to the risk of deterioration or risk of progression to multiple organ failure. It is a great privilege to be involved in such a program. And we hope that through earlier identification and risk-stratification of patients, many lives can be saved. We also hope that by improving the flow of patients out of the emergency rooms, that we can help hospitals run more efficiently, sending people home safely, escalating and expediting care to those patients who need it most. These efficiency gains could be huge and have a real impact on the entire running of hospitals and improve the delivery of health care. I think you can understand why we say it has an impact in all health care settings. Our final exciting development in 2025 has the potential to be a game-changing technology, not only in disease where time is critical, such as sepsis, but also in providing our tests to lower-income countries where laboratory infrastructure may be weak or nonexistent. Specifically, this is the development of a lateral flow test for point-of-care quantification of nucleosomes. In July 2025, we reported the quantification of nucleosomes in whole blood in minutes utilizing a simple lateral flow device. I'm delighted to say the second phase of research is now well underway, with the first patient recruited for comparison between whole blood and capillary blood in critically-ill patients. This really is a technology to look out for in the coming months. And hot off the press, we are delighted to announce this week the publication of a study with our colleagues at the Mayo Clinic in the journal, Shock. The Mayo Clinic study of 674 trauma patients demonstrated that nucleosome levels, as measured by Volition's Nu.Q H3.1 and Nu.Q H3R8 Citrulline tests, are elevated in people that go on to have complications from trauma. The identification of reliable biomarkers in trauma is a clinical challenge and remains a significant unmet need in the emergency and surgical settings. Professor Park, the principal investigator and senior author of the paper said, "These biomarkers could aid in early risk identification and may inform targeted preventive strategies in trauma care." For my part, I believe this is a significant study not only for clinicians, patients and their families, but also for Volition. A peer-reviewed publication with the Mayo Clinic Research team strongly supports our efforts to commercialize our Nu.Q NETs products. Indeed, my overall sentiment is that this study, together with our previously published evidence, demonstrates that Nu.Q NETs may enable clinicians and researchers to anticipate disease, guide treatment decisions, understand disease trajectory and monitor patients over time across acute and chronic conditions. Turning to Nu.Q Cancer and, in particular, lung cancer, where the first clinical use of Nu.Q is now imminent. Nu.Q Cancer represents a significant advancement in lung cancer patient management, offering clinicians an additional tool to enhance precision in treatment selection and monitoring. Research conducted by our long-term collaborators in Taiwan and Lyon consistently demonstrates that our Nu.Q Cancer technology empowers clinicians to make informed treatment decisions that provide valuable new monitoring capabilities through the patient journey. From a publications perspective, the first NTU manuscript was published in March 2025, coincidentally, almost the same day as the first patient was enrolled in the validation study. The NTU team also presented data at the North American Lung Cancer Conference in Chicago in December, and then as recently as last week's ESMO's European Lung Cancer Congress. Both posters support the use of Nu.Q Cancer preoperatively to help identify patients at high risk. High H3K27 trimethyl nucleosome levels predicted poorer recurrence-free and overall survival outcome. Whereas a lower H3K27 trimethyl level indicated a significantly better outcome. Joint Lead Author, Dr. Chen, commented that "The Nu.Q Cancer technology supports a practical approach to empower clinicians to make a more informed treatment decision and provide valuable new monitoring capabilities throughout the patient journey." This is excellent endorsement indeed. And I know from the commercial team, that they are now looking forward to how we can provide the test in routine clinical practice. Together with our colleagues in Lyon, we've also presented at a number of conferences and prepared a further 2 manuscripts for a submission to peer review publication, the first of which has just been submitted and the second is due to be submitted in the coming weeks. These results demonstrate that measured methylated nucleosome biomarkers at non-small cell lung cancer diagnosis can provide valuable information about survival -- progression-free survival and crucially help enhance the identification of patients who may benefit from more intensive therapy and potentially offer them curative care. As Cameron said at the top of the call, we made our first sale of our Nu.Q Cancer assays to the Hospices Civils de Lyon, one of Europe's leading cancer centers. And subsequent to year-end, we have announced, with the support of our Lyon team, the preparation of our reimbursement submission to the French government. Reimbursement is the next step on the path to the first use of Nu.Q in clinical practice, an exciting prospect which is core to Volition's mission of using our tests to help save lives. Reimbursement will be a major milestone for Volition in the commercialization and licensing of Nu.Q Cancer. Once achieved, we anticipate the introduction into routine clinical use in France by the fourth quarter of 2026. This is a truly exciting and rewarding prospect. And with that, I will pass you over to Jake, who will give you an update on another significant project. Thank you, everyone. Over to you, Jake. Jacob Micallef: Thanks very much, Andy, and hello, everyone. I'm just going to be talking about one project today, Capture-Seq, which we've had several announcements about, the first in December and others in more recent weeks. Volition is, I believe, the first company to demonstrate the isolation and analysis of greater-than-99% pure circulating tumor-derived DNA. To set the scene, the biggest problem facing liquid biopsy worldwide is that the vast majority of circulating DNA in blood plasma samples comes from healthy cells, not from cancer cells. In a world-first new technology, Volition has overcome this hurdle and produced greater-than-99% pure cancer-derived plasma DNA sequence sets for liquid biopsy. Our manuscript, submitted in November and previously announced in December 2025, described a new liquid biopsy chemistry for isolating CTCF DNA from plasma. Subsequently, our continuing work on CTCF-bound DNA has revealed what we believe to be an unprecedented new discovery: that there is almost no CTCF-bound DNA in healthy plasma, and almost all CTCF-bound DNA in the blood of a cancer patient is derived from cancer cells, i.e., it is virtually pure circulating tumor-derived DNA. Removal of background normal cell free DNA from the blood to reveal this level of tumor-derived DNA has been a long-term goal of liquid biopsy. In this updated manuscript, we report a new 2-step method for preparing virtually pure circulating tumor DNA sets for cancer patients. The first step is the physical enrichment of the sample, and the second step is the bioinformatic removal of virtually all remaining nontumor cfDNA sequences from the DNA sequence data set. This new method produced more than 99% pure ctDNA sequencing data sets for blood samples from cancer patients. And whilst we capture a subset of the circulating tumor DNA, not all of the circulating tumor DNA in a sample, it is virtually pure cancer DNA. These methodological and technological breakthroughs represent a novel liquid biopsy method for a novel class of potentially thousands of liquid biopsy sequence biomarkers, representing, in my opinion, the biggest scientific breakthrough in cancer testing and monitoring in recent years. Last week, we released data from a blinded validation cohort of 81 subjects, including 59 colorectal and lung cancer patients and 22 healthy controls. And we were extremely encouraged by the results, particularly in early-stage cancer where we detected more than 95% of Stage 1 and Stage 2 cancers. For patients, the potential significance is huge. If validated in larger cohorts, CTCF Capture-Seq could contribute to multi-cancer early detection, fulfilling a significant unmet clinical need. We also believe Capture-Seq has the potential to play a role in cancer management, including but not limited to, minimal residual disease detection, including tumor-naive minimal residual disease detection and treatment monitoring, either alone or potentially in combination with other technologies. Volition is, I believe, the first liquid biopsy company to focus on circulating cell free nuclear proteins, and we have filed a number of new patents to protect this technology. As you can imagine, this has generated a lot of interest, and we're in active discussions with several large liquid biopsy and diagnostic companies to accelerate the development and launch of this technology as soon as possible. And with that, I'll pass over to Cameron for his commercial perspective and wrap-up. Cameron? Cameron Reynolds: Thanks, Jake. Let me start by congratulating you, Andy and the whole innovation, research and development and the clinical teams on the truly amazing progress you have made, not only this year but over the last 15 years. We set out to help save lives and improve outcomes for millions of patients worldwide, and we're making huge progress towards that goal. With the first clinical use now imminent in both early sepsis detection and lung cancer management, we are about to be part of the solution, through simple, easy-to-use, low-cost tests. Our vision is for our technologies to be incorporated into tests that will be used first by millions, and ultimately, hundreds of millions of people and animals a year, with our platform licensed to a range of large diagnostic and liquid biopsy companies and governments worldwide. Combining our groundbreaking technology with their installed base of labs, analyzer machines and sales forces around the world, we will achieve the optimal outcome for us. Large companies have the resources to realize the opportunities better than Volition. The total addressable markets, TAMs, for our technologies on an annualized basis are multibillion-dollar opportunities, not only for Volition, but for our licensing partners too. Volition has made strong progress both clinically and commercially. Our goal is to secure a wide range of licensing agreements in the human diagnostic space, mirroring our successful strategy in the vet market, and anticipate, similar to vet market, diverse deal structures with potential for upfront and milestone payments and recurring revenue. As mentioned earlier, we are continuing our discussions with around 10 of the world's leading diagnostic and liquid biopsy companies. These discussions are at various stages of the negotiation process across all our pillars. Our laser focus is on executing licensing agreements, and we will update you as they complete. Thank you for joining our call today. We very much appreciate it. We will now take your questions. Operator? Operator: [Operator Instructions] Our first question is from Justin Walsh with JonesTrading. Justin Walsh: As we see more from Capture-Seq, it would be great if you could provide some additional color on the current state of the liquid biopsy field, where maybe the field has seen some success and where alternative approaches have fallen short. And then maybe related to this, some takeaways on the failure of the large NHS-Galleri trial to achieve its primary endpoint. Cameron Reynolds: Yes. So we tend not to criticize the other companies. I mean they're often well-run companies with good people trying to do good things. But I think it's very fair to say our discussions with everyone, no one out there is very -- since their current testing modality is where they really needed to be in early-stage detection for multi-cancer detection, or an MRD for treatment-naive, that's obviously not something either, so there is 100% an opportunity for anyone who can develop something which is truly routine, which ours is, low cost and easy to use, which ours is. And it certainly appears to be very accurate, we're doing more and more study, but the early work is incredibly encouraging. So I think in any space like cancer detection, there's going to be a number of parties. No company, no matter how good the technology, will be everything. But I think there's a very strong case to be made we will be a big part of cancer detection in the human space, like we are in the vet space, starting with the fantastic lung work, which is in the process of being reimbursed, which is incredibly encouraging, and of course, the strong promise we have from Nu.Q Capture, which could either be used in conjunction with what's currently used or potentially a test in itself. And given the early-stage detection that we have shown, that's certainly a possibility. So overall, I think we've got something which is very special in what we do. And we're working with a number of groups now. Obviously, we can't say who they are; it's confidential. But we have a lot of active discussions going. These are things which are far bigger than we can commercialize ourselves. And the bigger companies certainly have the installed capacity or the knowledge in particular areas, like screening and MRD. So we'll be updating as those hopefully come to fruition, hopefully, in the near term. And we're expecting a lot of news on that through the year. But as far as individual ones go, I guess, I read the news, there's been a lot of things which have not turned out exactly how they wanted. But we always say, we will succeed if we deliver a good platform. So we haven't spent a lot of time concerned about everybody else. There's always going to be a place for a routine, accurate, low-cost test, and that's exactly what we think we've developed. So we're working hard on commercializing. Operator: Our next question is from Yi Chen with H.C. Wainwright. Yi Chen: My first question is, could you comment on how do you expect the Nu.Q Cancer assays to ramp up in terms of volume throughout 2026? And my second question is, can you just provide some general comments on how many new licensing deals you expect to close this year? Cameron Reynolds: I'll start with the deals. And the first question, I didn't quite understand, what -- can you repeat the first question, please, Yi? Yi Chen: How do you expect the volume of the Nu.Q Cancer assays to ramp up through 2026? Cameron Reynolds: Okay. I'll have the CFO to answer that. I'll deal the deals. Look, it's very hard to know. We've signed several in the human space already with fantastic companies. We're working with 3 multibillion-dollar companies in the human space now. Revvity has launched a CE-marked kit in Europe on its platform. Revvity via PerkinElmer, obviously, a very large company. They very much like what we do. We're working with Hologic on the Discover side, on the marketing, which is very exciting. And we're working with Werfen now on the NETs kit and the process. So if you look at each individual area, I think, ultimately, the NETs test will be something that's extremely widely used. And the uses, as we've said, go way beyond the massive market of sepsis. Just yesterday, I believe it was yesterday -- anyway, these last few days, we announced the Mayo Clinic results which show, if you had trauma, a very elevated level -- I mean I've looked at the numbers, it's quite spectacular. Very elevated level if you've had trauma. And even higher, and I mean, very, very high, you can go through the numbers again in the paper, if you've had VET (sic) [ VTE ]. And trauma is one of the biggest -- well, highest cause of death of people below 50 in the world and one of the major causes of admission to emergencies. So another massive use for our NETs test. So deal-wise, there's all the NETs tests. We're talking with more companies now on the capture side, which is obviously very exciting. The governments are working on the lung cancer monitoring side, as you know. So it's hard to say which of the 10 or so companies will be first and what the order will and how many there will be. But I think I'd strongly suggest we will have multiple deals with different companies, different governments this year. And I think it will be across cancer and probably NETs as well. And then we're also working with groups on our recombinant nucleosomes and on Discover. And don't forget, we do have 100 clients in Nu.Q Discover now, and some of those are coming to the stage where they're going to become quite large in process where they come into clinical studies where they become very serious amounts of revenue. So overall, I can't give you an exact number, but I'm sure, I'm quite certain we'll have deals. And we're trying to get them out as quickly as possible because we basically stopped the R&D side and we're now on just commercialization because we have an absolute mountain of opportunities in all of the pillars. And we're very happy with how those deals are progressing. And the volume, Terig? Terig Hughes: Yes. So I think as Cameron mentioned earlier, we're in the process of submission preparation for the reimbursement. Yes, that's, obviously, that's an H2 event in terms of approval of that. And so we'd expect it to be about Q4 by the time we get that reimbursed product into routine clinical use. So we haven't built a huge amount in this year given the timing, but we would expect it to ramp fairly quickly once it's in routine clinical use. Cameron Reynolds: And the Nu.Q NETs now is in IVDD, in the process of being IVDR, so we're recording some revenue for that. But at the moment, we're not providing guidance, to be conservative. Obviously, there's a lot of things happening and they're all moving forward. But exactly when in the year it happens, obviously, will greatly affect when we can start recurring revenues. But they're all making progress, and they'll all be coming on stream, we think, in the next few quarters. Operator: Our next question is from Steven Ralston with Zacks. Steven Ralston: I looked into the revenue streams that you expect from the different pillars going forward and it seems to be quite complex because there are different avenues in each area. The one in Nu.Q Vet is developed and it's basically dependent on the partners and how successful they are in their different geographic regions. Can you make a comment on the rate of acceptance of the vet test for canines among the different partners you have? And are there any commonalities of the more successful ones of how they've ramped up usage? Cameron Reynolds: Yes. So I think there's several different partners there. So between all of them, the one strong message we got -- so obviously, our revenue is growing, but -- which, in a normal company, 40% will be very good, but obviously, we're looking for a lot more than that to really ramp. The key message from all of them, the key to that is to have it in a centralized lab. Currently, the vast majority of market, like over 80% of testing in dogs is done through a centralized lab. The only option currently we have available in centralized lab up until few weeks ago was microtiter plates, the plastic plates. So obviously, that's not great if you're trying to do millions of tests. A centralized hospital network, and there are several in the U.S. and France, you could get hundreds of thousands or millions of tests per network if it's part of a wellness panel or what they call the index of individuality. We obviously have not cracked them yet. And a key part of that is the acceptance, but also being able to run maybe potentially hundreds of thousands of tests per month. So you've probably noticed Fuji, who have been fantastic partners and very proactive, have shown it now works on the centralized lab. The fantastic Revvity machine, which we're now using also for NETosis in Europe, the CE-marked machine, the same one. So that will start flowing through. So it comes down to -- it's lumpy between quarter-on-quarter and when they order a batch and when they don't, because the plates can last up to a year. Obviously, Antech has also launched the small machine, but that's also subject to them selling and getting those machines in lots of different places. So that's not going to be an exponential growth by any means. So it has come down to that. But don't forget also, we are now working on felines, which potentially, I don't think will actually double the market, but theoretically, it doubles the market because there's more cats than dogs in the world, and that's making good progress. And obviously, we've got Nu.Q Capture, which potentially has uses in all this as well. So there's a lot of things going on in vet, and it's very hard to predict once -- if and when a centralized lab system in the U.S. goes for the centralized machine, I think that's something that could then accelerate very quickly. But in the meantime, it's kind of lumpy and bumping along with the rates of growth you can see. So it's hard to tell. But our commercialization efforts in the last 6 months are very much focused on the human space. We're extremely keen, lung reimbursement in Europe, that's EUR 50 per test, so that's a lot more per test as well. And if it's -- once it's approved, we expect it to be by the end of this year, then obviously, that's a very good revenue source. And the CE-marked kits are out there, so we spent a lot of effort changing from IVDD to IVDR, so it extends indefinitely from the time limits we currently have. And of course, we've put a lot of effort into licensing Nu.Q Capture. So the vet has not been the focus of the company, but it's obviously important to keep it ticking over. But we have made progress in the cats and the centralized labs, and we're looking perhaps even for transcription factors in dogs and cats. Steven Ralston: Now you even went into an area that I wanted to ask you about next, is that, in Europe, you seem to have a very strong foothold with these hospital networks in the areas of sepsis and lung cancer. Cameron Reynolds: Yes. Steven Ralston: Is that a model for the -- for your global emphasis? Or it just happens to be that this is the first foray? Cameron Reynolds: A bit of everything. So ultimately, what we have in Europe is a fantastic, large, multinational company in Revvity, so PerkinElmer, who have the machine which our test works on very well. They've undertaken to put it in lots of different locations. There's over a dozen large hospital networks which are testing. So our CE-marked is any NETs related inflammation. So that's obviously a lot of different things. You've seen the Mayo Clinic, that also involves trauma, and trauma is potentially as big as everything else. It's quite remarkable how versatile it is. But as Volition, we don't want to be doing 10 studies in trauma, in sepsis, in COVID, in APS, in HS, all those things. So we've shifted a lot to our partners doing the work, like Werfen, for example, in inflammatory diseases, like all the companies doing it in the process. So we are also looking for a large or several large diagnostic companies to -- you know who the large diagnostic companies are, to take it on. And I think as Andy said, the evidence is getting more and more overwhelming that NETs is going to be a very, very, very large product. So if you take all the issues in sepsis, all the issues in all the autoimmune diseases, add in trauma and COVID, it's just obviously huge. So it's been part of our strategy to get other people to buy our kits and do these studies. Again, the issue, just take their own time, but we're not spending. But I think that the big daddy of all those is the French government, which has spent, $7 million, $8 million, whatever it is, on an interventional study to test and hopefully launch our product as the screening test in France, in conjunction with NEWS, which are the physical symptoms, the non-biomarkers. Now if that does go well, and I think there's a very good chance it will, we won't know till the end, but we've seen it work very well in sepsis, we will become the test in France, which I think then we'll become the test in Europe. And then it becomes extremely easy to license to a large international diagnostics to do a 510(k) in the U.S. to also launch there. So our strategy has been: develop the platform, make sure it's incredibly robust, reproducible, reliable, make sure it's certified, which it is now in the first platform, get other people to do the work. And I think that's been a tremendous success. And to get them to do the leg work to show what the cutoff should be. So it fits in with our global strategy, and now we're working with the big diagnostic companies to get the first one of them to license on large auto-analyzer machines beyond the Revvity machine that we have now. Does that answer your question, Steven? Steven Ralston: Oh, yes. Very much so. Cameron Reynolds: Yes. And just on a personal note, just to finish, I think it's incredibly gratifying. I don't know if everyone understands necessarily, an interventional study means it's used on real people in real life, and those decisions are taken based on our test. That's going to be this year when the study starts. So that's -- the confidence they have in the test, this is not a university exercise or someone doing some samples from the freezer. It's an interventional study. And I don't quite know how much that would cost in the U.S., we didn't get it costed, but it's an awful lot more than the $8 million I think the French government is spending on it, to do it, say, in the U.S. So a huge amount of very valuable work being done for us, and it shows the level of confidence in what we do. And it's very heartening for us as a team to have them being used on actual saving people's lives this year. Operator: Our next question is from Bruce Jackson with the Benchmark Company. Bruce Jackson: I wanted to follow up on the Capture-Seq paper, the -- it's a fabulous study. I'm curious to know how amenable is this process to front-end automation in the lab and how easily could it be integrated into like an MRD test or a liquid biopsy test in the lab? Cameron Reynolds: Jake is here, our Chief Scientist. So that's probably a Jake question. Jake? Jacob Micallef: Bruce, thanks for the question. Yes, very good question. Essentially -- well, first of all, the updated, revised version of the manuscript is live on Research Square now. So that's public. And exactly how it works and how we've proved that we really have produced pure tumor DNA, all of that's in the paper and publicly accessible to everybody. In terms of the question, the basic process involves 2 parts. So the first part is a magnetic antibody. So it's the same as an immunoassay, it's the same as a Nu.Q immunoassay, it's the same as a PSA assay or a CTA assay. And the second part is sequencing. So immunoassay is easy to automate and the sequencing is actually much less involved than the sequencing that is involved in other tests, because we've removed all the background so there's actually less DNA to sequence. And of course, there's, in the end, there's less analysis because most of the analysis is involved in trying to work out whether any of the DNA came from a cancer or not. But if you've removed everything that didn't come from the DNA, that analysis also becomes like a PSA test, it shouldn't be there. If it is there, it came from the cancer. So I think it's -- at the moment, what we do is manual, but it is extremely suitable to be automated. Cameron Reynolds: And just some indications of costs, Bruce, people ask us this. It's -- we can answer that in a couple of ways. So the capture side, which as Jake said, the magnetic bead, the antibody, the immunoassay, at the moment, may cost us $100, but that's going to come down, but not to $10 or $20, but somewhere more like $60, $70, $80, something like that, to do the capture side. Then as Jake said, it depends on the sequencing. Those sequencing really depends on what the panel looks like, how many markets you have. But that could be a few hundred dollars or $500, depending on where we end up and how the panel looks. But that's sort of the cost you're looking at for the tests, that sort of $80 if -- for the capture and then the sequencing. If it's shallow sequencing or oxidizable sequencing, shallow sequencing, it won't be a lot. But that's really to be determined. And that's actually something our partners are looking at when we're looking at licensing. Obviously, they're the sequencing experts. So it's not a low-cost test in the sense of ELISA that costs us just $1 or $2 to make, but it has a strong potential to be tissue-specific and very accurate. So I think the market certainly would bear a few hundred dollars for that test, as we talked about. But that's all in process. But no, it's incredibly encouraging and an amazing breakthrough for a small company to have managed to concentrate. And people say, how did we do it? What made us able to do it? We're the experts at chromatin fragments, CTCF fragments. Everyone has ignored the ultrashort DNA for a whole lot of reasons. The sequencing machines don't tend to do much below 100. And we're experts at nucleosomes and now are experts at transcription back bound DNA. So we've really done something -- 15 years of heartache and pain getting where we are has made us very good at chromatin fragments. And this is just another chromatin fragment. So it is actually a quite easy process. It's a magnetic bead with an antibody and sequencing. Obviously, there's a lot of sequencing there and a lot of work to get to where we are. But at its heart, it's a very simple process, which I think can be optimized a lot from where we are. Bruce Jackson: Okay. Great. Then just a couple of quick finance questions. What's the anticipated timing of the feline cancer milestone? I know the paper has to be published before you get the milestone, but would that be like a second quarter event potentially, a third quarter? Terig Hughes: So it's difficult to predict, but we do expect to collect that money this year. We are in the process of submitting that paper, which is the final step in completing the requirements for the milestones. So we do expect to have that completed shortly. And then it's, like I said, it's difficult to know exactly which quarter it's going to fall into in terms of collecting that money. But we certainly expect to collect it this year. Bruce Jackson: Okay. And then last question for me, on the operating expense profile for 2026. Would you expect that to be up, down or about the same as 2025? Terig Hughes: So I think, yes, we've made a lot of progress over the last 18 months in terms of bringing the costs down. We're now operating at a significantly lower burn rate than we were 18 months ago, for example. Nevertheless, we're continuing with cost-saving actions, and we're targeting take out another 25% to 30% from the cash OpEx this year. That's not all going to happen in one fell swoop. That's going to take us through the end of the year to achieve that so that the exit run rate is that much lower. I think in terms of quarters, it's a bit lumpy and difficult to predict. But I wouldn't expect a sequential reduction in the first quarter. First quarter is always a little bit heavier and there are obviously some severance costs to take into account. So I think I would expect going through the rest of the year to see the cash OpEx burn rate coming down. Again, yes, it's not a one -- you won't see a one big drop. It's going to continue to come down over the quarters over the rest of the year. Cameron Reynolds: And I think, Bruce, something just to say from more of a take a step back, we are obviously cutting because we understand the climate and we understand Volition and we need to cut. But also it's a fundamental shift in the company. We spent a lot of our time and effort on studies, on research, on papers and processes, which we're just not doing anymore to anywhere near the extent that we were. Because, as you said, the French government is funding the interventional study in sepsis. Mayo Clinic did a lot of that work, obviously, in the trauma and is publishing itself. All those groups, Revvity selling kits to -- in Europe, are on the whole paying for the kits, and so we're not funding those studies. So overall, it's coming down a lot because we are no longer spending on our days doing R&D. We're commercializing. And I think we have an absolute pile of products, which I think are world-leading, to commercialize now. So we're shifting the cost base down quite a few notches so that we can, A, extend the runway; but B, it's just a fundamental change in our business. We are not intending to do a lot of research studies anymore. We're firmly in the commercialization path. Operator: We have reached the end of our question-and-answer session. I would like to turn the conference back over to Cameron for closing remarks. Cameron Reynolds: Thank you, everyone, for listening. I know it's been a very interesting year for Volition. And obviously, we've made a tremendous amount of progress. It's been a tough year in a lot of ways, as you can probably tell, but something where we, I think, we've made very strong progress in a lot of areas. And I can assure you, we're absolutely focused on getting products commercialized now. So hopefully, we'll have a lot of news on that through the rest of this year and we can really turn the corner on the commercial side to be a strong commercial company where we've been a very strong R&D and IP company. So keep a close eye out, we should have a lot of news throughout the year. Thanks again for calling in. Bye. Operator: Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.
Operator: Good afternoon, and welcome to the Xaar plc investor presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. I'd now like to hand you over to John Mills, CEO. Good afternoon, sir. John Mills: Thank you very much. And first of all, thank you, everybody, for taking the time to come on and listen to the story of Xaar. For some people who will have known Xaar from old, I just wanted to kind of quickly run through some of the history and some of the things that would have characterized Xaar historically and hopefully how Xaar today contrasts with that. So if you go back to 2013, Xaar was a FTSE 250 company, had GBP 140 million of revenue, made GBP 42 million profit, market cap of around about $1 billion, but it was effectively a single product into a single market, and that was ceramics. And that market, Xaar lost that market for various reasons and left the company really with no other revenue streams. And over the last decade, it's really been recovering from that situation. In contrast today, I've been with the company now for 6 years, and we've really focused on making sure that we have a broad portfolio of applications based around a value proposition, which is unique to Xaar. And really, what I would like you to take away with today is really two things. Firstly, that we have a unique capability to print fluids that no one else can and that we deploy that capability across a broad range of applications, which potentially give us significant revenue opportunity and indeed quite significant resilience against any individual market problems. So in order to first of all, explain to you what the value proposition of the business is that we make industrial inkjet printers and printheads. And we compete with companies like Epson and Fuji, Kyocera, Ricoh, Konica and also Seiko. These are huge Japanese corporations with global reach and substantially lower manufacturing costs than we have. And I think that the challenge or the problem for Xaar over the previous 15, maybe 20 years is trying to compete with these companies on their home territory is incredibly difficult and ultimately, Xaar has lost. And having joined the company in -- back in 2019, I, having known the company for many years, really focused on the attribute that Xaar had, which was unique, which is that we can print fluids that no one else can. And that parameter that's really important is viscosity. And viscosity is a measure of how thick the fluid is. So water has a viscosity of 1. Cream is 22. olive oil is 65 and yogurt all the way up at 1,000. So if you take the global #1 Epson, they can go up to around about 8 center points. So -- and some of the other competitors may be able to get over 20 and approaching 30, but really, that will probably be a generous assessment. We've got applications well over 100. And therefore, we have this capability of printing fluids that no one else can print. And the way to think about that is that if you have a fluid, if you want to add things into the fluid to add functionality to the fluid, the more you add in to the fluid, the more functionality you will have. But the more you add in, the more viscous or the thicker the material, the fluid is likely to become. So there is a correlation between functionality and viscosity. So the more functional the fluid, typically the thicker, more higher the viscosity is. And therefore, what we are seeing at Xaar is we can print fluids that are far more functional than other printhead manufacturers. And so the question then remains is, well, what do you do with that? And what I'd like to do today is just share with you some of the applications that utilize this unique capability, so you can see the sort of the breadth of applications that we are currently operating in. So the first one is decorating of cars. So today, if you want to put a graphic on a car, you need to use a sticker. If anybody has a mini or know somebody with a new mini, typically, they have some form of graphic on there that's a sticker. And those are not really well liked in the industry. So if you want to put graphics on there, that's pretty much the only way you can do that. We started working with Axalta, who are one of the major global suppliers of car paint to the industry and also Durr who make robots and 50% of the world's paint shops have their robots in them. And collectively, we have created a technology called NextJet, and this allowed you to digitally print graphics onto cars. So if you see the bottom right-hand corner, we're printing on the side of a door. And you could imagine that if we had a low viscosity watery fluid, then that would actually just drip and run down the side of the car, you would not be able to print graphics on a vertical surface. And so what I hope is clear from this that you actually need to have high viscosity capability to be able to print graphics onto vertical surfaces in this application. And so there's no other printhead that can do this, and we've enabled an industry to adopt digital technology through our ability to print high viscosity fluids. Just to go through another application. So this is car batteries. So this is another application where we started working with the battery industry about 5 years ago. There are issues around battery safety. And one of the contributory factors to this is that the insulation layer, the blue plastic film that goes around the battery to provide electrical insulation can be damaged through mechanical rubbing or through heat cycling of the battery as it's charged and then utilized. Having developed a fluid which is UV curable, you print on the battery, you shine UV light on it and it turns into plastic. This coating is nonflammable. It's much stronger. It doesn't crack and it has better peel strength away from the battery. So this is a better solution than the wrapping of the battery. As of today, we have 3 OEMs who we sell printheads to. They've built machines that print the battery. You see one of those operated on the bottom left-hand side of the video. And there are now 10 production lines in China that are making batteries on a daily basis for cars. And to give you some sense of scale, we have about GBP 150,000 worth of revenue for each production line. There's 10 in there at the moment, and we expect another 10 to 15 going in this year. And overall, there are 1,300 production lines in China. And so if the industry adopts this fully and changes all of the production lines to this digital coating, that would represent around about GBP 200 million of revenue for us. And if they did that over a 5-year period, that would be a good volume of revenue per year. For each of the applications that we have, there's a secondary revenue stream, which is from the replacement printhead cycle. So once you have an installed base, depending on the life of the printhead in that application, and that's a function of the type of fluid and the environment it works in. And in this application, the life of the battery may be -- may be, say, 4 years, then every year, you would expect to replace 25% of your printheads. What that means is if you have an installed base of GBP 200 million worth of printheads, then 25% would get replaced on an annual basis. So -- and that's the same across all industries. So you have revenue of printheads going in for new machines. And then depending on the replacement cycle, you have an annuity revenue from the replacement and printheads. So that's the battery coating. Change in tacks. If anybody has a desktop 3D printer, it's probably for those who recognize the term, an FDM printer, which is like a roll of fishing line that essentially goes through a nozzle and heats up and basically an arm scribes a path around and the fiber sticks to the fiber that was previously laid down and that way you build up a 3D model. And it typically is one color or a couple of colors and it's not very high resolution. And that's the typical 3D printer that's bought today, but there are 5 million of those printers bought every year. If you want to print something high resolution in full color, so things like you see on the bottom of the screen, all the things on the table next to the machine and the little farm on the left-hand side, if you want to print high-resolution things of that nature, you probably have to pay somewhere between GBP 40,000 and GBP 150,000 for an industrial machine. We've been working with Flashforge. They're one of the major suppliers of the desktop 3D printers. They sold 700 units last year. We have been working with them to develop the world's first desktop 3D printer. We estimate that, that printer will be on sale for around about GBP 2,500 to GBP 3,000. And with the occurrence now of AI, you can take a photograph of somebody or any object, AI will render that into a 3D model, and you can print it out on the printer. Equally, you can describe something into AI, and it will create the figure for you. So hobbyists around the world will be able to print whatever they would like to fulfill their needs in their hobby. So just if you have opportunity if you were to Google Flashforge CJ270, you'll be able to see the pre-marketing -- prelaunch, which we expect to be in the next few months. It's actually been shown at multiple trade shows to date ahead of the launch later this year. So I'll just play you the promotional video for the product. [Presentation] John Mills: Just to give you some sense of scale, the 500,000 desktop printers are sold each year, 1% of the market were to buy this machine that would represent GBP 25 million of revenue for Xaar. What we don't know because it's a brand-new product into the market is exactly how many units will be sold. So we're quite excited about this, so -- but the exact number is very difficult to predict, and so we will look forward to launch and see how many did sell. One of the things that's really impacted the numbers this year, we started working with the wax industry about 3 years ago, 4 years ago. This is an industry which uses wax to create bespoke high-quality jewelry in gold and platinum. What happens here is that the wax is actually heated up with melts and then you inkjet print the wax onto a substrate and you build up the facsimile of whatever you want in the gold or platinum in the wax. You then take that wax model and in case in effect like a plaster of Paris and it dries. And then once it's dried, you then heat up, the wax melts and then runs out and then you've left with the mold and then you can pour your gold and platinum into the mold. And then once it cools down, you break the mold and you've got your piece of jewelry. The -- we've taken that market very quickly because the -- again, the ability to print a wax that's much better, much stronger than the previous wax means that you can produce higher quality and more intricate jewelry. So when this was actually launched by the first company, the quality of the jewelry that was produced was so differentiated that every single other OEM looked at that and said, "We need to use our printheads because we won't be able to compete". So we went from 0 revenue in '23, we had around about GBP 1 million revenue in '24 and then GBP 8 million of revenue in '25. So we think we've got a sizable share of that market now. So we expect some growth in '26, but that's an example of a market where, again, we've taken market share purely down to the fact that we can print a better fluid than what was previously printed. The final application I'll show you today is on printing of cardboard. Probably all of you will receive Amazon packages. These are sort of cardboard boxes or sort of envelopes that you -- and they will all have a plastic -- a white plastic label with the address and the barcodes and other things on it. That's -- the plastic label that's on it is expensive, and it also makes it more challenging to recycle. And the reason for that is you can't print white ink onto -- digitally on to cardboard because what happens is that it's low viscosity and it just soaks into the cardboard, which is what you see in the image at the top here. As it sinks in, it takes the pigment with it into the cardboard and you can't see any of the white pigment left. Closer to a slowdown, you see that by contrast, a high viscosity fluid and a high viscosity fluid has less water. It's thicker. It doesn't soak into the cardboard and therefore, the pigment stays on the surface. So this gives us the opportunity to actually print digitally onto cardboard, which would be a significantly cheaper process, but also help with recycling. So again, this is just about the benefit of using a high viscosity fluid. So hopefully, that's been helpful. What I'll do now is hand over to Paul, who can take you through some of the financials. Paul James: Thank you, John. Yes. Okay. I'm not going to plow through the slides, slide by slide. If you want to see that, it's available on our website, but what I would like to do is just highlight some key financial numbers that we've delivered and talk about the shape of the numbers going forward over the medium term. So first of all, the group is organized into three divisions. The largest one, one of the greatest scale is Printhead, and then we have Megnajet, which is predominantly dealing in producing ink systems, and then we have EPS in the United States, which builds machines for high-speed single pass printing direct-to-shape purposes. And then you look at how they performed in 2025 versus 2024. Overall, the group is up 12% year-on-year, but Printhead revenue standout performance of 22% up versus the prior year. And that performance is driven, as John has alluded to, primarily from the Wax segment, the growth there. And actually, that 22% revenue growth, over half of it was a volume increase. And so more about that and its effects on our numbers in a moment. Megnajet broadly flat 2% and EPS down 10%. And the reason for that was they had a large multiyear contract to basically print on golf balls, and that came to a sudden unexpected end at the beginning of last year. And the then management team hadn't yet built a sufficient pipeline to backfill that loss of contract. So we have had a dip in performance there, but we brought in new management. And interestingly, despite that 10% reduction in revenue, the gross margin at EPS grew by 300 basis points, and that is as a result of restructuring, cost-out initiatives and so on and so forth. So the new manager has dealt with that. He's dealt with a number of intractable issues, and he's also rebuilt that pipeline. And one of the attributes of EPS is the way revenue is recognized. You kind of know 6 months ahead of time how much revenue you're going to have. So EPS is very much back into growth mode and we will, I'm sure, continue growing, continue performing financially very well. And then back to Printhead, as we said, 22% up, and that also came with 300 basis points increase in gross margin. And that is a key attribute of this business, which is that we have a very effective operational gearing effect. If volume does increase, then margin will increase too. So let's talk about first number, how that's -- we see that, how it's going to develop over the medium term. 40% gross margin overall. I had a look back -- by the way, I've been in Xaar just over a year. I had to look back over its history and the high watermark in terms of gross margin performance was probably about a decade ago where it was nudging 50%, high 40s certainly. Now you've got to be a bit careful making that comparison with then because, of course, it's apples and pears and revenue was made up of different constituent parts. But nevertheless, 50% does seem to be a laudable target to get back to. And so the current management team, we're now all working towards that over the medium term increasing that gross margin. And yes, operational gearing will help. If the business grows, the volume increases. But also, we are looking at cost-out initiatives. We're looking at -- we'll be looking at procurement, better procurement initiatives. And we've also shifted part of our supply chain to China to be closer to our customers. I describe as sort of ancillary activities. It's not the core IP activities that go into China and the inkjet systems construction also in China. So two benefits of that. We'll be close to the customer base, the Chinese customer base, but also it will take a lot of cost out of our base. So yes, 50% is we've set ourselves that medium-term goal to get as close to that as possible. I think another thing I'd like to talk about is the balance sheet and how that's shaping up. So it's true to say that in recent years, Xaar has held elevated levels of inventory. I'm not interested in why that was, but it's a fact, and it does need addressing. So we are setting ourselves the goal of -- and I've done this in other companies I worked in, of, if you like, a continuous improvement goal of increasing stock turn year in, year out, a minimum of half turn increase, preferably a 1 turn increase every year. And rather than just obsessing about a particular absolute number, stock turn has the benefit of being linked to how the business is performing, how the business is growing. And I see that as a way to free up more cash and get into that sort of virtuous circle of investing more, growing more, et cetera, et cetera. So that's something else perhaps you should look out for going forward with Xaar. In terms of investing in growth, a couple of things there. We spend about 8% to 10% of our revenue on R&D, and that feels about the right number at the right level. And in terms of capital expenditure, we have had last year elevated levels of CapEx, but that was investing in capability to basically speed up sales and to deal with some bottlenecks. And I think going forward, you can expect slightly higher elevated levels of CapEx, too, just to invest in growth, but also -- perhaps also to deal with some legacy issues in terms of replenishment of the asset base in the factory that we do need to address. So I hope that gave a bit of a flavor for the business. And yes, I'll hand back to John. John Mills: Good. I mean it's quite difficult to judge these things when the -- you can't see the audience. So hopefully, that's given you a sense of the company. I think the summary for me about the business is that when I go around and talk to particularly institutional investors, many of them have -- know Xaar. And one of their concerns is that Xaar has historically been boom and bust, and very difficult to predict the future revenues. I think what we'd say today is that we've worked hard on making sure that we have a very clear value proposition, and we only enter into markets where we have a unique and clear value proposition against the competition and that we now have 21 separate markets where we derive revenue. And we have in most of those many customers and a strong pipeline of applications that are coming through. So we feel confident about the business model, and we feel confident about the revenue growth over the coming years. What's very difficult to predict is the detail of when any individual application tool will land. And therefore, we tried to avoid talking about specifics of timing. But I think the key thing is that over time, the ones that are in the pipeline will come through. So for those who've got a slightly longer time horizon in the sort of 3 to 5 years, I think where we are today, it's difficult to see how we're not going to grow revenue substantially over that time. And with the operational gearing, we should see some of that falling through to the bottom line. John Mills: So with that, I think we'll look at any questions that we have. So I can currently see four questions that have come through. So please write any questions in the thing, and we'll do our best to answer them. We have a bit of time left over, so we can hopefully answer those questions as we go through. So I'll take them. First question, do we have any collaboration with [TeraView]? No, we don't at the moment. It's interesting that we're now starting to see companies coming to us once they understand our capabilities. So maybe that's something we should pursue. The second question is that with the 22% increasing in Printhead revenues, how much is initial system adoption versus recurring? That's from Matt. Matt, I think the revenues that we see coming in, we would describe as all recurring revenues. What we would normally see is that you have several years where you sell printheads into an OEM as they start developing machines and selling machines, then eventually, you get to a level of saturation where everybody who needs a machine has got one. And then you left to replacement recycle of the machine and you are left to growth within that market. And then the replacement heads for your installed base. So the revenue would peak after a number of years and then would move into a steady state where there will be slower growth, it might fall back by 20%, 30%. So that's how we tend to think about it. And therefore, what we -- when we model revenues, we look at layering on different applications. And so we take sort of fairly modest views of growth after the initial market size and try and layer that on. So hopefully, that answers the question. The second question is how visible are revenue levels over coming years from the new application areas? And again, this is a really good question and one of the fundamental ones for understanding the business. We sell printheads to OEMs. And if you take the battery situation, we sell printheads to OEMs who make the digital printers. They sell the digital printers to companies that develop production lines for the battery manufacturers and the battery manufacturers buy the production line. So we're three companies removed from the decision-makers in relation to the batteries. And therefore, we're not having direct conversations with the battery companies. We take our information from a number of sources and try and integrate that together to create a picture of what we think is going to happen. So it's incomplete. We are not selling machines directly to an end user. So in many cases, our information is not perfect in that. We do our best to try and understand forecasting and we ask our OEMs' forecast and what they believe are going to happen, and we have to interpret that in the best way that we can for planning. Typically, things usually take longer. The numbers that get delivered are usually smaller. And we try to take that into account when we look at any forecast that we publish. Next question I have is that the revenue opportunities for battery coating and 3D printing, are those annual revenue? How does the drop-through margins in each section differ? Yes, very good question. I think on the 3D -- on all of the -- as I said earlier, on all of the applications, we really are looking at recurring revenue. We don't see any revenue that comes in for a single year and then stops. So the revenues we talk about should be recurring revenues. The margins are quite different across different market sectors. The wax and the battery coating, the margins are quite strong. If you look at the consumer market, the desktop 3D, the margins are much lower in those areas. So we tend to try and price to value rather than looking at competitive pricing. And we try to maintain margins on the basis that we are enabling industries to do things they previously couldn't do. We're not competing on price in many of these markets. So -- and in terms of drop-through, this year, we did GBP 0.8 million profit on the revenues. As the top line grows, we should have -- we're now at that kind of breakeven point with the factory. So as we go forward, we should see more of that revenue dropping through. Okay. Next question is around IP from Paul. The IP protection, particularly as we are exposing the technology in China. Yes, really good question. We have very strong IP, but our strategy is to patent in -- according to GBP. So we take the top 6, 7 countries, excluding China, and we patent in those countries. And the reason we do that is that I think if we have a Chinese company, for instance, that did infringe our IP, we may find it difficult to enforce our IP in China. However, if those companies then build a printhead and sell that printhead outside of China into a territory where we have IP, then whoever uses that printhead is infringing our IP, and therefore, we can send the cease and desist. So our strategy is to enforce it in territories where we are able to kind of follow up and prosecute our IP effectively. So that's really what we would do. Somehow all the questions have disappeared. Paul James: You've answered them, I think. John Mills: Hopefully, that -- is there any more questions that we could -- I'm going to let you take that one, Paul. Paul James: Yes. Okay. So we obviously have a medium-term strategic plan, which we've not yet... John Mills: Please go and state the questions, Paul, you probably have to read the question. Paul James: Sorry. Thanks for reminding. So the first question, what level of turnover and profitability would you target in 3 to 5 years? So we obviously do have a medium-term strategic plan. It's been discussed at Board level and all signed up to. You would expect to see the growth levels we've achieved last year of 12% for the group, according to our plans, that's not inconsistent with the sort of annual growth levels you could expect to see going forward. And in fact, if you look at the consensus numbers that are out there, the revenue growth is broadly consistent with that. So a sort of 10 and a bit percent growth in revenue going forward. And then as we've mentioned a couple of times, the operating leverage benefits will start to kick in as well with that volume growth. By the way, I expect at least half of that revenue growth will be volume at least. And so as I said earlier, I am pushing for gross margins to be heading towards as close to possible 50% and with an operating margin in the high teens. That would be the sort of place I'd like to be in terms of profit and revenue. I think the next question is a congratulatory note, I think. Operator: That's great. Thank you for answering all those questions you can from investors. And of course, the company can review all questions submitted today, and will publish those responses on the Investor Meet Company platform. Just before redirecting investors to provide you with their feedback, which is particularly important to the company, John, could I please just ask you for a few closing comments? John Mills: Yes. Well, thank you very much for taking the time to come and listen to the story. We're quite excited about the business. It's been a bit of a grind for 5 years to build the pipeline and to do that. We do feel we're in a position now where we're at a kind of inflection point. And we can see growth coming over the coming years. It's important to say with any of these applications, it's very, very difficult for us to predict the exact timing or volume of any individual applications. So I wouldn't buy our shares on the basis of one particular application, but I think I'd encourage everybody to look at the broader value proposition of the unique capability of high viscosity fluids and the impact that has on industry and the breadth of the opportunity that we have because I think ultimately, that will be the thing that drives consistent revenue growth over the coming years. So again, thank you very much for your attendance. And hopefully, we can see some of you joining the share register in the near future. Thank you very much. Paul James: Thank you. Operator: That's great. Thank you for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This may take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team, we'd like to thank you for attending today's presentation, and good afternoon to you all.
