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Operator: Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to Purple Innovation Fourth Quarter Full Year 2025 Earnings. [Operator Instructions] I would now like to turn the call over to Stacy Turnof, Investor Relations. Please go ahead. Stacy Turnof: Thank you for joining Purple Innovation's Fourth Quarter and Full Year 2025 Earnings Call. A copy of our earnings press release is available on the Investor Relations section of Purple's website at www.purple.com. Before we begin, I'd like to remind you that certain statements made in this presentation are forward-looking statements. These statements reflect Purple Innovation's judgment and analysis as of today and are subject to a variety of risks and uncertainties that could cause actual results to differ materially from current expectations. You should not place undue reliance on these forward-looking statements. For more information, please refer to the risk factors outlined in our filings with the SEC. Additionally, today's presentation will reference non-GAAP financial measures such as adjusted gross margin, adjusted operating expenses, adjusted EBITDA, adjusted net loss and adjusted net loss per share. A reconciliation of these measures to the most comparable GAAP measures can be found in the earnings release available on our website. With that, I'll turn the call over to Rob DeMartini, Purple Innovation's Chief Executive Officer. Robert DeMartini: As we close out 2025, I'm proud of how far the business has come over the past year. While the broader market remains challenging, the progress we're making at Purple is increasingly evident in our results. The fourth quarter marked an important inflection point for the company. Revenue increased approximately 9% year-over-year. We delivered gross profit expansion and profitability improved meaningfully across the business. In the quarter, we generated adjusted EBITDA of approximately $8.8 million and finished the year profitable. This performance was driven by the benefits of the strategic actions we've taken. Those actions include our cost initiatives that are now fully embedded in the business, including consolidating our manufacturing footprint as well as a full quarter of expanded Mattress Firm distribution and a significant expansion of our Costco program. Looking at the full year, 2025 was a period where the business became meaningfully stronger. We continue to build on our path to premium sleep strategy and delivered positive adjusted EBITDA for the year, finishing within the guidance range we established at the beginning of 2025. Importantly, we achieved profitability levels that we haven't seen since 2021. That progress was driven by the execution and by the changes we put in place, not by a recovery in the broader market, which speaks to the durability of the model we've been building. Our focus throughout the year was not on short-term fixes, but on creating a business that can perform more consistently. Taken together, this represents more than a strong finish to the year. It marks a clear shift from defense to offense. Growth, margin expansion and profitability are showing up in the numbers and that's in a market which is down low single digits. The direction is clear, the momentum is real, and we're entering 2026 with a playbook designed to scale profitably as demand continues to improve. We've made meaningful progress across each of our sales channels in 2025. And in the fourth quarter, 2 of our 3 channels delivered positive growth for the second consecutive quarter. Comparable sales in our showrooms increased 8.8% in the quarter and showrooms continued to grow in profitability for the full year. Sales execution improved, the updated selling model gained traction and Rejuvenate 2.0 represented over 50% of showroom mattress revenue during the quarter with more than 80% of showroom's 4-wall profitable for the full year. Wholesale was a key driver in 2025 with a robust 39.8% growth in the fourth quarter. E-commerce performance was mixed during the year and declined in the fourth quarter, though we did see pockets of strength around Black Friday and Cyber Monday. At the same time, we saw solid marketplace performance, particularly on Amazon and meaningful improvements to the website experience tied to our less pain, better sleep positioning. Stepping back, the way we're thinking about the business today is fundamentally different than a year ago. Last year was about reshaping the business for a tougher market, rightsizing our cost structure, strengthening the foundation and restoring profitability. Today, we're focused on growth. Going forward, our focus is centered on 3 priorities: deepening our understanding of the consumer, delivering better sleep through product experience and expanded distribution and executing with financial discipline across the business. This approach builds on what's already working and reflects how we're running our business. With that framing, let me walk you through our progress against these priorities and what they mean for the business going forward. Number one, knowing our consumer. Over the past year, we've sharpened our focus on understanding who our consumers are, what matters most to them and how they make their purchase decisions across the channels. Our work is shaping how we communicate, shifting us away from promotionally led messaging towards clear benefit-driven storytelling, focusing on GelFlex Grid technology that helps consumers understand how Purple delivers better sleep. Our less pain, better sleep positioning continues to resonate, providing a consistent consumer-led message that translates across e-commerce, retail and wholesale channels. Importantly, we're focused on reaching our consumers with the right message in the right place at the right point in their decision journey. We're seeing early signs of improved brand momentum with increased awareness, beginning to translate into brand consideration. As a result, we're improving our clarity across touch points, strengthening engagement and supporting higher quality conversion as consumers better understand the value of our product. In e-commerce, we're encouraged by the progress we're making. As part of better meeting consumers where they're shopping, our expanded presence on Amazon is gaining traction. Improvements in availability, delivery speed and conversion are strengthening the consumer experience and broadening our reach particularly among new-to-brand consumers. This expanded assortment is driving a healthy lift in Amazon sales, especially in pillow and seat cushions and introduces new consumers to our technology. We're also seeing this consumer-focused approach resonate through our partnerships. Our participation in Mattress Firm's Sleep Easy marketing campaign drove sales conversion and improved aided awareness scores. At the heart of better sleep is better product. From there, we focus on how we bring innovation to life through the consumer experience and expanded distribution. Innovation remains at the core of Purple's differentiation and our Rejuvenate 2.0 collection continues to validate that approach. Performance exceeded our expectations in 2025 with strong traction across both showrooms and wholesale as retail partners expanded Rejuvenate 2.0 placement on their floors. Through our direct channels, Rejuvenate 2.0 is performing well at an average selling price of almost $5,800, demonstrating our ability to drive demand at meaningfully higher price points and reinforcing the value consumers place on better sleep. We also completed development work on Purple Royale, a new premium offering developed in close partnership with Mattress Firm. This is an important product for us and a meaningful step forward in our premium strategy. Purple Royale is complementary to our Rejuvenate 2.0 collection, with similar price points across the curated floor model lineup. The launch is on track with initial floor models arriving now. The Purple Royale collection was originally planned for over 2,800 slots bringing us to a total of 12,000 slots across Mattress Firm's 2,200 stores. Encouragingly, the quality and design of the final product has exceeded expectations, and as a result, Mattress Firm is adding incremental slots as the product launches