Operator: Good day, and thank you for standing by. Welcome to the Nanobiotix Full Year 2025 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Joanne Choi, Head of Investor Relations, U.S. Please go ahead. Joanne Choi: Thank you, Heidi. Good afternoon, and good morning, and welcome to the Nanobiotix conference call to discuss our full year 2025 financial and operational results. Joining me on the call today are Laurent Levy, Co-Founder and Chief Executive Officer; and Bart Van Rhijn, Chief Financial and Business Officer. Today's call is being webcast and will be available on our website for replay. Before we begin, I would like to remind you that today's discussion will include forward-looking statements within the meaning of applicable securities laws. These statements are based on our current expectations, assumptions and available information and are subject to significant risks and uncertainties that could cause actual results to differ materially. Such risks include, among others, those related to the timing, progress and outcomes of our research and clinical development programs, regulatory developments and our financial and operational performance. We encourage you to review the full description of risk factors that can be found in the documents we filed with the AMF in France and the SEC in the U.S., which are available on the Investor Relations section of our website. Any forward-looking statements made during this call reflect our views as of today and should not be relied upon as representing our views as of any subsequent date. Thank you. I will now turn the call over to Laurent. Please go ahead. Laurent Levy: Thank you, Joanne, and thank you, everyone. Good morning, good afternoon. Really happy to be here with you today to share our 2025 year and to give you a bit of perspective of what's going to happen in the next 12 to 18 months. So today, we're going to go over different aspects of things, how we've been moving the company for the past year and also give some financial highlights and then open for Q&A session. I think we've had a very rich 2025. We've been able to do many things during this year. First of all, start moving forward in a good way in the collaboration we have with Johnson & Johnson and start showing the potential of this first product, along with the potential of this deal in terms of future revenue for Nanobiotix. While doing so, we've been also pivoting the company towards the new platform, which has been a big effort from the team, and I would like to thank them all for that. While doing those operational things in parallel, we've been able to really improve our cash visibility into 2028. And this is beyond the timing of some of the expected milestones that should come from the collaboration with J&J. So altogether, we've had a rich year, and we are pleased to share that with you. And now we're going to go in some more details to give you a bit of insight. Before getting there, we would just like to remind a few things about the philosophy with which we are developing things at Nanobiotix. So as you can see here, we mentioned delivering first-in-class directly. But I think definitely, we are doing more than this. We are creating new class of drugs. That's what we have done for the radioenhancer, for the Nanoprimer and also for the last platform OOcuity. And that's really our philosophy. We don't want to do what other biotech are doing, not because it's bad because we think there are enough people working on the same target with the same technology. So we really want to bring something deep and different to help millions of patients. And that's what we're trying to do, and we continue to do. Our strategy is simple and stay in line with what we told you last year. First of all, is to continue to push and help J&J to address one of the potentially largest untapped market in oncology. And that's through our first product, radioenhancer that has been licensed to Johnson & Johnson. And beyond this product, we're really pushing hard on new platforms, starting with the Curadigm platform, which we think is going to disrupt part of how we think about drug development. And we have been starting making good progress in that regard this year. Obviously, we will come back to that in more detail. But let's focus first on NBTXR3 or JNJ-1900. What do we mean by addressing one of the largest untapped market in oncology? Well, I think for that, we still need to look at patients. And when patients are diagnosed with cancer, the vast majority of them have a local disease. It's more than 70% of patients having local disease at diagnosis. And our industry, in general, is more focused on late-stage treatment of patients when they get metastatic or have received several lines of treatment. If you think about it, if you want to have a big impact for those patients, it will be much better, if possible, to treat them at the beginning of their disease and try to eradicate the tumor when it's still at the local stage. And that's exactly what we are trying to achieve with NBTXR3. And for that, we're working with radiation therapy, which is one of the largest treatments used in oncology as more than 60% of all cancer patients are getting radiation. And we have a product that we licensed to J&J that fits this existing market with almost no competition. And as you can see on this slide, we have a very large pipeline linked to this product that have been developing across many tumors. And technically, that's just a few examples of what could be done with this product because there are many, many other patients getting radiation in different oncology indications. But let's try to look at where is the value here, what are the next key point of inflection and how are we going to bring that to next steps. This year, last year, sorry, 2025, we've been publishing additional data in different cancer types. On the top of the already established proof of concept in soft tissue sarcoma, the first data in head and neck cancer, we've been able to continue to show that this product could be widely applicable in oncology. Through 2025, we've been publishing data on head and neck cancer by talking here about recurrent metastatic patients, also pancreatic cancer, esophageal cancer, melanoma cancer and lung cancer. All those data have been showing not only that you could use safely NBTXR3 in different indications, but also start to show some potential good of efficacy for those different indications. And altogether, some consistency. In the way you administer the product, but more importantly, in the way this product could amplify the radiation therapy and potentially bring new benefits and additional benefit to patients. Let's focus on the 2 key developments. As you know, we've been transferring to Johnson & Johnson last year, the ongoing Phase III in head and neck cancer. That's a very important trial as a Phase III and could lead, if positive, to first approval and first market activity around NBTXR3. This trial is progressing well. J&J now has the full operation on this and also the financial aspects of this trial are taken care by J&J, and we still expect to get the first readout of this trial the first half of next year. You may have noticed that on the top of this Phase III, J&J has also started a Phase Ib in another population of head and neck, meaning patients getting radiation plus cisplatin. If you think about head and neck cancer, with those 2 trials, you're technically capturing all the patients frontline that have a locally advanced tumor and that received radiation and that cannot go to surgery. So technically, if you -- if you exclude, sorry, the few patients that have metastasis at diagnosis, with those 2 trials, you could capture the vast majority of head and neck cancer patients, first-line treatment with the highest unmet medical need. So that's a very important pathway and could, if positive, establish NBTXR3 as a key player in whole head and neck cancer treatment. Now there is another trial, which is equally important and potentially even more important. We're talking about here the first lung cancer trial that J&J is running. The name of this trial is CONVERGE. It's a randomized Phase II trial in unresectable Stage III non-small cell lung cancer. This trial is important for many reasons. First of all, as you may have seen, lung cancer is a very important aspect of the strategy of J&J in oncology. And it's also, as you know, a gigantic market, if not the biggest market with breast cancer. So here, starting with this trial, assuming that the data are positive, what we feel at Nanobiotix is that could be a trigger for Johnson & Johnson to start expanding the development. But if we just stick to lung cancer, that's already a gigantic market per se. Here, we're talking about Stage III, but could expand into some other indication in lung cancer. And maybe as we did not have the occasion to talk about the data that has been generated, the first part of this data, let's have a small focus on that. As I mentioned, we are talking here about patients that have a locally advanced unresectable Stage III lung cancer and the treatment of reference is radiation to chemo followed by consolidation with durvalumab. And as you can see, if you look left and right of this box, many other patients in lung cancer would receive radiation therapy frontline treatment, which could be at some point an expansion of the use of this product, assuming that this trial read positive. So what's the design of the trial? There's 2 parts in it. First, a safety leading with very few patients and then what we call a proof of concept with the randomized part of the trial where we compare the standard of care chemo radiation with durvalumab versus the same plus the product with 2 different dose. And this is randomized 1:1:1. Total should have 120 patients. And Johnson & Johnson published that they should expect the readout of the randomized part beginning of 2027. The data that have been presented this week are about the safety leading. So there's a lot of caveat around that. It's a small number of patients, but nevertheless, we can start looking at what we observe here. So we've been first showing a good safety profile with no serious adverse events linked to the treatment of the procedure and the feasibility of injection in every patient. Then what has been observed is a good first rate of response that we could see as we've seen 5 out of 7 patients responding. And equally importantly, we get 100% disease control, meaning that all those patients will go or went to durvalumab, which is not the case if you look at the details of PACIFIC trial. Many patients have been excluded post radiation and chemo for different reasons, including progression post radiation and chemo, which we did not observe so far in this clinical trial. But altogether, what we can say it's a first readout encouraging. And we can wait to see the next steps of this safety lead-in or the final data that should come as we mentioned beginning of 2027. So we can say we've been progressing a lot with this collaboration. Also now that we have transferred the Phase III to J&J, they are running most of the operation. We're still running and finishing the 1,100 trial that has completed in terms of recruitment. Now there is some follow-up of patients, and we will continue to deliver some data in that regard. And the collaboration with MD Anderson Cancer Center is still ongoing with many trials that have been completed in terms of recruitment last year, we're going to see data this year, and we may open to new trials with MD Anderson Cancer Center. But maybe let's take time to talk a little about our new platform, Curadigm. Here, we're still talking about nanophysics. We're still talking about nanoparticle, but with a different perspective with different particle with different potential benefit to the patient. Just as a reminder, for those that are new on the call, as I see many, Curadigm is about trying to help many of the innovations we see in the biotech and the pharma arena. You do notice that most of the new innovation coming out, people are building more and more complex objects. We can talk about oncolytic virus, RNA-based therapy, in vivo CAR-T, cell therapy and all the subjects because being complex, at some point, when you try to inject them IV, the liver will play a role of filter and will capture a big part of them, if not all, in certain cases. So for many of those innovations, it's very hard to have access to the entire body with a normal IV route. So rather than doing what our industry is usually doing, which is let's try to tweak this subject to make it more efficient and try to escape the liver while delivering at the right place while delivering the payload and get the good transection, for example, so you're building a lot of compromise in one object. With the Curadigm technology, we decided to build what we call a nanoprimer, a second object. This nanoprimer is injected prior to the second product, and this nanoprimer has been specifically designed to transiently getting into the liver and get it occupied for a certain amount of time. So why the liver is busy? When you inject the second product, then it is much less captured by the liver and can have access to many other organ from the body. So what you could do with this approach is improving pharmacokinetic of a product, allowing when it's not possible to escape the liver, reducing liver toxicity or combination of all this. So there are many, many opportunities and many, many applications we could do with this technology. And now a big part of the team is focused on the development of it. What we've been doing lately is really continuing pushing, meaning filing for 4 new patents applications to continue to build our supremacy with this technology. We also have presented positive new in vivo preclinical combination with different type of combination. And more importantly, we are moving forward towards the IND, and we started the CMC activity with the start of the GMP manufacturing and also preclinical studies allowing to file for an IND. And while doing that, that the internal program at Nano, we've been expanding a lot our external reach out. We have now more than 20 MTAs that we've been signing with pharma or biotech, where they have taken our product and they are testing it with one of their products to either improving the pharmacokinetic of this product or reducing liver toxicity, and we've done that with many different technologies for different therapeutic areas like oncology, rare disease, CNS disorder. So it's moving quite well. And then we expect in a not-too-distant future to start transforming some of those MTAs into deals. But globally, the way we see the value of this platform and the 3 pillars that we are using to push it is first, continue to build and protect the technology while building an internal pipeline. We want to have our fully owned product to be developed up to a certain stage. While we are building or piling up deals with different partners, pharma and biotech. And of course, because of all this, we need to prioritize and build the right infrastructure to be able to build to manufacture and to provide this product to many partners and to our internal pipeline. So things are moving well, and we expect to get a bit more update and new data on this platform coming before the end of the summer. Just of note, last year, we've been entering a new index on the Euronext market, which is the SBF 120, and that's an index that covers 120 largest French listed company by market and cap liquidity. So it does give us a bit more institutional visibility, and we've seen through that some of the new investors coming on the top of specialized biotech investors that have entered our stock last year. And I'm going to take this to give the mic to Bart to talk about the financial part of this presentation. Bart Van Rhijn: Thank you, Laurent. Good morning and good afternoon, everyone, and thank you for joining us today. Over the past year, we've materially strengthened the company's financial foundation, positioning us to advance to upcoming value inflection points with greater resilience and strategic flexibility. This progress was supported by 2 strategic initiatives that meaningfully reshaped our capital requirements and hence our long-term operating flexibility. First, we amended our global licensing agreement with Janssen in a way that materially improves our financial profile. Under the revised terms, we have removed the vast majority of our funding obligations for the Phase III NANORAY-312 study while retaining significant upside through milestone payments that could total hundreds of millions of euros over the next 24 to 36 months. This amendment materially enhances capital efficiency, improves cash flow visibility and better aligns the partnership structure with our long-term strategic priorities. Second, we strengthened our balance sheet to the securing of a nondilutive royalty financing with Healthcare Royalty Partners for up to $71 million. This transaction provides incremental capital while avoiding shareholder dilution extends our projected cash runway into early 2028, excluding potential milestone inflows. Taken together, the strategic initiatives that I just outlined enhance our financial flexibility, reduce near-term funding requirements and position the company to sustainably advance its pipeline while maintaining a disciplined approach to capital allocation and long-term value creation. Turning to the next slide. Just a brief overview of the deal we announced back in October. We're extremely pleased to have partnered with Healthcare Royalty Partners on this transaction, bringing up to $71 million of nondilutive capital into the company. We selected Healthcare Royalty Partners following a comprehensive evaluation of financing alternatives. And given their deep sector experience and expertise, long-term investment outlook and strong record of supporting innovative biotech companies, we selected to partner with them. We believe that this partnership reflects a high degree of alignment around the long-term potential of JNJ-1900 and our broader strategic objectives. Critically, this royalty structure ensures that our partners' return is directly linked to the success of our lead program, which aligns incentives while avoiding repayment obligations beyond the nominal value of the bonds. Moreover, this is a construct that is kept from a time and amount perspective and therefore, a capital-efficient way to finance the company beyond anticipated value inflection points to ensure we maximize the value for our shareholders. This financing not only ensures we are funded through those critical inflection points, but validates the commercial potential of JNJ-1900 and supports our continued progress towards long-term sustainability and profitability. Moving over to our full year financial highlights. For the full year 2025, we recognized positive revenue of EUR 32.6 million compared to negative EUR 7.2 million for the year ended 2024. As a reminder, the negative revenue recorded in 2024 was primarily driven by a onetime recognition of the net liability to Janssen following the transfer of the sponsorship of the NANORAY-312 study. The positive revenue recognized in 2025 reflects a onetime accounting impact of EUR 21.8 million associated with the amendment to a licensing agreement that we executed in March 2025. This amendment, as Laurent alluded to earlier, eliminated the vast majority of the company's development cost obligations related to the NANORAY-312 study. This technical accounting effect related to the transfer of sponsorship and the cancellation of current and future study-related costs resulted in a corresponding impact on our reported top line, which is nonrecurring. Said differently, as these changes in 2024 and 2025 are considered purchase price adjustments from an accounting point of view, these results flow through the revenue line in our profit and loss account. Let us turn to R&D expenses. These include clinical and manufacturing expenses related to the development of JNJ-1900 and preclinical pipeline activities and totaled EUR 23.1 million for the 12-month period ended December 31, 2025, which compares to EUR 40.5 million for the 12 months ended December 31, 2024. As previously discussed, the significant year-over-year decrease of approximately 43% was primarily driven by the removal of development costs associated with the NANORAY-312 study following the transfer of sponsorship to Janssen. This transition resulted in the elimination of related clinical and operational expenditures previously borne by the company. More broadly, R&D spending during the period reflects continued prioritization of capital-efficient development across our clinical and preclinical programs, while maintaining investment in key manufacturing and pipeline activities, supporting the long-term advancement of our all platforms that Laurent just spoke to. Selling, general and administrative expense for the 12-month period ended December 31, 2025, were flat to significantly -- sorry, to slightly down year-over-year at EUR 20.4 million compared to EUR 20.5 million, reflecting continued expense control. Net loss attributable to shareholders was EUR 24 million or EUR 0.50 per share for the 12-month period ended December 31, 2025, reflecting a year-over-year decrease of 65%. The decrease was primarily attributable to the one-off noncash positive revenue recognition accounting impact together with a meaningful decrease in R&D expense resulting from the removal of the funding obligation for the 312 study. This compares to a net loss of EUR 68.1 million or EUR 1.44 per share reported for the same period last year. As we turn to cash and cash equivalents, as of December 31, 2025, that amounted to EUR 52.8 million compared to EUR 49.7 million as of December 31, 2024. Based on the current operating plan and financial projections, Nanobiotix anticipates that the cash and cash equivalents of EUR 52.8 million as of December 31, 2025, will fund its operations into early 2028, assuming the receipt of the remaining $21 million from Healthcare Royalty Partners expected in Q4 of 2026. To conclude, we remain focused on disciplined execution as we advance through key clinical and strategic milestones. We will continue to prioritize prudent capital allocation, operational efficiency and balance sheet resiliency and believe the foundation we have built positions us well for the periods ahead as we work to deliver long-term value for our stakeholders. Thank you. And now I would like to turn the call back to Laurent. Laurent Levy: Thank you, Bart. Just in a nutshell, what's coming for the 12, 18 months in front of us, we will continue to push with our new platform Curadigm and we'll continue to deliver new data and also visibility on how we're going to transform that into business. On the top of that, the NBTXR3 or JNJ-1900 development is still key in our development, as should be the critical next step for value creation as we expect to get the results of the Phase III in first half of '27 and the results of the Phase II in lung cancer in early 2027. Besides this, this year, we're going to deliver 4 different results of clinical trials, which 3 of them have been completed, so you will be able to see the final data for this. The key takeaway for today, if we think about 2025 and what's coming is the J&J partnership and the development of NBTXR3 is moving in the right direction with amplification of the development through multiple trials. We've continued to show that potential use of NBTXR3 across different indications, which reinforces the potential value of this product. And as mentioned, we've continued the Curadigm development, a new class of drug that we intend to bring to life. As Bart just mentioned, we're getting in a good financial position as our cash visibility is going into 2028 beyond key milestones in head and neck and lung and potentially other milestones. And as you have just seen, we have multiple near-term data readouts that could continue to show, assuming it's positive, that NBTXR3 could really improve life of millions of patients. Thank you very much for your attention, and now we're going to open the call for questions. Operator: [Operator Instructions] Your first question comes from the line of Tara Bancroft from TD Cowen. Tara Bancroft: So my question is about the lung data that you guys showed from CONVERGE yesterday that were really interesting even it's only in the first 7 patients. So we were hoping you could give us some context for how you benchmarked that to the 45% to 50% ORR. We ask because PACIFIC seems to be the best comp here where ORR was actually around 30%. So just curious to hear your thoughts on that. And then on follow-up, when were these assessments taken that were in the poster? And how does that length of follow-up so far play into your level of confidence in the data that potentially improving even further in Part 2? Laurent Levy: Thank you, Tara. Well, I think there are a few paper or historical control we could look at comparator for that. As a context, we are using the PACIFIC regimen in this trial and patients getting radiation plus chemo and if they do not progress, then they go to durvalumab. If you look at the PACIFIC paper, they start with 983 patients that received radiation plus chemo. And out of that, only 70% will be randomized, 2 patients in the direction of durvalumab, one with placebo. So there is in the evaluation of the response rate in the PACIFIC paper, something telling 40% -- 48% of response, but that excludes the 30% patients that have been not treated after that with durvalumab. So that's the response rate therefore after radio chemo. And if you look at the response rate post durvalumab, then it's going down, but it's going down slower than the placebo arm. And here, you find the 27% response that you probably mentioned. But again, this 27% response is excluding the patients that have been frontline excluded from the trial before randomization. So altogether, if we take 40%, 50%, that's what we can find in some other paper as what radiation plus chemo is doing for those patients and close to what they find as an optimization in the PACIFIC regimen. But I think that's just the first part. The most important part is how this evolves over time. Because what we see in PACIFIC, some patients did not get durva, 30%, and then the rate is going down over time. So I think if [R3] can provide a real local control, then we should see something different happening versus what you can observe with durvalumab. But this will be answered a bit later and potentially definitely answered when we will see the results of the Phase II beginning of next year. Operator: Your next question comes from the line of Clemence Thiers from Stifel. Clemence Thiers: Just to come back to the CONVERGE study. Full data will be in early 2027. Is there any chance you or J&J could file based on that study? Or do you have to run a Phase III afterwards? That's the first question. Laurent Levy: Thank you for the question. Well, first of all, we can talk for our partner. J&J now is running the CONVERGE trial and has the license on the product. So that will be their decision. And I think it's a bit early to talk about that. That may be a question we could ask when we see the data coming from the Phase II. But if the data are excellent, everything is open. But again, that will be a J&J's decision to move that direction or to do a proper Phase III after that. But we will hope for the best. Clemence Thiers: Yes. That was worth the shot. And the second question, in 2026, we'll have all those additional data sets from your IO study and MD Anderson studies. Are those the last ones in the sense that will you be after that at the stage where you again J&J decide whether you move forward with it or not? Laurent Levy: Yes. I think some of those trials have been completed like the melanoma cancer trial, the lung re-radiation and the last one, esophageal cancer. Just to know that we are now looking with MD Anderson as opening some potential new trial to explore new avenues, but that's something that will come a bit later. Obviously, out of all those trials, we got a lot of signs of safety, feasibility, potential good efficacy for the product. And now it's within the hands of the J&J, but also discussing with us about potential next step, but nothing that we can say at this stage. I have one mention to do, is to maybe take a particular look at the MD Anderson cancer trial about lung reraadiation. This trial, the recruitment has been completed last year, and we'll see the final data this year on more patients with more follow-up. I think this trial is very important because it's not like the same population that is treated in CONVERGE, but to a certain extent, could be seen as a surrogate of what we could observe in CONVERGE. So we will pay particular attention to this trial, but also we'll bring that to your attention. Operator: Your next question comes from the line of Jonathan Chang from Leerink Partners. Albert Agustinus: This is Albert Agustinus, on for Jonathan Chang. Congrats on all the progress. So my question also reflects on the CONVERGE data, is how do we extrapolate these results to your other ongoing trials and potential indications? And secondly, if I may, how do you foresee JNJ-1900 will be positioned within the landscape of non-small cell lung cancer treatment paradigm? Laurent Levy: Well, I think lung stage III cancer, like locally advanced head and neck cancer and other tumor are different because they are coming and they are in different organ, but they all share something is that if you can improve the local control and have a strong rate of response and CR, then you can deeply change the PFS and overall survival. And what our product does is improving the absorption of energy, killing more cells. And we know when you have a local disease, killing more cells may lead to more control. So that's the basic thesis that led us to start developing NBTXR3 and going into frontline treatment when patients have a local disease. And that's also what J&J is going after if we think about the 2 trials in head and neck and this trial in lung cancer. For us, it does establish the strong power of having local control transforming into benefit for patients. And starting from this point, then we could anticipate or imagine the diffusion of this product across different populations that are also getting radiation. But it's always pure to demonstrate that this work when local control plays the key role in the survival and quality of life of patients. So that's how we will extrapolate the results of CONVERGE, but also that's what we started to do with the randomized data coming from soft tissue sarcoma, which was a similar situation, even though this is really different. And that's a good start to any tumor type. And if we think about how to extrapolate to other indications, that could be a path. Now for lung cancer, there are many patients receiving radiation beyond lung Stage III. It is around 77% of lung cancer patients getting radiation. And not to mention that small cell lung cancer is also another indication where radiation is key. So we could imagine, but again, that will be J&J's decision to spread this product across different lung subpopulation. Operator: We will take our next question. And the question comes from the line of Swayampakula Ramakanth from H.C. Wainwright. Swayampakula Ramakanth: This is RK from H.C. Wainwright. I also have a couple of quick questions on CONVERGE. So in your mind, do you see J&J when they're spending time on both NANORAY-312 and CONVERGE, do you see them sourcing equal time for both of these projects? And additionally, does -- do you have any data from your partner regarding abscopal effect in the lung? Because injecting into lung lesions are potentially technically challenging. So how do we -- how do you and your partners see this being a successful therapeutic modality in the lung? Laurent Levy: Well, first of all, about the bandwidth or the investment in lung versus head and neck. I think a Phase III is always bigger than the Phase II. And in that case, that's a very big Phase III versus the CONVERGE trial. So there's much more people working on one than the other, which is normal given the size of things. But the attention is equally important from our perspective and what we can observe. And obviously, as I mentioned previously, the lung is a very important trial for J&J and also for us because if it does work, that's really opening a big market for JNJ-1900 or NBTXR3. But let's say that what we observe is they're pushing all front to make sure that all this could happen. Now on the abscopal effect, I think that's a big question. That's an effect we already observed that in melanoma patients, head and neck patients, some of the lung patients, when they have met with or without primary tumor, when we do inject one lesion and irradiate that lesion, we see a distant effect in the non-irradiated non-injected lesion. So that's something we start observing in many different clinical situations. That will be very useful to understand and to investigate when we think about metastatic patients. But for the vast majority of patients getting radiation, they have no met. They have a local or local regional disease. And here, local control is much more important than any potential immune response. And if we can provide it through local injection of the particle plus the radiation, that could be a win. And in the case of local regional when some of the lymph node could be involved, then we've seen in different trials now that we are able to inject lymph node on the top of the primary tumor, which could add also an additional immune response. But RK, if we just step back a minute, I think this abscopal effect or the possibility to trigger an immune response is really critical for met, as I mentioned. But also if you think about local regional disease where radiation plays a role, usually the local regional area is irradiated, which is not in favor of having an immune response because the X-ray, as we know and have seen, could kill some of the activity of the immune system. So here, the local control brought by physical treatment like radiation with the addition of JNJ-1900 is where we should play and where we should try to win. Swayampakula Ramakanth: One quick question on Curadigm. You did present some preclinical data previously. Now thinking -- going forward, since you also have collab MTAs with multiple parties. Are you planning to initiate an IND from the internal pipeline? Or do you expect some of these external collaboration partners to file first? How should we think about that program going forward? Laurent Levy: We are pushing both because we think building our internal pipeline will go through have a first proof of concept of this product into human, and that's what the team is working on, not only by manufacturing the product and starting pre-IND studies, but also designing the first proof of concept we want to bring to life. And if we think about it, as soon as we have established the safety and feasibility of this product into human, that's also opening many more combination possibilities with other products that are already into clinical development. So that will not only push forward our pipeline, but also will open many other opportunities for collaboration and licensing out. Operator: We will take our next question. Your question comes from the line of Kiara Montoni from Van Lanschot Kempen. Unknown Analyst: This is [indiscernible] on for Kiara. So for the J&J driven Phase II trial in lung, do you expect that J&J will report an interim before the readout in early 2027? And if they do, what do you think they will most likely disclose the ORR or the post durvalumab from Part 1? Laurent Levy: Thank you for the question. So yes, that's true. There are multiple readouts in this trial, different rate of response depending on timing, PD-L1 and also potential measurement as exploratory for other more systemic endpoints like PFS and OS. Now we can't talk for J&J. What we can say is what has been said publicly, which is the readout of the Phase II beginning of '27. But in between, who knows. Unknown Analyst: Okay. And on the MD Anderson lung reirradiation trial, you said you expected to read out in 2027. Is there any possibility you can narrow down on the timing? Laurent Levy: We filed for different abstracts. If first one accepted, that should be around the summer. Operator: We will take our next question, and the question comes from the line of David Dai from UBS. Xiaochuan Dai: Congrats on the progress. So a couple of questions from me as well. So just on the CONVERGE trial, so just thinking about the JNJ-1900, how do you think this early post-CCRT response we saw from the Part 1 could translate into durable load control and PFS benefit in Part 2? And I have a follow-up after that. Laurent Levy: Well, I mean, that's depending on how durable will be the response. But generally what we have observed in other clinical trials with different disease, when you start getting radiation, you usually get the optimal efficacy of radiation a few months after the end of the last session. Here, patients are going directly, I mean, rapidly into durvalumab. The good point is that, first of all, all of them went to durvalumab, which is not the case when you look at the overall population. And now we need to wait the next set of data to conclude on that. But if we believe of what we have seen previously in other trials, we should expect a much greater local control. And now we'll see how this potentially impacts a more systemic aspect of things for the patient. Xiaochuan Dai: Got it. Okay. And then just on -- for next follow up, just on the Part 1 study here, will we expect another follow-up of this data from the Part 1? And also for the Part 2, which we're expecting to have some data in early 2027. Could you just help us understand a little bit more around what's the sort of expected data readout? Would it be OR? Or should we look at PFS as well? Laurent Levy: I don't know. What we know is that all this that you mentioned are endpoint of the trials, but we don't know what J&J is going to communicate yet. Operator: Your next question comes from the line of Michael Schmidt from Guggenheim. Michael Schmidt: I had a couple more on the CONVERGE data from yesterday. Obviously, very interesting. Could you confirm whether Part 2 of that study is enrolling? Or are still patients being added to Part 1, sort of the safety lead-in component of the trial? Laurent Levy: Yes. Part 1 has been completed and the Phase II part, randomized part is enrolling since last year. Michael Schmidt: Okay. That makes sense. And then, yes, so just -- so you did note the sort of next update in early 2027. Is your impression that this is sufficient for your partner to potentially make a Phase III go decision? Or do you think more follow-up may be needed to look at things like DFS or maybe even OS to make that move into a large Phase III trial? Laurent Levy: That's a very good question, Michael. I think overall, first of all, a response in those patient population, if you find a high rate of response, then you should get an impact and a correlation with PFS and OS. I think the number of CR globally also could be a surrogate of that as PACIFIC did show very little rate of CR, less than 1.7% in the post [indiscernible] treatment. But globally, patients, if you look at the dynamic of the curve, they're relapsing quite fast in [indiscernible] arm and versus radio plus chemo. So I think comparing all those data, we can say if you beat that bar, then you move to Phase III directly, you don't need PFS, you don't need OS. I think that should be a mix of results linked to number of patients getting to [indiscernible] because usually 30% are not, number of patients getting response, number of patients getting complete response and then you can start following PFS and OS to see. But a combination of all these or just a few of them, depending on the magnitude could be enough. But at the end, that's J&J's decision to look at this and to take the path moving forward. Michael Schmidt: Okay. Makes sense. And then another one, I know this may be, again, difficult to answer, but what is your sense how J&J may prioritize other indications beyond head and neck and lung. For example, breast cancer is obviously a very big opportunity in prostate as well. And to what degree do you think they're incorporating data that's sort of coming out of the ISTs that have been ongoing? Laurent Levy: Well, that's a tricky question. We can't answer. What we can say is you can see the priorities of J&J in terms of indications like lung, bladder, head and neck and so on. So as you mentioned, breast cancer is not part of those priorities. Also, we have all the trials we've been running or are still running with MD Anderson that could serve as a base for expansion. But even though we have a lot of discussion with J&J's team about optionality, there's nothing we can say at this moment. Michael Schmidt: So we'll keep our eyes out for any other updates. Operator: [Operator Instructions] We will take our next question, and the question comes from the line of Shan Hama from Jefferies. Shan Hama: Just 2 from me, please. Actually, just on potential indication expansion on J&J's part. I know there's obviously not much you can comment on their behalf. But the indications that NDA is working on, is there scope for J&J to actually expand the [R3] program into those indications, so pancreatic, esophageal, et cetera? That's my first question. And then I can ask a follow-up after. Laurent Levy: I'm sorry, I'm not sure I got. The question was can they or will they? Shan Hama: As in, can they?, are they able to? Laurent Levy: Yes, of course, they are able to. And obviously, all the clinical trial we've been running serve really as a base for discussion with them, and they can. Shan Hama: Okay. That's clear. And then just actually on cash burn. So obviously, R&D has come down pretty sharply post the transfer to J&J. So what's the sort of steady-state annual cash burn we should assume through to 2027? Bart Van Rhijn: Thank you for the question. We don't provide specific forward-looking guidance to the individual years, and we refer to the cash runway that is in early 2028. But we have a very disciplined approach to how we allocate capital. So what you've been used to in the past few years, you should expect to continue to see from us. Maybe one high-level comment is that as the 312 costs have been transferred to our partner, Janssen, we should expect to see development cost on the new platforms that Laurent talked to. Operator: Your next question comes from the line of Clement Bassat from Portzamparc BNP Paribas. Clément Bassat: I have 2. First, I was wondering how much R&D you spent in oncology in H2? And how much was allocated to Curadigm just in order to assess the shift? And secondly, regarding the mechanism of Curadigm, my understanding is that with the Nanoprimer, we will reduce the effective dose level, but at the same time, we may also reduce the dose. So could you please provide some insight into the relationship between these 2 dose, if the relationship is linear or not? And if this could lead to narrowing the trend between these 2 dose due to the suspension of the liver clearance? Bart Van Rhijn: Let me try to address the question on the R&D spend and how that is proportion between our 3 new platforms. What I can share is that at this time, and this is relating to full year 2025, the spend on Curadigm has been ramping and should be in the low single-digit millions. Again, as we start to pivot and have pivoted meanwhile to these new platforms, that spend will obviously increase. But for the past year, it was a smaller amount compared to the total R&D spend. Laurent Levy: So to your second question about Curadigm, I think the answer is yes, there is a correlation, but will depend also on the need of the product. Let me try to get to that. So what the Nanoprimer does is by occupying transiently the liver, it will allow a second product to circulate more freely. So if this product had a strong accumulation in liver, but not much toxicity, what you're going to play on is the ability for the second product to circulate more freely and to reach other targets that will not be able to reach normally. But if this product has a high liver toxicity, would prevent him to be used at the right dose, then you will play more on the liver toxicity by preventing the accumulation while allowing some circulation of a therapeutic dose. But there's always a correlation between the dose of the Nanoprimer and the quantity that you will avoid to be captured in the liver and the quantity that will be allowed to circulate. And there is a link to that but different products will request different outcome, and that's where we're going to play A or B, meaning more efficacy or less safety issue. In some cases, we can play on both. Operator: This concludes today's question-and-answer session. I'll now hand back for closing remarks. Laurent Levy: Everyone, thank you very much. It was a pleasure, as usual, to talk to all of you. And I think that you are numerous today assisting to the call. It's a very good thing and hope to see you all in a short for more news about Nanobiotix. Thank you very much. I wish you a great day. Thank you. Bart Van Rhijn: Thank you all. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Good day, everyone. Welcome to the Milestone Scientific Inc. Fourth Quarter 2025 Financial Results and Business Update Conference Call. [Operator Instructions] As a reminder, this call is being recorded. It is now my pleasure to turn the floor over to your host, James Carbonara with Hayden IR. The floor is yours. James Carbonara: Thank you, operator. Good day, everyone. Before we begin, please note that today's call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results differ materially from those projected. Please refer to our earnings press release as well as our filings with the SEC, including our 2025 Form 10-K for a discussion of these risks. A replay of this call will be available shortly after its conclusion. With that, I'll turn the call over to our CEO, Eric Hines. Eric Hines: Thank you, James, and good morning to everybody, and thank you for joining our call today. When I stepped in as a CEO in August of 2025, the company was in the middle of the quarter and had been operating without a consistent executive leadership team. I found an organization where spending wasn't always tied to revenue generation or clear ROI. And from day 1, we went line by line through every expense,, cut what wasn't moving the needle and made sure every dollar had a purpose. We also chose not to raise capital just to fund that kind of spending. Our shareholders deserve better. Our focus has been on responsible stewardship while building a stronger operating model. Our early priority was understanding the business, restructuring and building the right team. We also invested in organizational structure, building a capable commercial team and strengthening leadership to ensure we have the talent, processes and tools to execute. The restructuring completed in 2025 allows us to move past stabilization and begin to play offense smartly, investing where we see clear returns and staying disciplined and everything else. By Q4, we began that shift to increasing targeted digital marketing and launching initiatives across both business segments that drove early traction. Our dental business remains the company's backbone. Internationally, adoption of the STA, Single Tooth Anesthesia system continues to grow, reflecting the strength of our technology and distribution relationships. We are also pursuing registrations in many other countries, including Japan, India and Mexico, which could open meaningful new markets. Domestically, we see significant room for expansion with still less than 2% of the overall market. The pilot launch of our dental Ambassador program in December sparked renewed engagement. And in January '26, we took it national. We continue executing that program and pursuing international registrations, and we expect to see results from these efforts beginning in the second and third quarters. Turning to the medical side. CompuFlo is increasingly important to our story. This patented system provides real-time pressure feedback to guide precise epidural injections and clinician interest continues to build. We believe CompuFlo represents a transformative growth driver as reimbursement and clinical adoption expand. In 2025, we relaunched commercialization efforts for CompuFlo and advance the foundation for broader adoption, expanding clinician awareness, progressing regulatory and reimbursement efforts and strengthening key account engagement. In February 2026, we introduced our CompuFlo Advisor program, bringing together more than 10 physician partners and a dedicated reimbursement support infrastructure to drive utilization and accelerate adoption. Looking ahead, we are advancing broader Medicare reimbursement, onboarding new distribution partners and pursuing national and local VA channels. These programs position us to translate early traction into meaningful growth over the coming quarters. Turning to the guidance for 2026. We expect total revenue of $9.8 million to $10.2 million, reflecting double-digit year-over-year growth, driven by expanding adoption across both markets. We expect CompuFlo to contribute $500,000 to $600,000 and approximately 400% increase over 2025. Combined with 2025 cost actions, this 2026 top line growth should meaningfully improve operating leverage and significantly reduced cash burn relative to prior year levels. I want to be direct. Our goal is to reach cash flow breakeven in early 2027 and build real lasting value for shareholders. With a stronger organization, clear commercial focus and innovative products at the heart of our business, Milestone Scientific is entering 2026, ready to deliver. I'll now turn the call over to Keisha now for a few reviews of the financials. Keisha? Keisha Harcum: Thank you, Eric, and good morning, everyone. Let's take a look at our financial performance for the fourth quarter and full year of 2025. For the 3 months ended December 31, 2025 and 2024, total revenue was $2.1 million and $2 million, respectively, an increase of 2.2% or $45,000. Gross profit was $1.5 million, unchanged compared to $1.5 million for the prior year period. Operating loss was $1.1 million, an 89% improvement of $953,000 compared to the operating losses of $2 million in the prior period. Net loss was $1.1 million compared to the net loss of $2 million for the prior period. Turning to the full year. Net sales totaled $9 million, up 4% from $8.6 million in 2024, driven primarily by the growth in international and dental sales. Gross profit remained flat at $6.4 million, reflecting changes in product mix and cost structure. Operating losses for 2025 improved by $1.1 million to $5.7 million, down from $6.8 million in 2024, primarily due to lower SG&A, reduced of dental-related and R&D expense. Net loss was $5.7 million or $0.07 per share, an improvement of $1 million on a dollar base compared to $4.7 million $0.06 per share in 2024. As of December 31, 2025, the company had $1.1 million in cash and debt of $800,000 and a strong working capital position to support continued growth initiatives. With that, I'll -- With that, operator, we can open the floor for questions. Operator: [Operator Instructions] Your first question is coming from Bruce Jackson with Benchmark Co. Bruce Jackson: You mentioned that with -- I think it was CompuFlo, you've put in place some reimbursement support with the doctors. Maybe you could elaborate on that a little bit more. Eric Hines: Thanks, Bruce, and good to hear from you. So yes, so one of the things that I observed even in the past as a shareholder is that we really didn't have the infrastructure in place to sort of shotgun the CompuFlo out globally. And so what we've done as part of the Advisor program is we have put a very robust group of individuals, in fact, 2 consultants Evelyn Gittinger and [ Rhonda Turner ], both 20-plus year Medicare veterans, who will be supporting our doctors that are part of the Advisor program with reimbursement claims and so forth as they start to initiate that process. So not only that, we've also got a call center, dedicated call center with 3 to 4 people that will be also helping the offices deal with rebuttals and so forth from a claims perspective. So we've got a good team with a lot of experience who will be helping the doctors through that process. Bruce Jackson: Okay. Great. And then 1 more reimbursement question. Are you still currently in 3 of the MACs? Eric Hines: We are. Bruce Jackson: And then the idea is to go more deeply into those 3 regions and then consider expanding from there? Eric Hines: Yes. So the focus will be on Novitas and First Coast in those 3 respective regions. However, we are already into, I believe, 2 additional MACs that we are -- that are part of Advisor program. So we are going to be pushing down and pressing down hard on the First Coast of Novitas MACs, but also expanding into others. Bruce Jackson: Okay. And then last question for me. The gross margins had a nice little tick up this quarter. Is that something that's going to be sustainable going forward? Eric Hines: I'm going to turn that over to Keisha. I think we're more or less going to be consistent with the gross margins. I think we'll stay in the 70% range is kind of the plan. Keisha Harcum: Yes, that is our plan. However, with issues of tariffs and anything like that might arise, we still have to look at all of those options to make sure that we are putting in accruals and different things like that, but we have not been affected totally with tariffs or anything like that at this time. Operator: Your next question is coming from Anthony Vendetti with the Maxim Group. Anthony Vendetti: Yes, Eric, I was just wondering the guidance for the CompuFlo, for the Epidural System for pain management. Is -- are there specific milestones you need to reach or specific number of pain clinics or physicians using it to get to that? How much of that is -- how that guidance is from current signed up clinics or physicians? And then how much of that do you need to actually go out and procure? Eric Hines: That's a great question. So it will be a combination of a handful of things, right? So it will be -- I'm going to say 3 different things, right? First and foremost, it will be the existing customers, right? We've got 1 of our Board members Dr. Demesmin, whose clinic and others within that group use the solution. And we've got several that were generated under the prior administration. We also have added quite a number of new physicians, and we're finding that the adoption rate is maybe a little bit higher than even we expected because people that get it, get it and see the value even in spite of some of the Medicare challenges right at this moment. And then the third is international, right? So we've got sort of 3 components to that. But right now, we are seeing quite an appetite for people and for new customers, embracing the units. And I think you'll see that reflected in our Q1 highlights at some point. Anthony Vendetti: Okay. And then switching gears to the dental program. you launched a new program, the Wand Ambassador program. How does that differ from any other marketing strategy the company has had in the past? And what specific KPIs do you need to hit? Or do needs to occur for that to be deemed successful for '26? Eric Hines: Yes. No, another good question. So how it differs is historically, we've got a relatively small inside sales team who chases the dental business. So we've got 1 person who focuses on the installed base and another person that's focused on new business. And we've really fortified sort of our digital marketing tremendously to the point that we're seeing so many leads come in that it's a tough time for us to sort of keep up with the staff we have to do the demos. So the Ambassador program is a little bit more of a local push. So I believe that as of now, we've signed up nearly 200, I think, about 175 ambassadors nationally, which include, I don't know, maybe 20 or 30 states, and so the point there is that we get people out physically in the marketplace talking with expertise because these are registered for the most part, dental hygienists, until we get people out in the community who know the doctors in their respective communities out visiting offices, in some cases, in a physical way. And in other cases, them using some of our own content to broadcast the great things about the Wand STA on their own social media channels. So it's really an effort to get out into the physical market, more so than relying on inside sales and relying on digital marketing. We've generated, I think, close to 30 demos as a result of it so far. And again, there's a certain percentage of those that translates into new sales. So as far as what we expected to contribute in 2026, the goal is somewhere in the neighborhood of a few hundred thousand dollars of new sales as a result of the Ambassador program. And more recently, I think in the next -- in the coming days, we have -- I don't know if it's like a refresher, but we have monthly meetings with our entire ambassador staff, they're sort of giving them FAQs, what's working, what's not working, who's having success, what content seems to be working. So it's still a little bit new, but at the same time, we're pretty happy with the results of thus far. Anthony Vendetti: Okay. And then on the guidance, I think the total guidance is $9.8 million to $10.2 million. Obviously, most of that is the dental program, the STA. You mentioned you're looking at other international opportunities in Japan, Mexico, India. Is -- does the guidance include any revenue from those new countries? Or is the guidance -- or if you start generating revenues in 1 of those other countries in '26, that would be upset. Eric Hines: Yes, the numbers don't contemplate any business from Mexico, India or Japan at this moment that -- we're still waiting for the final registrations to be approved. We're 85%, 90% of the way through those, but it's up to each individual country to work through their respective systems to get us the official registration. But we're pretty far along in each of them. We had expectations that we might 1 or 2 in the first quarter, but we're probably a couple of months. So we'll see. We hope that will be accretive to the guidance. Anthony Vendetti: Okay. Great. And then last question, just switch back to the CompuFlo. So I know one of the reasons that the focus has moved to the pain clinics versus the hospitals for OB/GYN. For CompuFlo, the hospitals are a much longer sales cycle, tougher to penetrate and get traction as a small company and the pain clinics are a little bit faster conversion cycle in terms of marketing to them and seeing the benefits and hopefully, getting a sale. Is -- do you have a -- at this point, a good grasp on how long that takes? How long is the sales cycle for the pain clinics. And is there any way to shorten that at this point? Eric Hines: Yes. No, we've seen sales cycles as short as a day, right? I mean, so -- and I don't think that we're just missing OB/GYN, neurosurgery, what we're finding is we're still kind of a little bit in the discovery phase where we pivoted from labor and delivery over to pain. We're not convinced or at least I'm not convinced that this -- the CompuFlo doesn't have an opportunity to penetrate all respective markets. Again, we want to do our best to be focused. On the other hand, we're -- we don't want to completely walk away from things where we think there's huge potential. I mean, labor and delivery being one of those, right? Because there, the doctors going blind with no fluoroscopy. And when you get into more complex cases and neurosurgery up in the cervical spine and even the thoracic, you've got ribs in the way that compromise the x-ray. So it makes it more difficult for them in more difficult cases. We're seeing spinal stimulation opportunities. So we haven't completely dismissed any of the markets. We want to remain focused on pain, and we're seeing sales cycles like I said, that can -- anywhere from a few days, right? I'll just give a shout out to 1 of our great Board members, Dr. Sayed, who's been tremendously helpful in introducing us to lots of people within that community. Operator: [Operator Instructions] your next question is coming from John [ Corb ], a private investor. Unknown Attendee: Eric. I have a very short comment. As you may know or remember from our last quarterly call, I'm a long-term shareholder, been a shareholder for many years with Milestone. First of all, I really like the way you are handling this company since you came on Board. And there's -- the last line in your comment or your written comment yesterday, I don't think I've ever read anything like this from Milestone. Our objective is clear: position the company to achieve cash flow breakeven by early '27. That's extremely focused. I've asked in the past, when will you be cash flow neutral positive and the answers were always nebulous. You're extraordinarily focused, and I'm greatly encouraged by your stewardship at Milestone. So I just want to thank you for your efforts. Eric Hines: John, I appreciate that, and I couldn't do any of this without Keisha. She's sitting here with me, and she's tough, right? And we, together as a team are going to ensure that we -- every money -- every cent that comes into this company is going to be used in the right way. And as a former shareholder and current shareholder like yourself, a lot of us were discouraged by the way the company was handling some of that. And I can promise you, we're going to do everything we possibly can to get to cash flow breakeven. And as I pointed out in the conversation we had moments ago, we are not going to take money and send it toward bad situations. And the money that we receive or that comes into the company will be used in a very judicious way. And if we can't get to breakeven next year, I'll be disappointed. Operator: [Operator Instructions] There are no questions in queue at this time. I would now like to turn the floor back over to Eric Hines for any closing remarks. Eric Hines: I just want to thank everybody for joining, and we greatly appreciate all of our shareholders. This is going to be a shareholder-driven company here until I'm gone. Hopefully, that's not for a long time. And I'm looking forward to a great 2026. And I hope everyone has a happy and healthy week ahead of them, and good luck to all of us and thank you Kelly and thank you, James, for managing the call, and good luck. Thank you. Operator: Thank you, everyone. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.
Operator: Good day, and thank you for standing by. Welcome to the Nanobiotix Full Year 2025 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Joanne Choi, Head of Investor Relations, U.S. Please go ahead. Joanne Choi: Thank you, Heidi. Good afternoon, and good morning, and welcome to the Nanobiotix conference call to discuss our full year 2025 financial and operational results. Joining me on the call today are Laurent Levy, Co-Founder and Chief Executive Officer; and Bart Van Rhijn, Chief Financial and Business Officer. Today's call is being webcast and will be available on our website for replay. Before we begin, I would like to remind you that today's discussion will include forward-looking statements within the meaning of applicable securities laws. These statements are based on our current expectations, assumptions and available information and are subject to significant risks and uncertainties that could cause actual results to differ materially. Such risks include, among others, those related to the timing, progress and outcomes of our research and clinical development programs, regulatory developments and our financial and operational performance. We encourage you to review the full description of risk factors that can be found in the documents we filed with the AMF in France and the SEC in the U.S., which are available on the Investor Relations section of our website. Any forward-looking statements made during this call reflect our views as of today and should not be relied upon as representing our views as of any subsequent date. Thank you. I will now turn the call over to Laurent. Please go ahead. Laurent Levy: Thank you, Joanne, and thank you, everyone. Good morning, good afternoon. Really happy to be here with you today to share our 2025 year and to give you a bit of perspective of what's going to happen in the next 12 to 18 months. So today, we're going to go over different aspects of things, how we've been moving the company for the past year and also give some financial highlights and then open for Q&A session. I think we've had a very rich 2025. We've been able to do many things during this year. First of all, start moving forward in a good way in the collaboration we have with Johnson & Johnson and start showing the potential of this first product, along with the potential of this deal in terms of future revenue for Nanobiotix. While doing so, we've been also pivoting the company towards the new platform, which has been a big effort from the team, and I would like to thank them all for that. While doing those operational things in parallel, we've been able to really improve our cash visibility into 2028. And this is beyond the timing of some of the expected milestones that should come from the collaboration with J&J. So altogether, we've had a rich year, and we are pleased to share that with you. And now we're going to go in some more details to give you a bit of insight. Before getting there, we would just like to remind a few things about the philosophy with which we are developing things at Nanobiotix. So as you can see here, we mentioned delivering first-in-class directly. But I think definitely, we are doing more than this. We are creating new class of drugs. That's what we have done for the radioenhancer, for the Nanoprimer and also for the last platform OOcuity. And that's really our philosophy. We don't want to do what other biotech are doing, not because it's bad because we think there are enough people working on the same target with the same technology. So we really want to bring something deep and different to help millions of patients. And that's what we're trying to do, and we continue to do. Our strategy is simple and stay in line with what we told you last year. First of all, is to continue to push and help J&J to address one of the potentially largest untapped market in oncology. And that's through our first product, radioenhancer that has been licensed to Johnson & Johnson. And beyond this product, we're really pushing hard on new platforms, starting with the Curadigm platform, which we think is going to disrupt part of how we think about drug development. And we have been starting making good progress in that regard this year. Obviously, we will come back to that in more detail. But let's focus first on NBTXR3 or JNJ-1900. What do we mean by addressing one of the largest untapped market in oncology? Well, I think for that, we still need to look at patients. And when patients are diagnosed with cancer, the vast majority of them have a local disease. It's more than 70% of patients having local disease at diagnosis. And our industry, in general, is more focused on late-stage treatment of patients when they get metastatic or have received several lines of treatment. If you think about it, if you want to have a big impact for those patients, it will be much better, if possible, to treat them at the beginning of their disease and try to eradicate the tumor when it's still at the local stage. And that's exactly what we are trying to achieve with NBTXR3. And for that, we're working with radiation therapy, which is one of the largest treatments used in oncology as more than 60% of all cancer patients are getting radiation. And we have a product that we licensed to J&J that fits this existing market with almost no competition. And as you can see on this slide, we have a very large pipeline linked to this product that have been developing across many tumors. And technically, that's just a few examples of what could be done with this product because there are many, many other patients getting radiation in different oncology indications. But let's try to look at where is the value here, what are the next key point of inflection and how are we going to bring that to next steps. This year, last year, sorry, 2025, we've been publishing additional data in different cancer types. On the top of the already established proof of concept in soft tissue sarcoma, the first data in head and neck cancer, we've been able to continue to show that this product could be widely applicable in oncology. Through 2025, we've been publishing data on head and neck cancer by talking here about recurrent metastatic patients, also pancreatic cancer, esophageal cancer, melanoma cancer and lung cancer. All those data have been showing not only that you could use safely NBTXR3 in different indications, but also start to show some potential good of efficacy for those different indications. And altogether, some consistency. In the way you administer the product, but more importantly, in the way this product could amplify the radiation therapy and potentially bring new benefits and additional benefit to patients. Let's focus on the 2 key developments. As you know, we've been transferring to Johnson & Johnson last year, the ongoing Phase III in head and neck cancer. That's a very important trial as a Phase III and could lead, if positive, to first approval and first market activity around NBTXR3. This trial is progressing well. J&J now has the full operation on this and also the financial aspects of this trial are taken care by J&J, and we still expect to get the first readout of this trial the first half of next year. You may have noticed that on the top of this Phase III, J&J has also started a Phase Ib in another population of head and neck, meaning patients getting radiation plus cisplatin. If you think about head and neck cancer, with those 2 trials, you're technically capturing all the patients frontline that have a locally advanced tumor and that received radiation and that cannot go to surgery. So technically, if you -- if you exclude, sorry, the few patients that have metastasis at diagnosis, with those 2 trials, you could capture the vast majority of head and neck cancer patients, first-line treatment with the highest unmet medical need. So that's a very important pathway and could, if positive, establish NBTXR3 as a key player in whole head and neck cancer treatment. Now there is another trial, which is equally important and potentially even more important. We're talking about here the first lung cancer trial that J&J is running. The name of this trial is CONVERGE. It's a randomized Phase II trial in unresectable Stage III non-small cell lung cancer. This trial is important for many reasons. First of all, as you may have seen, lung cancer is a very important aspect of the strategy of J&J in oncology. And it's also, as you know, a gigantic market, if not the biggest market with breast cancer. So here, starting with this trial, assuming that the data are positive, what we feel at Nanobiotix is that could be a trigger for Johnson & Johnson to start expanding the development. But if we just stick to lung cancer, that's already a gigantic market per se. Here, we're talking about Stage III, but could expand into some other indication in lung cancer. And maybe as we did not have the occasion to talk about the data that has been generated, the first part of this data, let's have a small focus on that. As I mentioned, we are talking here about patients that have a locally advanced unresectable Stage III lung cancer and the treatment of reference is radiation to chemo followed by consolidation with durvalumab. And as you can see, if you look left and right of this box, many other patients in lung cancer would receive radiation therapy frontline treatment, which could be at some point an expansion of the use of this product, assuming that this trial read positive. So what's the design of the trial? There's 2 parts in it. First, a safety leading with very few patients and then what we call a proof of concept with the randomized part of the trial where we compare the standard of care chemo radiation with durvalumab versus the same plus the product with 2 different dose. And this is randomized 1:1:1. Total should have 120 patients. And Johnson & Johnson published that they should expect the readout of the randomized part beginning of 2027. The data that have been presented this week are about the safety leading. So there's a lot of caveat around that. It's a small number of patients, but nevertheless, we can start looking at what we observe here. So we've been first showing a good safety profile with no serious adverse events linked to the treatment of the procedure and the feasibility of injection in every patient. Then what has been observed is a good first rate of response that we could see as we've seen 5 out of 7 patients responding. And equally importantly, we get 100% disease control, meaning that all those patients will go or went to durvalumab, which is not the case if you look at the details of PACIFIC trial. Many patients have been excluded post radiation and chemo for different reasons, including progression post radiation and chemo, which we did not observe so far in this clinical trial. But altogether, what we can say it's a first readout encouraging. And we can wait to see the next steps of this safety lead-in or the final data that should come as we mentioned beginning of 2027. So we can say we've been progressing a lot with this collaboration. Also now that we have transferred the Phase III to J&J, they are running most of the operation. We're still running and finishing the 1,100 trial that has completed in terms of recruitment. Now there is some follow-up of patients, and we will continue to deliver some data in that regard. And the collaboration with MD Anderson Cancer Center is still ongoing with many trials that have been completed in terms of recruitment last year, we're going to see data this year, and we may open to new trials with MD Anderson Cancer Center. But maybe let's take time to talk a little about our new platform, Curadigm. Here, we're still talking about nanophysics. We're still talking about nanoparticle, but with a different perspective with different particle with different potential benefit to the patient. Just as a reminder, for those that are new on the call, as I see many, Curadigm is about trying to help many of the innovations we see in the biotech and the pharma arena. You do notice that most of the new innovation coming out, people are building more and more complex objects. We can talk about oncolytic virus, RNA-based therapy, in vivo CAR-T, cell therapy and all the subjects because being complex, at some point, when you try to inject them IV, the liver will play a role of filter and will capture a big part of them, if not all, in certain cases. So for many of those innovations, it's very hard to have access to the entire body with a normal IV route. So rather than doing what our industry is usually doing, which is let's try to tweak this subject to make it more efficient and try to escape the liver while delivering at the right place while delivering the payload and get the good transection, for example, so you're building a lot of compromise in one object. With the Curadigm technology, we decided to build what we call a nanoprimer, a second object. This nanoprimer is injected prior to the second product, and this nanoprimer has been specifically designed to transiently getting into the liver and get it occupied for a certain amount of time. So why the liver is busy? When you inject the second product, then it is much less captured by the liver and can have access to many other organ from the body. So what you could do with this approach is improving pharmacokinetic of a product, allowing when it's not possible to escape the liver, reducing liver toxicity or combination of all this. So there are many, many opportunities and many, many applications we could do with this technology. And now a big part of the team is focused on the development of it. What we've been doing lately is really continuing pushing, meaning filing for 4 new patents applications to continue to build our supremacy with this technology. We also have presented positive new in vivo preclinical combination with different type of combination. And more importantly, we are moving forward towards the IND, and we started the CMC activity with the start of the GMP manufacturing and also preclinical studies allowing to file for an IND. And while doing that, that the internal program at Nano, we've been expanding a lot our external reach out. We have now more than 20 MTAs that we've been signing with pharma or biotech, where they have taken our product and they are testing it with one of their products to either improving the pharmacokinetic of this product or reducing liver toxicity, and we've done that with many different technologies for different therapeutic areas like oncology, rare disease, CNS disorder. So it's moving quite well. And then we expect in a not-too-distant future to start transforming some of those MTAs into deals. But globally, the way we see the value of this platform and the 3 pillars that we are using to push it is first, continue to build and protect the technology while building an internal pipeline. We want to have our fully owned product to be developed up to a certain stage. While we are building or piling up deals with different partners, pharma and biotech. And of course, because of all this, we need to prioritize and build the right infrastructure to be able to build to manufacture and to provide this product to many partners and to our internal pipeline. So things are moving well, and we expect to get a bit more update and new data on this platform coming before the end of the summer. Just of note, last year, we've been entering a new index on the Euronext market, which is the SBF 120, and that's an index that covers 120 largest French listed company by market and cap liquidity. So it does give us a bit more institutional visibility, and we've seen through that some of the new investors coming on the top of specialized biotech investors that have entered our stock last year. And I'm going to take this to give the mic to Bart to talk about the financial part of this presentation. Bart Van Rhijn: Thank you, Laurent. Good morning and good afternoon, everyone, and thank you for joining us today. Over the past year, we've materially strengthened the company's financial foundation, positioning us to advance to upcoming value inflection points with greater resilience and strategic flexibility. This progress was supported by 2 strategic initiatives that meaningfully reshaped our capital requirements and hence our long-term operating flexibility. First, we amended our global licensing agreement with Janssen in a way that materially improves our financial profile. Under the revised terms, we have removed the vast majority of our funding obligations for the Phase III NANORAY-312 study while retaining significant upside through milestone payments that could total hundreds of millions of euros over the next 24 to 36 months. This amendment materially enhances capital efficiency, improves cash flow visibility and better aligns the partnership structure with our long-term strategic priorities. Second, we strengthened our balance sheet to the securing of a nondilutive royalty financing with Healthcare Royalty Partners for up to $71 million. This transaction provides incremental capital while avoiding shareholder dilution extends our projected cash runway into early 2028, excluding potential milestone inflows. Taken together, the strategic initiatives that I just outlined enhance our financial flexibility, reduce near-term funding requirements and position the company to sustainably advance its pipeline while maintaining a disciplined approach to capital allocation and long-term value creation. Turning to the next slide. Just a brief overview of the deal we announced back in October. We're extremely pleased to have partnered with Healthcare Royalty Partners on this transaction, bringing up to $71 million of nondilutive capital into the company. We selected Healthcare Royalty Partners following a comprehensive evaluation of financing alternatives. And given their deep sector experience and expertise, long-term investment outlook and strong record of supporting innovative biotech companies, we selected to partner with them. We believe that this partnership reflects a high degree of alignment around the long-term potential of JNJ-1900 and our broader strategic objectives. Critically, this royalty structure ensures that our partners' return is directly linked to the success of our lead program, which aligns incentives while avoiding repayment obligations beyond the nominal value of the bonds. Moreover, this is a construct that is kept from a time and amount perspective and therefore, a capital-efficient way to finance the company beyond anticipated value inflection points to ensure we maximize the value for our shareholders. This financing not only ensures we are funded through those critical inflection points, but validates the commercial potential of JNJ-1900 and supports our continued progress towards long-term sustainability and profitability. Moving over to our full year financial highlights. For the full year 2025, we recognized positive revenue of EUR 32.6 million compared to negative EUR 7.2 million for the year ended 2024. As a reminder, the negative revenue recorded in 2024 was primarily driven by a onetime recognition of the net liability to Janssen following the transfer of the sponsorship of the NANORAY-312 study. The positive revenue recognized in 2025 reflects a onetime accounting impact of EUR 21.8 million associated with the amendment to a licensing agreement that we executed in March 2025. This amendment, as Laurent alluded to earlier, eliminated the vast majority of the company's development cost obligations related to the NANORAY-312 study. This technical accounting effect related to the transfer of sponsorship and the cancellation of current and future study-related costs resulted in a corresponding impact on our reported top line, which is nonrecurring. Said differently, as these changes in 2024 and 2025 are considered purchase price adjustments from an accounting point of view, these results flow through the revenue line in our profit and loss account. Let us turn to R&D expenses. These include clinical and manufacturing expenses related to the development of JNJ-1900 and preclinical pipeline activities and totaled EUR 23.1 million for the 12-month period ended December 31, 2025, which compares to EUR 40.5 million for the 12 months ended December 31, 2024. As previously discussed, the significant year-over-year decrease of approximately 43% was primarily driven by the removal of development costs associated with the NANORAY-312 study following the transfer of sponsorship to Janssen. This transition resulted in the elimination of related clinical and operational expenditures previously borne by the company. More broadly, R&D spending during the period reflects continued prioritization of capital-efficient development across our clinical and preclinical programs, while maintaining investment in key manufacturing and pipeline activities, supporting the long-term advancement of our all platforms that Laurent just spoke to. Selling, general and administrative expense for the 12-month period ended December 31, 2025, were flat to significantly -- sorry, to slightly down year-over-year at EUR 20.4 million compared to EUR 20.5 million, reflecting continued expense control. Net loss attributable to shareholders was EUR 24 million or EUR 0.50 per share for the 12-month period ended December 31, 2025, reflecting a year-over-year decrease of 65%. The decrease was primarily attributable to the one-off noncash positive revenue recognition accounting impact together with a meaningful decrease in R&D expense resulting from the removal of the funding obligation for the 312 study. This compares to a net loss of EUR 68.1 million or EUR 1.44 per share reported for the same period last year. As we turn to cash and cash equivalents, as of December 31, 2025, that amounted to EUR 52.8 million compared to EUR 49.7 million as of December 31, 2024. Based on the current operating plan and financial projections, Nanobiotix anticipates that the cash and cash equivalents of EUR 52.8 million as of December 31, 2025, will fund its operations into early 2028, assuming the receipt of the remaining $21 million from Healthcare Royalty Partners expected in Q4 of 2026. To conclude, we remain focused on disciplined execution as we advance through key clinical and strategic milestones. We will continue to prioritize prudent capital allocation, operational efficiency and balance sheet resiliency and believe the foundation we have built positions us well for the periods ahead as we work to deliver long-term value for our stakeholders. Thank you. And now I would like to turn the call back to Laurent. Laurent Levy: Thank you, Bart. Just in a nutshell, what's coming for the 12, 18 months in front of us, we will continue to push with our new platform Curadigm and we'll continue to deliver new data and also visibility on how we're going to transform that into business. On the top of that, the NBTXR3 or JNJ-1900 development is still key in our development, as should be the critical next step for value creation as we expect to get the results of the Phase III in first half of '27 and the results of the Phase II in lung cancer in early 2027. Besides this, this year, we're going to deliver 4 different results of clinical trials, which 3 of them have been completed, so you will be able to see the final data for this. The key takeaway for today, if we think about 2025 and what's coming is the J&J partnership and the development of NBTXR3 is moving in the right direction with amplification of the development through multiple trials. We've continued to show that potential use of NBTXR3 across different indications, which reinforces the potential value of this product. And as mentioned, we've continued the Curadigm development, a new class of drug that we intend to bring to life. As Bart just mentioned, we're getting in a good financial position as our cash visibility is going into 2028 beyond key milestones in head and neck and lung and potentially other milestones. And as you have just seen, we have multiple near-term data readouts that could continue to show, assuming it's positive, that NBTXR3 could really improve life of millions of patients. Thank you very much for your attention, and now we're going to open the call for questions. Operator: [Operator Instructions] Your first question comes from the line of Tara Bancroft from TD Cowen. Tara Bancroft: So my question is about the lung data that you guys showed from CONVERGE yesterday that were really interesting even it's only in the first 7 patients. So we were hoping you could give us some context for how you benchmarked that to the 45% to 50% ORR. We ask because PACIFIC seems to be the best comp here where ORR was actually around 30%. So just curious to hear your thoughts on that. And then on follow-up, when were these assessments taken that were in the poster? And how does that length of follow-up so far play into your level of confidence in the data that potentially improving even further in Part 2? Laurent Levy: Thank you, Tara. Well, I think there are a few paper or historical control we could look at comparator for that. As a context, we are using the PACIFIC regimen in this trial and patients getting radiation plus chemo and if they do not progress, then they go to durvalumab. If you look at the PACIFIC paper, they start with 983 patients that received radiation plus chemo. And out of that, only 70% will be randomized, 2 patients in the direction of durvalumab, one with placebo. So there is in the evaluation of the response rate in the PACIFIC paper, something telling 40% -- 48% of response, but that excludes the 30% patients that have been not treated after that with durvalumab. So that's the response rate therefore after radio chemo. And if you look at the response rate post durvalumab, then it's going down, but it's going down slower than the placebo arm. And here, you find the 27% response that you probably mentioned. But again, this 27% response is excluding the patients that have been frontline excluded from the trial before randomization. So altogether, if we take 40%, 50%, that's what we can find in some other paper as what radiation plus chemo is doing for those patients and close to what they find as an optimization in the PACIFIC regimen. But I think that's just the first part. The most important part is how this evolves over time. Because what we see in PACIFIC, some patients did not get durva, 30%, and then the rate is going down over time. So I think if [R3] can provide a real local control, then we should see something different happening versus what you can observe with durvalumab. But this will be answered a bit later and potentially definitely answered when we will see the results of the Phase II beginning of next year. Operator: Your next question comes from the line of Clemence Thiers from Stifel. Clemence Thiers: Just to come back to the CONVERGE study. Full data will be in early 2027. Is there any chance you or J&J could file based on that study? Or do you have to run a Phase III afterwards? That's the first question. Laurent Levy: Thank you for the question. Well, first of all, we can talk for our partner. J&J now is running the CONVERGE trial and has the license on the product. So that will be their decision. And I think it's a bit early to talk about that. That may be a question we could ask when we see the data coming from the Phase II. But if the data are excellent, everything is open. But again, that will be a J&J's decision to move that direction or to do a proper Phase III after that. But we will hope for the best. Clemence Thiers: Yes. That was worth the shot. And the second question, in 2026, we'll have all those additional data sets from your IO study and MD Anderson studies. Are those the last ones in the sense that will you be after that at the stage where you again J&J decide whether you move forward with it or not? Laurent Levy: Yes. I think some of those trials have been completed like the melanoma cancer trial, the lung re-radiation and the last one, esophageal cancer. Just to know that we are now looking with MD Anderson as opening some potential new trial to explore new avenues, but that's something that will come a bit later. Obviously, out of all those trials, we got a lot of signs of safety, feasibility, potential good efficacy for the product. And now it's within the hands of the J&J, but also discussing with us about potential next step, but nothing that we can say at this stage. I have one mention to do, is to maybe take a particular look at the MD Anderson cancer trial about lung reraadiation. This trial, the recruitment has been completed last year, and we'll see the final data this year on more patients with more follow-up. I think this trial is very important because it's not like the same population that is treated in CONVERGE, but to a certain extent, could be seen as a surrogate of what we could observe in CONVERGE. So we will pay particular attention to this trial, but also we'll bring that to your attention. Operator: Your next question comes from the line of Jonathan Chang from Leerink Partners. Albert Agustinus: This is Albert Agustinus, on for Jonathan Chang. Congrats on all the progress. So my question also reflects on the CONVERGE data, is how do we extrapolate these results to your other ongoing trials and potential indications? And secondly, if I may, how do you foresee JNJ-1900 will be positioned within the landscape of non-small cell lung cancer treatment paradigm? Laurent Levy: Well, I think lung stage III cancer, like locally advanced head and neck cancer and other tumor are different because they are coming and they are in different organ, but they all share something is that if you can improve the local control and have a strong rate of response and CR, then you can deeply change the PFS and overall survival. And what our product does is improving the absorption of energy, killing more cells. And we know when you have a local disease, killing more cells may lead to more control. So that's the basic thesis that led us to start developing NBTXR3 and going into frontline treatment when patients have a local disease. And that's also what J&J is going after if we think about the 2 trials in head and neck and this trial in lung cancer. For us, it does establish the strong power of having local control transforming into benefit for patients. And starting from this point, then we could anticipate or imagine the diffusion of this product across different populations that are also getting radiation. But it's always pure to demonstrate that this work when local control plays the key role in the survival and quality of life of patients. So that's how we will extrapolate the results of CONVERGE, but also that's what we started to do with the randomized data coming from soft tissue sarcoma, which was a similar situation, even though this is really different. And that's a good start to any tumor type. And if we think about how to extrapolate to other indications, that could be a path. Now for lung cancer, there are many patients receiving radiation beyond lung Stage III. It is around 77% of lung cancer patients getting radiation. And not to mention that small cell lung cancer is also another indication where radiation is key. So we could imagine, but again, that will be J&J's decision to spread this product across different lung subpopulation. Operator: We will take our next question. And the question comes from the line of Swayampakula Ramakanth from H.C. Wainwright. Swayampakula Ramakanth: This is RK from H.C. Wainwright. I also have a couple of quick questions on CONVERGE. So in your mind, do you see J&J when they're spending time on both NANORAY-312 and CONVERGE, do you see them sourcing equal time for both of these projects? And additionally, does -- do you have any data from your partner regarding abscopal effect in the lung? Because injecting into lung lesions are potentially technically challenging. So how do we -- how do you and your partners see this being a successful therapeutic modality in the lung? Laurent Levy: Well, first of all, about the bandwidth or the investment in lung versus head and neck. I think a Phase III is always bigger than the Phase II. And in that case, that's a very big Phase III versus the CONVERGE trial. So there's much more people working on one than the other, which is normal given the size of things. But the attention is equally important from our perspective and what we can observe. And obviously, as I mentioned previously, the lung is a very important trial for J&J and also for us because if it does work, that's really opening a big market for JNJ-1900 or NBTXR3. But let's say that what we observe is they're pushing all front to make sure that all this could happen. Now on the abscopal effect, I think that's a big question. That's an effect we already observed that in melanoma patients, head and neck patients, some of the lung patients, when they have met with or without primary tumor, when we do inject one lesion and irradiate that lesion, we see a distant effect in the non-irradiated non-injected lesion. So that's something we start observing in many different clinical situations. That will be very useful to understand and to investigate when we think about metastatic patients. But for the vast majority of patients getting radiation, they have no met. They have a local or local regional disease. And here, local control is much more important than any potential immune response. And if we can provide it through local injection of the particle plus the radiation, that could be a win. And in the case of local regional when some of the lymph node could be involved, then we've seen in different trials now that we are able to inject lymph node on the top of the primary tumor, which could add also an additional immune response. But RK, if we just step back a minute, I think this abscopal effect or the possibility to trigger an immune response is really critical for met, as I mentioned. But also if you think about local regional disease where radiation plays a role, usually the local regional area is irradiated, which is not in favor of having an immune response because the X-ray, as we know and have seen, could kill some of the activity of the immune system. So here, the local control brought by physical treatment like radiation with the addition of JNJ-1900 is where we should play and where we should try to win. Swayampakula Ramakanth: One quick question on Curadigm. You did present some preclinical data previously. Now thinking -- going forward, since you also have collab MTAs with multiple parties. Are you planning to initiate an IND from the internal pipeline? Or do you expect some of these external collaboration partners to file first? How should we think about that program going forward? Laurent Levy: We are pushing both because we think building our internal pipeline will go through have a first proof of concept of this product into human, and that's what the team is working on, not only by manufacturing the product and starting pre-IND studies, but also designing the first proof of concept we want to bring to life. And if we think about it, as soon as we have established the safety and feasibility of this product into human, that's also opening many more combination possibilities with other products that are already into clinical development. So that will not only push forward our pipeline, but also will open many other opportunities for collaboration and licensing out. Operator: We will take our next question. Your question comes from the line of Kiara Montoni from Van Lanschot Kempen. Unknown Analyst: This is [indiscernible] on for Kiara. So for the J&J driven Phase II trial in lung, do you expect that J&J will report an interim before the readout in early 2027? And if they do, what do you think they will most likely disclose the ORR or the post durvalumab from Part 1? Laurent Levy: Thank you for the question. So yes, that's true. There are multiple readouts in this trial, different rate of response depending on timing, PD-L1 and also potential measurement as exploratory for other more systemic endpoints like PFS and OS. Now we can't talk for J&J. What we can say is what has been said publicly, which is the readout of the Phase II beginning of '27. But in between, who knows. Unknown Analyst: Okay. And on the MD Anderson lung reirradiation trial, you said you expected to read out in 2027. Is there any possibility you can narrow down on the timing? Laurent Levy: We filed for different abstracts. If first one accepted, that should be around the summer. Operator: We will take our next question, and the question comes from the line of David Dai from UBS. Xiaochuan Dai: Congrats on the progress. So a couple of questions from me as well. So just on the CONVERGE trial, so just thinking about the JNJ-1900, how do you think this early post-CCRT response we saw from the Part 1 could translate into durable load control and PFS benefit in Part 2? And I have a follow-up after that. Laurent Levy: Well, I mean, that's depending on how durable will be the response. But generally what we have observed in other clinical trials with different disease, when you start getting radiation, you usually get the optimal efficacy of radiation a few months after the end of the last session. Here, patients are going directly, I mean, rapidly into durvalumab. The good point is that, first of all, all of them went to durvalumab, which is not the case when you look at the overall population. And now we need to wait the next set of data to conclude on that. But if we believe of what we have seen previously in other trials, we should expect a much greater local control. And now we'll see how this potentially impacts a more systemic aspect of things for the patient. Xiaochuan Dai: Got it. Okay. And then just on -- for next follow up, just on the Part 1 study here, will we expect another follow-up of this data from the Part 1? And also for the Part 2, which we're expecting to have some data in early 2027. Could you just help us understand a little bit more around what's the sort of expected data readout? Would it be OR? Or should we look at PFS as well? Laurent Levy: I don't know. What we know is that all this that you mentioned are endpoint of the trials, but we don't know what J&J is going to communicate yet. Operator: Your next question comes from the line of Michael Schmidt from Guggenheim. Michael Schmidt: I had a couple more on the CONVERGE data from yesterday. Obviously, very interesting. Could you confirm whether Part 2 of that study is enrolling? Or are still patients being added to Part 1, sort of the safety lead-in component of the trial? Laurent Levy: Yes. Part 1 has been completed and the Phase II part, randomized part is enrolling since last year. Michael Schmidt: Okay. That makes sense. And then, yes, so just -- so you did note the sort of next update in early 2027. Is your impression that this is sufficient for your partner to potentially make a Phase III go decision? Or do you think more follow-up may be needed to look at things like DFS or maybe even OS to make that move into a large Phase III trial? Laurent Levy: That's a very good question, Michael. I think overall, first of all, a response in those patient population, if you find a high rate of response, then you should get an impact and a correlation with PFS and OS. I think the number of CR globally also could be a surrogate of that as PACIFIC did show very little rate of CR, less than 1.7% in the post [indiscernible] treatment. But globally, patients, if you look at the dynamic of the curve, they're relapsing quite fast in [indiscernible] arm and versus radio plus chemo. So I think comparing all those data, we can say if you beat that bar, then you move to Phase III directly, you don't need PFS, you don't need OS. I think that should be a mix of results linked to number of patients getting to [indiscernible] because usually 30% are not, number of patients getting response, number of patients getting complete response and then you can start following PFS and OS to see. But a combination of all these or just a few of them, depending on the magnitude could be enough. But at the end, that's J&J's decision to look at this and to take the path moving forward. Michael Schmidt: Okay. Makes sense. And then another one, I know this may be, again, difficult to answer, but what is your sense how J&J may prioritize other indications beyond head and neck and lung. For example, breast cancer is obviously a very big opportunity in prostate as well. And to what degree do you think they're incorporating data that's sort of coming out of the ISTs that have been ongoing? Laurent Levy: Well, that's a tricky question. We can't answer. What we can say is you can see the priorities of J&J in terms of indications like lung, bladder, head and neck and so on. So as you mentioned, breast cancer is not part of those priorities. Also, we have all the trials we've been running or are still running with MD Anderson that could serve as a base for expansion. But even though we have a lot of discussion with J&J's team about optionality, there's nothing we can say at this moment. Michael Schmidt: So we'll keep our eyes out for any other updates. Operator: [Operator Instructions] We will take our next question, and the question comes from the line of Shan Hama from Jefferies. Shan Hama: Just 2 from me, please. Actually, just on potential indication expansion on J&J's part. I know there's obviously not much you can comment on their behalf. But the indications that NDA is working on, is there scope for J&J to actually expand the [R3] program into those indications, so pancreatic, esophageal, et cetera? That's my first question. And then I can ask a follow-up after. Laurent Levy: I'm sorry, I'm not sure I got. The question was can they or will they? Shan Hama: As in, can they?, are they able to? Laurent Levy: Yes, of course, they are able to. And obviously, all the clinical trial we've been running serve really as a base for discussion with them, and they can. Shan Hama: Okay. That's clear. And then just actually on cash burn. So obviously, R&D has come down pretty sharply post the transfer to J&J. So what's the sort of steady-state annual cash burn we should assume through to 2027? Bart Van Rhijn: Thank you for the question. We don't provide specific forward-looking guidance to the individual years, and we refer to the cash runway that is in early 2028. But we have a very disciplined approach to how we allocate capital. So what you've been used to in the past few years, you should expect to continue to see from us. Maybe one high-level comment is that as the 312 costs have been transferred to our partner, Janssen, we should expect to see development cost on the new platforms that Laurent talked to. Operator: Your next question comes from the line of Clement Bassat from Portzamparc BNP Paribas. Clément Bassat: I have 2. First, I was wondering how much R&D you spent in oncology in H2? And how much was allocated to Curadigm just in order to assess the shift? And secondly, regarding the mechanism of Curadigm, my understanding is that with the Nanoprimer, we will reduce the effective dose level, but at the same time, we may also reduce the dose. So could you please provide some insight into the relationship between these 2 dose, if the relationship is linear or not? And if this could lead to narrowing the trend between these 2 dose due to the suspension of the liver clearance? Bart Van Rhijn: Let me try to address the question on the R&D spend and how that is proportion between our 3 new platforms. What I can share is that at this time, and this is relating to full year 2025, the spend on Curadigm has been ramping and should be in the low single-digit millions. Again, as we start to pivot and have pivoted meanwhile to these new platforms, that spend will obviously increase. But for the past year, it was a smaller amount compared to the total R&D spend. Laurent Levy: So to your second question about Curadigm, I think the answer is yes, there is a correlation, but will depend also on the need of the product. Let me try to get to that. So what the Nanoprimer does is by occupying transiently the liver, it will allow a second product to circulate more freely. So if this product had a strong accumulation in liver, but not much toxicity, what you're going to play on is the ability for the second product to circulate more freely and to reach other targets that will not be able to reach normally. But if this product has a high liver toxicity, would prevent him to be used at the right dose, then you will play more on the liver toxicity by preventing the accumulation while allowing some circulation of a therapeutic dose. But there's always a correlation between the dose of the Nanoprimer and the quantity that you will avoid to be captured in the liver and the quantity that will be allowed to circulate. And there is a link to that but different products will request different outcome, and that's where we're going to play A or B, meaning more efficacy or less safety issue. In some cases, we can play on both. Operator: This concludes today's question-and-answer session. I'll now hand back for closing remarks. Laurent Levy: Everyone, thank you very much. It was a pleasure, as usual, to talk to all of you. And I think that you are numerous today assisting to the call. It's a very good thing and hope to see you all in a short for more news about Nanobiotix. Thank you very much. I wish you a great day. Thank you. Bart Van Rhijn: Thank you all. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Artur Wiza: Good afternoon, ladies and gentlemen. I'd like to welcome you very cordially to the conference dedicated to the results of the Asseco Group for 2025 today. At today's conference, we will summarize our operations for the previous year, for last year, and we'll also convey information pertaining to the backlog for the upcoming year, for the current year. During the first portion of the conference, we will have the presentation. The latter portion we will invite you for a Q&A session. We have the CEO, Mr. Adam Goral, and we also have Rzonca-Bajorek, who is the CFO of the group; as well as Marek Panek, who is the Vice President of the group. I'll go ahead and give the floor right now to Adam Goral. Adam Góral: [Interpreted] I would like to welcome you very cordially. I'm pleased that we're all here together. And above all, I see in the first row, we see people who decided to be here physically in attendance. And of course, with full respect for all those persons who are participating remotely. So I'd like to welcome everybody very cordially. So Artur didn't emphasize that this is a special meeting because in a year, we Rafal Kozlowski will have to be here. And for me, this is going to be a totally new situation, of course, with the hope and looking to the future because I'm going to move into the Supervisory Board where I should be the Chairman of the Supervisory Board. And so Asseco will always be with me, and this is my entire life, of course, outside of my family, but I treat this company as a member of my family. I'm going to have to be vigilant because I want Rafal to be a leader with his attributes. He's a little bit different. We're different from another. Of course, I have a guarantee of one thing that he represents espouses the same values and that he's perfectly well prepared to run this company -- and I'm sorry for saying that saying that I believe that it was well run. But I think the company was in good hands and was well run. And having in mind that I have a good hand towards other people and is managed by really great people. And so we come here in great sentiments. And these sentiments, of course, are somewhat toned down because I would like for the world to look a little bit differently. And there's a lot of bad people heading up some company -- countries. And even though you have wonderful results, people are aware of their responsibilities, their liabilities, and it's a shame that the world is -- has much turmoil, but we don't have any impact over that. Today, up until now, the various wars have not obstructed us. I don't really want to talk about it. So we have our leader on Friday, I was talking quite a bit with [ son ]. And when we hear that 12 times during the day that you had to go into like the bomb shelter, then you become aware of what it means to think about a war. It doesn't matter who started the war. It doesn't matter who's at fault, who's the guilty party. We have to think about these people who are suffering in Ukraine and those people who are suffering war at the hands of war. And so these wars, I'm not going to say they are helping us or acting as a boost, I'm sorry, during the pandemic period, I had hoped that these times would teach us something that the leaders of -- the global leaders would understand, would grasp the concept that there's not that much that needs to be done in order for us to be totally disappear. They have to understand that human life is of importance. And so that's all the more reason to be disenchanted. But thanks to the wonderful work of tens of thousands of people in the Asseco Group. I'm able to come here today in convey wonderful information. And the previous year was a great year. It was a record-breaking year. And the net profit of PLN 1.139 billion. We have the successful sales. We were able to sell at a good price. And so we had basically 119% growth. And so we made these decisions because we thought that Sapiens should have a new impulse. And today, jointly with Advent, we want to make sure that this impulse will continue to drive us forward. And we hope that, that 18% will have a huge loss of roughly PLN 500 million of that EUR 1.139 billion is due to Sapiens. The rest, which is also record-breaking is linked to the organic growth that we have achieved. And so I'm pleased that we are well positioned in Poland and Central Europe, and you've been able to look at that, and we had a more difficult period. And I'm, of course, under a great impression that as we've been having seen the organization being run by Jozef Klein, our leader. And so for me, the test of his person as a manager is an exceptional year. This was the difficult time when those countries and we are dependent on government projects. It didn't seem that it wasn't spending money on IT and it seemed that some of the substantial EU funds that were being allocated to the energy sector and then Jozef's ambitions led to a situation. Well, it was a very difficult point in time for him. So I'm pleased that they were able to survive and this very difficult period, they were able to draw conclusions, and they were able to perceive the weaknesses of the organization, and they utilize that time in order to eliminate those weaknesses. And today, they have a wonderful 2025. And today, we believe very strongly that they will continue to prosper in 2026. So that group in terms of what's linked to Asseco International, we have reasons to be proud. And in these difficult and challenging times, our teams in Israel. This is a global company, of course, has done very well has coped very well. And so we've known for years that we have exceptional wonderful people there. I remember because I'm going to have a request when we talk about our stock exchange. I don't entirely understand this that we're not able to vote on that 1.5% for my team. So take a look at this. I was a person who was looking at the interest of the investors, the management and the people working for this company. And if I'm going to be in the [indiscernible] I'm going to be in the Supervisory Board, I'm not going to be able to -- operationally, I'm not going to be able to scrutinize these things. Ralph is going to do it, but these 95 people, for us, for the investors, this is the safety in terms of people fighting for the value of this company. And this is the time to encourage you to look at this vote. Once again, it's really worth looking at closely. Do you know why we've been able to achieve such a great success in Israel, the first thing that I did was I met with guy and I gave him a certain number of shares. Of course, in the voting, I wasn't afraid that he's going to be -- he's going to be the richest person in the world. Of course, I wish that to him. Look at the business we've been able to do there. Of course, those equities might not have been the deciding factor, but he had an incredible amount of motivation to run the company in such a way because we say that we're controlling some company. But in our area, there's no bonafide control as a leader, I'm dependent on thousands of people. In terms of how they're operating. And if that later would want to do something, it would be possible to do that legally. And doing this simple maneuver, we were able to achieve a very simple and straightforward objective. And so the $143 million has paid back quickly. And I'm pleased that our investment in Israel is the largest Polish investment. And so we've only got good experience under our belt here. And some of you had given us heatings, warnings, but they're going to try to, let's say, maneuver you and somehow do something. We have a wonderful success there. Take a look at this case and think about my people, please. Think about them who are totally deserving. Of course, they've created this beautiful history of Asseco. And this is not a salary for the history. There is a portion of that is remuneration for -- but this is also remuneration for what they're going to do in the future. So I'd be grateful if you were to follow and embrace my thinking, I'll give the floor to Marek, and we'll drill down into some of the details, and we'll talk about the individual results. And then at the end, I'll take the floor -- I go ahead and bore you a little bit more because I continue to think about the future of this company, and I'm going to tell you a little bit about how I see the future. So I'll give the floor to Marek. Marek Panek: [Interpreted] Thank you very much. So having in mind what Adam said that we still have the final section of the meeting during which Adam is going to want to speak to the future. I today will try to speak more succinctly and I'll take less time than usual, especially since the trends we've observed over the last 3 quarters were sustained and nothing happened, nothing extraordinary happened in Q4. And I think this -- so it wouldn't be necessary to talk about. Let's talk about the profits. So Adam mentioned the net profit, which is PLN 1 billion nearly PLN 140 million. But look at some of the other 2 numbers. So we have revenue at nearly 16.7 -- so it's PLN 16.780 billion, and this is a 12% increase year-on-year. And then we have operating profit, which is in excess of PLN 1.6 billion, and the increase here was 11%. As a matter of tradition, I will show you the split of our revenue by operating segments in terms of geographies. And you can see this is not a mistake. That all 3 of our segments were growing at exactly the same pace of 12% year-on-year. And if you start on the right side, Formula Group, which is the largest, and this is some 60% of our revenue, we've been able to achieve nearly the PLN 10 billion watermark. And then we have international, which is some 27% of total revenue in the group. So we have PLN 4.6 billion. And then we have the Polish segment, which is the Asseco Poland segment, and we have nearly PLN 2.3 billion in revenue. As I mentioned everywhere, we have across the board a 12% pace of growth year-on-year. We'll also show you the revenue by product groups. Here, I will not discuss this in great detail. You can see that all of our segments across the board are basically growing. In some cases, we're growing more quickly. In some cases, we're growing less quickly. All of the solutions that we have for public institutions, which represent 25%, so 1/4 of the total revenue of the group, we have very dynamic growth of some 15%. We're pleased with what's happening in banking sector from the very outset of our operations as Asseco. This is a very important and significant bulk of products or segment of products that we've been offering. So we have nearly PLN 4.7 billion. So it's more than 8% increase. And so all these things are pleasing to us. We're pleased with the diversification of our business. So the top 10 customers in the revenue of the overall group is a mere 12% of the total revenue of the group. And so -- so the largest customer represents 2% of total group revenues. So we're not dependent on any single customers or clients. And let me say a few words about our solutions for finance. We'll talk about the other segments as well. So we have across the group, some PLN 3.7 billion. We have in revenue, an increase of nearly 5% year-on-year. And so you can see in the Formula Group up until now, it was always the leader and was the major contributor of revenue in the financial segment. Now it's #2. And that is a result of the fact that Sapiens has been extracted because it was sold as was stated previously. And of course, this formula system segment is still doing very well. So it's nearly PLN 1.5 billion at 11% growth. Then we have Asseco International, which came in at PLN 1.6 billion, which is 4% growth. And we have Southeastern Europe and PST, which is our company in Portugal, which is operating in the Portuguese market. And then we have Asseco Central Europe. So all of these businesses are growing well. Then we have on top of that, Asseco Poland. So this segment, Asseco Poland segment has a 10% uptick in growth. And here, we're the market leader in terms of banking and lease companies as well as brokerage houses. And so we're very pleased because this business for many, many years has developed nicely. If we think about our public institutions, the growth is much more dynamic than in the financial sector. So we have a 15% increase year-on-year. So it's more than PLN 4.15 billion. And so we have the International segment. Well, for a couple of reasons, that's grown so fast because it's the Czech and the Slovakian markets. And as you recall, we had a stagnation there in previous years. We've been able to rebuild our position. And so the revenue is substantially higher. And the same is true in Southeastern Europe. In the Balkan Group, and so 2024 was clearly a softer year. And so we have experienced dynamic growth on this revenue. In Poland, our growth is nearly 20%. So we came in at PLN 1.2 billion in revenue. So in Poland, we are the leader in terms of our solutions for public institutions. We're a major player in terms of public administration for the health service as well as for the power sector, where our position is a leadership position. And so we're very pleased that the business has grown at such a fast clip. And then we have Formula Systems, which you can see is the major contributor to the revenue. In public institutions, it's seen 11% growth with revenue coming in at PLN 2. billion -- nearly PLN 4 billion. And the final segment that I would like to cover today is ERP solutions. So these are our businesses within Asseco International. So as a matter of fact, it's Asseco Enterprise Solution, ERP solution in Poland, Germany, Slovakia, Czech Republic, we see 8% growth and revenue over PLN 1 billion. You might have noticed that another line disappeared Asseco Poland segment. But this is the reason -- the reason is that DahliaMatic that used to be reporting to Asseco Poland was transferred to Asseco Business Solutions and now is part of the Asseco International segment. Therefore, it made no further sense to show Asseco Poland segment. In Formula Systems, we also have our ERP solutions at a lower scale, but we are very happy to see a 14% increase and revenue over PLN 6 million. We continue our acquisitions 2 slides to cover this story. We are showing all the acquisitions completed last year, Asseco Poland segment and Asseco International segment and Formula Systems segment likewise. That was the greatest bunch. Altogether, we had 13 new entries joining the group last year. So we were keeping the pace from the previous years. Every year, we have a dozen or so new companies joining the group. And we continue our efforts as we speak. We are scanning the market. We are speaking to [ content ] companies, and we are looking for the best match. We have definitely more selective approach. We don't want to just build our mass, but we want to have entities that have specific features in terms of products and competence that they bring to the table. And obviously, we have to look at the price that we need to pay and the return that we can get on each deal. Now when we look at the formula, I have to emphasize that it was a special year for formula systems acquisitions and corporate governance involvement. In addition to the acquisitions that they made, you may recall because we've mentioned that already in Q1, this year, we reached the sort of final line. However, we've been working on it since 2024, namely the combination and Matrix and Magic were joined as one company. So today, they are the largest company in Israel and one of the top 10 IT service providers globally. That was a major project, and it turned out to be very successful. We've already heard that Sapiens sale was a long project, a difficult project, but at the end of the year, very successful. And another sort of tier that we are building here, Michpal, that's the new company that was listed on the Israeli Stock Exchange last year. This is mostly HR and payroll solutions, software companies and service providers. So we are happy to embrace that because we see a lot of growth potential here. So we see a lot of good prospects for the future. Guy has a lot of ideas. He has a healthy and sound pipeline of M&A projects, and I believe that he will be delivering that step-by- step. Thank you for your attention. Over to Karolina. Karolina Rzonca-Bajorek: [Interpreted] I will briefly cover the financials. On the first slide, you see the key numbers. Marek mentioned revenue. We are almost at PLN 17 billion. And we remember that Sapiens was sold in December last year. So it was already excluded from the individual items of our P&L. So it was shown in one line as a discontinued business. Therefore, this is all comparable when you look at these numbers. It's comparable to the prior periods. So over PLN 16 billion of sales. Our own proprietary services PLN 12.6 billion and a nice growth of 7% in both items. And Non-IFRS EBITDA and Non-IFRS EBIT, 8% and 9% up, respectively, and it's PLN 2.5 billion for EBITDA and over PLN 2 billion for Non-IFRS EBIT. And Non-IFRS net profit is PLN 742 million and CAGR, the best of the past 5 years, 9% up. And for some time, we've been showing P&L items between the years. And here, we are sharing this information again. You may see that there is less negative impact of the currency exchange compared to the prior years. It is still a negative impact, but not major, PLN 48 million in terms of revenue and PLN 4 million in terms of operating business and Non-IFRS. We are truly happy about our organic results, PLN 1.3 billion it's ours organic sales. Across the group. And that was translated into PLN 300 additional million operating profit, non-IFRS. And acquisitions is PLN 452 million at the revenue line and PLN 46 million at the operating income, Non-IFRS. Net profit, Non-IFRS, we show which segments were the greatest delta contributors on an annual basis. And we can tell that Asseco Poland is doing very well. The Marek company is showing exquisite performance, but you may scrutinize in the stand-alone financial statement, minus [ PLN 11 million]. So it's a [ interior ] contribution from Formula Systems segment. The main reason is that Sapiens was consolidated over the course of 12 months. But in Q4, we had a first restructuring processes and the cost of that charged the result for the Q4. And Asseco International contribution was PLN 49 million more compared to the prior year. When you look at the entire P&L statement, and we are happy about the dynamics, 11% growth year-to-year revenue and proprietary software and services, over 15% Non-IFRS EBITDA goes up and 20% nonoperating profit, Non-IFRS and 11% the standard operating profit. And here, there is a slight decline when it comes to profitability year-to-year. But please note that it was just Q4. And the reason is in the line that you will find below and namely M&A. This is all one-off events. PLN 67 million is the write-off at Formula Systems for ZAP company. Well, they were not doing as well as we were projecting at the moment of the acquisition. So we decided to actually write off that asset. Some costs were generated by the transaction that Marek referred to. So the merger of Magic and Matrix is PLN 67 million. And then we also have some write-offs from other companies and PLN 15 million was our own project, our own investment, goodwill and assets in Nextbank company. Now what is happening below the operating profit line? Well, you can tell that we are efficiently managing our debt. We were decreasing debt year-to-year. Interest income, the cost of interest is less year-to-year. And the currency line, it's mostly the formula. Formula is reporting in [indiscernible], but they were paid for the Sapiens deal in US dollars. And the translation of the currency balance, even with a small exchange rate decrease generated major foreign exchange impact. Well, we may say that this is just an accounting impact. M&A, I've already covered. And for some time, we've been affected by hyperinflation, and that is Turkish business. And the share in profit of associates looks very nice, but this is formula who is the main contributor. We had the indexation of the revaluation of the -- our investment in the company that was doing SPO, but this year. And therefore, we have the step-up and therefore, we are showing better numbers. In addition to that, we have profit on the discontinued business or discontinued operations. So this is the accounting result that we show on sale of Sapiens, PLN 500 million. This is what we show in the current report, and this is distributed to the shareholder of the dominating company. Now the Sapiens Group. I think that we need to align our projections when we look at the operating revenue and operating profit, well, the Sapiens was a major contributor to these lines. Therefore, for 2026, because of the sale of Sapiens Group, we will be probably PLN 2 billion short in terms of revenue on our operating business and probably around PLN 350 million profit on our operating activities. So Q4 was really charged with the cost of the sale transactions at the cost of restructuring. Therefore, I would rather look at prior year instead of Q4 2025. So that was the explanatory note to Sapiens. Now what is happening across different companies. As I said, we are truly happy to see the performance of the Marek company. In terms of the dynamics and profitability, both were very, very decent. Your notes, analytical notes, expressed some surprise about the net profit contribution. Let me just explain. But when we speak about deals like the sale of Sapiens, the taxes such as CFC are actually booked to Asseco Poland line. And therefore, it is really a charge to our net result. And this is a one-off effect. In case of the Sapiens sale, the Marek company had to pay -- or had to show almost PLN 24 million of additional tax, namely CFC. So the effective tax rate for the Marek company seems to be surprisingly high, but this is the one-off effect of that transaction. In terms of other operations in Poland, Asseco Data Systems is improving their performance, and I think that they are doing quite well and other major companies seem to be in good shape likewise. Now Formula. Here, we decided to show Matrix and Magic together in one line. And as Marek explained, in February, the merger was completed. Right now, they are going to operate as one company. Magic was taken off the stock exchange. It is actually the subsidiary of Matrix. Therefore, you need to look at them as one group. And in terms of other companies, we have consolidated Michpal that was listed on the Israeli Stock Exchange this year. And we have a new subgroup under Formula. The working name or actually the formal name is Formula Infrastructure. Now Asseco International segment, we are truly thrilled with the improvement that Slovakia demonstrated. Adam highlighted that. This is both true for the core business, the public sector business, our health segment in Slovakia. It seems that they really rebounded and they improved substantially. But it needs to be highlighted that in this line, we have our ERPs. So excellent performance of Asseco Business Solutions. We also have major improvement in profitability in Germany. So that's another reason to be happy. And now the Southeastern Europe -- so great performance in dedicated solutions, major improvement year-to-year, very good result in the banking sector. And the payment segment, very decent, too. We need to remember that they are actually charged with the write-offs in India. I believe that [ Piotr ] mentioned that during the conference earlier. And there are some risks that emerged in that segment because of the loss of one of the Turkish customer and the potential loss of another customer in Turkey. Both of them are actually switching to in-sourcing. Therefore, they will drop from our customer portfolio. If we look at cash, I think this is something that has been observed. We have very robust cash flow across the year in Q4 as well. And this is true across the board, across the group. So it's 122%. And if we look at EBITDA, this is something that we've been displaying for years. And Asseco Poland this is 124% it's 109% in international and Formula Systems, 128%. So we had specially good cash flow in the Matrix ID company. And let's take a look at the balance sheet. And you can see that the header is more up to date than previously. And you can see the amount of cash. So it's more than PLN 7 billion on the bank accounts of the companies in the group. and Asseco Poland, which is the mother company and from the sale of treasury shares, it's more than $1.5 billion. Then you have Formula Systems. Here, we need to remember that more than $750 million was obtained from the sale of Sapiens. And this is also on the accounts of the company or in the segment at the end of last year. If we look at the proportional recognition, as is the case in the full recognition, we have certain reconciliations year-on-year. And so we can look at the contribution of the organic businesses and so PLN 734 million and then EUR 110 million from acquisitions. And then if we look at the operating profit Non-IFRS and so we have 3 from acquisitions, PLN 216 million from organic results. We have to remember about some of those impairments. I talked about them previously, the M&A adjustments. And so they're in this proportional recognition. What's also important here, as I've mentioned, that some of these impairments are through Formula, but we also have the Asseco Poland as well. And if we look at the proportional results, we can see that the growth rate is better and the profitability and the improvement in profitability is better. And this is a result of the fact that the Polish segment and Asseco International saw market improvement. And we also show the main companies. I don't think I will discuss that because we've already discussed that. And if we think about the proportional recognition of cash flow generated, it seems that it's very decent, 27%. And so we have 124% in Asseco Poland and 114% in International and 127% in Formula Systems. And so then we have the balance sheet set up on proportional recognition. So the cash available to the shareholders or the holders of the parent company. And so it's PLN 3.3 billion, then EUR 1.5 billion in Asseco Poland and then Formula and Asseco International. So this information has been indicated that a portion of this will be paid out in the form of dividends of some $200 million has been communicated and that this will be paid out in the formal resolution of the shareholder meeting. Well, of the Board of Directors will be made after the -- this will probably be in May once the financial statements of Formula Systems are approved. Then if we look at the backlog, I think we've got a satisfactory growth rate. This information coming from your releases. And so -- if we look at own proprietary services and software and 19% in Asseco Poland is like 17%. And so it's more or less equally divided on public systems and financial sector. So hence, we've got 9% for Asseco International and 14% in Formula Systems. And if we look at this on a proportional basis, we have 16% in Asseco Poland and 10% in Asseco International and 14% in Formula Systems. And then I mentioned the dividend. I said that we have very decent cash flow, and we have a very stable position -- cash position if we look at our balance sheet. And these robust results give us the ability and the wherewithal to pay out a dividend of PLN 1.051 billion, which translates into PLN 13.05 as a dividend per share. Of course, treasury stock doesn't participate in that and 3% of our shares are in the form of treasury stock. And so the PLN 13 per share as dividend per share. And if we look at the consensus opinion here, it's probably around PLN 11 was, I think, the figure that was stated in the consensus. Why did we make the decision to pay out PLN 1.51 billion. The first tranche would be paid out in terms of the cash proceeds from the sale of treasury stock. So we had received more than PLN 1 billion. And so PLN 500 million with plus would be a little bit -- that would be half of that would be from the sale of treasury stock and the rest. And so we took a look at the free cash flow. We factored in on our balance sheet. We looked at the results, and we came to the conclusion that all of this taken together would give us the ability to pay a higher dividend from our current results and cash flow, and that's what fed into this defining the specific figure or calculating the specific figures. Adam Góral: [Interpreted] So thank you very much, Karolina and Marek and my friend who's been listening to us that these are wonderful results, and you guys are even smiling, so I'd like to apologize. It's because of my gravity because I was talking about the world itself. And let's forget about the world for a little bit. Because we have enormous reasons to be joyful and satisfied because these results are wonderful, and they're linked to our efficacy, to our wisdom and to the cogent execution of our strategy. These are things that have happened. I've never lived in the past. So only future is of interest to me. And so of course, we're living in interesting times. So there's the AI battle, which is not easy to monetize in terms of what -- it's not having an easy go at monetizing what is achieved up until now. So this world is giving us wonderful opportunities, and new hopes. We have this battle for the world in terms of AI with us. Of course, this world isn't monetizing things because they're thinking that we're operating too slowly and informing the world, quite the contrary, that we do appreciate what AI is doing because we've reconciled ourselves that this is happening with the tools, but there's a large number of our people who are following this world or tracking that world that we're going to utilize that in a wise fashion. And Asseco's strategy is unchanging. [ Rafal ] is something that will continue along with my new wonderful partners, and we agreed that at the outset, we will continue to make sure that we're going to specialize in the producing software and services related to the software we're going to write. And this is going to be the predominant or prevalent portion of our revenue. And where it's sensible, we won't, of course, resign from integration. We want to make sure there are several regions where we are very strong. We don't want to lose those footholds. We will continue to build and make sure that we're building our sector position, sectoral position. This is something that I'm very proud of. In the near future, I'll have a meeting with my teams responsible for the various sectors and each sector is coming in with its vision for the upcoming 3 years. Of course, our strength is [ individually ] our knowledge of our customers, our customer knowledge and our customer knowledge is something that's been proving its position, its importance in Asseco for some 35 years. So I've been the leader for some 35 years. So this year, we're celebrating the 35th anniversary. We're not going to make a major celebration as a result, isn't that true? But it's a wonderful Jubilee celebration. And the fidelity in terms of our education, the awareness processes that customers utilize. This is our greatest value in the marketplace. And having in mind these new times, well, our fortune is predicated upon the following that we are present in many institutions. Well, these are nonstandard solutions. So AI trying to learn those types of solutions is something that will take a lot more time for that to be replaced or for that to be done. And so this knowledge that we mentioned on the first slide in terms of the teams of people, we talk about our human intelligence. This is going to drive the future of the company. And here, we have an advantage. And I'll show you another slide in a moment. We talk about our experience in a given area is also a great source of value. On top of that, we are utilizing and we are utilizing AI. I will show you where we are because we've made enormous inroads for many years, we've allowed ourselves to be dispersed. We've been a little bit chaotic. So 1.5 years with [ Garrick Brown ] who was -- has been running business intelligence for many years in a wonderful way and in our business division. And so we've appointed him to be a leader in terms of AI. And then I'll show you what we've achieved thus far. Our goal, we want to utilize these tools to enhance the quality of our operations, our activities. We want to be more efficient. We won't use them to restructure. We want to do more with the exact same team. That's our concept. And I'll give you some evidence that we are far along the path in terms of implementing this concept. So in some cases, we have a little bit more time as opposed to those areas where the standard plain vanilla solution is the name of the game. So when we talk about the learning process, that standard, that plain vanilla approach for those companies that are selling the plain vanilla approach, this is going to be something that's going to be precarious for them because those companies will have greater problems. We -- by utilizing our tools wisely, we're going to speed up the pace at which we're utilizing those tools. So our sectoral knowledge, which is a type of capital, this is an edge that we hold. So we have more than 30,000 employees I don't like the word employees, but that's what we wrote on the slide because these are my business partners in some more than 50 countries, the knowledge about the banking sector, about the health care sector, about the government sector. And we have people from various countries. No country has been capable of creating a solution for the government that would be a plain vanilla solution that one size fits all. This gives us some time to learn these AI tools and utilize them at the right point in time. So 12 years is the average seniority in Asseco Poland, somebody could say, well, you guys are old. Well, take a look at the last item, more than 8,000 people applying to participate in our internship programs in 2025. So in the on-boardings, we need these young people, and I convey that to them. I impart that knowledge to them. We can be -- I've never lived by success. I only see problems, and I'm interested in solving problems because I know that we're going to be better as a result. But if people are, let's say, somehow have -- they're just quite. So we're bringing on board these young people. So 12, 15 years ago, I delivered a lecture at the Warsaw University where we're being promoted and touted and Artur hadn't yet joined us. And I was showing thousands of articles, lots of publications about us that everybody knows everything about us. And I was asking the most outstanding IT experts at the University of Warsaw Do you know something about Asseco? And they didn't know anything about Asseco. So I'd like to thank Artur here. From that point in time, we've made huge inroads because our brand recognition that the young people want to join us. And we have young people. Sometimes I'm surprised they want to learn COBOL because we have solutions at PKO BP, which is a COBOL solution. And so I'm pleased to see that young people want to learn COBOL. So you should learn it, but you should make sure that you're diversified in terms of your knowledge business. You can't lose from sight those tools that are timely today. And you have to have that knowledge about other types of tools. And so you should take pains to ensure that you have those things mastered. So that's why I'm calm at ease that this company is going to be healthy, but somehow not entirely quite, not calm. We're #1 in Poland and Europe, many countries. We always talk -- say one thing about that, but the other talk -- the other things we talked about in 10 years, we want to continue being a wonderful company. We want to be a competitive company. Of course, I fully believe that we will be such a company, and that's clearly the case. Why am I trying to be reasonable about AI? As a businessman and entrepreneur, I've been through a time when IT was about distributed architecture. We were one of the very first Polish companies that were centralizing IT systems. And some people were saying, "Oh, you will get lost, the Polish system will never survive." but we made it. We were able to centralize whatever had to be centralized. And then there was a moment of the Internet frenzy. Unfortunately, we were not the main players in that field because we didn't offer the tools. But please note that we were able to grab quite a place for ourselves and build it up. And then the cloud came up. And from the very beginning, I was cautious about it because cloud mean when you have a public cloud, it means that you give single individuals huge power over everyone else. And today, I'm really happy to see the Polish government taking measures and looking at the local content. This is what we are really trying to do. Other countries have done it earlier. I've been fighting for it over 30 years because I've always been of the opinion that Polish people should depend on themselves or [indiscernible]. Let's do it the same way other nations do it. Today when we look at our Diplomatic Corp and our economic diplomacy in different countries. I also noted a major progress. You can actually rely on the Polish ambassadors. They really want to help you. And it started back when we had the first government of Civic Platform and land justice was keeping it up. And now the coalition is doing it again. We have great ambassadors for our beautiful growth and development. I'm really proud that Artur is actually setting up the meetings and people show up. People want to help us sell because they show that we were able to grow. And I know for a fact, but if we take good care of all these things that I mentioned, we will not get lost in the new world where the AI becomes a major player. Now look at [ Adam Goral ] and his team. In June last year, they made a promise, Adam, in December, we will cover your entire internal production process with AI solution. It's been covered. We have been implementing it internally. No not much is going to change with our customers because when we approach our customers, we want to solve their core problems. We don't talk about the products. We say, okay, we help you increase your sales with IT solutions. A we enhance your security or we help you control and curb your costs. So we sell that. The tools are secondary. Why am I saying that we are cautious and we try to be wise about it. The only value that we truly have is our customers and the value that we are able to bring to them. If the customers are disappointed with the solutions that will be driven by AI, we will be doomed. And some AI-based solutions are not stable, are not mature. So this cautious approach, but I'm advocating here. Is something that is not appreciated by the evangelist of the new tools. They think that we should take a different approach. You may have noticed, but there are other peer companies that are similar to us, and they've been dropping in value 20%. This is like pressure on us to get our act together and act faster here. But I have a message to everyone who wants to make money on AI. No worries here. We are going to do it in a smart way. We are going to take advantage of everything that you have developed there, but we will do it in a way that brings the real and true value to our customers, and we are not going to experiment on our customers. So the entire AI process is somewhat atypical for our organization. That's the way we do it. We opted for the federated model, and this is how we do our business. We really wanted to enhance enterprise in all our locations. We didn't want to kill the local spirit. So 3, 4 years ago, we worked everywhere on these themes. Today, we are trying to integrate that and centralize that, not to overlap and double the costs. We are trying to develop the model where Slovaks do not feel fully dependent on Poles. We want to make sure that Balkans curb some room for themselves. And I believe in that model. So the advantage over the companies that have holdings is such that they have to actually scrutinize each of their group companies. They didn't integrate it. But we are pretty well integrated across different sectors. And therefore, once we have AI solutions, it will be much easier for us to implement that than for those who have completely distributed and dispersed business. Therefore, I do have faith. I think that this is my new passion, and that's something that we are going to deliver. I don't want to bore you with the stories of all the sectors that we support and cover. I'm proud of the leaders we are disruptive, but in a healthy way and our ambitions run high. But there are 2 things where my ambitions have not been met. One is cybersecurity. We have a small company concept, and we are not yet happy with them. They are not efficient. Despite the fact that they have smart people on board, they can do a lot, but we are honest about it. We haven't been able to develop the business model that would be fully aligned with Asseco philosophy. And another area is solutions for defense and armed forces. And we have very strong references because we are supporting Frontex. But nevertheless, something is missing here. I believe in my leaders, and I believe that we will see some progress in these areas. Right now, we have a great project in Togo on the radar. You may remember the project that we successfully completed during the pandemic in Togo. We have a Togo company shared with the government. Togo is a very pro-European country, and the leaders are very well educated. And I'm really thrilled because we signed a contract for the development of the system for the Togo Armed Forces for their army. So that also has to do with the cybersecurity and solutions that address the needs of the armed forces. But now we are also trying to find a good partner for cybersecurity business. We are looking for a company that would be better than our current capabilities. Today, we are talking to a company that is of great interest to us. But at the end of the day, there is a price. You pay for the history, but you are buying the future. So we have to be reasonable about it. So this is something that I'm going to really look at and take good care. I think that in our countries in Eastern Europe, these areas have not been truly developed yet in terms of business. I believe that if we find the right leader, we would be able to build a very strong regional position. So that's what I have in my screen. Okay. So once when I am going to be on the Supervisory Board, I'm really going to harass -- sorry for my word, but everyone who will be responsible for these areas that I have just mentioned. But they know how I handle that. I have a lot of patience and -- but I believe that we will be able to build a new position for our business. And the time comes when we have to assess our partnership with our friends from the Netherlands. I'm saying that they are our friends. It hasn't been a long time, but I have to say that we are really pleased I am grateful. Probably the transaction would have never occurred if we were not able to keep the Polish control, so to speak, in terms of the power and being able to decide about the strategy. They come from the background that has a different strategy. When we were buying companies, we were integrating and building our integrated position. Their philosophy is that each company that they acquire, they have as a separate company within the group, and they actually have a separate settlement for each investment. This is a different approach. But now they are looking at the way we are doing it because they truly appreciate the fact that we are in a very special point in time. AI is definitely affecting or impacting our world and our companies have to respond adequately. And I would like to really acknowledge our gratitude to them. I would like to thank them for their openness, for being so generous with their knowledge, the expertise that they have with acquisitions and with handling of the companies once they are acquired. They also have a lot of expertise in finance management. So I have to say that they were really open about it. We were actually borrowing some of their solutions and methods. Some KPIs that they have been using. This is not very surprising to us because they were looking at cash flow, and we were also very mindful of our cash flow. For them, cash was #1 and so has been for us. But they also have other KPIs that really help, but they keep people motivated. They also have KPIs for software companies that are able to identify certain weaknesses. We've been also looking at that, but I'm really happy that we were able to tap into the expertise of these KPIs because to be honest, we were relying more on our intuition here. And based on that knowledge, I think that Rafal can claim the greatest contribution here. Asseco growth. And this is the project that started a lot of commotion within the group because everyone thinks, okay, we've been doing it for years. We know everything about software. But suddenly, it turned out that others approach the same thing from a completely different perspective. So I have to say that it was a very informative and educational experience. And I really wish that we would have this 1.5% approved. I don't feel sorry about the 3% that I didn't get, although they told me openly that Adam, you have to get the 3%. But I say, okay, I can go about it because otherwise, it's like not appreciating the succession that you need. There is a change in generations, right? If you've been doing business with someone and they always deliver and never failed you, you really want to continue doing business with them. So in my generation is still there and is still quite efficient. Rafal has his own peers of his own generation, and he's navigating that very well. But my role is to make sure that we have proper continuity with this succession. So they came to us and they said, well, 3% is the right way to go. I told them, look, our market is not really ready for that. So they were disappointed that we were not able to take a good vote on that. So they don't understand our mindset and our investors. But they continue to respect our country and our market and our capital market. And we believe that together, we were able to vote in the favor of this 1.5%. Once we finally close 2025. Now 2026 makes us optimistic. I always say that it's great. I always say that we are good. And Artur was saying that we are phenomenal. We were great. We were phenomenal. I've already said that on several occasions when I was speaking about our company and our business. So I've been learning too. So very optimistic. Today, journalists were asking questions. They were saying, Adam, we would like to meet you again. I said, look, now Rafal is the key man. I am a very open person. I think that Rafal is more restrained. But if he's more restrained make sure that he's more down to earth, because media has never failed us. And even if I was saying way too much, they didn't publish everything when I said afterwards that, well, perhaps that shouldn't be published. It's not very much shame of that, but we are just humans. And to rank people who are onboarded in the company, I always tell them, look, we don't have a single individual in this company who has never made any mistake. The shame is to repeat the same mistakes again and then to lie about it. If you made a mistake and if you lie about it, then as a result, 100% can get sacked because of it. If you don't lie, if you're open about it, everyone will help you repair and remedy your mistake. That's the way we need to keep it at a [ side]. We have to be positive. You may say, okay, it's hard, but you have to multiply it by 10, saying what you can do to make it better. We are critical, but not in terms of complaining, but we are critical in terms of, okay, that needs to be improved. This is what has to be done about it. It's not about just complaining and saying, I don't know what to do about it. And we are not afraid to make mistakes. And we believe that customers are definitely sacred. They pay our bills. So if something prevents us from providing good service to the customers, we have to fight with that. You have to show it to us, but this is wrong and young people are coming full of power and energy. I love the onboarding experience. I always tell them that they have to address me as Adam. I have a great assistant and she's 24 years, and she's addressing me Mr. President. And I say, look, one order that I always give, I'm Adam. Look, I'm not saying farewell. I'm not really leaving for good, but I'm -- it will be tough because I've always loved meeting you. So I don't know. I will have to learn what to do not to get into Rafal's way. Rafal is definitely sharing and representing the same values. I know that he's prepared. He knows everything how to do the job, but he's a different person. I want him to be himself. I just cannot get in his way. And I know that things will be fine. And I would like to thank all of you for still coming to our meetings because we've been together on so many occasions, but probably you don't find me surprising. I said at the beginning that there are wars out there, and this is not a reason to be happy. But then there is another aspect. It's important to actually speak to people face-to-face. The more the people we have in the room, the merrier it is. It's easier to smile when you have real people sitting in front of you. I know that we have 100 people who are watching us online, but those who came here and are with us in person, it's really nice. Well, perhaps for those 100 that are just watching us online, we were not top performers. If there is anything we need to improve, please let us know. Operator: [Interpreted] So after this wonderful presentation and summary, we have the opportunity to move on to the Q&A session because there are questions coming to the forefront from some of our participants, our online participants. And so the idea is we'd like to move on now to the Q&A session. And at the end, we'll wrap up by bidding ado. So let's begin with the first question in terms of this year's recommendation for the dividend. Should we treat that as an extraordinary dividend? What is the dividend policy for the upcoming years? And in subsequent years, should we anticipate that there would be a higher amount or quantum of transfers to the shareholders? Unknown Executive: [Interpreted] If we will not acquisitions are still our passion. It's more difficult to buy things. There's an enormous amount of competition. We have certain boundaries. The only limit, I think I mentioned that in terms of relations with our new partners that the decisions, acquisition decisions, we make those decisions together. This is a limitation for Marek. This is something we wanted. We wanted to buy things at the optimum price. So we've had major success even if we were a little more intuitive than our new business partners. We've been very effective. I would like for Marek's team to have access to knowledge about how others do that. And I'm pleased that we have that access. So Marek has several potential acquisition targets. We're working on that now. But in Asseco, we always want to buy for organic growth. That's our obsession. One of the very kind journalists, Adam, you know you had Balkans, other areas, but those were different times. At that point in time, we were buying companies at normal prices. So today, if somebody is coming forward to us and we have tens of people, business owners talking with me per annum. And so Marek, of course, is talking with them because Marek, of course, introduces me as well. And so somebody is coming forward and what they've created, which is far away from our standard is pricing that at a multiple of tens over the profit, but they don't want to buy the brand. And I'm not interested in that because we have -- we can pay a lot for the past, for the history. But the fact that we're going to build the future together, well, because if you're using a very high multiple, let's say, 30 or 20 or 40, whatever, then we all understand what that means. And since there's a lot of competition, there are funds out there that have a pressure to spend money and Asseco is not going to participate in that type of battle. We want to attract business owners who understand that based on what you've created in Poland, you can create a wonderful European position because we've proven that we're capable. Our model has proven itself. We know how to attract business owners from other countries. And so if we can find partners like -- and we're looking for those types of partners and hypothetically, we have them, -- but of course, we can always haggle a little bit about price multiples. We are buying -- not to buy. We want it to be effective to generate a return. And jointly with our leaders, we want -- we're going to give them a lot of authority to build things. So if we don't have those type of projects, you can always count on a hefty dividend. And of course, if we have those type of M&A projects, then we won't have that cash. And so the dividend will be a little lower. And so this is a question to our colleagues from Business Solutions. In Asseco Business Solutions is the biggest impact of the national inventory system KSeF was it exerted in Q4 2025? Or will we see it in subsequent quarters? So perhaps I'll field that question because I'm in the Supervisory Board. And I think I might not be entirely precise. I think we can count on KSeF, this national invoicing system. I don't think I'm apologize for saying perhaps I don't know the figures. I don't think it was the biggest quarter for us, Q4 2025. So at the beginning of 2025, we were counting on the national invoicing system. The results were phenomenal because all of you in ABS are proud of what we have done. What Rafal did on an international basis, that integration of our teams with Germany, and Germany is doing very well and competing with Poland, trying to catch up. And of course, this will take a little bit of time. And so we're working strongly on Slovakia and Czech Republic because we want to have integration, I believe in that strongly. So I think in ABS, we will continue to deliver results through the national invoicing system,. And if we talk about recurring revenue, and this is something that's been prepared that we're going to have increase in recurring revenue. For people who might not know the Polish market, today, we have the opening the next wave of companies that will utilize the national invoicing system called KSeF. And so those companies, there's going to be many more companies starting to use that. And so this is coming down. It's going to be applicable to medium-sized companies and smaller companies. What are the problems with implementing or adopting the share system? And what are the obstacles to implementing this program? So based -- this is a little bit of gossip. Basically, what I'm hearing is as follows: the open-end pension funds, we can't give anything away free of charge because we're paying for the past, so we can't vote in favor. So I can embrace that -- I can accept that opinion. But I'm asking these OFEs for them to think about this because even if something is so highly regulated, that's against the development of the Polish capital market, and I'm always going to be an advocate because had it not been for the Polish Stock Exchange, we would not have moved for it because in 2024, nobody would have lended money to Adam Goral for his -- to build his fantasies because I wouldn't be able to prove to any bank in 2004 that I was going to be capable of doing something had it not been for the Polish Stock Exchange. There would be no Asseco. I'm sorry to say, I regret that we don't have a sufficiently large number of IPOs and business owners have started to stop seeing that there's opportunities linked to being on the exchange. So like PKO BP, baby was waiting for us with a credit to when we wanted to buy back shares. Well, the times are different nowadays. And we have to remember that times do change. So of course, I understand the regulations. Well, let's change things that are illogical. My friends from the Netherlands and Canada linked to Constellation, they don't really understand what's behind this because for them, the fact that we will vote this through, well, it's not a guarantee because we're making decisions together in fact. The fact that we voted through gives greater certainty to all of us as investors. So I would precede those. We understand those who can't do it because of the laws, but I hope that we'll have people, if we looked at the results of voting, I was nearly satisfied. We were only missing some 700,000 shares. So that's not very many. So maybe somebody want to come to the shareholder meeting, we're going to vote on that. And then we could vote it through. Let me tell you, honestly, I don't understand why they're behaving this way. We, as investors, why don't we want for one group of Poles that have worked hard and toiled hard for them 95 people for them to receive a total of 1.5% of the company. Of course, 1.5% PLN 200 million. Of course, it's PLN 200 million. That's 95 people that will be the recipients. We haven't -- we're not creating [ oligarchs ]. We want people to have interests aligned and be participating in the risk we have. And if we want to be active on the Polish Stock Exchange, if you want to have more IPOs, we have to have and utilize mechanisms that are utilized on mature stock exchange. I'm not sure if this is of importance, if it will have import. We've been -- we've received rewards or awards by like, for example, the Parkiet newspaper that gave us an award for the growth we've been able to achieve in terms of our market cap and so on and so forth. But I also asked and perhaps these words will exert an impression on somebody and they will vote through proposal through. Well, people are for those person, we want to take care of the stock exchange. The people who are taking care of our business interest, we want more and more of these people to think about the interest of the investors for them to buy for the value of the company and the shareholder value. Operator: [Interpreted] The next question, is it possible to think about the sales of the -- remaining 18% shareholder -- share stake in Sapiens? Well, you remember that after the sale of Sapiens, this is a strange case. We lost control because we sold almost all of the shares. We hope that we have an 18% minority stake, which we hold indirectly in Sapiens. Unknown Executive: [Interpreted] And so this is a good position to think about how to earn thinking about the new shareholder, what the new shareholder is doing in Sapiens, what the restructuring processes are in telling, and we surmise that advent because that's a new investor, if it makes the decision in a couple of years to sell Sapiens, then of course, we will, of course, join forces with them in that sale. Operator: [Interpreted] The next question, what will you earmark the money -- the proceeds from the sale of Sapiens in terms of -- because only a portion is going to the dividends. Unknown Executive: [Interpreted] But well, we don't have the right. You know Guy, even though he was started as a manager, we gave him shares. He's an investor. He's a business owner. He's an entrepreneur. And please note that everything that he did was with our consent and he's nearly made no mistakes over the last 16 years. He was buying at the right prices. We've all forgotten because you were -- perhaps you were right. We were buying shares in the holding, which was running a company that was slightly lost. This is not the Sapiens that was sold just recently. This was not the Magic. This was not the Matrix company. All of that was growing and expanding, not talking even forgetting about the new purchases. So in terms of investing in running these type of companies, he knows and he's very cognizant of. He knows it very well, and he talked -- he didn't give me much time sometimes for some decisions. That's true. But I always had that time to make a decision. I received the materials that were needed and so on and so forth. I continue to believe in him, and we're going to pay out a very hefty dividend. I think we can officially say -- so it was already announced at $200 million. And so we're also counting on a dividend. Well, Guy is working how to neutralize this fact, the sale of the majority stake. He has ideas. We won't talk about those ideas because I analyze this is a new topic in terms of building a position in a given area is still within the framework of IT. He's not running into other areas. And initially, this is something that really appeals to me in Israel. So we wish peace to that corner of the world. We hope that peace will be achieved. And major investments are in the works, infrastructural investments. And we would like to have a company, a group of companies prepared to participate in these projects because we have a very strong position there. We haven't agreed on this, but if there were no interesting targets on the marketplace to purchase, well, then we can always buy back some shares in formulas, we can increase our shareholding. We have some opportunities. I'm not saying that we as Asseco, but utilizing that money that's there. So we can have different types of ideas. Today, we're not being precise on that subject. But I wanted for this decision to be a joint decision about Sapiens because we were of the opinion that we were coming close to a wall that we might not have better ideas. And looking at Advent we're learning a new approach to these type of situations. We believe strongly that Advent is going to be effective and that our 18% stake will have the same value of what we sold. And -- this is something that we wish to those people who are now managing. We wish that from the bottom of our hearts. Operator: [Interpreted] The next question is about TSS and Constellation as your potential competitor in M&A in terms of consulting on M&A. Is that something that's beneficial to Asseco? Unknown Executive: [Interpreted] So Marek, he likes to argue. So this is my area. And of course, we're competing with TSA in Constellation and M&A. And that's not changing after the transaction, but we have written down what we're going to do together and how we're going to behave if we identify a conflict of interest. And so betraying what it looks like from the kitchen. So if we identify that there is a conflict of interest that we're competing on a given project, then we won't engage in these type of consultations in that case. So even members of the investment committee from the TSS that would not participate in these meetings. They would not have any role to consult on those projects. And so we can do that according to our own recognition, according to our best knowledge and our experience. But this is an area where there is competition. Well, this is high business culture. somebody might think about it whether or not you needed that. But take a look, had we not been together. We wouldn't know anything about it. We would compete with one another anyway. Today, I wouldn't preclude a situation, in fact, that we will not want to buy something and we'll inform them of that fact. And we'll give them that target for them to think because it's perhaps the case they might want to buy it because this could be aligned to a concept they harbor. This is something we're going to be able to master. Marek, there are some individual examples and we've developed -- we've cultivated them. There are some cases. It's hard to be surprised because TSS and Constellation are highly active players and the market of potential targets is finite in size, that universe is finite in size. So in many cases, in 5 cases, we had conflicts of interest. And if this is something that we can live with out of a number under 20. Operator: [Interpreted] The next question is to Marek. In terms of potential targets in cybersecurity, are there any Polish companies in that universe? Marek Panek: And the answer is brief, yes. And this is where I would stop. Operator: [Interpreted] And the final question that we have from remote participants, are you thinking about developing a motivation program where the strike price would be closer to the market price as opposed to, let's say, PLN 1. Unknown Executive: [Interpreted] Well, yes, in our concept, I don't know if somebody has noticed, we have 1.5% stake. Those are shares linked to my -- to me. I've selected some 95 persons who, in my opinion, will clearly drive the future. I would like to give shares to 33,000 people. There is no person in our company, in our group who will not drive the future. But just as such, that we had to make some choices. And so for group consists of 95 people. And I believe that these people have earned and deserve to take a role in the future. This is one program. And in that program, these objectives, we can discuss what those objectives should be. But this is going to be PLN 1 because we need these people as investors, but there is a program PLN 0.25. That is a program to change or slightly new bonus program and the bonus program this is experience that I've known from Constellation for years, and this is from [ Topicos]. And so Rafal Kozlowski is today coming forward to each one of our leaders in people who are heading up businesses. And the proposal is that a portion of their bonus would be paid out in shares, in equities, and they will be purchased at the market price. And so these shares would be purchased at market price. And so we'll have a program of that sort as well. I don't know the details, but [indiscernible] who set up Constellation in that overall concept. This is a person from the financial market. He himself with his family. I don't want to -- it was a 7% or 9% over 30 years. These were shares. These were these bonuses. That's how he was able to compile that position that were purchased at various points in time. We want -- our team doesn't have an obligation to follow that program, but we would also like to implement that program. And this will be an additional portion because the 95 people, this will give us a guarantee if you assist me in making sure that we can vote this through at the shareholder meeting, and then we'll make sure that, that other program is going to be available and that we want to remunerate people in the form of shares, of course, at the market price. So we'd like to thank you. Are there any other questions here in the room? Would anybody else like to we don't have a question from the room. So we'll wrap up the Q&A session. And we'd like to thank you very much. And so we've started this year very well. So it portends well. In the near future, we'll come back, but they won't take me to participate in the quarterly conferences. So I think Rafal will be Okay. You can -- so you can take him. I'd like to thank all of you, all those people who are participating remotely, the people here physically in attendance. And so I would like to thank you enormously because we are a very close-nit group, and we've lived many years together in a beautiful way, and you've all had a very positive contribution to the development of our capital market. You've never disappointed me. So I didn't have the 95% share. You've never disappointed me and the votes were always consistent with what I was thinking or what I came forward to propose. And so I'm very grateful because you have a real participation in what we as Asseco have achieved this great achievement. Let me tell you, this is a commercially viable approach. It's worthwhile to turn over that 1.5% equity stake to 95% [indiscernible]. So let's continue vying for our position for there to be peace across the world because then it will be very easier -- much easier for us than to smile then. So thank you once again, then Bye-bye. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Operator: Good morning, everyone, and thank you for participating in today's conference call to discuss Synergy CHC Corporation's financial results for the fourth quarter and full year ended December 31, 2025. Joining us today are Synergy's CEO, Jack Ross; CFO, Jamie Fickett; and Greg Robles with Investor Relations. Following their remarks, we'll open the call for analyst questions. Before we go further, I'd like to turn the call over to Mr. Robles as he reads the company's safe harbor statement. Greg Robles: Thanks, Liz. Good morning, and thanks for joining our conference call to discuss our fourth quarter and full year 2025 financial results. I'd like to remind everyone that this call is available for replay and via a live webcast that will be posted on our Investor Relations website at investors.synergychc.com. The information on this call contains forward-looking statements. These statements are often characterized by terminologies such as believe, hope, may, anticipate, expect, will and other similar expressions. Forward-looking statements are not guarantees of future performance and the actual results may be materially different from the results implied by forward-looking statements. Factors that could cause results to differ materially from those implied herein include, but are not limited to, those factors disclosed in the company's SEC filings under the caption Risk Factors. The information on this call speaks only as of today's date, and the company disclaims any duty to update the information provided herein. Now I would like to turn the call over to the CEO of Synergy, Jack Ross. Jack? Jack Ross: Thank you, Greg. Good morning, everyone. Thank you for joining us today to discuss Synergy's performance for the fourth quarter and full year 2025. While 2025 was a year of transition in many areas of our business, it was also a year of meaningful strategic progress that sets an important foundation for sustainable long-term growth. Before discussing our performance, I want to briefly address the 8-K we filed regarding our international license agreement covering the UAE and Turkey. As many of you recall, in mid-'25, we expanded our international license partnership to include UAE and Turkey for a baseline licensing fee with additional royalties tied to product performance. However, the licensee has elected to terminate the agreement, given the increasing instability and uncertainty across the region. As a result, the $2.5 million licensing revenue associated with the agreement had to be reversed in the fourth -- sorry guys. I have technical difficulties here. Just one second. Okay. While unfortunate, this outcome reflects the macro volatility outside of our control rather than any change in our conviction around the potential of FOCUSfactor internationally. We continue to view the UAE and Turkey as an attractive multiyear growth market for both our supplements and functional beverages. The groundwork we laid in 2025 hasn't been lost, the demand remains intact. The brand is strong and our international strategy continues to be focused on scalable, capital-efficient expansion. Before I turn the call over to Jamie, I want to touch on another development that further supports our international growth strategy. During 2025, we established our wholly owned subsidiary in Mexico. And in December, we initiated our first product shipments to Costco, Mexico. On the beverage side of our business, during the first quarter of 2026, we have generated over $600,000 in gross revenue surpassing the entire 2025 revenue, which now equates to $2.5 million run rate for 2026. We have shipped our focus in energy RTDs in shots to new key distribution locations, including EG of America, the parent company of Cumberland Farms convenience stores, Wakefern Foods, Indian Nation wholesale, Mackoul Distributors, Mancini beverages, [indiscernible] and Pine State Beverages to name a few. We have millions of cans of RTDs and shots in stock and ready to ship, and we expect 2026 to be a foundational growth year for our Beverage division. We continue to execute on our supplement side as well, having just shipped 3 new SKUs to all 1,600 Kroger locations. One initiative that we did not achieve in 2025 was turning back on the TV advertising, which is hugely important for our existing store growth. We will be diligently working towards executing this in 2026 to drive same-store growth within our key retailers. If the results that we achieved in the past hold true, we expect to see at least a 15% lift in same-store sales once the TV advertising is up and running. With those updates, I'd like to turn the call over to our Chief Financial Officer, Jamie Fickett. Jamie? Jaime Fickett: Thank you, Jack. I'll now review our financial results. Beginning with the fourth quarter, net revenue was $6.07 million compared to $10.27 million in the year ago quarter, a 41% decrease versus the prior year. The decrease was due to the termination of the license agreement of $2.9 million. Without that reversal, net revenue was $8.97 million, a 12.7% decrease. Gross margin for the fourth quarter was 36.6% compared to 63.3% in the same quarter last year. The decrease in gross margin was primarily driven by the termination of the license agreement of $2.9 million and the write-off of obsolete inventory of $1.04 million. Without those 2 items, gross margin would have been 68.8%, an increase from prior year. Operating expenses for the fourth quarter were $15.53 million compared to $5.14 million in the year ago quarter. The increase in operating expenses was largely due to one-time items of an allowance for bad debt of $6.6 million and the write-off of prepaid media credit of $0.9 million. Without those 2 items, operating expenses would have been $8 million. The majority of the increase was due to professional fees for our corporate development. Loss from operations for the fourth quarter of 2025 was $13.31 million compared to income from operations of $1.35 million in the fourth quarter of 2024. As discussed, this is largely due to onetime items of allowance of bad debt of $6.66 million, termination of the license agreement of $2.9 million, write-off of the obsolete inventory of $1.04 million and the write-off of a prepaid media credit of $0.9 million. Without those one-time items, loss from operations would have been $1.85 million, which is impacted by the increased professional fees for our corporate development. Net loss on the fourth quarter -- net loss for the fourth quarter was $14.82 million or $1.35 per diluted share compared to net income of $105,700 or $0.01 per diluted share income in the fourth quarter of 2024. This is largely due to one-time items of allowance of bad debt of $6.66 million, termination of the license agreement of $2.9 million, write-off of obsolete inventory of $1.04 million and the write-off of prepaid media credits of $0.9 million. Without those one-time items, net loss would have been $3.35 million, which is impacted by the increased professional fees for corporate development. EBITDA loss for the fourth quarter was $13.28 million compared to EBITDA income of $1.68 million in the fourth quarter of 2024. Adjusted EBITDA loss for the fourth quarter was $4.48 million compared to adjusted EBITDA income of $2.79 million in the fourth quarter of 2024. Now turning to our full year results. For the full year of 2025, revenue was $30.38 million compared to $34.83 million in the year ago period. Without reversing the $2.9 million in license revenue, our net revenue would have been $33.28 million in 2025. Gross margin for the full year of 2025 was 66.8% compared to 67.9% in the year ago period. Without the previously discussed inventory write-off, gross margin would have been 70.3%, an increase over prior year. Operating expenses for the year were $28.76 million compared to $17.84 million a year ago. Without the one-time items previously mentioned, operating expenses would have been $21.24 million, which is impacted by the increased professional fees for corporate development. Loss from operations for the year was $8.46 million compared to income from operations of $5.8 million a year ago. The decrease is also due to the one-time items as discussed. Without them, the full year income from operations would have been $3 million, impacted by increased professional fees for corporate development. Net loss for the year was $12.3 million or $1.27 per diluted share compared to net income of $2.1 million or $0.28 per diluted share a year ago. This is also due to the one-time items as discussed, offset by a gain on the settlement of our notes payable of $2.15 million. Without those items, the full year net loss would have been $3.03 million, which again is impacted by the increased professional fees for our corporate development. EBITDA loss was $6.19 million in 2025 compared to EBITDA of $6.46 million a year ago. Adjusted EBITDA and income was $800,000 compared to adjusted EBITDA income of $7.35 million a year ago. Moving to our balance sheet and cash flow. As of December 31, 2025, we had cash and cash equivalents of $2.6 million compared to $687,900 as of December 31, 2024. Inventory was at $3.7 million at the end of the fourth quarter compared to $1.7 million at the end of 2024. At the end of December 31, 2025, we had $33.3 million in total liabilities compared to $33 million in total liabilities December 31, 2024. At December 31, 2025, we had a working capital surplus of $1.78 million as compared to a working capital deficit of $1.12 million as of December 31, 2024. For the 12 months ended December 31, 2025, our cash used in operating activities was $2.6 million compared to cash used in operating activities of $4.8 million at December 31, 2024. The decrease primarily reflects higher noncash charges, including bad debt write-offs and stock-based compensation as well as improved cash collections and accounts receivable, partially offset by the increased inventory investment and the gain on the settlement of debt. Now I will turn the call back to the operator. Operator: [Operator Instructions] And our first question will come from Sean McGowan with ROTH Capital Partners. Sean McGowan: Can you hear me okay? Jack Ross: We can. Sean McGowan: On your comments on the RTD year-to-date being better than all of last year, it kind of implies that the fourth quarter was, I don't know, maybe $200,000 or something and -- so what is still going on there that kept out from being a lot higher in the fourth quarter? Jack Ross: We -- as you know, we just raised the money to actually build the inventory in August and to actually get the inventory built takes time, meaning 8 to 12 weeks to build the inventory. So we just really received the majority of the RTD inventory in-house in December. So that's what affected that. Sean McGowan: Okay. And looking at some of the other lines, was, let's say, compared to the third quarter, was Flat Tummy up? Jack Ross: No. Flat Tummy continues to decline. The weight loss business is being heavily impacted by the GLP1s. It seems that the whole industry has moved to those. So we'll be making a strategic decision on Flat Tummy in the near future. Sean McGowan: Okay. And then on the core supplement group, what's going on there? Jack Ross: The core supplement group, I think, is relatively strong. We continue to add key retailers like Kroger, we mentioned, although the TV advertising is very key to that same-store growth. We have our competitors. We all know who the competitors are pounding the TV airways every single day and night and we need to get that TV turned back on. Sean McGowan: Okay. And what do you think the outlook is going to be with a lot of these one-time things behind you regarding gross margin? Jack Ross: Jamie, you want to talk to that? Jaime Fickett: Sure. We anticipate gross margin to maintain its current level or increase. Again, it was impacted largely by those one-time items. But other than that, our gross margin remains stable. Sean McGowan: Do you mean -- when you say at the current level, you mean excluding those one-time items? Jaime Fickett: Yes. Sorry, like as I read in the script. We look at it normalized. Sean McGowan: Okay. And has there been any other changes to your approach to kind of go-to-market strategy on the RTD as you look to roll that out? Jack Ross: No. I think again, it's a sales cycle, Sean, right? So these things are all driven by planograms. So you really get twice a year where you can really call gain meaningful distribution and we'll call it the major chains. Certainly, you can add smaller chains in the meantime. But we continue with the sales cycle. We do expect -- this is big news. We do expect to have some Costco roadshows coming up in different regions, and we expect to have a BJ's road show coming up. So it should be some meaningful growth there on the beverage side. Operator: [Operator Instructions] And our next question will come from Edward Woo with Ascendiant Capital. Edward Woo: Congratulations on the growth in Mexico. You guys recently formed a subsidiary in Mexico. Are there other international markets that you plan on creating a subsidiary to ship directly in those markets? Jack Ross: Edward, good speaking with you today. No, we don't have any other any other plans on open and international markets directly at this time, although Mexico is a massive opportunity for us to build out the retail network there. So having that subsidiary there allows us to do that. But as you can see, we've started a lot of initiatives last year and for Synergy 2026 is about executing against those initiatives. If those TVs turn back on, get the same-store sales growing, get the opportunities in Mexico that we've already identified up and running and continue to grow our beverage business, that's the focus for 2026. Operator: At this time, this concludes our question-and-answer session. I would now like to turn the call back over to Mr. Ross for closing remarks. Jack Ross: Thank you, everyone, after joining the earnings call today. We look forward to speaking to you shortly as we report our first quarter 2026 results. Thank you. Operator: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Operator: Good afternoon, and welcome to the Xaar plc investor presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. I'd now like to hand you over to John Mills, CEO. Good afternoon, sir. John Mills: Thank you very much. And first of all, thank you, everybody, for taking the time to come on and listen to the story of Xaar. For some people who will have known Xaar from old, I just wanted to kind of quickly run through some of the history and some of the things that would have characterized Xaar historically and hopefully how Xaar today contrasts with that. So if you go back to 2013, Xaar was a FTSE 250 company, had GBP 140 million of revenue, made GBP 42 million profit, market cap of around about $1 billion, but it was effectively a single product into a single market, and that was ceramics. And that market, Xaar lost that market for various reasons and left the company really with no other revenue streams. And over the last decade, it's really been recovering from that situation. In contrast today, I've been with the company now for 6 years, and we've really focused on making sure that we have a broad portfolio of applications based around a value proposition, which is unique to Xaar. And really, what I would like you to take away with today is really two things. Firstly, that we have a unique capability to print fluids that no one else can and that we deploy that capability across a broad range of applications, which potentially give us significant revenue opportunity and indeed quite significant resilience against any individual market problems. So in order to first of all, explain to you what the value proposition of the business is that we make industrial inkjet printers and printheads. And we compete with companies like Epson and Fuji, Kyocera, Ricoh, Konica and also Seiko. These are huge Japanese corporations with global reach and substantially lower manufacturing costs than we have. And I think that the challenge or the problem for Xaar over the previous 15, maybe 20 years is trying to compete with these companies on their home territory is incredibly difficult and ultimately, Xaar has lost. And having joined the company in -- back in 2019, I, having known the company for many years, really focused on the attribute that Xaar had, which was unique, which is that we can print fluids that no one else can. And that parameter that's really important is viscosity. And viscosity is a measure of how thick the fluid is. So water has a viscosity of 1. Cream is 22. olive oil is 65 and yogurt all the way up at 1,000. So if you take the global #1 Epson, they can go up to around about 8 center points. So -- and some of the other competitors may be able to get over 20 and approaching 30, but really, that will probably be a generous assessment. We've got applications well over 100. And therefore, we have this capability of printing fluids that no one else can print. And the way to think about that is that if you have a fluid, if you want to add things into the fluid to add functionality to the fluid, the more you add in to the fluid, the more functionality you will have. But the more you add in, the more viscous or the thicker the material, the fluid is likely to become. So there is a correlation between functionality and viscosity. So the more functional the fluid, typically the thicker, more higher the viscosity is. And therefore, what we are seeing at Xaar is we can print fluids that are far more functional than other printhead manufacturers. And so the question then remains is, well, what do you do with that? And what I'd like to do today is just share with you some of the applications that utilize this unique capability, so you can see the sort of the breadth of applications that we are currently operating in. So the first one is decorating of cars. So today, if you want to put a graphic on a car, you need to use a sticker. If anybody has a mini or know somebody with a new mini, typically, they have some form of graphic on there that's a sticker. And those are not really well liked in the industry. So if you want to put graphics on there, that's pretty much the only way you can do that. We started working with Axalta, who are one of the major global suppliers of car paint to the industry and also Durr who make robots and 50% of the world's paint shops have their robots in them. And collectively, we have created a technology called NextJet, and this allowed you to digitally print graphics onto cars. So if you see the bottom right-hand corner, we're printing on the side of a door. And you could imagine that if we had a low viscosity watery fluid, then that would actually just drip and run down the side of the car, you would not be able to print graphics on a vertical surface. And so what I hope is clear from this that you actually need to have high viscosity capability to be able to print graphics onto vertical surfaces in this application. And so there's no other printhead that can do this, and we've enabled an industry to adopt digital technology through our ability to print high viscosity fluids. Just to go through another application. So this is car batteries. So this is another application where we started working with the battery industry about 5 years ago. There are issues around battery safety. And one of the contributory factors to this is that the insulation layer, the blue plastic film that goes around the battery to provide electrical insulation can be damaged through mechanical rubbing or through heat cycling of the battery as it's charged and then utilized. Having developed a fluid which is UV curable, you print on the battery, you shine UV light on it and it turns into plastic. This coating is nonflammable. It's much stronger. It doesn't crack and it has better peel strength away from the battery. So this is a better solution than the wrapping of the battery. As of today, we have 3 OEMs who we sell printheads to. They've built machines that print the battery. You see one of those operated on the bottom left-hand side of the video. And there are now 10 production lines in China that are making batteries on a daily basis for cars. And to give you some sense of scale, we have about GBP 150,000 worth of revenue for each production line. There's 10 in there at the moment, and we expect another 10 to 15 going in this year. And overall, there are 1,300 production lines in China. And so if the industry adopts this fully and changes all of the production lines to this digital coating, that would represent around about GBP 200 million of revenue for us. And if they did that over a 5-year period, that would be a good volume of revenue per year. For each of the applications that we have, there's a secondary revenue stream, which is from the replacement printhead cycle. So once you have an installed base, depending on the life of the printhead in that application, and that's a function of the type of fluid and the environment it works in. And in this application, the life of the battery may be -- may be, say, 4 years, then every year, you would expect to replace 25% of your printheads. What that means is if you have an installed base of GBP 200 million worth of printheads, then 25% would get replaced on an annual basis. So -- and that's the same across all industries. So you have revenue of printheads going in for new machines. And then depending on the replacement cycle, you have an annuity revenue from the replacement and printheads. So that's the battery coating. Change in tacks. If anybody has a desktop 3D printer, it's probably for those who recognize the term, an FDM printer, which is like a roll of fishing line that essentially goes through a nozzle and heats up and basically an arm scribes a path around and the fiber sticks to the fiber that was previously laid down and that way you build up a 3D model. And it typically is one color or a couple of colors and it's not very high resolution. And that's the typical 3D printer that's bought today, but there are 5 million of those printers bought every year. If you want to print something high resolution in full color, so things like you see on the bottom of the screen, all the things on the table next to the machine and the little farm on the left-hand side, if you want to print high-resolution things of that nature, you probably have to pay somewhere between GBP 40,000 and GBP 150,000 for an industrial machine. We've been working with Flashforge. They're one of the major suppliers of the desktop 3D printers. They sold 700 units last year. We have been working with them to develop the world's first desktop 3D printer. We estimate that, that printer will be on sale for around about GBP 2,500 to GBP 3,000. And with the occurrence now of AI, you can take a photograph of somebody or any object, AI will render that into a 3D model, and you can print it out on the printer. Equally, you can describe something into AI, and it will create the figure for you. So hobbyists around the world will be able to print whatever they would like to fulfill their needs in their hobby. So just if you have opportunity if you were to Google Flashforge CJ270, you'll be able to see the pre-marketing -- prelaunch, which we expect to be in the next few months. It's actually been shown at multiple trade shows to date ahead of the launch later this year. So I'll just play you the promotional video for the product. [Presentation] John Mills: Just to give you some sense of scale, the 500,000 desktop printers are sold each year, 1% of the market were to buy this machine that would represent GBP 25 million of revenue for Xaar. What we don't know because it's a brand-new product into the market is exactly how many units will be sold. So we're quite excited about this, so -- but the exact number is very difficult to predict, and so we will look forward to launch and see how many did sell. One of the things that's really impacted the numbers this year, we started working with the wax industry about 3 years ago, 4 years ago. This is an industry which uses wax to create bespoke high-quality jewelry in gold and platinum. What happens here is that the wax is actually heated up with melts and then you inkjet print the wax onto a substrate and you build up the facsimile of whatever you want in the gold or platinum in the wax. You then take that wax model and in case in effect like a plaster of Paris and it dries. And then once it's dried, you then heat up, the wax melts and then runs out and then you've left with the mold and then you can pour your gold and platinum into the mold. And then once it cools down, you break the mold and you've got your piece of jewelry. The -- we've taken that market very quickly because the -- again, the ability to print a wax that's much better, much stronger than the previous wax means that you can produce higher quality and more intricate jewelry. So when this was actually launched by the first company, the quality of the jewelry that was produced was so differentiated that every single other OEM looked at that and said, "We need to use our printheads because we won't be able to compete". So we went from 0 revenue in '23, we had around about GBP 1 million revenue in '24 and then GBP 8 million of revenue in '25. So we think we've got a sizable share of that market now. So we expect some growth in '26, but that's an example of a market where, again, we've taken market share purely down to the fact that we can print a better fluid than what was previously printed. The final application I'll show you today is on printing of cardboard. Probably all of you will receive Amazon packages. These are sort of cardboard boxes or sort of envelopes that you -- and they will all have a plastic -- a white plastic label with the address and the barcodes and other things on it. That's -- the plastic label that's on it is expensive, and it also makes it more challenging to recycle. And the reason for that is you can't print white ink onto -- digitally on to cardboard because what happens is that it's low viscosity and it just soaks into the cardboard, which is what you see in the image at the top here. As it sinks in, it takes the pigment with it into the cardboard and you can't see any of the white pigment left. Closer to a slowdown, you see that by contrast, a high viscosity fluid and a high viscosity fluid has less water. It's thicker. It doesn't soak into the cardboard and therefore, the pigment stays on the surface. So this gives us the opportunity to actually print digitally onto cardboard, which would be a significantly cheaper process, but also help with recycling. So again, this is just about the benefit of using a high viscosity fluid. So hopefully, that's been helpful. What I'll do now is hand over to Paul, who can take you through some of the financials. Paul James: Thank you, John. Yes. Okay. I'm not going to plow through the slides, slide by slide. If you want to see that, it's available on our website, but what I would like to do is just highlight some key financial numbers that we've delivered and talk about the shape of the numbers going forward over the medium term. So first of all, the group is organized into three divisions. The largest one, one of the greatest scale is Printhead, and then we have Megnajet, which is predominantly dealing in producing ink systems, and then we have EPS in the United States, which builds machines for high-speed single pass printing direct-to-shape purposes. And then you look at how they performed in 2025 versus 2024. Overall, the group is up 12% year-on-year, but Printhead revenue standout performance of 22% up versus the prior year. And that performance is driven, as John has alluded to, primarily from the Wax segment, the growth there. And actually, that 22% revenue growth, over half of it was a volume increase. And so more about that and its effects on our numbers in a moment. Megnajet broadly flat 2% and EPS down 10%. And the reason for that was they had a large multiyear contract to basically print on golf balls, and that came to a sudden unexpected end at the beginning of last year. And the then management team hadn't yet built a sufficient pipeline to backfill that loss of contract. So we have had a dip in performance there, but we brought in new management. And interestingly, despite that 10% reduction in revenue, the gross margin at EPS grew by 300 basis points, and that is as a result of restructuring, cost-out initiatives and so on and so forth. So the new manager has dealt with that. He's dealt with a number of intractable issues, and he's also rebuilt that pipeline. And one of the attributes of EPS is the way revenue is recognized. You kind of know 6 months ahead of time how much revenue you're going to have. So EPS is very much back into growth mode and we will, I'm sure, continue growing, continue performing financially very well. And then back to Printhead, as we said, 22% up, and that also came with 300 basis points increase in gross margin. And that is a key attribute of this business, which is that we have a very effective operational gearing effect. If volume does increase, then margin will increase too. So let's talk about first number, how that's -- we see that, how it's going to develop over the medium term. 40% gross margin overall. I had a look back -- by the way, I've been in Xaar just over a year. I had to look back over its history and the high watermark in terms of gross margin performance was probably about a decade ago where it was nudging 50%, high 40s certainly. Now you've got to be a bit careful making that comparison with then because, of course, it's apples and pears and revenue was made up of different constituent parts. But nevertheless, 50% does seem to be a laudable target to get back to. And so the current management team, we're now all working towards that over the medium term increasing that gross margin. And yes, operational gearing will help. If the business grows, the volume increases. But also, we are looking at cost-out initiatives. We're looking at -- we'll be looking at procurement, better procurement initiatives. And we've also shifted part of our supply chain to China to be closer to our customers. I describe as sort of ancillary activities. It's not the core IP activities that go into China and the inkjet systems construction also in China. So two benefits of that. We'll be close to the customer base, the Chinese customer base, but also it will take a lot of cost out of our base. So yes, 50% is we've set ourselves that medium-term goal to get as close to that as possible. I think another thing I'd like to talk about is the balance sheet and how that's shaping up. So it's true to say that in recent years, Xaar has held elevated levels of inventory. I'm not interested in why that was, but it's a fact, and it does need addressing. So we are setting ourselves the goal of -- and I've done this in other companies I worked in, of, if you like, a continuous improvement goal of increasing stock turn year in, year out, a minimum of half turn increase, preferably a 1 turn increase every year. And rather than just obsessing about a particular absolute number, stock turn has the benefit of being linked to how the business is performing, how the business is growing. And I see that as a way to free up more cash and get into that sort of virtuous circle of investing more, growing more, et cetera, et cetera. So that's something else perhaps you should look out for going forward with Xaar. In terms of investing in growth, a couple of things there. We spend about 8% to 10% of our revenue on R&D, and that feels about the right number at the right level. And in terms of capital expenditure, we have had last year elevated levels of CapEx, but that was investing in capability to basically speed up sales and to deal with some bottlenecks. And I think going forward, you can expect slightly higher elevated levels of CapEx, too, just to invest in growth, but also -- perhaps also to deal with some legacy issues in terms of replenishment of the asset base in the factory that we do need to address. So I hope that gave a bit of a flavor for the business. And yes, I'll hand back to John. John Mills: Good. I mean it's quite difficult to judge these things when the -- you can't see the audience. So hopefully, that's given you a sense of the company. I think the summary for me about the business is that when I go around and talk to particularly institutional investors, many of them have -- know Xaar. And one of their concerns is that Xaar has historically been boom and bust, and very difficult to predict the future revenues. I think what we'd say today is that we've worked hard on making sure that we have a very clear value proposition, and we only enter into markets where we have a unique and clear value proposition against the competition and that we now have 21 separate markets where we derive revenue. And we have in most of those many customers and a strong pipeline of applications that are coming through. So we feel confident about the business model, and we feel confident about the revenue growth over the coming years. What's very difficult to predict is the detail of when any individual application tool will land. And therefore, we tried to avoid talking about specifics of timing. But I think the key thing is that over time, the ones that are in the pipeline will come through. So for those who've got a slightly longer time horizon in the sort of 3 to 5 years, I think where we are today, it's difficult to see how we're not going to grow revenue substantially over that time. And with the operational gearing, we should see some of that falling through to the bottom line. John Mills: So with that, I think we'll look at any questions that we have. So I can currently see four questions that have come through. So please write any questions in the thing, and we'll do our best to answer them. We have a bit of time left over, so we can hopefully answer those questions as we go through. So I'll take them. First question, do we have any collaboration with [TeraView]? No, we don't at the moment. It's interesting that we're now starting to see companies coming to us once they understand our capabilities. So maybe that's something we should pursue. The second question is that with the 22% increasing in Printhead revenues, how much is initial system adoption versus recurring? That's from Matt. Matt, I think the revenues that we see coming in, we would describe as all recurring revenues. What we would normally see is that you have several years where you sell printheads into an OEM as they start developing machines and selling machines, then eventually, you get to a level of saturation where everybody who needs a machine has got one. And then you left to replacement recycle of the machine and you are left to growth within that market. And then the replacement heads for your installed base. So the revenue would peak after a number of years and then would move into a steady state where there will be slower growth, it might fall back by 20%, 30%. So that's how we tend to think about it. And therefore, what we -- when we model revenues, we look at layering on different applications. And so we take sort of fairly modest views of growth after the initial market size and try and layer that on. So hopefully, that answers the question. The second question is how visible are revenue levels over coming years from the new application areas? And again, this is a really good question and one of the fundamental ones for understanding the business. We sell printheads to OEMs. And if you take the battery situation, we sell printheads to OEMs who make the digital printers. They sell the digital printers to companies that develop production lines for the battery manufacturers and the battery manufacturers buy the production line. So we're three companies removed from the decision-makers in relation to the batteries. And therefore, we're not having direct conversations with the battery companies. We take our information from a number of sources and try and integrate that together to create a picture of what we think is going to happen. So it's incomplete. We are not selling machines directly to an end user. So in many cases, our information is not perfect in that. We do our best to try and understand forecasting and we ask our OEMs' forecast and what they believe are going to happen, and we have to interpret that in the best way that we can for planning. Typically, things usually take longer. The numbers that get delivered are usually smaller. And we try to take that into account when we look at any forecast that we publish. Next question I have is that the revenue opportunities for battery coating and 3D printing, are those annual revenue? How does the drop-through margins in each section differ? Yes, very good question. I think on the 3D -- on all of the -- as I said earlier, on all of the applications, we really are looking at recurring revenue. We don't see any revenue that comes in for a single year and then stops. So the revenues we talk about should be recurring revenues. The margins are quite different across different market sectors. The wax and the battery coating, the margins are quite strong. If you look at the consumer market, the desktop 3D, the margins are much lower in those areas. So we tend to try and price to value rather than looking at competitive pricing. And we try to maintain margins on the basis that we are enabling industries to do things they previously couldn't do. We're not competing on price in many of these markets. So -- and in terms of drop-through, this year, we did GBP 0.8 million profit on the revenues. As the top line grows, we should have -- we're now at that kind of breakeven point with the factory. So as we go forward, we should see more of that revenue dropping through. Okay. Next question is around IP from Paul. The IP protection, particularly as we are exposing the technology in China. Yes, really good question. We have very strong IP, but our strategy is to patent in -- according to GBP. So we take the top 6, 7 countries, excluding China, and we patent in those countries. And the reason we do that is that I think if we have a Chinese company, for instance, that did infringe our IP, we may find it difficult to enforce our IP in China. However, if those companies then build a printhead and sell that printhead outside of China into a territory where we have IP, then whoever uses that printhead is infringing our IP, and therefore, we can send the cease and desist. So our strategy is to enforce it in territories where we are able to kind of follow up and prosecute our IP effectively. So that's really what we would do. Somehow all the questions have disappeared. Paul James: You've answered them, I think. John Mills: Hopefully, that -- is there any more questions that we could -- I'm going to let you take that one, Paul. Paul James: Yes. Okay. So we obviously have a medium-term strategic plan, which we've not yet... John Mills: Please go and state the questions, Paul, you probably have to read the question. Paul James: Sorry. Thanks for reminding. So the first question, what level of turnover and profitability would you target in 3 to 5 years? So we obviously do have a medium-term strategic plan. It's been discussed at Board level and all signed up to. You would expect to see the growth levels we've achieved last year of 12% for the group, according to our plans, that's not inconsistent with the sort of annual growth levels you could expect to see going forward. And in fact, if you look at the consensus numbers that are out there, the revenue growth is broadly consistent with that. So a sort of 10 and a bit percent growth in revenue going forward. And then as we've mentioned a couple of times, the operating leverage benefits will start to kick in as well with that volume growth. By the way, I expect at least half of that revenue growth will be volume at least. And so as I said earlier, I am pushing for gross margins to be heading towards as close to possible 50% and with an operating margin in the high teens. That would be the sort of place I'd like to be in terms of profit and revenue. I think the next question is a congratulatory note, I think. Operator: That's great. Thank you for answering all those questions you can from investors. And of course, the company can review all questions submitted today, and will publish those responses on the Investor Meet Company platform. Just before redirecting investors to provide you with their feedback, which is particularly important to the company, John, could I please just ask you for a few closing comments? John Mills: Yes. Well, thank you very much for taking the time to come and listen to the story. We're quite excited about the business. It's been a bit of a grind for 5 years to build the pipeline and to do that. We do feel we're in a position now where we're at a kind of inflection point. And we can see growth coming over the coming years. It's important to say with any of these applications, it's very, very difficult for us to predict the exact timing or volume of any individual applications. So I wouldn't buy our shares on the basis of one particular application, but I think I'd encourage everybody to look at the broader value proposition of the unique capability of high viscosity fluids and the impact that has on industry and the breadth of the opportunity that we have because I think ultimately, that will be the thing that drives consistent revenue growth over the coming years. So again, thank you very much for your attendance. And hopefully, we can see some of you joining the share register in the near future. Thank you very much. Paul James: Thank you. Operator: That's great. Thank you for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This may take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team, we'd like to thank you for attending today's presentation, and good afternoon to you all.
Operator: Good morning, ladies and gentlemen, and welcome to today's Investcorp Credit Management BDC's Quarter ended December 31, 2025 Earnings Call. It is now my pleasure to turn the floor over to Andrew Muns, Chief Financial Officer. Andrew Muns: Thank you, operator. Welcome, everyone, to Investcorp Credit Management BDC's earnings call for the quarter ended December 31, 2025. I'm joined today by Suhail Shaikh, President and Chief Executive Officer of the company. I would like to remind everyone that today's call is being recorded and that this call is the property of Investcorp Credit Management BDC. Any unauthorized broadcast of this call in any form is strictly prohibited. An audio replay of the call will be available on the Investor Relations page of our website at icmbdc.com. I would also like to call your attention to the safe harbor disclosure in our press release regarding forward-looking information and remind everyone that today's call may include forward-looking statements and projections. Actual results may differ materially from these projections. We will not update forward-looking statements unless required by law. To obtain copies of our latest SEC filings, please visit the company's registration statement on the SEC's EDGAR platform or our Investor Relations page on our website. The format for today's call is as follows: Suhail will provide an overall business and portfolio summary, and then I will provide an overview of our results, summarizing the financials. This will be followed by Q&A. Please note that today's discussion will focus on our financial results. As stated in our press release, we do not intend to comment further regarding the review unless or until it determines that further disclosure is appropriate or necessary. As such, we will not be taking questions on the strategic review process during today's call. Management will be pleased to address questions related to our quarterly financial statements and business operations. At this time, I would like to turn the call over to Suhail. Suhail Shaikh: Good morning, everyone, and thank you, Andrew, and thank you, everyone, for joining our December 31, 2025 quarter-ended earnings call. As a reminder, ICMB provides flexible capital solutions to middle-market companies, primarily through first lien senior secured debt. Our disciplined underwriting approach focuses on downside protection while generating income for shareholders. We will begin with an update on the business, a review of our fourth quarter results and portfolio activity, and then Andrew will walk you through our financials in greater detail. Before we dive into the details, here are the key takeaways from the quarter. We formed a special committee of independent directors to review strategic alternatives and maximize value for shareholders. We successfully refinanced the $65 million notes due April 1 with new unsecured notes maturing in 2029. NAV per share declined to $4.25, primarily driven by fair value adjustments and dividend payout in excess of net investment income. Nonaccruals increased to 6.9% of the portfolio at fair value with Easy Way added to nonaccrual. We remain focused on liquidity, capital preservation and disciplined underwriting in a still uncertain market environment. As announced in our earnings press release, the Board of the company has formed a special committee of independent directors to review strategic alternatives to maximize value for shareholders and in parallel has decided to not declare a quarterly dividend for the current quarter. In addition, on March 30, we successfully refinanced the $65 million 4.875% notes due April 1 with new $65 million unsecured notes provided by our advisers affiliate. The unsecured notes bear a floating rate coupon of SOFR plus 550 basis points and are due on July 1, 2029. The market environment, macroeconomic and geopolitical uncertainty continues to shape the operating backdrop. Credit markets have remained open, but deal activity in our segment of the market has stayed below historical norms as sponsor-driven transaction volumes have yet to recover in a meaningful way. Our focus on disciplined underwriting and active portfolio management has not changed, and we remain in active dialogue with management teams and sponsors of our portfolio companies. Turning to our fourth quarter results. ICMB reported net investment income before taxes of $0.3 million or $0.02 per share before taxes, a decrease of $0.02 per share from the previous quarter. The sequential decline in NII was primarily driven by a reduction in income-producing assets, including the placement of Easy Way term loan on nonaccrual and an increase in professional fees and other expenses that is typically experienced in the December quarter. Nonaccruals increased to 6.9% of the portfolio at fair value compared to 4.4% last quarter, driven by the addition of Easy Way, as mentioned above. Easy Way is a manufacturer of customizable outdoor furniture products sold through retail channels. Net assets declined approximately 16% sequentially from the prior quarter, with net asset value per share decreasing to $4.25 from $5.04 in the previous quarter. This was largely the result of fair value adjustments and the payment of a dividend in excess of NII. These fair value adjustments primarily reflect changes in market valuation levels and updated exit timing assumptions in the current environment rather than broad-based deterioration across the rest of the portfolio. The portfolio remains diversified across 18 industries with no single investment representing more than approximately 3% of fair value. I would also like to note that our software exposure represented less than 3% of fair value at quarter end. Our focus during the quarter was on liquidity management. Hence, our new investment activity remained muted. During the quarter, ending December, we invested $1.5 million in the first lien term loan of Axiom Global, an existing portfolio company to fund the dividend to existing shareholders. Axiom is a leading provider of flexible expert legal talent for enterprise customers. We have been investing in Axiom across our platform since February 2021. Our yield at cost is approximately 8.8%. In the same period, we fully realized 3 portfolio company investments totaling $8.2 million in proceeds with an IRR of approximately 10.6%. This included the full realization of 2 term loan investments in existing portfolio companies, CareerBuilder and LABL, L-A-B-L as well as our preferred equity investment in Advanced Solutions International, which was recapitalized during the quarter. I'll now turn the call over to Andrew to review our financial results in more detail. Andrew Muns: Thanks, Suhail. Let me begin by providing you with highlights of our quarterly performance. For the quarter ended December 31, 2025, the fair value of our portfolio was $172.7 million compared to $196.1 million on September 30. Our net assets were $61.3 million, a decrease of $11.4 million from the prior quarter. This quarterly change in net assets consisted of a $9.4 million decrease from operations and a $2 million decrease related to our dividend, which was paid in excess of NII for the quarter. The weighted average yield of our debt portfolio was 10.6%, a small decrease of 31 basis points from the September quarter. As of December 31, our portfolio consisted of 37 borrowers, approximately 81% of these investments were in first lien debt and the remaining 19% was invested in equity, warrants and other positions. 98% of our debt portfolio was invested in floating rate instruments and 2% in fixed rate instruments. The weighted average spread on our floating rate debt investments was 4.5%, which is relatively unchanged from the prior quarter. The average investment size per portfolio company on a market value basis was approximately $4.7 million or 2.7% and our largest portfolio company investment on a fair market value basis, Bioplan at $11.4 million. Our largest industry concentrations by fair market value were professional services at 14.5%, IT services at 9.2%, insurance at 8.9%, diversified consumer services at 8.6% and commercial services and supplies at 7.9%. Overall, our portfolio companies are spread among 18 GICS industries as of quarter end, including our equity and warrant positions. Gross leverage at the end of the quarter was 2.02x and net leverage was 1.78x compared to 1.75x gross and 1.59x net, respectively, for the previous quarter. We paid down approximately $14 million of debt in February. On a simple pro forma basis, had this pay down occurred on December 31, our net leverage would have been closer to 1.8x, while our reported year-end net leverage remains 1.78x. This pay down improved our asset coverage ratio from 150% to 155%. With respect to liquidity, as of December 31, we had approximately $15 million in cash, of which approximately $10.4 million was restricted cash. In addition, we had $41.1 million of unused commitment under our revolving credit facility with Capital One, of which approximately $8.7 million was available under our borrowing base. Additional information regarding the composition of our portfolio and quarterly financial results are included in our Form 10-K. And with that, I would like to turn the call back over to Suhail. Suhail Shaikh: Thank you, Andrew. As we reflect on the quarter, we are operating in an environment with elevated uncertainty both across both the macro backdrop and broader market sentiment. Our priorities are clear. preserving capital, maintaining disciplined underwriting and actively managing our nonaccrual positions. To summarize, we have formed a special committee to pursue strategic alternatives focused on maximizing shareholder value. We refinanced our April notes and extended our maturity profile, and our portfolio remains predominantly first seen with broad industry diversification. While we expect market conditions to remain challenging in the near term, we believe our focus on liquidity and risk management positions ICMB to navigate this period and pursue opportunities as they arise. We appreciate your continued support and look forward to updating you on our progress next quarter. That concludes our prepared remarks. We will now open it up for questions regarding our quarterly financial performance and business operations. As noted earlier, we will not be commenting further on the strategic review. Operator, please open the line up for Q&A. Operator: [Operator Instructions] Our first question comes from Justin Scott, [indiscernible] Research. Unknown Analyst: First of all, I'd like to applaud the forming of the special committee. I know you can't take any questions on it, but I think we can all see that, unfortunately, it's an economic necessity for the fund. Just back of the envelope, fees and expenses of running this fund have now $0.48 a share. The additional interest on the shift from the previous loan notes costing the fund 4.9% to the current ones, 9.1%, add another $0.19 per share. So $0.67 per share of fees and expenses and additional interest, which is 15.8% of the net assets or 42% of the share price. Obviously, no matter how hard your team tries, those are unattainable investment skills to generate a return for the fund. So I fully understand why you had to do it. Obviously, most of the investors are in here for income, but applaud the decision. And I know you can't comment about the options you're looking into. One thing I'd like to ask is whether anything is being done to trying to put this tactically, closer align the interest of the manager with the shareholders, given that the fees that the manager takes and now with the new loan, the interest that the affiliate of the manager is earning is a very substantial part of the assets of the fund and whether during the interim period as you're doing the review, whether the manager will consider reducing their fees somewhat. Suhail Shaikh: Justin, thank you for your question, and thank you for your opening remarks as well. Look, I think, as you can see from our financials, we have been [ waiting ] fees on an ongoing basis, even when the fund is performing slightly better in a slightly better environment. So that tool always exists for us and if we have to. But I think what I more importantly note is, you should think about the managers sort of alignment with the shareholders. If an affiliate of the manager just provided $65 million of capital to refinance the notes. Affiliate of the manager also owns about 25% of the shares. So I think we are -- we consider ourselves fully aligned with shareholders, and we'll use whatever means necessary to keep that alignment going. Hopefully, that answers your question. Unknown Analyst: It's just that you are earning a substantial amount of money during the period when the fund is open, and I just concerned about that affecting the motivation. Basically, the adviser is going to be earning about $10 million in interest and fees during this period. And I think time is not on your side, and I guess I'm saying don't dilly-dally, so to speak. Suhail Shaikh: Understood. Operator: [Operator Instructions] I currently don't see anyone with questions. [Operator Instructions]. Suhail Shaikh: If no more questions, Luke, I think we can conclude the call, and thank you again for everyone joining in. And we look forward to talking to you again next quarter, and we'll see you then. Thank you, Luke. Operator: Thank you, everyone. And this concludes today's conference call. Thank you for attending.
Operator: Welcome to the earnings call of SUSS Micro SE following the figures of 2025. I would like to welcome the company's CEO, Burkhardt Frick; the CFO, Dr. Cornelia Ballwießer; the COO, Dr. Thomas Rohe; and IR, Sven Kopsel, who will guide us through the presentation in a moment, followed by a Q&A session via audio line and chat. And with that, I hand over to you, Mr. Kopsel. Sven Kopsel: Thank you so much, and welcome to our full year conference call after today's release of our annual report 2025, including our outlook for the new financial year. First of all, one personal note from myself after 3.5 years with SUSS in total, 4 annual reports, 2 Capital Market Days and yes, countless investor and analyst interactions, today marks my final conference call with SUSS. While I truly love the company, I have decided to take on an exciting new role in a different listed German company as of May. So April 24 will be my last day at SUSS, and my colleague, Florian Mangold, will continue to be available to you as your point of contact. Now back to the official part. As you probably know from earlier calls, this call is being recorded and considered as copyright material. It cannot be recorded or rebroadcast without permission and participating in this call implies your consent to this procedure. Please be aware of our safe harbor statement on Page 2 of the slide deck. It applies throughout the conference call. And now I hand over to Burkhardt, our CEO, for some opening remarks, followed by our CFO, presenting the financial development. Burkhardt, please? Burkhardt Frick: Sven, many thanks, and also thanks for your great contribution over the past 3.5 years. We really enjoyed you having on board, and I'm sure you will have an exciting future ahead of you. So thanks a lot from my side. Let's now start with an overview on the key financials for 2025. Our order intake ultimately came in at EUR 354 million, more on this shortly with a particular focus on the fourth quarter. Revenue recorded at EUR 503 million, once again, a double-digit growth and exceeding EUR 0.5 billion for the first time. Profitability with a gross profit margin of 35.7% and an EBIT margin of 13.1%, we came short of our initial margin expectations. However, we did meet our most recent guidance. Now a few more words on revenue. EUR 503 million marks another record revenue figure and an all-time high for SUSS. Even more important, we have increased revenue over the past 2 years from around EUR 300 million to EUR 500 million, an increase of EUR 200 million. SUSS is now a significantly larger and more capable company. We are a growth company, and we intend to resume this growth in the midterm. Regarding order intake, in November, I stated that we could achieve EUR 100 million in order intake in the fourth quarter. We now can confirm an order intake of EUR 117.5 million. The book-to-bill ratio was thus around 1. Both segments contributed to the improved order situation with AI being the dominant driver, both in terms of HBM and CoWoS. Further good news, this positive momentum has continued into the first quarter of 2026. Now on profitability. We explained the deviation from our original plans during the Q3 conference call. And as we said in the Capital Markets Day in mid-November, we introduced the new product generations and innovative solutions to achieve a substantial improvement in margins. That's why we are very much looking forward to the next 2 to 3 years and the multiple launches we have lined up. Now let's take a look at the performance of our 2 segments. First, Advanced Backend Solutions. Order intake was approximately EUR 25 million lower than in the previous year and was distributed fairly evenly across the 3 product lines: imaging, coating and bonding. Demand for our imaging systems, specifically for UV projection scanner used in CoWoS process remains strong. Demand for bonding solutions was lower than in previous year, but has improved since the fourth quarter. Revenue grew by 10.7% to around EUR 350 million, while bonding was below 2024. Imaging and Coating Systems contributed the most significant growth, each posting an increase of more than 50% compared to the previous year. Profitability was significantly lower than in previous year, primarily due to weaker product and customer mix, strong growth in Imaging and coating and the frequently mentioned increased temporary ramp-up support provided to our customers for already installed tools as well as the establishment of our new production facility in Taiwan. Now to Photomask Solutions. Order intake of approximately EUR 80 million was significantly down by EUR 43.5 million from the previous year. Out of this number, EUR 31 million was due to lower orders from Chinese customers. However, Q4 showed an improved trend versus Q2 and Q3. Revenue growth of 17.3% to over EUR 150 million is very encouraging. Thanks to our improved operational capabilities, we have further significantly reduced our backlog and accelerated the completion of customer projects. Higher sales volume and an improved product and customer mix also led to a 5% point increase in the gross profit margin and an 8% point increase in the EBIT margin. Now let's zoom in on the fourth quarter of 2025. I already mentioned the positive order intake of EUR 117.5 million, reversing the negative trend of the first 3 quarters. Of this amount, EUR 92 million was attributable, difficult word, to the advanced back-end solutions and EUR 25.5 million to Photomask Solutions. We once again received several orders for our UV projection scanner for CoWoS process as well as for HBM-related follow-up orders, particularly for one of our memory customers. Orders for our mask aligner from customers in mainstream applications have also improved significantly. It may still be too early to speak of a turnaround in this business, but this was certainly a strong intake quarter. Revenue of EUR 119 million was almost unchanged from the third quarter of EUR 118 million. This demonstrates our significantly greater stability when it comes to executing customer projects. Gross profit margin remained low at 34.9%, though it improved slightly compared to the third quarter, where we had 33.1%. EBIT margin was 9.8%, which was slightly lower than Q3, but still better than we originally had expected. To wrap up the first part, here's a look at our new production facility in Zhubei, Taiwan, which is already fully operational. Following the opening ceremony at the end of October, all relocation work has since been completed. As planned, we returned all existing locations to our landlords by the end of February. We delivered the first tool made in Zhubei, a UV projection scanner to our customer already in February. Production is now in full swing, as you see on this picture, about 10 tools were built in Zhubei during the first quarter in 2026. Further capacity increase is under preparation. Q1 '26 is, therefore, also the last quarter in which the P&L will be impacted by the implementation of the new site. And with that, I hand over to Cornelia for some details on our financial development. Cornelia Ballwießer: Thank you, Burkhardt, and also a warm welcome from my side to all of you. Here, you see our key financial figures. First of all, I would like to point out that the previous year figures have been adjusted due to accounting changes made in the connection of the preparation of the 2025 consolidated financial statements. These changes are explained in detail in the notes in our annual report, which has been published today. The adjustments for fiscal year 2024 in short are a sales adjustment amounted to plus EUR 0.5 million. Gross profit was adjusted by minus EUR 1.5 million and EBIT by minus EUR 0.5 million, and net income was adjusted by EUR 0.4 million. In a nutshell, the main changes are based on a more detailed approach to revenue recognition. In particular, installation service following the delivery of our tools and upgrades are no longer recognized on a point-in-time basis, but rather on a period basis. This is from shipment to final acceptance by the customer. The second significant change was made to the provision for the equity-based compensation, which is now recognized on a pro rata temporary basis over the entire 4-year period, the vesting period rather than at the time of the grant of the virtual shares at their estimated value. This resulted in an adjustment of plus EUR 1.2 million in EBIT. And now let's have a look on our financials here on the screen. The order book was EUR 266.8 million at the end of 2025. The vast majority of these orders will be produced, delivered and recognized as revenue throughout 2026. Expenses for selling, administration and R&D increased from roughly EUR 100 million to EUR 118 million in 2025. The main reasons were an increase in R&D, plus EUR 7 million spending to support several product and technology development projects and for IT and digitalization projects, such as the mitigation of our ERP system. But that's not all. There are some other systems we introduce. And the full cost impact of new hires made in 2024 has an impact or the full impact in 2025. Net profit amounted to EUR 46.1 million in 2025, down from EUR 110 million in 2024 when the sale of the MicroOptics business had resulted in a significant onetime gain. Cash and cash equivalents were at EUR 98.7 million and compared to 2024, reduced by EUR 33.5 million. And this mainly because of a significant lower prepayments from our customers and of course due to our CapEx in 2025. Net cash amounted to EUR 49.1 million in 2025. And this is because of the deduction of the leasing liability from the lease agreement for our new Zhubei site which caused this decline. Free cash flow from continuing operations was EUR 20.6 million (sic) [ EUR 22.6 million ] in 2025 and in total at minus EUR 26 million. The fourth quarter was cash flow positive at EUR 5.6 million, but that was not enough to bring the figure back to 0. As our dividend policy is based on free cash flow and is designed for a payout of 20% to 40% of this figure, a dividend of EUR 0.04 per share will be proposed to the Annual General Meeting in June. CapEx increased to EUR 23.2 million in 2025, driven in particular by our new site in Zhubei. Now let's move to the development of our main financial KPIs over the fiscal year. Please be aware of that the '25 quarterly figures are as reported. This means they are not restated. In our reporting, in 2026, all prior year figures will be restated. Burkhardt has already mentioned the significant improvement in order intake in the fourth quarter of 2025. While this can certainly be attributed to seasonal factors and a traditionally strong fourth quarter, it is all the more important that we are able to confirm this improved demand in the coming months. We have already discussed profitability in the past. This overview clearly shows that profitability came under pressure particularly in the second half of the year. The decline in the second half of the year is not unexpected. The weak order intake in the first 2 quarters and the shift in its composition as well as some nonrecurring items and extra costs are clearly evident here. To achieve a significant improvement, we are working on new higher-margin product solutions, which will only begin to gradually impact the P&L starting in 2027. In both segments, we have an order intake trend reversal with strong bookings in both divisions versus previous quarters, and this trend continues in the first quarter. Photomask Solutions benefited in the fourth quarter from product and customer mix, also in connection with upgrade and service business and from some currency gains. The fourth quarter of Advanced Backend Solutions, a lower top line in the fourth quarter than in the third in combination with very negative product mix affected gross profit margin and EBIT margin. There were a lot of UV scanner, but we had the lowest amount of bonus in the fourth quarter. As you know, the double rental costs for the new fab in Zhubei affected the result. And in addition, write-offs for clean room equipment in our old Hsinchu site, which cannot be used in our new fab in Zhubei. This impacted the result in the fourth quarter. And also R&D expenses rise in the fourth quarter to support future growth projects. The R&D expenses also left the mark on the fourth quarter, especially projects for left chamber improvements and for a CoPoS project. On this side, we see our order intake by segments and regions. The order intake by region shows a familiar pattern. The APAC region once again accounted for the largest share of new orders at around 77%, with Taiwan as a dominant contributor. The remainder was distributed relatively evenly between EMEA and Americas. Now I would like to present the main balance sheet developments. Total assets increased by EUR 7.6 million. For the noncurrent assets, the main driver was the Taiwan expansion with the right-of-use asset and CapEx for the interior layout of the building in Zhubei. And as well, there were some CapEx in Europe, around EUR 8 million, mainly in Germany. In current assets, we have a decrease by EUR 54 million to a total volume of EUR 386.7 million. Inventory declined by EUR 39.1 million on a year-on-year basis and amounted to EUR 171.6 million at the end of '25. Contract assets and trade receivables in total increased by EUR 20.6 million. Cash and cash equivalents decreased, as I said, by EUR 37.5 million and of course, due to free cash flow of minus EUR 26 million. And of course, of the dividend payments in the last year and some repayments of our financial debt together in the amount of around EUR 10 million. On the liability side, the main changes already happened in the second quarter with the inclusion of the leasing liabilities from the Taiwan site. In noncurrent liabilities, the main driver was this lease liability for the Zhubei site. Current liabilities decreased at the same time, minus EUR 60.2 million. Here, the major drivers were lower prepayments from our customers who supported last year's steep ramp. And now we have less orders from customers, which usually accept prepayments. Equity increased by EUR 32.5 million, and equity ratio was at 62.2% at the end of December '25, which means that we have improved the equity ratio by 5.6 percentage points. Net income contributed with EUR 46 million and other comprehensive income and dividend payments amounted to minus EUR 13.7 million. And finally, I would like to give you a brief overview of the new syndicated loan, which we announced back in mid-February. Despite the current healthy liquidity position, it is very important for us as a company to increase our financial flexibility to finance further growth and to maintain sufficient reserves to cover industry typical fluctuations. We achieved this with the new syndicated loan agreement and the volume has roughly doubled to EUR 115 million, thereof EUR 85 million for revolving credit facility and EUR 30 million for guarantees. The new contract has a term of 5 years with 2 optional 1-year extension periods. We are now even better positioned to support our growth plan and we have sufficient buffer against industry-specific fluctuations as well as against a general deterioration in economic conditions and economic cycles. Finally, we had significantly reduced the liquidity risk. And now I gave back to Burkhardt, who will present the outlook for 2026. Burkhardt Frick: Thanks, Cornelia. As you said, I now would like to come to the guidance overview. As said before, 2026 will be a transition year. After that, we expect to resume our growth path. Forecasted sales range of EUR 425 million to EUR 485 million, indicating a decline of 9.6% at the midpoint of the range. We see a broadly stable gross profit margin of 35% to 37%, but a declining EBIT margin of 8% to 10%. On the next 3 pages, I will provide a bit more color on all 3 KPIs. First, on the sales guidance of EUR 425 million to EUR 485 million. When we compare the starting points for 2024, 2025 and 2026, obviously, we are beginning the year with a significantly lower order book. You see a detailed comparison on the right side. As a result, visibility at the start of the year is lower. Therefore, we decided to expand the guidance corridor from previously EUR 40 million to EUR 60 million. The extent of the revenue decline compared to 2025 will highly depend on the volume of orders we will receive in the first half of 2026. Thanks to our improved operational flexibility and shorter lead times, we will be able to execute the majority of the orders between January and June within the same year and recognize them as revenue. On gross profit margin, we forecast 35% to 37%, and thus are broadly stable in our expectation. As said before, in the financial year 2026, we will be offering more or less the same portfolio as in 2025. For portfolio-driven substantial improvements, we will launch and ship our new product solutions in the next 2 years. A change in the product and customer mix could still affect margins during the year, depending on the order intake from the first half of the year and beyond. For example, higher demand for Bonding solutions would generally be beneficial for us. Then there are various effects that are likely to neutralize each other. On the positive side, fewer one-off events such as the establishment of a new site in Taiwan and a more normalized ramp-up support for our customers for already installed tools. On the negative side, the impact of the expected decline in revenue on the fixed cost coverage. Finally, our EBIT margin, which is forecasted to a range of 8% to 10%. We had already explained in the Capital Markets Day that the expected decline in revenue is likely to impact the EBIT margin development. In that regard, I don't think the guidance came as much of a surprise. A few analysts had already placed their estimates within that range. So here is what we do expect to happen. First, lower sales volume, combined with a broadly stable gross profit margin will weigh on profitability. We have made a conscious decision not to reduce the R&D budget despite the lower revenue forecast. On the contrary, we actually expect an increase in this area as we are setting the base for future growth in the coming years. At the same time, we expect only a slight increase in sales and administrative expenses, and I can assure you that we will continue to strictly manage those budgets. Now some words on the expected development in our 2 segments. First, Advanced Backend Solutions. Expected sales decline of roughly 10% versus '25 is expected. Slight increase in gross profit margin and a broadly stable EBIT margin as lower business volume will have an impact on profitability. We anticipate the following trends in the market demand. Imaging Systems, there we see a stabilization of the strong 2025 level provided there is continued CoWoS-related demand for additional UV projection scanners. Coating, we see a slight improvement expected provided that the mainstream business picks up alongside a continued strong packaging and OSAT business. And on Bonding, significant improvements versus 2025 are expected as HBM customers commit to add more capacity again after a temporary digestion period which we experienced last year. Secondly, on Photomask Solutions, we have similar sales expectations as in the backend unit with roughly 10% versus 2025. Profitability is expected to decline as a result of the lower sales volume. On the market outlook, I can comment that we expect an improved order situation as high demand for semiconductors, again, driven by AI requires additional front-end equipment, see also the strong ASML order trend and consequently, also additional mask cleaning equipment. Preparation of customers for the introduction of High-NA also can play a role. Potential for additional momentum from the launch of 3 new solutions like the high-end mask cleaner, the mid-end mask cleaner and the first wafer cleaner addressing the 200-millimeter market can also give us a boost. When looking at our guidance for 2026, some might think that this year represents a step backwards for SUSS. I personally don't see it that way. As said, 2026 is a transitional year or rather a year of preparation for further growth and a substantial improvement in margins by 2030. These goals, which we presented in November Capital Markets Day, remain unchanged and recently are even getting tailwinds. Thanks to a strong focus on R&D and the development of new innovative solutions and next-generation products for selected faster-growing markets, 2026 is an important year and a necessary stepping stone into our bright future. And with that, we are opening the floor to your questions. Operator: [Operator Instructions] We have already received some risen hands, for example, by Mr. Menon. Janardan Menon: Burkhardt, I just want to check whether you can give us any indication on how you would expect your sales and gross margin to trend through the year? Is it possible that Q1 is your low point for both sales and gross margin and then you will see a gradual improvement from there? Would that be a reasonable assumption? Or any other color how you see the first half versus the second half develop would be great. And I have a small follow-up. Burkhardt Frick: Janardan, that's a really good question. And of course, you are spot on. We see really us hitting in Q1 as a low point of the effects we saw last year. Remember, we had a 3-quarter declining order intake, and it started showing, of course, in the last quarter of last year, and it will extend into the first quarter. However, this is offset, of course, with a reverse trend in order intakes, which, of course, will take a couple of quarters to materialize in an improved situation. So we think we are approaching the bottom here and will climb up from there. Janardan Menon: Understood. And then I was in Taiwan recently, and there is some talk in the Taiwan market about TSMC looking to localize their equipment, especially on the backend where possible and working with some of the local companies. I was just wondering whether you have any thoughts on that. Do you see this as a potential threat? Or is this mainly in areas where SUSS is not involved right now? Burkhardt Frick: I see that as an opportunity because we are local at the doorstep of Taiwan with our main production site. That's, by the way, also where we are developing our next-generation EUV scanner also in Taiwan. So in that sense, you could even call us a local company. But at least on those products we are designed in, I think we have a fairly solid position. Janardan Menon: Understood. And last one, a short one. Is the prepayments that have fallen, is it mainly Chinese customers that give you prepayments? And is the cash impact because of lower China orders? Cornelia Ballwießer: Yes. Yes, it's the Chinese customers and Chinese demand is not that strong. But there are some other institutes like R&D institutes who make prepayments, but mainly from China customers. Operator: We have another question from Madeleine Jenkins. Madeleine Jenkins: I have a few. Just the first is on a slide you just showed on the different segments. And if I understand it correctly, you're saying that Imaging is going to be kind of roughly flat so as Coating and then Bonding is significantly higher than 2025. But then you've got your sales expectation down 10%. So I'm just trying to understand where exactly that weakness is coming from for that sales forecast. Burkhardt Frick: Madeleine, also good question. Of course, the lower expectations, they stem from the accumulated order intake we collected in the last quarters. So from this, we can, of course, pre-calculate what we have already in our books. The rest, of course, are orders which we have to collect in the running year, mainly in Q1 and Q2 and '26. And both together will, of course, create a forecast which we picked. We picked there a decline of 10% for both units because we see various effects, as I think detailed out in our presentation. For Photomask, it's the decline we saw from Chinese customers. And for the backend, it's really the combined effect of the low intake we have received so far. Now this trend, we see partially being now offsetted, but we need to know and, of course, experience how strong this new high order intake trend will last. Madeleine Jenkins: Perfect. Makes sense. And then my second question is just on HBM. I think you mentioned in your opening remarks that only one of the customers was really in the Q4 order book. Do you have any indication of when the second customer might come in? And also at your Investor Day, you mentioned the potential qualification of SK Hynix. Is that -- could you provide an update on that as well, please? Burkhardt Frick: Yes. As you know, the other Korean customer still sits on a lot of underutilized equipment. So we carefully planned in some kind of demand resuming in the second half of this year. But of course, that has to materialize. But I have some good news on the other -- the second Korean memory maker. There, we did receive some HBM-related orders. So basically, we can now claim that we are in all 3 major memory makers. Madeleine Jenkins: That's great. And just a final question quickly. On the wafer-to-wafer hybrid bonding side, there's a lot of talk recently on its kind of application in 4 F-squared in DRAM. I just wondered if you're kind of in any early conversations here. Do you expect to be inserted in supplier for this in the next few years as that transition is made? Burkhardt Frick: Yes. Hybrid bonding, as you know, Madeleine, is moving a bit sideways, a little bit away from die-to-wafer application because runways are extended for TCB bonding equipment and also some customers, they are struggling with the process. Therefore, wafer-to-wafer hybrid bonding also comes in because you can bond the wafers first and then do the die stacking. I think there's some momentum going on there. But I think it's still in a, I would say, more experimental phase where we do see some interest, but we haven't seen it materializing yet. As you also know, we are not at the forefront with wafer-to-wafer hybrid bonders. I mean there are 2 other customers -- sorry, 2 other suppliers ahead of us. But we have our systems at IMEC, where we are running tests, and we can provide very good data. So I also expect more momentum picking up on that side also where we can benefit from. Operator: We have another question by Michael Kuhn. Michael Kuhn: Firstly, on the transition year again, maybe you could provide us with an update on, let's say, which of the products, the renewed products or the all new products you expect to contribute to sales first? What kind of ramp-up costs you expect and whether you see, let's say, some cost portion that you incurred this year as kind of nonrecurring and also for the context of R&D, is that mostly on medium-term projects? Or is there also a bigger portion, maybe including some external providers for, let's say, final engineering steps ahead of the product launches? Burkhardt Frick: Michael, yes, that's quite a mixed bag there. So let me start with the R&D side. So yes, we have external and internal R&D. And I think we made very clear in our call here that we have not reduced our spend in R&D. In reverse, we increased the spending to make sure that we can stick to the launch timing of those products we have in our pipeline. The first products are coming out this year, and there are notably 3 Photomask products. One is the high-end mask cleaning, the MaskTrack Smart. There we received the first order also in the first quarter of a large memory customer. And so that's the first shipment we are preparing for the second half of the year. The mid-end mask cleaners, we also there, are working on the first systems because we have more than a handful of firm orders for that mid-end cleaner, which will replace also our aging mid-end platform, which we then take from the market. And the wafer cleaner, that's the third product, we also received first hardware, and we are doing our internal commissioning and evaluation before we send it to a launching customer. So there are 3 projects which are really in the final stage for rollout this year. And then there's a backend product, which is our EUV scanner, which is panel capable, 310 x 310 projection scanner, which will be launched in Q3, also, of course, with a large Taiwanese target customer who already has set up a pilot line to evaluate the panel application. So in that sense, 4 products, which are launching this year. Maybe we can squeeze in the fifth, but we have to see to get all these projects on the road. And that's also the reason why we deliberately in that sense, bit the bullet in high continued spend in R&D because we want to make sure we are not letting down the customers. And we anticipate, therefore, this gap or this drop in EBIT. But this is, in our view, just very short term until we can reverse the trend. Michael Kuhn: Understood. And then maybe a follow-up in that context on wafer cleaning. At the CMD, you mentioned you're obviously starting with 200 millimeter, but saw pretty strong demand also for 300 millimeter and also accelerate that project. Where do we stand here in the time line? Burkhardt Frick: Yes. I mean, as you rightly said, the launching product is a 200-millimeter product. We want to, of course, get some feedback first, a, from our internal evaluation and then, of course, also from the first customer feedback, which is then also an input for the design. But we are preparing the design phase for the 300-millimeter tool in combination with an external partner. And we probably will kick off that design in the second half of this year, and we should see first hardware in the first half of 2027. Michael Kuhn: And then last one on the new EUV scanner. My understanding is that the current product comes with a relatively low gross margin. So should we expect the new product to be launched in Q3 to have a, let's say, sizable effect on the gross margin then because it's probably a relatively big part of your top line right now? Burkhardt Frick: Yes. That was the point in also redesigning this platform, which really came to age. Unfortunately, of course, the current CoWoS run, I couldn't wait for that. That's why we have to ship the old version, and we probably have to keep doing so because the first product we are launching is the panel version, which goes into a pilot line and panel production is not going into volume until '28-'29 time frame. So -- but very shortly after this panel version, of course, also our wafer version of the UV scanner, the next generation is coming. But that launches in 2027. And that, of course, depending on the conversion rate will then also improve this very low margin for the current DC. Operator: We have another question from Mr. Schaumann. Malte Schaumann: First one is on timing for potential Photomask uptake in demand for Photomask orders. We have seen quite a strong Q4 order intake at ASML, obviously, with shipments mostly scheduled for 2027. Is that kind of supporting the assumption that you would expect an uptake in demand in the second half of this year for the Photomask cleaning business? Burkhardt Frick: Yes, Malte, that's a good assumption. Of course, we are loosely connected because lead times and cycle times are very different if you compare us with an EUV system of ASML. But ultimately, we should see these effects. And as a matter of fact, we already see those effects because despite our expected decline in China, we currently see Chinese customers speeding up again, especially for photomask tools. But we also see international customers considering to pull in orders. So we are in the middle of evaluating the impact of that, but that is a trend which started late in Q4 last year, and we see it continuing in this quarter -- in the running quarter. Malte Schaumann: Okay. And for the Chinese demand you alluded to, is that then linked to the new mid-end cleaner? Or would these customers still order the current equipment? Burkhardt Frick: Actually, both. Of course, due to the equipment in use in China, the mid-end cleaner is more suitable for that market. But we see still a fairly high amount of high-end cleaning demand picking up again in China, which we didn't anticipate. Malte Schaumann: Okay. A quick one on Hynix. Do you see or do you expect kind of more or less regular follow-up business when production lines get extended with the product you have placed at Hynix? Burkhardt Frick: No, we are only interested in one-off sales, Malte. No, sorry, but I make a joke here. So obviously, yes, that's the intent to see follow-up business. But I think for us, it was important to get back into the door. So we are not talking volume orders here, but at least we have our hardware place now in the most recent HBM R&D line, which we can then, of course, exploit and hope fully get follow-up business. Malte Schaumann: Okay. Then on the guidance, I mean, given the current strength in orders that has continued into the first quarter of the year, the low end of the guidance at the sales level, actually appears a bit low. Is that reflecting uncertainty at customer level you're recognizing? Or is that rather linked to the overall global situation, which is not that stable at the moment? Burkhardt Frick: Yes. We -- of course, one good quarter doesn't make a full year, as we all know. And although we really have a very strong expectation because the quarter is almost over for the first quarter in intake. We have to see how long this strong push remains. When we created the guidance and also set our budgets, we had quite some expectations, and there was also a certain concentration in the second half of the year. But now we got strong demand already in the first quarter. And we have to see if this is a continued trend because if the second half also remains strong, then of course, we can come up with better results. Also the mix will have an important contribution here. So -- it's too early to just base it on one strong first quarter in order intake, I must say, because in sales, we will not see a strong first quarter. Malte Schaumann: Yes sure. Okay. Last one on double costs or one-offs, which are baked into the earnings guidance for this year. So are you able to quantify an amount, which is linked to double rent ramp-up costs and the like? Cornelia Ballwießer: There are some one-offs regarding Taiwan, as you know, because in the first quarter, we have some double rent double cost. And yes, that's more or less what we included in our guidance. Malte Schaumann: And that is a low single-digit amount. Cornelia Ballwießer: Yes, it's 0.4, something like this. Operator: We're moving on to Mr. Ries. Johannes Ries: Also a couple of questions from my side. Maybe let's first start with Taiwan, a short recap. How high was this payment you had made for the leasing which reduced the cash significantly? Remind us, please, how high this impact was? And how high is -- how much capacity you have now finally in Taiwan only to a reminder because it gets more and more important. Thomas Rohe: So Thomas speaking. The investment in Taiwan was a low 2-digit million euro budget, which we invested into the clean rooms and all these kind of stuff. And the leasing contract is now for 20 years and about EUR 40 million of leasing agreement, which we have there. But the cash out is really only on a yearly base for sure, but the leasing has to be accounted in our books already for the complete period. And the capacity only to really make this clear, we are really fully loading the factory as much -- as soon as possible. Right now, we have a load of around, let's say, about 70% with the old sites, which moved all into the new sites. So we are really heavily working to fill it up completely by at least the end of the year. Cornelia Ballwießer: Sorry, I just want to add, as Thomas explained, of course, the leasing liability is booked. It's around EUR 40 million. But you asked for cash out, and cash out is around EUR 2 million to EUR 2.5 million this year. Johannes Ries: Okay. The reduction in last year, but you mentioned partly was the leasing reason that the net cash or the cash has come down heavily. So that's a booking effect. Cornelia Ballwießer: Yes. It's KPI net cash figure, but it's not -- yes, it does not really says something about the duration of the liability in this case. So it's just net cash. But cash out is over the 20 years. Johannes Ries: Clear. On the capacity, from a revenue, how much revenue you can handle with the capacity you have now in Taiwan? Is it -- I have something of EUR 150 million, EUR 200 million in my head. Is that right? Thomas Rohe: That's a really good question, but it heavily depends on the product mix. As you know, we are introducing scanners there, coaters and bonders. And so from that point of view, it's really hard to say how much really revenue we can generate with this. But in general, I would say right now because we have half-half between Germany and Taiwan. So from that point of view, it's roughly perhaps the right order of magnitude, probably a little bit higher. Johannes Ries: Okay. Half of the total revenue came already from Taiwan? Thomas Rohe: Not yet completely, but we are targeting for this. Johannes Ries: Super. On the OSAT business, we hear from the OSAT that they are Amkor and ASE that they definitely heavily increased their budget. How much you have already seen in your own order income is much more -- it's more to come in the coming quarters from this side? Burkhardt Frick: Johannes, it's Burkhardt here. We already saw it last year, and I think I also mentioned that we saw this strong uptick for our Coating and Imaging business, which was mainly on the coating side contributed by additional demand from OSATs. They are expanding in their existing sites in Asia, but also they are planning to expand in the U.S. as also some other companies are. So there also, we expect a continued strong demand. Johannes Ries: And you mentioned that the Coating and Imaging business, there's also scanner in, which is low margin, but there's one reason for the lower margin. I always in my head that the coating -- at least coating had a quite good margin. Has it changed? Or is it only that maybe the scanner has brought down this average margin of Imaging and Coating? Burkhardt Frick: Coating is kind of pretty in the center of our margin distribution. So it is not as good as the bonders, but by far not as bad as the EUV scanners. Johannes Ries: Okay. I expected this. And also for your forecast, you're expecting a stronger business with temporary bonding for this year, but the margin in Advanced Backend Solutions will nearly stay flat. What is the reason? Because last year, it was a pressure coming partly from the temporary bonding came down, we expect an increase. Why is not maybe -- why we couldn't see a little bit stronger margin development in Advanced Backend? Burkhardt Frick: It depends how many more orders we see, especially from the bonding side. When we set out these corridors, we assumed a certain mix. We now see strong intake also on the bonder side. But we have to see how sustainable this is, Johannes. As I said, one good quarter doesn't make a full year. If the other Korean HBM maker doesn't place orders in the second half of this year, then I think we did everything right in our prognosis. But a lot of things can be happening. And as we saw last year, where we had to go in and correct twice our guidance. This is something we don't want to repeat. Johannes Ries: It's clear. But the bonding business is still above average at the margin side. Burkhardt Frick: Yes, well above average. Johannes Ries: Last question, R&D, will it further increase this year and only feeling how much it could increase? It will further increase but how much? Thomas Rohe: So it will increase only slightly. There are no big change really planned for this year. That's much more than EUR 2 million or EUR 3 million in total in absolute values. But we try to keep the headcount stable and also the investment in R&D. Burkhardt Frick: Maybe to add, Johannes, since the top line reduces, so the R&D ratio increases even faster. Johannes Ries: That's a fair point. Very fair point. But finally now, because I will meet him in person in the weeks, but I think it's the last call maybe of Sven as IR. And I think maybe even in the name of all other participants, all colleagues, I really want to say thank a lot for his work and great support, and it was a pleasure to work with him. Sven Kopsel: Thank you so much, Johannes. It was my pleasure. Operator: We're moving on to Mr. Devos. Ruben Devos: I had one follow-up on the EUV projection scanner. I think you've provided already quite some indications, but I was looking or whether you were able to maybe quantify what the EUV scanners actually contributed to the top line last year and whether you could give us a sense of the 2026 order funnel because I mean, there's many growth parameters out there. I think in itself, the products could be quite sizable for you, not only this year, but in the next 5 years. So it would be very helpful if we know a bit where you are currently. Burkhardt Frick: Yes. It's, I think, fair to say that the revenue contribution of the EUV scanner alone was between EUR 30 million and EUR 40 million last year. And this year, this number will be larger. Ruben Devos: Okay. All right. That's very helpful. I think on the -- and then just thinking about your other, let's say, younger products out there, thinking about the hybrid bonders, but also the inkjet printers, like on a combined basis, are we thinking this is about 5% of sales in '26? Or how should we think about that? Burkhardt Frick: Yes, that is really a low contribution because we sold single units to customers who are evaluating those systems. So this is not what I call a volume state. We are at the very beginning of that. So we had last year 2, 3 systems we sold. This year, we probably also have a couple of systems, but it's in the very single-digit percentage range. Ruben Devos: Okay. Okay. And then just for the temporary bonder business, looking a bit further out, with HBM4E and HBM5 sort of requiring thinner dies and even more bonding complexity. Are the existing platforms already compatible with those, let's say, next-generational stack requirements? Or will there be a meaningful upgrade or new tool generation needed? Burkhardt Frick: Well, our current generation of temporary bonders is, as we speak, qualified for HBM4. Otherwise, we wouldn't have received those orders. But of course, we are continuously improving those -- our products and also listening to our customers, what else they need. So we have, in parallel, a flanking program to improve bond chamber performance to meet also future needs because we are working both with the volume side of those customers, but also with the R&D centers who already work on the next N+1, N+2 generation of HBM stacks. So we stay tuned. And then we work with our customers when are we phasing in which improvements. It can be a running change. It can also be introduced in the next-generation platform. So we do both. I hope that helps. Ruben Devos: Okay. Great. And then just a final question on, I think co-packaged optics, you also talked about in the CMD, specifically on co-packaged optics on the interposer as a potential future opportunity. I mean, in the last few months, excitement on co-packaged optics has quite strongly accelerated. So my question is like within that further integration complexity, do I understand it well that basically your EUV scanner and coating portfolio map well on to this? And what is generally the last -- the traction you've been seeing in the last 3 to 6 months on Photonics in general? Burkhardt Frick: Yes, you're absolutely right. There's a lot of hype there, and we are kind of positioned with our existing portfolio. But of course, we need to enhance or upgrade our portfolio to also serve the co-packaged optics market well. So -- but it's from our side, more kind of technical feasibility, what additional features are needed, which can be added to our existing portfolio to also play a role there. But it's too early to really turn this into concrete products. So right now, it's on our side in an R&D development stage. And as soon as we have something noteworthy to report, we will do so. Operator: I think Mr. Schaumann has a follow-up question. Malte Schaumann: One follow-up question on the orders in the first quarter of the year. I mean the environment is pretty dynamic. So a continuation of the trend can have several meanings. So maybe some more color on what does that actually mean? I mean, typically, Q1 is not the strongest quarter in terms of order intake. So despite that fact, should we expect kind of more or less stable order development from the fourth quarter and the first quarter, which would be already good? Or do you see even an acceleration? So some additional color would be appreciated. Burkhardt Frick: Yes. I was almost fearing that this question will come, but it comes late now. So the -- I mean, first of all, I can confirm that we are breaking with that trend that in terms of order intake, this first quarter in '26 is a really very good quarter since we are in the last 2 days of the quarter. Of course, we already know what's coming. We know most of it. And I can say that much that we will be well above the Q4 number of last year in terms of order intake. Operator: We have another question by Mr. Jarad. Hello. Can you hear us? I can see that you're unmuted, but I cannot hear you. Abed Jarad: Yes, sorry. I have a question regarding -- a follow-up question regarding the sales forecast. So maybe you can help me understand it better. But based on your order book of EUR 267 million and assuming like 18% of aftersales, your implied order intake needed in H1 to reach the midpoint is very, very modest. And you are saying that in Q1, order momentum was strong. Burkhardt Frick: Yes. Of course, we need to have 2 strong quarters to complete the year because only what we have an intake in the first 2 quarters, the majority of that, we can still turn around in products assembled, shipped and recognized. So the first quarter, if that is strong, definitely helps to secure the guidance we provided. If we have a second quarter, which is also strong, that pretty much gives us some assurance that we are safe with that guidance. But again, this is speculation, so I don't want to speculate. I can only see a strong order momentum carried over from last quarter into the first quarter. And based on these 2 quarters, we have made our sales projection. Abed Jarad: Okay. Maybe correct me if I'm wrong, did you just mention that Q1 order intake is above Q4? Burkhardt Frick: Yes, I did. Abed Jarad: Okay. Wouldn't this already put you on the midpoint of guidance? So EUR 267 million plus EUR 117 million, let's say, and 15% after -- even assuming conservative 15% aftersales, you are above guidance? Or am I -- like midpoint of guidance? Burkhardt Frick: Well, first of all, the EUR 117 million of Q4 already included in the order book. So I cannot follow your math there completely. But yes, of course, the first -- if we have a strong first quarter, that relieves some of the concerns because it's a continued reversal of the trend at a very high run rate. And if we can also get a decent second quarter in, then I would start agreeing with you, but we are not yet in the second quarter. Sven Kopsel: Maybe, Abed, if I may add one sentence, the order book number of our annual report also always includes service business. So if we get service business, for example, a contract for 2 years, the entire period, this 2 years period is included in the total order book number. So service is not getting on top completely. It's partially already included in order book. Operator: We have one more question in our chat box by Mr. [ Dion ]. He's asking, do you see competition of ASML in the scanner business? And do you think there could be a competitor in hybrid bonding as well? Burkhardt Frick: Yes. I think ASML was late to the party to also join the backend business with the recent announcements and also their focus in that arena. I mean they already have a scanner out there targeted for backend. But this one, we don't see as a competition in the CoWoS process we are currently involved in. However, that is, of course, competition for other markets, our real competition, which is Canon is facing. So that I don't see us as a threat. The other activities, I think it's too early to gauge where this is heading. But of course, I mean, there are other companies, whether it's AMAT or Lam and already TEL who is already active in this domain. So with ASML, this is just the last party -- the last company joining the party. And I think this ultimately will just help the ecosystem to get on common ground here. So I see this rather as an opportunity to collaborate than anything else. Operator: I guess we have one last question by Mr. Jarad. He is raising his hand again. Abed Jarad: Yes, my bad. That was a mistake. Operator: Okay. Thank you so much. Well, with no further questions, we have come to the end of today's earnings call. Thank you very much for your interest in SUSS MicroTec SE. And a big thank you also to you, Mr. Frick, Mrs. Ballwießer, Mr. Rohe and Mr. Kopsel for your presentation and your time. If any further questions arise at a later time, please feel free to contact Investor Relations at SUSS MicroTec SE. I wish you all a successful day, and I'm handing over to Mr. Kopsel once again for your closing remarks. Sven Kopsel: Yes. Thank you so much and nothing really to add. So take care and yes, get in touch if you have any more questions. Thank you. Take care.
Unknown Executive: [Audio Gap] I'm honored to become the host and to brief you on the performance of China Coal Energy, Shanghai Energy and Xinji Energy. We have this consolidated earnings briefing and to do the reports and outlook. We want to express our gratitude for the Shanghai Stock Exchange, Roadshow Center and all the live streaming platforms, and we appreciate your support for our group. Those attending our meetings, we have Mr. Gao Shigang, China Coal's Party Secretary, Board member; Ms. [indiscernible], China Coal's Independent Executive Director and CFO, Chai Qiaolin, [indiscernible] General Manager for the Chemicals Department; Vice Director for Marketing Department, Mr. Li Ping; China Energy's Chairman, Mr. Zhang Futao; Independent Executive Director, Mr. [indiscernible]; General Accountant, Mr. Zhang Chengbin, Energy General Manager, Mr. Sun Kai; Independent Executive Director, Mr. Yao Zhishu; Vice President, Guoxiu Zhang, General Accountant, Mr. [indiscernible], Board Secretary, Mr. Dai Fei and all the business heads for the 3 subsidiaries. We have 5 items on the agenda. First is the basics about China Coal Group, our performance in the 14th Five-Year Plan, our outlook for the next Five-Year Plan outlook. And then the 3 listed subsidiaries will brief you on our performance, our tasks completed and our work tasks for the 2026, and then we will have the Q&A session. Let's give the floor to Mr. Gao Shigang to give you a briefing about the China Coal Group, our achievements in the 14th Five-Year Plan and the outlook for 2026 and the next 5-year period. Shigang Gao: Distinguished Investors, ladies and gentlemen, good afternoon. Welcome to the 2025 Collective Performance Briefing for China National Coal Group's listed subsidiaries. I would like to express my sincere gratitude for your continued attention and support for China Coal. I will provide a brief overview from 4 aspects; the basic profile for China Coal and its listed subsidiaries, key achievements during the 14th Five-Year Plan and the development plan for the 15th Five-Year Plan and analysis of industry trends, outlook for 2026. First, overview of China Coal. China Coal is a key state-owned backbone enterprise under the supervision of SASAC as a central enterprise, covering the entire coal industry chain shoulders' important mission of ensuring national energy security. Our core businesses include coal development utilization and trading, electricity and heat production and supply, coal-based new materials and related chemical product development, equipment manufacturing and engineering and technical services. We have controlled proven coal resources reserves exceeding 70 billion tonnes with a total capacity of 310 million tonnes and annual trading volume of 400 million tonnes. We operate and construct 11 chemical projects with a total capacity exceeding 20 million tonnes we have an installed capacity of over 47 gigawatts for thermal power in operation and under construction and renewable installed capacity of 7 gigawatts. We hold controlling stakes in 3 listed subsidiaries, China Coal Energy, Shanghai Energy and Xinji Energy. By the end of 2025, the group's managed total assets exceeded RMB 650 billion with 120,000 employees. We have received an A rating from SASAC for operational performance for 6 consecutive years and have been listed in the Fortune Global 500 for 6 consecutive years. China Coal Energy, the core listed subsidiary of China Coal Group. It's a large-scale energy enterprise integrating coal production and trading, coal chemicals, power generation and coal mining equipment manufacturing. It was listed in Hong Kong in December 2006, and we returned to Asia market in February 2008. Shanghai Energy was listed on the Asia market in August 2001, primarily engaged in coal electricity, railway operations and integrated energy services. Xinji Energy was listed on the Asia market in December 2007 and became a holding subsidiary of China Coal in 2016, mainly involved in coal electricity and renewable. Second, the key achievements during the 14th Five-Year Plan period and development plan for the 15th Five-Year Plan. During the 14th Five-Year Plan period, China Coal and its listed subsidiaries diligently implemented the requirements from SASAC. We adhered to the general principle of pursuing progress while ensuring stability, enhancing efficiency from existing assets and driving growth through new businesses pursued 2 integrated business models, established and refined governance systems, innovative information disclosure, strengthened IR management, took measures to enhance market cap and promptly conveyed confidence while stabilizing expectations. We delivered remarkable achievements characterized by steady growth, structural optimization. The key features are: first, focusing on core businesses with enhanced core competitiveness with the mission of ensuring national energy security. During the 14th Five-year plan period, we fulfilled medium- and long-term coal contracts of 730 million tonnes, reserved 160,000 tonnes of fertilizers and supplied nearly 10 million tonnes of urea, and provided over RMB 110 billion in benefits to society. We completed investments exceeding RMB 200 billion and paid total taxes with over RMB 180 billion contributing to local economies. We optimized our industrial structure. Total coal production capacity reached 310 million tonnes per year, up by 22% versus 2020. Installed capacity of thermal power in operation and under construction exceeded 47 gigawatts, quadrupling versus 2020. Installed capacity of renewable in operation and under construction surpassed 7 gigawatts, achieving leapfrog development. Significant progress was made in the 2 integrated business models. Through coordinated efforts in resource and marketing, we leveraged the synergies of the full coal-based industrial chain. Distinctive integrated coal electricity chemicals, renewable industrial chain with China Coal characteristics has gradually taken shape. Second, we focused on strengthening our business, achieving improvements in scale and efficiency. The enterprise has grown rapidly with total assets increasing from CNY 400 billion in 2020 to over RMB 600 billion. Production volumes of major products achieved substantial growth. Since 2023, coal production has remained above 240 million tonnes. Power generation went up by over 80% and the output of coal chemical was above 10 million tonnes, maintaining a safe, stable, long-term full capacity and optimal operating status. The average annual operating revenue during the 14th Five-Year Plan period was up by 80% compared with the previous period. Profitability was enhanced with average annual total profit exceeding CNY 40 billion. Thirdly, we focused on value creation, achieving quality improvement for listed subsidiaries. During the 14th Five-Year period, China Coal achieved an average annual total profit of CNY 30 billion, up by 253% versus 13th 5-year period with market cap growing by approximately 200%. We consistently ranked among the top of the China Top 100 listed companies and received the Shanghai Stock Exchange's A rating for information disclosure for 16 consecutive years. Shanghai Energy focused on strengthening its fundamentals, making efforts in areas such as system optimization, lean management, policy utilization and bidding procurement, achieving cost reduction and efficiency improvement. Its average annual profit grew substantially, while its assets, market cap and stock price all maintained a stable upward trend. Xinji Energy promoted transformation and upgrading, advancing the integrated development of coal and power during the 14th Five-Year Plan. Its installed thermal power capacity went up by 298% from 2 gigawatts at the end of the 13th Five-year period to 7.96 gigawatts at the end of the 14th Five-Year Plan period, proving the effectiveness of the 2 integrated business models. Its average annual operating revenue increased with both average annual profit and asset growing. During the 14th Five-year period, the 3 listed subsidiaries cumulatively paid out dividends of CNY 30.9 billion, up by 360% versus the previous Five-year period. By the end of the 14th Five-Year Plan period, the combined market cap of the 3 listed subsidiaries reached CNY 176 billion. Fourth, we focused on problem-oriented approaches, achieving significant improvements in risk prevention and control capabilities. Safety supervision responsibilities were strengthened, safety awareness among all employees was enhanced, system support capabilities were reinforced. Overall safety production remained stable. We continue to strengthen pollution prevention and control, promoted application of clean production and energy saving emission reduction technologies, carried out mine ecological restoration, land reclamation, biodiversity protection and improved ecological environment in mining areas. Each listed subsidiary improved its ESG governance system, advancing specialized work such as climate change and double materiality analysis. Fifth, we focused on innovation-driven development, gaining momentum for transformation and development. The group refined its innovation system featuring a small internal brain plus large external brain. We established the National Natural Science Foundation of China Enterprise Innovation and Development Joint Fund in the field of Coal Energy, the National Key Research and Development Program, Disruptive Technology innovation key project, Energy Low Carbon Joint Initiative, reorganized the National Key Lab of digital and Intelligent Technology for Unmanned Coal Mining, established Energy and Low-Carbon Innovation Center of the Beijing-Tianjin-Hebei National Technology Innovation Center, got approval for the construction unit of the Central Enterprise Industrial green low-carbon original tech source and a leading technology-based enterprise with focused on national strategic needs. The development of original technology in the strategic emerging industries, the group increased our R&D spend by 2.2x compared with 13th Five-year period. Breakthroughs in key technologies were advanced, including special catalysts for polypropylene units filling the technology gaps. During the 15th Five-Year Plan period, China Coal and China Coal Energy will be guided by the Xi Jinping thought on socialism with Chinese characteristics for a new era, fully implement the spirit of the 20th National Congress of the CPC and its subsequent plenary sessions fully implement the new development philosophy, deeply implement the renewable security strategy of 4 revolutions and cooperation, respond to the major strategic decision of carbon peaking and carbon neutrality, fulfill our mission of ensuring national energy security, strengthening SOEs and state-owned capital and leading the high-quality development of coal industry, adhere to the dual wheel drive of efficiency gain of existing assets and transforming incremental assets practice. The 2 integration plus model build a hedging mechanism against the downward risk of the external market for own coal and against future carbon emission constraint, create an industry chain of coal, electricity, chemicals, renewable with China coal characteristics expand in emerging industry. Shanghai Energy will leverage its 3 major bases in Jiangsu Xuzhou, Shanxi and Xinjiang as strategic pillars to strengthen its coal power generation and renewable and integrated energy services. It will accelerate innovation, industrial transformation, achieving complementary advantages and tiered succession among its basis to become a benchmark for China Coal Energy's transformation in the Yangtze Delta region. Xinji Energy will focus on the Anhui and Jiangxi region aiming to create a CNY 100 billion level energy supply industrial cluster in East China. It will promote co-development of coal, thermal and renewable power with 7 major industrial bases in Huainan, Fuyang, [indiscernible] and Jiangxi, laying a solid foundation for high-quality development. China Coal will leverage the synergy of its listed companies to enhance high-end energy supply and service guarantee capabilities, striving to become a highly competitive integrated energy player by 2030 and by 2035, a world-class energy company with multi-energy complementarity, green and low-carbon exemplary leadership and modern governance. Third section, industry analysis. 2026 marks the start of China's 13th Five-Year Plan. China's development is characterized by strategic opportunities and risks with increasing uncertainties. The company's production operation reform and development will face a complex external environment. In macro economy, the world is undergoing accelerated changes with increasingly complex and intense great power competition affecting domestic development. At the same time, China has mismatched supply and demand and many risks and hidden dangers in key areas. However, the fundamentals supporting China's long-term positive economic outlook, including a stable economic foundation, numerous advantages, strong resilience and great potential remain unchanged. Supported by serious macro policies, especially the 15th Five-year plan, the development has great prospects. In terms of industry operation with profound adjustments in the global energy landscape and parallel construction of a new energy system, the green and low carbon transition is a long-term process. Ensuring energy security is essential for stable economic and social development and coal's role as a primary energy source and a safety net is more prominent. Considering international geopolitical tension, the supply and demand of China's coal market in 2026 is expected to be tight. The LTA mechanism for ensuring the supply of thermal coal will still be an anchor and the spot price of coal is likely to rise with more fluctuations. Looking into the 15th Five-year period, we are still in strategic window of opportunity. The foundational role of coal and thermal power will be strengthened and new power system with renewable as the mainstay is being accelerated. Technological and industrial innovation is integrating and a unified national market is advancing. This period presents both opportunities and challenges as well as pressures and drivers. Facing this new landscape, China Coal possesses the following advantages: first, resource and scale, abundant coal resources, ample production capacity, strong internal synergies, a solid development foundation and considerable industry influence. Second, value creation advantage. Lean management has been implemented with notable cost reduction efficiency gains and economic benefits and our operational performance consistently ranks among the top of the central enterprises. Third, industrial chain synergy. We continue to optimize our industrial structure, integrating coal, coal chemicals, renewables with more resilience. Fourth, innovation and mechanism. Investment in technology continues to grow. The science and innovation system is refined, giving us more momentum. Fourth section, outlook for 2026. In 2026, China Coal will adhere to the general principle of pursuing progress while ensuring stability, efficiency gains from existing assets and growth from new businesses focused on our core business, deepen reform and innovation, accelerate the green transformation, co-work development and safety, strengthen core functions and competitiveness, promote high-quality development and contribute to ensuring national energy security and achieving a good start for the 15th Five-Year plan. First, we will scientifically optimize production organization develop potential and enhance efficiency. We will carry out special actions to improve quality and efficiency, strengthen refined management and cost control. Second, we will focus on project development and advance strategy implementation. We prepare the 15th Five-year plan, develop the coal electricity, chemicals, renewables business, strengthen the modern industrial system, create new growth engines and enhance the hedging capacity. Third, we will consolidate and deepen reform achievements and drive reform to greater depth. We promote reform to the grassroots level, remove institutional and mechanism obstacles. Fourth, we will strengthen the management of listed subsidiaries and solidify investment value. We will improve the market cap management, enhance the quality of information disclosures, strengthen investor communication and maintain overall stability in operational performance, barring significant market changes. Dear friends, the development of China Coal is inseparable from your trust and support. We will always uphold the principle of openness, transparency and mutual benefit to continue to improve our management to accelerate green transformation and innovation and strive to become a trustworthy outstanding listed company with long-term investment value. We firmly believe that with the joint efforts of all shareholders, investors and all sectors of society, China Coal will take on greater responsibility and make even greater contributions to the advancement of Chinese style modernization. Thank you. Unknown Executive: Thank you, Mr. Gao. Now let me give you a presentation of the operating performance of China Coal Energy during the 14th Five-year plan and the work arrangement for '26. So dear investors and analysts, I will begin with the performance presentation of China Coal Energy. Unless otherwise specified, this is subject to the Chinese accounting standard. China Coal Energy has resolutely implemented decisions and plans of the Central Committee and firmly grasp the theme of high-quality development and earnestly practiced development strategy of improving efficiency in existing operations and transforming new ones. It has accelerated the advancement of 2 joint operations and actually building the 2 hedging mechanisms, continuously enhancing development resilience. First, high coal output and stable sales with enhanced efficiency during the 14th Five-year plan, the company resolutely showed the mission of ensuring energy supply and carrying out in-depth benchmarking of refined management, we have achieved a total of 639 million tonnes of commercial coal output, an increase of 43% compared with the 13th Five-Year Plan and a total of 1.4 billion tonnes of commercial coal sales, an increase of 52.7% compared with the 13th Five-Year Plan period. In '25, the company made every effort to ensure safe and stable supply of coal and fully release the production capacity of high-quality mines. To maximize output and benefits, the company strengthened the management of coal quality at the source. We have increased the mining area by 18%, optimizing the output. However, due to stricter safety supervision and changes in the geological conditions, the company's coal output decreased. The total commercial coal output was approximately 135 million tonnes, a decrease of 1.8% but still at a relatively high level in history. The company adhered to the general tone of a stable and refined sales, strengthened the coordination between production and sales and deeply implemented the marketing strategy of a segmented product and segmented markets. It innovatively launched a new trading model such as a virtual coal mines and maintained the sales base under the background of deep pressure in the industry. The fulfillment rate of the medium and long-term contracts for thermal coal exceeded 90%, fully playing a role of a stabilizer in energy supply. In '25, the total commercial coal sales were 256 million tonnes, a decrease of 10.2%. And the self-produced commercial coal sales were 136 million tonnes, a decrease of 0.9%. And the purchased coal sales were 109 million tonnes, a decrease of 23%. The average sales price of self-produced commercial coal was CNY 485 per tonne, a decrease of 13.7%. Among them, the sales price of the thermal coal was CNY 448, a decrease of 10.2%. The sales price of coking coal was CNY 949, a decrease of 24.3%. The sales price of purchased coal was CNY 492 per tonne, a decrease of 15.6%. Second, stable and refined sales in coal chemical industry and rapid growth in new energy business. During the 14th Five-Year Plan, the company's coal chemical business maintained a very robust curve. The total output of major coal chemical product was 28.9 million tonnes, an increase of 49.2% compared with the 13th Five-Year Plan. And the total sales volume was 29.545 million tonnes, an increase of 49.9% compared to the 13th Five-Year Plan. The total installed capacity of wholly owned and controlled coal-fired power plants under construction and operation was 53.9 million kilowatts, an increase of 58%. The total installed capacity of new energy has also reached 12 million kilowatts, growing from scratch. In '25, the company's coal chemical business adhered to the standard operations, strengthening basic management and successfully completed the national commercial reserve tasks. The total output of major product was 6.06 million tonnes, an increase of 6.5%. Among them, the output of polyolefins was 1.38 million decreased by 8.5%. The output of urea was 2.134 million tonnes, an increase of 14.1%. The output of methanol was 1.955 million tonnes, an increase of 13% and the output of ammonium nitrate was 0.58 million tonnes, an increase of 1.9%. The company continuously improves its marketing network, flexibly adjusted sales strategies, optimizing the layout and flow direction. In '25, the total sales volume reached 6.356 million, an increase of 8.8%. Specifically, the sales volume of polyolefins was 1.381 million tonnes, a decrease of 9%. The sales of urea was 2.423 million tonnes, an increase of 18.9%, the sale volume of methanol was 1.963 million tonnes, an increase of 14.4%, and the sales volume of ammonium nitrate was 0.58 million tonnes, an increase of 3%. The sales price of polyolefin was CNY 6,337 per tonne, a decrease of 9.4%. The sales price of urea was CNY 1,752, a decrease of 14.4%. The price of methanol was CNY 1,737 per tonne, a decrease of 1.1% and the price of ammonium nitrate was CNY 1,776 per tonne, a decrease of 13.5%. Thirdly, upgrading of coal mine equipment services and the prominent value of financial business. During the 14th Five-Year Plan, the coal mine equipment business promoted the improvement and expansion of joint storage and supply and intelligent transformation, achieving a total output value of CNY 50.41 billion, an increase of 56.6%. The financial business is centered on the construction of the treasury system and continuously improving the level of centralized and lean management, maintaining an asset scale of over CNY 100 billion, and net profit continued to grow steadily. In '25, the coal mining equipment business will accelerate its transformation towards intelligent manufacturing plus modern services, achieving a total output value of CNY 9.21 billion. We have also obtained international orders worth CNY 1 billion, an increase of 22.9%. We have also been highly rated by SASAC. Fourthly, in-depth promotion of lean management. During the 14th Five-Year Plan, the company deeply implemented standard cost management and all production centers established cost control mechanisms. In '25, in the face of a CNY 77 per tonne decrease in average selling price of self-produced commercial coal, the company deeply carried out the lean management approach. The unit sales cost of major product decreased significantly. In '25, the unit sales cost of self-produced commercial coal was CNY 251.51 per tonne, a decrease of CNY 30.2 per tonne or 10.7%. Specifically, material cost decreased by CNY 5.45 or 9.4%. Labor cost decreased by CNY 0.82 per tonne or 1.4%. Depreciation and amortization increased by CNY 1.76 or 3.9%. Maintenance expenses decreased by CNY 1.26 or 11.6% Transportation and port charges decreased by 1.82 or 3.2% and other costs decreased by CNY 22.63 or 43%. So this was mainly due to the company's implementation of cost management and also the optimization of production organization, which led to a decrease in the material cost per tonne of coal. Additionally, due to the need for safety production and future production continuation, the use of -- there's an increase of unit depreciation and amortization costs. And in 2025, due to the decline of the purchasing price of raw coal and fuel coal, the unit sales cost of some product decreased year-on-year, specifically, the unit sales cost of polyolefin was CNY 6,136, a decrease of 1.6%. The unit sales cost of urea was CNY 1,297 per tonne, a decrease of 21.7%. The unit sales cost of methanol was CNY 1,321 per tonne, a decrease of 35.7% and the unit sales cost of ammonium nitrate was CNY 1,412 per tonne, an increase of 7.4%. Number five, the company maintained a stable business performance and continuously optimizing the financial structure. During the 14th Five-Year Plan, the company strengthened the operation management and focusing on improving quality and efficiency. We have reached annual revenue of CNY 198.2 billion, an increase of 91.8%. And the average annual profit was CNY 30 billion, an increase of 253%. The weighted average return on net asset increased by nearly 6 percentage points compared to the end of 13th Five-Year Plan. The average annual net cash flow from operating activities was CNY 39.7 billion, an increase of 109%. The company's market cap increased by 209%. And the total net profit attributable to parent company over the past 5 years was CNY 88.7 billion, laying a solid foundation for the long-term development. In '25, because of the decline in the market price of coal and chemical products, the company achieved a revenue of CNY 148.1 billion, a year-on-year decrease of 21.8%. The total profit was CNY 26.6 billion, a year-on-year decrease of 15.7%. The net profit attributable to parent company was CNY 17.9 billion, a year-on-year decrease of 7.3%. The comprehensive GP margin was 27.5%, an increase of 2.6%. The basic earnings per share was CNY 1.35. Despite the overall pressure in the industry, the company still maintained a strong profit resilience. The company continuously strengthens cash flow management with a net cash inflow from operating activities of nearly CNY 30 billion, providing a solid support for business development and shareholder returns. The asset liability ratio further decreased to 45.8%. The capital structure became more stable and the risk resilience is increased. The changes in the total profit in '25 were as follows: firstly, the unit sales cost of self-produced commodity coal decreased, increasing profit by CNY 4.16 billion. Second, the reduction in taxes and surcharges increased the profit by CNY 0.8 billion. Thirdly, the power business increased the profit by CNY 0.7 billion. Fourthly, reduction in period expenses increased the profit by CNY 0.53 billion. Fifth, the reduction in impairment provisions increased the profit by CNY 0.426 billion. The main profit decreasing factors were: first, the decline in self-produced commodity coal pricing by 10.5%. Second, the main coal chemical enterprises reduced profits by CNY 0.36 billion. Thirdly, the decrease in the sales volume of self-produced commodity coal reached profit reduced profit by CNY 0.35 billion. Fourthly, the reduction in investment income reduced the profit by CNY 0.34 billion. Fifth, the decrease in nonoperating income and expenses reduced profit by CNY 0.087 billion. Number six, the company steadily advances the 2 joint operations and enhance the momentum for development. During the 14th Five-Year Plan, the company accelerated the 2 joint operation program and also being the 2 hedging mechanisms of coal electricity, chemical and new energy, accelerating the installation of key projects. In 2025, the company's CapEx plan was closely centered around coal, about CNY 21.678 billion. And during the reporting period, a total of CNY 19.92 billion was completed, achieving 91.9%. Relevant key projects were steadily advancing. For example, the Libi Coal Mine is expected to achieve the dry operation by end of '27 and the Weizigou Coal Mine is expected to achieve a try operation by end of '26. The Wushenqi power plant is expected to be in operation in the second half '27 and the Yulin Coal Deep Processing Project has entered the equipment installation stage. The company's CapEx plan for '26 was CNY 21.32 billion, an increase of 7.05% compared with 2025. By business segment, the Coal segment plans to allocate CNY 7.24 billion. The Coal Chemicals segment, about CNY 8.48 billion; the Coal Power segment, about CNY 2.18 billion; the New Energy segment, about CNY 2.6 billion, the Coal Mining Equipment and other segments, about CNY 739 million. Seven, the foundation of safety and environmental protection remains solid. In '25, the company has strengthened the foundation and consolidating the basics, increased the safety protocols and carried out in-depth safety production efforts with no major safety incidents. The company strengthened the pollution prevention and ecological governance and also established a long-term mechanism. The regionalization and specialization reform was deepened. And the company maintained a leading position in the top 100 Chinese listed companies and has received an A level information disclosure evaluation from the Shanghai Stock Exchange for 16 years in a row. Number 8, the dividend payout policy continuously been optimized. The shareholder returns remained stable during the 14th Five-Year Plan. The company's cumulative dividends were CNY 28.2 billion, an increase of 393%. And since its listing, the company's cumulative dividend has reached CNY 46.1 billion. In '25, to enhance the investment value of the listed company, the company's Board of Directors proposed to distribute RMB 5.07 billion in a cash dividend to shareholders in '25, which is 35% of the company's shareholders' share of profit. After deducting the interim dividend of CNY 2.2 billion already distributed, the cash dividend to the distributed to the shareholders is CNY 2.87 billion. Number 2, main work arrangements for '26. In '26, the company will continue to adhere to the general principles of seeking progress while maintaining stability, improving efficiency and striving to have a good start of the 15th Five-Year plan. The company plan to produce and sell over 130 million tonnes of self-produced commercial coal with 1.45 million tonnes of polyolefin product and over 2.03 million tonnes of urea under the condition that the market does not undergo significant changes, the company will strive to maintain overall stability of revenue and profit. And also the company will fully ensure a stable supply of energy to fulfill its responsibility of energy supply security, accelerating the transformation and upgrading of energy service business to ensure the efficient and smooth operation of the entire value chain from production, transportation, sales, distribution and usage. And second (sic) [ third ], we will deepen the lean management and the cost control for the Phase 2 of Yulin Chemical project. And number four, we'll steadily promote the 2 joint operation programs as well as the co-electricity chemical, new energy industrial chain to promote the green development. Number 5, continuously deepen enterprise reform and mechanism innovation to consolidate the achievements of reform and improvement and to stimulate organizational vitality and talent potential. Number 6, we also strengthen the level of digitalization, increasing R&D investment as well as to cultivate new high-quality productivity with Chinese coal industry characteristics. And number 7, we will also enhance the ability to prevent and resolve major risks. We will strive to further consolidate the foundation of market value management. And number 8, the company will continuously consolidate the foundation of market value management as well as the level of corporate governance and the quality of information disclosure. Dear investors and analysts, looking back to the 15th Five-Year Plan and 2025, China Coal Energy against a complex and dire market environment, we have demonstrated resilience. And in 2026, we'll continue to maintain this attitude to forge ahead and also to reward our shareholders with even greater returns. Thank you. Unknown Executive: Thank you. Now please join me to welcome Mr. Zhang Futao from Shanghai Energy to present the performance in '25 as well as the work arrangement for '26. Zhang Futao: Dear Mr. Gao, Mr. [ Jiang, ] distinguished guests, ladies and gentlemen. I will present to you the performance in '25 as well as the plans for '26 and the 15th Five-Year Plan. Firstly, we have intensified efforts to improve quality and efficiency, enhancing the level of operation. The company closely focused on the 1 profit and 5 raised targets. For example, we have embraced some cost-down initiatives such as blending inferior coal and reducing all the materials. We managed to reduce cost by CNY 500 million and the production cost of raw coal and the cost of electricity sales decreased by CNY 40 per tonne and CNY 0.012 per kilowatt hour, respectively. We strengthened the management of off-peak electricity usage, saving nearly CNY 13 million in electricity fees. We have also coordinated the use of safety and maintenance funds, reducing cost by CNY 50 million. We have also expanded new customers. We are also proactively adapting to the market. We have also improved the value added to our products. This has led to an efficiency boost of CNY 16.28 million. And also the raw coal calorific value has also increased by 164 [ Kcol. ] Additionally, the company has also achieved operating income of CNY 7.67 billion and net profit attributable to shareholders of listed company of CNY 220 million, total profit of CNY 150 million, total assets of CNY 1,900 billion and net asset of CNY 12.63 billion and earnings per share of CNY 0.31 and the asset liability ratio of 35.28%. We have also strengthened the coordination of production, transportation and marketing. Faced with this continued downturn in the coal market and unprecedented production pressures, the company coordinates production, transportation and marketing, optimizing the production organization and also we all aim to stabilize the production capacity. So in '25, the company's annual commercial coal volume is 6.13 million tonnes and refined coal output has also improved to over 4.47 million tonnes and also the power generation capacity, 4.24 billion kilowatt hours. Among them, the power -- new energy-based power generation is 536 million kilowatt hours. And thirdly, we have also solidified the reform and continuously improving the development momentum. Additionally, we have also increased -- vigorously promoted unified allocation of human resources, deployed 216 personnel between mines, including 87 technical personnels that are operating under the mine. The ratio of the 3 lines has reached by 1 x 1.7 x 3. And number four, we have also steadily advanced the key projects. The company took key projects as the basis to accelerate the construction of the 2 joint operation programs or demonstration bases in Xinjiang and the first mining project of Xinjiang Weizigou coal mine smoothly entered the construction stage. Additionally, the construction of a key new energy project has also been accelerated. The 165,000-kilowatt PV project in the subsidence area of Ningdong mine has been fully connected to the grid for power generation. The installed capacity of new energy under construction has reached 672,000 kilowatts. The Datang Power Grid renovation was also put into operation. Fifth, the company has continuously strengthened innovation and R&D. The company has continuously increased our commitment to this direction with our R&D expense increase of 4.12% and also has won 24 provincial and ministerial level and the industrial level awards with 8 achievements reaching a domestic leading or above levels. The company has also obtained 45 national authorized patents, including 10 invention patents and key science projects such as carbon storage space and virtual power plant have been implemented in an orderly manner. The source grid load storage coordinated regulation microgrid project has also been included. Number 6, the company has paid close attention to shareholder dividends. Since its listing, the company has achieved a cash dividend for 21 years in a row with a total dividend amount of CNY 3.91 billion, which is 4.46x the raised funds of CNY 877 million. In September '25, the company implemented a 25 semiannual cash profit distribution, distributing a total of CNY 65 million. This is the company's second interim dividend. From 2017 to 2024, the company's cash dividend ratio to the net profit attributable to shareholders of the listed company has exceeded 30%. In '25, on the basis of implementing interim dividends, the company distributed a total of CNY 217 million in cash dividends to all shareholders at a rate of CNY 2.1 per 10 shares, accounting for nearly 100% of the net profit attributable to shareholders. At the same time, the company distributed 3 bonus shares per 10 shares to all shareholders and increased the share capital by 1 share per 10 share through capital reserve. Number 7, the company has continuously strengthened market value management and fully met market expectations. The company accelerated the pace of external development and -- we have also kickstarted the Phase 1 of the 400-megawatt PV power generation project in Luxi C [ Qidong ] City, and it has been approved by the Board of Directors and also the company actively completed the share purchase by some directors or former supervisors as well as senior management and middle-level management, purchasing 623,200 shares with a total value of CNY 7.10 million. China Coal Energy has increased the holdings of Shanghai Energy shares by 2.43 million shares with a holding ratio of 62.78%. It has continued to introduce active shareholders. For the next step, the company will continue to take value creation as the core, continuously boost investor confidence and promote reasonable reflection of the company's quality and its investment value through standardized governance, stable operation and transparency. Second, Shanghai Energy's 15th Five-Year Plan. At present, the company has formulated a preliminary 15th Five-Year Plan. The overall thinking is to resolutely implement the strategic orientation for green and low-carbon transformation and also leading a core mission of high-quality development in the coal industry as well as to fully incorporate the ESG concept into the company's strategy and operation. And again, the company is building the 2 hedge mechanism and remain firm in the 1, 2, 3, 4, 5 development strategy without wavering. That is aiming at creating a new [indiscernible] mine, and we will build a hedge mechanism based on these 2 joint operation programs, creating 3 major bases in Jiangsu Xuzhou, and Shanxi and Xinjiang adhere to the regionalization integration principles and also strengthen the 5 coordinations of safety, stability, improving efficiency of existing assets and transforming new assets. We will also accelerate the expansion of external coal product from a single fuel to raw materials. We will also focus on researching and developing the technology of coal grading and quality differentiation. The 3 mines and the headquarters will remain stable production, increasing the planning of resources in [indiscernible] area and also promote the sustainable exploitation of resources in the headquarters. The 2 mines in Xinjiang will shift their focus to improving economic benefits, taking the path of differentiation and focusing on improving coal quality and also to achieve a key transformation from production growth to value creation. Power and new energy sector, we will adhere to our load-oriented approach, focusing on the load-intensive areas and also to build an integrated energy park service providers to meet the needs. The headquarters will fully leverage the integrated advantages and actively expand electricity customers. We will use different ways to obtain resources through investment acquisition and as well as building new projects in rural areas to obtain new resources. Comprehensively boosting the business for the energy service. We will firmly establish the concept of going out for development and also encouraging the high value-added and high-tech content business. Next, work plan for 2026. '26 is the starting year of the 15th Five-Year Plan. We will be guided by the Central Government to implement the spirit of the 20th National Congress of CPC and also requirements of the Central Economic Work Conference. We will comprehensively strengthen the party's leadership unwaveringly implement the new development concepts. We will also strive to improve the quality and efficiency of operation and with a focus on the [ 1233/6 ] tasks as well as accelerating the start of the 330,000-kilowatt PV project in the remaining area of the 1 million kilowatt ecological governance clean energy base in Peixian. Additionally, we'd also try to strengthen the 3 production keys of roof control, system optimization and advanced prevention. Dear guests, ladies and gentlemen, the achievement of Shanghai Energy today could not have been possible without your long-term care support and help. I would like to express my sincere gratitude. We will take this opportunity as we will take this performance briefing as a new starting point and carefully listen to the valuable input and opinions of all investors and draw on the experiences of China Coal Group. In the next step, we will continue to optimize the effort of operation, continuously improving our corporate governance and strive to create greater returns for investors. Thank you. Unknown Executive: Thank you, Mr. Zhang. Let's give the floor to Mr. Sun Kai about the performance of Xinji Energy in 2025 and the working plans for 2026. Kai Sun: Distinguished investors, good afternoon. I'm very pleased to meet with all our friends at the Xinji Energy performance briefing. I would like to extend my sincere gratitude and heartfelt greetings to all the friends from various sectors who have consistently cared for and supported the development of Xinji Energy. We forged ahead with innovation, achieving breakthroughs against challenges, marking a successful conclusion to the 14th Five-Year Plan. In 2025, it was a critical period for Xinji Energy as we navigated challenges and tackled difficulties head on. Our cadaries and staff united as one fully embodying the Xinji spirit of perseverance, resilience and dedication. We actively responded to multiple challenges, including a downturn in the coal market and spot market trading for electricity sales, achieving record results in key operating indicators. For the year, we produced 19.76 million tonnes of commercial coal and sold 19.69 million tonnes. We generated 14.2 billion kilowatt hour of the electricity and sold 13.4 billion kilowatt hours. We achieved operating revenue of CNY 12.3 billion total profit of CNY 3.1 billion net profit attributable to shareholders of the parent company, of CNY 2.1 billion and EPS of CNY 0.8 for the year. By the end of 2025, total assets reached CNY 53 billion liabilities or RMB 33.7 billion with a gearing ratio of 60%. Owners' equity attributable to the parent company was CNY 17 billion, up by 9% year-over-year. In 2025, it also marked the conclusion of Xinji Energy's 14th Five-Year Plan. During this period, all categories and staff implemented the strategy of enhancing efficiency for existing assets and driving growth through new businesses, and we had 7 major achievements. The first as we made historical breakthroughs in transformation. We established a new industrial structure with coal at the foundation, thermal power as the support and renewable as the direction. The coal foundation was strengthened with commercial coal production up by 1.7 million tonnes, a growth of 10%. The thermal power business achieved a leap from single point projects to clusters with controlled installed capacity increasing by 5.96 gigawatts, nearly fourfold. The renewable business grew from the scratch, establishing a demonstration base for the group's 2 integrated business models and now a crucial milestone. Secondly, we made significant improvements in production efficiency. We improved our production layouts and with commercial coal production achieving an average annual growth rate of over 2%. The calorific value of commercial coal was up by 392 kilocal per kilogram, generating over RMB 1.5 billion revenue from quality improvement. Equipment upgrades improved with all 5 operational coal mines passing intelligent acceptance inspection. Third, construction of an intelligent safety protection and control system. We advanced system governance and intelligent construction upgrading intelligent safety systems and disaster early warning platforms, advanced tools like AI intelligent identification and video surveillance, intelligent safety perception network covering underground and service operations was established, enabling real-time monitoring and intelligent early warning of gas, water hazards and ground pressure, taking our risk control capability to the next level. Fourth, we achieved leapfrog growth in operating performance. Total assets exceeded CNY 50 billion, nearly doubling total assets and profit versus the end of 13th Five-Year Plan. We entered a fast track for both scale and quality, achieving a dual breakthrough in asset and profitability. Gearing ratio was 63%, down by 9.55 percentage points. Labor productivity per headcount reached CNY 724,800, up by 69%. Fifth, we reaped the fruits from our reform efforts, a corporate governance system known as 1135/11 was established, comprising 1 charter, 1 measure, 3 rules, 5 lists, 1 menu and 1 completion. We were selected as a demonstration enterprise for grassroots corporate governance by SASAC. We completed our 3-year action plan for SOE reform with high quality. Sixth, we achieved leading progress in tech innovation. We invested RMB 330 million intelligent construction. We undertook 3 national key R&D projects during the 14th Five-Year Plan period with 10 world-leading technological achievements. We were selected as one of the first batch of pilot enterprises for digital transformation by SASAC and established the industry's first 5G plus smart power plant. Seventh, we owned our social responsibility over the 5-year period, 76 million tonnes of LTA coal were delivered, exceeding national energy supply assurance targets and fulfilling our role as a pillar in ensuring energy security. We spent CNY 450 million to improve our employees' sense of gain and well-being. We paid CNY 13.67 billion in taxes. We've consistently built an ESG governance system. In 2025, we received the highest A rating for information disclosure and got recognized as an excellent enterprise for national coal industry, social responsibility report released for 8 consecutive years. 2026, we are setting clear goals systematically planning, outlining a grand blueprint for the 15th Five-Year Plan. 2026 is a pivotal year for Xinji's energy transformation and development with firm and clear objectives. Comprehensively improve production quality and efficiency with commercial coal production less than 18.5 million tonnes and aiming for 19 million tonnes. Power generation, no less than 30 billion kilowatt hours. We'll make every effort to improve operational quality, optimizing the annual budget targets for the 5 rays indicator will develop at full speed, ensuring timely commissioning of 3 power plants. 2026 also marks the start of Xinji Energy's 15th Five-Year Plan closely aligning with national requirements for building a renewable and modern industrial system and Anhui, Jiangxi, development plan and leveraging the advantages of the coal-based full industrial chain, we've established a 1245/7 development strategy. The focus will be on the following tasks: First, focusing on stable production and increased sales to build up on our strength in coal. Adhering to the development principles of safety, efficiency, green and intelligence while improving the quality and efficiency of the existing 5 operational mines, we will advance the level deepening of [indiscernible] Xinji #2 mine and 1 mine or we develop [indiscernible] the coal resources and complete the integration of coal [indiscernible]. We focus on changes in coal products and categories to enhance our competitiveness. Second, we will focus on the 2 integrated business models to fully advance new project construction. We will strictly control the safety and quality of power projects under construction to ensure the timely grid connection and power generation of [indiscernible] power plant, accelerate the renewable projects, construct and strengthen the renewable industrial landscape, achieving leapfrog development. Thirdly, we will focus on industrial upgrades to explore emerging industries. Leveraging the resources in coal mining areas and our renewables development, we conduct feasibility studies combined with water electrolysis, hydrogen production and CCUS for thermal power centered on the strategy of building a new energy system and based on the regional industrial parks and facilities, we will promote projects for substituting clean energy in regional heating and achieve industrial upgrades. Fourth, we focus on innovation-driven development to empower high-quality development. We will expand intelligent control applications, data lake integration and standardized governance. We will plan for the construction of high-value AI plus scenarios, creating a smart support system covering production, safety and management. We will accelerate the construction of national key labs, establish experimental environments for technologies such as unmanned intelligent mining, intelligent rapid tunneling and adaptive and control deep mine equipment. Fifth, we will focus on the 3 defense lines and solidify the foundation for stable development. Safety is the lifeline and environmental protection is the bottom line and compliance is the red line. We will strengthen these 3 defense lines. Sixth, we focus on strengthening the enterprise through talent. We will improve recruitment model, systematically maintain normalized recruitment and try to meet the labor needs of grassroots units. We improved the compensation system, break the equal pay for all approach and effectively safeguard the income of frontline workers. We conduct scientific analysis, promote competitive selection for positions and build a talent pipeline for cadres. Seventh, we focus on party building leadership to forge strong entrepreneurship. We will always adhere to CPC's leadership over SOEs, ensuring high-quality development with party building. We deepen the comprehensive governance of the party, consolidate the political responsibility, improve party building quality, advance the scientific standardized systematic construction of party building, promote the deep integration of party building with production and operations. Looking back, we have overcome obstacles and achieved remarkable results. Looking ahead, we are full of confidence. 2026 is a crucial transitional year for Xinji Energy's transformation. We will maintain an unrelenting spirit to strengthen our confidence for ahead and work diligently. We will make every effort to accomplish all annual targets and write a new chapter for the company's high-quality development during the 15th Five-Year Plan. We will keep improving quality and efficiency, supporting market cap growth through solid operations and rewarding all shareholders and investors with strong performance. I wish all investors a smooth work, good health and abundant rewards. Thank you. Unknown Executive: Thank you, Mr. Sun. Now we'll open the floor for Q&A with both online and on-site participants. We will give priority to the on-site questions while also addressing some online questions, please. Unknown Analyst: Thank you, Mr. Zhang and management from China Coal. I am analyst from CITIC Securities. I have 2 questions about coal chemical. Since the conflict in the Middle East, people are concerned about the pricing trend of coal chemicals. So what will be the trend now compared with the last year for coal chemical pricing? And the second question is about the polyolefin business. So last year, the production and sales volume of polyolefin has dropped. Do you think that this year, the production and sales would rebound? And if that's true, will that lead to better economies of scale and thus lowering the unit cost of sales for polyolefin? Unknown Executive: Okay. I would like to ask [ Ms. Li ] from the marketing to address this question. Unknown Executive: Okay. Thank you for the question. the international conflict has indeed an impact on the chemical products as well as on energy. So for China Coal Group, the pricing of our urea and polyolefin has also been affected, even though recently, it started to rebound to a more reasonable level. We have made some price comparison on March 31. So urea pricing is basically flat with the same period last year. So in 2025, the urea pricing was relatively stable. So it went down, but it has rebounded. This has something to do with the supply control as well as additional export. For polyolefin, the pricing is more volatile. The price is like 10% higher than last year. That's for the polyethylene. While for the propylene, the price is actually still higher. It's like CNY 1,000 higher than same period last year. Even though recently, both futures and spot prices are falling. And also, I think that in the Chinese market, the capacity and the supply abilities are relatively sufficient. So in 2026, there are a lot of new capacity. So in the '26, the price would be more reasonable but it won't drop a lot because indeed, this conflict has a huge impact on the energy sector. Unknown Executive: Okay. So regarding the production and sales volume of polyolefin, I'd also like to ask Mr. Shu from the Coal chemical BU to address this question. Unknown Executive: Okay. So in 2025, we have 2 sets of our devices are under major maintenance or overhaul. So judging by the current circumstances, reaching a full load or full operation is very probable. So this year, we have a plan the production volume of 1.45 million tonnes. And I think we are able to go beyond that by around 60,000 tonnes. And secondly, after the device overhaul, the overall operation is becoming better. So that means the cost will be lower, and that also extends to next year. So that means we'll have better outcomes. gentleman in the first row. Unknown Analyst: Okay. Thank you, Mr. Gao and also thank management from China. I am [indiscernible] from the [ Yangtze River Metal. ] I have some questions. So firstly, a question to Mr. Gao regarding the 15th Five-Year Plan of the group. I understand that in the 14th Five-Year Plan, the group has a lot of investment in the coal chemicals, and people are also interested to find more about the directions of our investment and the volume guidance for the 15th Five-Year Plan for Coal Chemical as well as whether the dividend payout of China Coal Group would also change with the changes of CapEx. So that's my first question. And the second question is about -- we know that in Anhui province, the electricity price is turning down this year. And actually, judging by the performance last year, the integration advantage is quite significant. revenue stream was quite stable. So after the placement of several power plants, what will be the prospect for like the power generation segment in '26 and '27? That's my second question. Last question is about market cap. As mentioned earlier, the company will continue to do more in the capital market. So the current the ratio is like still lower than 1. So what will be the plan to improve the price-to-book ratio or any other additional plans in the capital market? Shigang Gao: Thank you for the question. So this is about the coal chemicals. It's true that we've been paying close attention to this segment. The chemical business is one of our main businesses. So apparently, we need to be aligned with the national strategy to remain committed and unwavering in this direction. We are paying close attention to a few initiatives. We have some production bases in the Mongolia and the Shanxi province. We're also interested to find more about the opportunities in Shanxi province and Xinjiang for some like early technical investment or some demo project. And second thing would be the coal-based LNG. We are also engaging in some research in North China because for coal chemical business, it has a high requirement for the quality of the coal as well as the maturity of the chemical technology as well as the equipment readiness. So we are also considering these aspects. And thirdly would be coal to oil. As we know, because of this international insurgence, now China we have like 77% of like oil dependency on the foreign countries and also over 40% of gas dependency on foreign countries. So from a strategic point of view, the nation is trying to improve the supply chain activity, in particular, in light of the current international conflict. So we have also made some attempts in the coal-based oil but the profit margin is not as high as coal-based methanol or coal-based olefins. If the technology readiness is not good enough, then it might lead to loss-making. So we are engaged in the R&D in this area. This is also actually our forte. So for China Coal Group, we've been cultivating in these areas for many years. So these will be the main directions. And the other thing, as mentioned earlier in a prior presentation, the coal-based hydrogen and then using the hydrogen to generate grain alcohol, we are making some experiments in order. If the technology becomes more mature, then we might to invest more in this direction. As to how to land this project, that will be dependent on the state's industry policies as well as our technology maturity and also the coal quality and whether it matches with our know-how in the chemical segment. So we would try to seize the right timing, and we are currently engaged in some preliminary research. But please rest reassured that coal and the power and chemical and new energy, these are the main businesses for China Coal Group. And we would steadily step forward in these areas. Thank you. Unknown Executive: Next, please. Unknown Executive: Thank you for your question. I'd like to address the question about the commissioning of the power plant. So the last year, the [indiscernible] power plant, the power capacity is 14.2 billion. And this year, for the Xuzhou and Shanxi, with these new power plants, our electricity -- the generated electricity would increase by 13 billion. So I think that means the profit margin for the power business would be better. And also the power business is also correlated with the coal cost. 75% of the cost is actually the coal. And because of our 2 joint operation programs, we're able to leverage this advantage. So our power plants is very resilient against the risk. And thirdly, for our power plants, I think we have over 1 million capacity and over 660,000 capacity. So these are very ideal for the spot market transactions. So I think the profit prospect of the Power segment is something that we could look forward to. Thank you. Now move to Shanghai Energy. Let me briefly address the questions. So for Shanghai Energy, we've been driving these initiatives there are still some gap from our targets. So in 2026, we aim to address the following initiative. Firstly, to improve our operational ability, which is like the value of a listed company. So that means we would stabilize our production capacity to improve the quality, to optimize the product mix and also the production efficiency and in work to boost our operation. And secondly, from a perspective of development, we would also accelerate the cadence mostly in 3 directions. Firstly, for the coal industry, in principle, we would want to stabilize the coal output. So capacity will be controlled within the number 709. And regarding the quality, we would also try to speed up like the contribution ratio from external projects, including the Xinjiang project. We need to speed up the construction of the Xinjiang project and also improving the quality of coal output. And also, we also wanted to speed up the construction of our facility in Gansu province and Shanxi province. And at appropriate timing, we would announce more details to the capital market. In the meantime, for our power business at the headquarter level, we would also engage in some major expansions. As you probably have noticed, we had like this MA project. And we would have even more MA projects for new energy as well as some of our self-developed projects. And all of these will be carried out. At the same time, our ESS project is also in the validation stage. And maybe very soon, we're able to disclose more details. And also regarding the construction of the new power system like the distribution network as well as the micro grid, we are working on these agenda. At the same time, we have also a new direction that is low carbon and green initiatives, including making use of geothermal energy as well as the recycling of the coal ashes or coal powder. So all of these are on the right track. So we aim to leverage this development to drive the market value. And thirdly, we would also strengthen the communication with the capital market so that our investors would understand and appreciate the value of Shanghai Energy. At the same time, we are also actively introducing more shareholders and to improve the branding as well as driving the market cap. Thank you. Unknown Executive: Thank you, Mr. Zhang. Next, please. The lady in the middle. Unknown Analyst: I am from [indiscernible]. I have 2 questions. First, about dividend payout because we have noticed that in the recent years, China Coal has been improving your dividend payout. And you had some special dividend payout after the annual result after -- for 2023 and 2024 and also last year when the coal price was low, but you still improved your dividend payout ratio from 30% to 35%. And these measures were well received by the market. And many of the long funds they have been paying attention to the changes we have been making. But in this year's annual payout, you have used the payout ratio of 35%. You're not improving it further. And we used the Hong Kong performance at a relatively lower base to do the payout ratio. So that means for the A shares market, the payout ratio is about 28%. And this for the long insurance-based funds, this is a bit stressful for us because we expect higher returns. So my question for the management team is what's your plan for the future dividend payout? And we also noticed how the finance ministry has adjusted up the payment ratio for SOEs and for those in coal sector, it's at 35%. So does that affect your payout ratio? That's my first question. For question number two, we have noticed you have many of the good quality assets. In May 2028, so your commitment about the noncompete with [indiscernible] will expire and the PBE in Asia market is at 1.5x and in Hong Kong Stock Exchange, it's 1x. So that means you're no longer under the pressure to do further asset injection and the external environment is good for you. So do you have any plans to inject the good quality assets into the listed companies? Unknown Executive: Okay. The dividend payout question will be taken by Mr. Li. Unknown Executive: We were listed in the H-share market in 2006, and we made the commitment to have a cash dividend payout ratio of 20% to 30%. And it is part of our company charter. And from that IPO year, although we made the range of 20% to 30%, but it has never gone below 30%. And when we make the dividend payout policy, we want to strike the balance between our development, operation stability. We want to maintain our high-quality development. And we have been asking for the inputs from investors from our shareholders, from the management teams and from the Board. That's how we made the dividend payout policy. And for your question, I have several points to make. So people might say that we have a lot of the cash reserves and with so much cash on hand, why don't we pay out more. RMB 90 billion of those money market funds, we put such of the finance management under the holdings company. So out of the RMB 90 billion, about RMB 40 billion belongs to the group level. So that -- not all of those cash reserves can be tapped into. And also, we have got the special reserve funds for safety and environmental compliance. So it's not the idle funds resting our balance sheet. And if you deduct all that amount, we have only about RMB 40 billion at our disposal. And considering our revenue size of at least RMB 150 billion, this is a good enough ratio here. and we want to further improve our operational efficiency to give better returns to our shareholders. I want to explain more about how we are using those cash reserves. It's not being idly held. And of course, about investor returns, at the end of the day, it all comes back to the high-quality growth. It's not just about the cash payout. You can calculate our payout ratio in the 14th 5-year plan versus the market average. We are always on top. In 2020, we paid out RMB 1.7 billion. And in 2024, it was RMB 6.3 billion, and we also offered some special dividends. Last year was also about RMB 5 billion. And through further improving efficiency and improving our growth, we are expanding the base for dividend payout. And no matter how violent the market could be, we still have a stabilized growth, and that's a better guarantee for your returns. And about whether we can further expand the payout ratio. Well, in the 15th 5-year plan, you have been asking about the M&A possibilities and asset injection possibilities. These are part of our plan, and they all need funds. They need liquidity. For a good enough asset, we need to at least have RMB 10 billion or even RMB 20 billion to be part of the bidding process if we want to acquire it. And for all the transformations and the development we need for the 15th 5-year plan, we also need the ammunition. So we have to factor in all those different variables and also getting the input from investors and shareholders. And we will definitely listen to the input from you and then we welcome all advices from you to formulate the payout ratio policy. About your second question, we have got a lot of attention from our existing assets and the injection of other assets. Yes, the group has some other coal and electricity-based assets. And you're wondering what would happen to them. This is something we have been studying at the group level. We do not rule out the possibility to securitize those assets or injecting them into the listed subsidiaries. But as to how does that happen through what channel and when we are conducting the researches here. We do not have a finite solution here. If we have come to a conclusion, we would definitely disclose it to the capital market. And about the noncompete commitment being expired, thank you for noticing that, and we have been discussing this issue. And we are studying all these issues. And again, if there are some concrete conclusions, we would disclose them in a timely manner. Unknown Executive: Okay. Let's continue. Unknown Analyst: I'm from Minsheng Securities. I have 3 questions. First question for China Coal Energy. Last year, the coal price was trending down, and you have made different efforts to cut costs. That is why you had good enough performance. And based on your 2025 financial report, you have lower levels of the specialized reserve. And in 2026, we have a lot of uncertainties in the external market and the geopolitical landscape. So can you give us some outlook about the unit coal cost? How would that trend? And second question is for [indiscernible]. In Q1, the power plant in Shanxi and Xuzhou has been put into operation. Another one will be put into operation in the second half. And in 2027, 2028, what are the new growth drivers? Or would you prioritize paying the liabilities, paying for liabilities or increasing the payout ratio? And the third question, Xinjiang [indiscernible] subsidiary was loss-making. It's tied to the Xinjiang 106 coal mine. And in 2026 with the coal mine will go live. It's also based in Xinjiang. And once it goes online, what's your expectation for the profit level? Unknown Executive: About unit production cost of coal. So we have used more of the specialized funds last year. And in the 15th 5-year plan, we had good cost control. It was very effective. It's not about how much we tapped into the specialized fund, but our mines are modernized and highly efficient and production technologies and designs are very advanced. That matters. So no matter how strict or severe the circumstances are, we could have stable operation, and that's the most important foundation for the good operation. For the specialized funds, it mostly went to the inspection and safety. And we do not get to decide how to spend it. There are some strict state-level rules about how to spend it. So we have a very detailed rule about spending it. It's all going according to rule. So we do not get to decide to use it more or less based on the market trends. There is rules about this usage. And last year was -- last year for 14th 5-year plan, so we decided to invest more into safety and inspection so that we would have smooth operation for the 15th 5-year plan. Every year, there are different focuses for such investments. That is why it seems that we used more of the specialized funds. As for the smaller balance, starting from last year, we took some big measures. One part of the cost would be about the finances. We have unified. We have got a transparent procurement for all the raw materials and eliminating 90% of the middlemen. So we're connecting directly to the vendors, and we can have better management of the vendors. Last year, procurement cost was reduced by more than 7%, and we continue -- we will continue that trend this year. And we have done the online procurement for such procurement so that we can keep tabs on procurement. So that's what we have done from the source. And we have standardized cost control. And over the years, we have established a good SOP there. And Mr. Gao is being hands-on in monitoring this system, making sure that each step of the process, we can scientifically squeeze the costs. And this is still an ongoing process. We believe we can effectively control the costs here. But I want to emphasize, it's not about how much more you can squeeze the costs here because margin is also tied to the selling prices. The unit coal shipping fees could be tied with the sales. And we -- there could be different pricing for different varieties of the coals, and we could shift the manufacturing capacity for different varieties. And last year, we increased about RMB 800 million in profit through shifting the capacity for different varieties of coal. So it's not just about cutting costs, this one dimension. We have multiple levers to pull. Unknown Executive: Question about Xinjiang. Thank you for the question. In Q1, our Shanxi and Xuzhou power plant went live. This year, we increased the power generation by 30 billion kilowatt hour in Q1, up by 2 billion units. So that ensures our future profitability. Your question about our investments during the 15th 5-year plan. Mr. Gao in his report has mentioned our Xinji 1, 2, 4, 5, 7 strategy and the 2 hedging system. We have -- we're aiming to build the industry cluster in East China, and we will have 2 transformational sites. And we also have the coal power chemical renewable. We have got installed capacity for thermal plants, and we want to make a thermal power plant base. And for the coal-based chemical, it's also an important component. And for our coal production capacity, we are tying it with the chemical production and renewable production so that we can be better hedged against the future risks. And in the 15 5-year plan, we are adding another some incremental capacity. And in the 7 bases we have, we are conducting new businesses there. Question about Shanghai Energy. [indiscernible] company sustained loss last year. It had 1.8 million tonnes of capacity. And in 2025 because of the complex geological structure, it affected our production capacity. And also the 1.6 mine, there was an incident with a higher carbon monoxide level. And to prioritize safety, we had this thorough inspection and governance. And these 2 factors led to only 960,000 tonnes of 47% reduction versus our goal and also coal price was reduced a lot. In 2025, it was RMB 195 per ton, 30% down year-over-year. That is why mine 106 sustained losses in 2025. As for the WISCO mine, it is in the same region with Mine 106, but it has some features. It has bigger capacity, 3 million tonnes of capacity. And also during the construction of WISCO, we added the washing -- coal washing plant -- but for Mine 106, there is no washing and selection. But in WISCO, we have added the washing step, so it's more differentiated. So it's possible that we could use it for chemical coal. We could change our sales strategy. And we are also planning for a cost control here to better ensure cost reduction after it went online to achieve good efficiency. Unknown Executive: In the interest of time, let's have one last question. Unknown Analyst: I am from [indiscernible] Securities. I am [indiscernible]. Two questions for the management team. In the past decade, we saw how the 3 listed companies have got very advanced footprint. You're present in Shanxi, Xinjiang and in other regions in China. You're more advanced than your peers. And -- in the presentation, you said in the 15th 5-year plan, you have presence for coal power chemical renewable. But after 2030 when peak carbon emission has been reached, do you have any changes to coal power chemical renewable business? Are you adding new things? Or are you putting a stop to any of these sectors, any of these businesses? Question number two, Xinji is aiming to build 100 billion energy cluster. How do you make that happen? Shigang Gao: So you're already asking questions about the 16th 5-year plan. It's beyond 2030. So you're asking a very sharp question, tricky for us to answer. But based on what I have learned, this is from Mr. Gao and based on my knowledge about the group strategy, let me give you a response. About coal power, chemical renewable strategy, we have the 2 integration and 2 hedging system. So during my prepared remarks, I have mentioned the 2 integration coal plus thermal power so that we can be better protected against the changing prices of coal. If the coal price goes up, electricity could be sustaining losses. If the coal price goes down, it could be loss-making for coal. But if we tie the 2 together, we produce the coal and we use it ourselves so that there's less price fluctuations affecting our performance. And making sure that our margin would be steadily trending up, less fluctuations here. Second integration is thermal power being tied to renewable. Why do we do this? It's about the carbon emission restrictions here. We are onboarding many of the renewable projects. They are part of the green energy. It can offset some of the CO2 emissions from our thermal power generation. So this can address the carbon emission restrictions for us. That is why we set the 2 integration strategies, 2 integrations leading to the 2 hedges. As for -- in 2030, how will we develop the coal power, chemical renewable strategy, we have another strategy about efficiency gains from existing assets for our existing businesses. You already know that. But for our future growth, you have the thermal power and renewable. These are the focuses. Where is our leverage here? For the coal business, we want to use less human labor. We want it to be even unmanned. We want higher unmanned intelligent solutions so that we can have more efficiency gains. As for thermal power generation, many other power companies have high coal consumptions for the new power generation units, they could be reducing coal consumption by 10%. By consuming less coal, it means less carbon emission. And we also have other steps like desulfurization and that can also further be even more environmentally compliant. And as for the chemical, we are combining biomass with chemicals. We make hydrogen with green energy, and then we add hydrogen into our chemical devices. You're all experts here. And in the chemical process, hydrogen is used a lot. But the hydrogen we have now is gray hydrogen made out of coal. But now -- but in the future, if we have the green energy-based hydrogen and we add it into the chemical process, it can help reduce our carbon emissions, too. And through -- this is our rationale and our strategy. For carbon peak emission and carbon neutrality, this is the trajectory that we are on. We're not just grounded. We also have high ambitions. In the renewable sector, we are also making some explorations. For example, the gas, natural gas and also biomass-based protein and the green ammonia and green hydrogen. We're following those technologies, but they are not part of our main business just yet, but we're considering those new advancements. Unknown Executive: Thank you, Mr. Gao. The question about Xinji. Thank you for your question. About our 100 billion cluster in the 15th 5-year plan, we're headquartered in Huainan. And the Huainan mine should be -- we're trying to make it amend. And for the Fuyang green mine, we are trying to combine coal with renewables, and there was a new policy targeting it last year. And about the [indiscernible] industry, cycling industry for the Weixin power plant, where it is based, we are combining it with another coal energy. We're providing the local government with cheap energy and also heat generation. And fourth, around the Xuzhou factory, there is a zero carbon industrial park and we can combine it with heat generation and renewable. And for our Luan power plant, after putting it into operation in H1 this year, we could expand its possibilities based on what's available to us locally. And for the Tengchong base, it is around a development -- economic development zone. We could provide that region with thermal power. And it's the same story for [indiscernible] because renewable energy is taking some share from thermal power in the future, we want to work better with the government so that we can gain more inroads through such introductions. Unknown Executive: Well, let's wrap up the Q&A session. Dear friends and investors, the management team from the -- from our group has answered your questions. But in the interest of time, I know if you have some unresolved questions, you can keep in touch with us. You can reach out to us. We're happy to address your questions. Again, thank you for your questions. Thank you for following our development and participating in our earnings briefing. Thank you.
Operator: Thank you for standing by. This is the conference operator. Welcome to the NOVAGOLD's First Quarter 2026 Financial Results Conference Call and Webcast. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Melanie Hennessey, Vice President, Corporate Communications. Please go ahead. Melanie Hennessey: Thank you, Galen. Good morning, everyone. We are pleased that you have joined us for NOVAGOLD's 2026 First Quarter Webcast and Conference Call and for an update on the Donlin Gold project. On today's call, we have NOVAGOLD's Chairman, Dr. Thomas Kaplan; President and CEO, Greg Lang; and NOVAGOLD's Vice President and CFO, Peter Adamek. At the end of the webcast, we will take questions by phone. Additionally, we will respond to questions received via e-mail and the webcast. I would like to remind you, as stated on Slide 3, any statements made today may contain forward-looking information such as projections and goals, which are likely to involve risks detailed in our various EDGAR and SEDAR filings and forward-looking disclaimers included in this presentation. With that, I will now turn the presentation over to NOVAGOLD's President and CEO, Greg Lang. Greg? Greg Lang: Thank you, Melanie. On Slide 5, we highlight the key attributes that make the Donlin project unique in the gold industry. Donlin has a combination of scale, grade, long life, low operating costs and significant upside potential in the exploration areas, and we're in a safe jurisdiction. With about 40 million ounces of reserves and resources at 2.25 grams, Donlin has got grade better than twice the industry average. Our known resource occupies only 5% of our total land holdings and there is considerable potential to increase the strong reserve base. We're also fortunate to have long-term committed shareholders who understand the value in an asset like Donlin. Moving on to Slide 6. This chart illustrates the value of Donlin and a variety of gold prices. With today's gold price approaching the upper end of this chart, the project has a net present value of almost $24 billion at a 5% discount rate. This underscores the leverage and significant economic potential of Donlin in the current gold price environment. As highlighted on Slide 7, Donlin will be a big mine. It will average over 1 million ounces a year during its 30-year mine life and about 1.3 million ounces the first 10 years. This asset production makes it really unique and stands out in the gold space. Grade is one of the most important attributes of a mining project. At 2.25 grams, Donlin is twice the industry average. It's this high grade that contributes to Donlin's very low operating costs at less than $1,000 an ounce. This slide really highlights the significant exploration potential at Donlin. Our known resources reside in the ACMA and Lewis areas, as shown on Slide #9. These areas represent only 3 kilometers of an 8-kilometer gold bearing system. When the time is right, we will continue to explore both along strike and at depth, and there's tremendous potential right in our own backyard. Turning to Slide 10. This slide is a summary of the status of our permitting. We've completed the federal permitting process and we're wrapping up the state permitting. We've worked well with the federal and state agencies over the years, and our permits are in good standing. The only remaining permit in Alaska is for the dam safety certificates and the design packages have been submitted to the state, and we anticipate approval well in advance of needing this permit. Slide 11 highlights a recent statement from Governor Mike Dunleavy up in Alaska. Governor Dunleavy as well as the other elected officials in Alaska have long been staunch advocates for the Donlin project and the importance of what it can mean to the state of Alaska in the Y-K region. On Slide 12, we highlight our long-standing engagement with our Native Alaskan partners, Calista owns the mineral rights and TKC owns the surface rights. We've got a life of mine agreements in place with both of these entities. And it's really important to remember that this is private land that was designated for mining activities. Both Calista and TKC have an owner's interest in seeing this project go forward. Moving on to Slide 13. We are starting to fill out the Donlin Gold feasibility team. Frank Arcese is our project manager. He's been around the industry for almost 40 years and is very well seasoned with big projects in remote locations. We've hired Fluor, one of the industry's leading engineering firms to lead the bankable feasibility study. Under Fluor, we have 3 specialty firms, Worley, who was responsible for the pipeline; Hatch, who is a leader in pressure oxidation and oxygen plants; and WSP, a firm specializes in, among other things, power plants. These are all industry-leading firms that will help us with the bankable feasibility study and taking the project forward into construction and, ultimately, operation. I will now turn the call over to NOVAGOLD's Vice President and Chief Financial Officer, Peter Adamek. Peter? Peter Adamek: Thank you, Greg. Turning to our operating performance on Slide 15. NOVAGOLD reported a fiscal 2026 first quarter net loss of $15.4 million. This represents an increase of $6.3 million from the comparable prior year period primarily due to higher expenditures at Donlin Gold following the commencement of the bankable feasibility study related activities including hiring for key roles on the Donlin Gold project team and higher G&A expenses at NOVAGOLD. The company's share of Donlin Gold expenses in the first quarter of 2026 was $3.9 million higher than the comparative prior year period due to camp remaining open this winter and increased project activities following Fluor being awarded the lead engineering role for the Donlin Gold bankable feasibility study in early February 2026. Unlike the comparative prior year period, the company's first quarter results also reflect NOVAGOLD's 60% interest in Donlin Gold. NOVAGOLD's G&A expenses increased in the first quarter of 2026 by $3.9 million from the comparable prior year period, primarily due to higher professional fees and share-based compensation. Professional fees were elevated during the first quarter but remained in line with quarterly cadence expectations and are expected to decline from first quarter levels during the remainder of the year and remain within previously issued 2026 guidance. On Slide 16, our treasury increased by $277.4 million to $392.5 million at the end of the first quarter, primarily due to closing of a private placement of approximately [Technical Difficulty]. NOVAGOLD intends to use the net proceeds from the private placement for expenditures associated with Donlin Gold activities, exercise of the company's prepayment option on the Barrick promissory note and general corporate purposes. Excluding the financing, corporate G&A costs during the first quarter increased by $3 million, and our share of Donlin Gold funding increased by $11.9 million compared to the prior year. Moving to Slide 17. Our treasury at the end of the first quarter sits at a robust $392.5 million. NOVAGOLD is well funded, enabling it to complete the Donlin Gold bankable feasibility study in 2027 and exercised its option to prepay the Barrick promissory note later this year. Our operating cash expenditures in the first quarter of fiscal 2026 remained in line with our 2026 budget and guidance. And with that, I will now turn the presentation back over to Greg to discuss first quarter highlights. Greg Lang: Thank you, Peter. Slide 18 highlights our continuing engagement with the communities in and around Alaska. We work closely with Calista and TKC on all of these programs as well as preparing them and the local people for ultimate employment at the mine. All of these programs are a testament to our commitment to total engagement with the local communities and ultimately preparing a workforce for the Donlin project. Turning to Slide 19. During the first quarter, we announced the advancement of the Donlin Gold bankable feasibility study as well as additional engineering firms have been engaged for very specialized components of this study. This integrated approach leverages the deep technical expertise that all of these firms bring to the bankable feasibility study. On Slide 20, another development we follow with a lot of interest is the proposal to bring gas down from the North Slope into the Cook Inlet, ultimately tying into the header that will feed the Donlin project. We've got a nonbinding letter of intent with Glenfarne to evaluate natural gas supply from this proposed pipeline. This pipeline has the potential to be a real game changer for Donlin, giving us access to cheap, reliable and long-term natural gas. We will continue to advance discussions with Glenfarne as the project moves forward and where they might potentially fit in supporting the infrastructure for the Donlin project. Last year was really a transformational year for the company. Post the Barrick transaction, we've steadily made meaningful progress to advance the Donlin Gold project through a bankable feasibility study. We're building up the team with expertise to do this. In a while, we will continue to engage with our local communities. Turning to Slide 22. This highlights our top shareholders, we have always valued their long-term commitment to the project into the company. I think it's important to note that Paulson, who is now our 40% partner with Donlin has been a major shareholder in NOVAGOLD for over 15 years. This slide also highlights the coverage that NOVAGOLD has from various banks. NOVAGOLD is focused on delivering on every single commitment we've made, advancing the Donlin Gold project through a bankable feasibility study and achieving all of these milestones. Operator, we are now prepared to open the line for questions. Operator: [Operator Instructions] Our first question is from Francesco Costanzo with Scotiabank. Francesco Costanzo: I'll just start with the BFS. I appreciate that you'll be giving a more fulsome update on the BFS time line around midyear. But given that you've now awarded the engineering contracts for the project, can we consider that the clock on the 12- to 18-month time line to complete the BFS has now started? Greg Lang: I would say, yes, certainly, we have got all of the firms in place to do the bankable feasibility study. Fluor hit the ground running. They're obviously the key driver in this. And from where we're sitting today, I'd say, give or take a year, we will have it wrapped up. Francesco Costanzo: That's great. And my second question is just going to move to project financing. Just this week, we saw Perpetua Resources announced the approval of a $2.7 billion loan from EXIM. Now though the projects are obviously different, I'm wondering if you see any read-throughs on the potential debt financing availability for a project that offers significant domestic investment in the U.S., such as Donlin? Thomas Kaplan: Shall I take that one, Greg? Do you want to begin? Greg Lang: Sure. Go ahead, Tom. Thomas Kaplan: I think that it's very fair to say that when you're building the biggest gold mine in the United States, you're going to have multiple sources of financing that come to the floor. And if I had to hazard a guess, I would say that governments will be a very large component in that. There is, of course EXIM. I believe that EXIM is very well aware of our project. And for many reasons that you've cited, the domestic component of this story, not only being the largest gold mine in the United States, but being located in a place where it becomes a nexus for the energy story in Alaska, which is of extraordinary importance to this administration. Yes, I think it is fair to say that we should expect that the U.S. government has a serious interest in this story. But equally, I would point out that at least 2 Asia Pacific countries, Japan and South Korea have made very substantial commitments to investment in the United States. $550 billion in the case of Japan, $350 billion in the case of Korea. And both of those have advanced in terms of execution over the last several months. I think that it is fair to say that one of the things that we do expect them to be interested in is being able to make quite a statement with Donlin as the biggest, but also as enjoying the fruits of location, location, location. If you're on the Pacific Coast of Alaska, you have an opportunity to really develop relationships that are natural in terms of meshing together. The Japanese are very large buyers of gold and the South Korean Central Bank. Several months ago, announced that it was going to go back into the market to add to its reserves. Their timing was actually quite good. The prospect for us to be able to utilize the benefits, for example, of offtake agreements of 1.3 million, 1.4 million ounces a year, clearly make us a bit of a unicorn in terms of the ability to attract financing. And I'm not even talking about the other traditional sources. I hope that helps. Operator: The next question is from Soundarya Iyer with B. Riley Securities. Soundarya Iyer: Congratulations on this, the quarterly update. My question is on the exploration work. So as you mentioned in your opening remarks, the current resource is just 5% of the land package. So have you planned any 2026 exploration drill program or budget to test further targets? Or is that a priority after the bankable feasibility study? Greg Lang: I'll start with that one. We have putting together an exploration plan, more I would describe it as general reconnaissance work throughout our land holdings and the area in and around Donlin. So I think that's getting started. But you have to remember, I think there's a lot of snow left on the ground in Alaska. So it will be another month or 2 before we really can get on the ground. But it's more general recon. We've been studying Donlin. We believe the next Donlin is at Donlin, and we're in a modest program starting to evaluate that. Thomas Kaplan: If I may add just a few words on that because the drill bit has been my best friend over the last 3 decades. If I may echo Greg's comment, and this is obviously a very forward-looking statement. But being that for reasons belonging to Barrick's ultimate belief that this would fall into their lap one day or the other. The 95% of the property that's been unexplored is all prime real estate. And we believe that in addition to what we see as low-hanging fruit to add tens of millions of ounces within the 8-kilometer belt, 5 kilometers of which just simply have been drilled, shown mineralization, but there was never any follow-up because the deposit was already so big that it was thought you leave that for later. But in addition to the 45 million ounces of resources that we already see, it's low-hanging fruit to add, in our view, tens of millions of more ounces. But we are looking for that at Donlin. In a bear market, people really don't care about exploration results. And so I'm very glad that you asked that question because in a bull market, great drill results can cause the stock price to double or more. And we do expect to be adding a lot more ounces in the immediate vicinity of the property as we go from the 3 kilometers to the 8-kilometer mineralization. But at the same time, what Greg is referencing is that we are undertaking a project or property-wide analysis in order to identify the best drill targets that are extrinsic of the 8 kilometers. Because in our view, the odds that this occurrence is alone. Well, mother nature is very fickle. We know that the odds are very long in exploration. But I've been in this movie before. And I found that in the case of precious metals, and in the case of hydrocarbons, where we made our biggest killing at Electrum, Wildcatting is something that can take a 10x opportunity to 100x. And fortunately, we have a partner who doesn't see exploration success as being a challenge. But John Paulson and his team completely have aligned with us on understanding that good news through the drill bit is a multiple expander. And if this turns out to be what we hope it is and it's a hope, this is really the next Carlin. And the partners are aligned in being able to identify that. So when you think of the relatively low cost of exploration versus the high reward, I think you can understand that the partners in Donlin are very keenly aware that we may just be scratching the surface in this story. It remains one of the greatest exploration stories in the world, and that will unfold for the market. Soundarya Iyer: Yes. I mean I totally agree with that. My question was on that front that exploration work could gain more value in a bull market. And just one more. On the state permitting, can you walk us through what's left there on the -- as a full state permitting checklist? What is in hand? What remains outstanding? And how do we expect the receipt of those permits going forward? Greg Lang: Sure. I'll take that one. The only outstanding state permit is for the tailings dam and other water retention structures. Our federal permits which are all in hand, authorized us to do this work. However, in Alaska, these structures are administered by the state, and they require final engineering drawings before they grant approval. We've submitted the design packages to the state. We had already completed the geotechnical work, and we expect approval of these permits about the time we're wrapping up the bankable feasibility study. So they're not on the critical path, but the work to get these permits is well in hand. All of our other remaining state permits are in good standing as is our federal permits. Melanie Hennessey: Thank you. I do have a few questions from the webcast that I wanted to read out. The first is from Eric. Will the BFS include a closure and recognition estimate, including long-term water treatment and post-closure monitoring assumptions? Greg Lang: I'll start with that one. Yes, it does. Part of the feasibility study and actually the permitting requires you to have approved closure plans that have to be invested by the state and our native partners. The lease plans, reclamation and closure and water treatment, they are all part of the commitments in our existing permits. Once the mine is in operation, it will cash fund these permits through a trust. So it's -- the procedure is well defined and the approvals are all in place for the subsequent reclamation and restoration of the Donlin site post mining. Melanie Hennessey: Great. Thank you, Greg. The next question comes from Jean. Given the recent share price volatility and now with the feasibility team in place, which upcoming milestone in this study do you believe will be most important in helping the market recognize the project's underlying progress and value? Greg Lang: Well, there's -- I mean, the important piece of this, obviously, is to finish the feasibility study. But along the way, we're advancing many different avenues. I think particular interest is we will be evaluating third-party participation in our gas pipeline and other components in the infrastructure that we could logically bring in a third party to handle. So that will be one of the catalysts coming up as we advance the feasibility study. Then the other milestones along the way as different components of the study are completed, and we will update the marketplace as this work unfolds. But the real key item is finishing the study, and we anticipate it will certainly demonstrate robust economics in this price environment. Melanie Hennessey: Great. Thank you. I have a further question that come through the line from Matt. Dr. Kaplan, at the last quarter's update, you mentioned that your decisions toward NOVAGOLD and Donlin were family influence. I have been following NOVAGOLD for over 15 years and now have many family members investing in the story. I just wanted to say that I appreciate your's and NOVAGOLD's integrity over the years. A big thank you. Could you comment on the recent movement in gold and how that relates to NOVAGOLD? Thomas Kaplan: Well, that's very kind. While I'm going to ask our team, could you please call up the chart that references the long-term bull market in the Dow, and just let me know when it's up there. Melanie Hennessey: Yes, the slide is up. Thomas Kaplan: But before that, let me get to the best part of the questioner's remarks. First of all, I find it very gratifying, we all do that you're able to make this comment about our integrity and your family's investment in NOVAGOLD. Needless to say, as Electrum is the largest shareholder of the company. And as the largest shareholder of Electrum is my family. I take it very much to heart that I have a responsibility to my family, but all the other shareholders and in your case, your own family, to do the best possible thing that we can. And I would say that the thing that Greg and I are most proud of since having come into the story together in 2011, we are celebrating 15 years of joyful monogamy. And one of the things that we are most proud of is that any promises that we made, we kept. To the extent that we disappointed, I think 100% of our shareholders understood it was for reasons beyond our control. And we had all the tailwinds that I think and John Paulson thinks will take us to $100 per share. But we had one headwind. And when you think that a year ago, our stock was at $2 and change, and reached 14, and I have no doubt that we will vastly surpass that and multiply past $14. You understand that we took it to heart as much as any shareholder that we were being held back. And once that was relieved approximately a year ago, we knew that we would be on our way to $10 to $15 to $30, and we think well beyond that for all of the reasons that have become so clear to everyone that whether people realize it or not, and I'm not saying we're going back to a gold standard, because we'll never see that kind of discipline ever again in human economics. But we are seeing the remonetization of gold. We are seeing that central banks have shown through their purchases that gold is the asset that they hold because it doesn't represent someone else's liability. When central banks hold gold, when central banks buy gold, they're making a statement. To the extent that some central banks need to lay off some gold as Turkey is said to have, that proves, proves to all of the rest of them that gold is the asset that you want to own because gold traditionally in a crisis gets hit because if it's in a bull market, it may be one of the only things in which people have a profit. So the ability to not just buy but the ability to sell something, if you need to take some chips off the table because I don't know, you have missiles that are flying into your territory and need to be taken out with Patriots. That's a good thing, not to be concerned about. And this is one of the things that I enjoy most in the time that I've been bullish on gold and publicly so since gold was at $500 in 2007. And when I said my first equilibrium for gold would be between $3,000 and $5,000, people thought I was nuts. Similarly, when I said that silver will go to triple digits, people thought I was nuts, but that's my stock in trade. I don't know how to build a mine. Greg Lang knows how to build the mine. Richard Williams knows how to build the mine. They know how to do it on budget and on schedule. I can't figure out how to make chrome work over Safari. But I don't need to. You surround yourself with the very best people. My job is to protect my family's wealth. And by extension, all of the families that depend on me, including our management team and including our shareholders. So with that, let me go back to a chart that I spoke to on our last conference call because I wanted to give people a heads up as to what might happen. It wasn't required, but it might happen. In fact, what I would call the 1987 correction started 3 days later. Now I'm not going to say that I was predicting it. I was going to say that it should be expected. And for that reason, whereas people who predict a downdraft are seen as Cassandra's, I wasn't actually being a Cassandra in this case. And I have been a Cassandra in different cases, like on the Middle East. But in this instance, I was presenting people with my belief that we could have in 1987. 1987 is not so much remembered for how you felt when you thought the world was caving in, in October of '87. It was -- it is and should be remembered as the blip that created the best buying opportunity of the bull market in stocks. The best because we've already seen the stock market go to 2,750. And when it pulled back to 1,650, you have to fade these numbers a bit, I'm sorry. That was actually the cream of the opportunity to be able to build the position if you didn't have one or to add on weakness in a bull market that has all the structural factors going forward. And if anything, we can see that the world is a very different place. I hope that it's going to turn out to be a much safer place. But without getting into politics, the reality is that we're in unchartered waters economically and the debt burden will never be repaid. So just for all these reasons, if you didn't own gold on the way up, taking advantage of a pullback was what I was trying to express, while some people were a little bit upset that I said that there could be such a pullback, the reality is we're looking at it. So look at this chart again because this is the exact same chart as I issued. And I'll just repeat the sentence that I repeated 3 months ago. As a curiosity, I want you to go back and look back at the mid-1980s. The blip, which barely is noticeable is the crash of '87 that a lot of us thought was going to be the harbinger of The Four Horsemen of the Apocalypse. You can't even see it as the Dow march from 1,000 to 45,000 and up to 50-some-odd thousand plus leap in value over the decades. A few days later, '87 began. And then it was compounded by the need for people to be able to have some liquidity due to the war with Iran. So once again then let me reiterate, in the words of Ray Dalio, one of our greatest contemporary applied historians, Gold is now the second largest reserve currency behind the U.S. dollar. To understand why you need to look at the history of fiat currencies like the dollar and hard currencies like gold. The way I see it, we're currently facing a classic currency devaluation similar to what we saw in the 70s or 80s. In both of those cases, fiat currencies around the world all went down together and all went down in relationship to hard currencies like gold. If events today follow a similar pattern that makes hard currencies an attractive asset to hold. For all of you who've known me or listened to me over the years when I was asked which currencies to own, I said, if you have to own a paper currency on the dollar. But the real currency is gold. And now I don't really know what paper currencies are going to thrive the most. But I will repeat something which I've said now over the last couple of years, regardless of your view on currencies against gold, the dollar is actually collapsing. So every once in a while, you'll have a pullback, but the long-term trend on gold, to my mind, is going to be very similar and indeed price-wise, it actually looks at, but that's coincidence. Very similar to what we saw in the Dow Jones. And so for those, if you haven't taken advantage of the pullback, my strong recommendation is that you do. And I can only say that what my family does, we are long-term holders in our flagship gold asset Donlin and will absolutely remain so because to our mind, if we sell it, we can't go into something at least as good, and we really think impossible to go into anything better. So thank you for being a long-term shareholder. Thank you for your support. I can tell you it means a lot to us. And the last conference call for those who managed to stay through it. One of the callers actually said that he and his wife had an argument over NOVAGOLD during the tough times, but that the revival of NOVAGOLD actually saved his marriage. And we regarded that as probably not only the funniest, but the most heartwarming piece of news we've had all year. So with that, I thank you and all of the shareholders who have kept the faith. All I can do is promise you that I, the entire management team is devoted to being able to unlock the fullest value of what we consider to be the greatest gold development story in the world and what will be the largest single gold mine in the best jurisdiction on the planet. Thank you. Operator: I'd now like to hand the call back over to Greg Lang for concluding remarks. Greg Lang: Well, I just want to thank everybody for taking the time to get an update on NOVAGOLD, and our Chairman's thoughts on gold prices and markets. So everybody thank you. We'll be in touch. Operator: This brings to a close of today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.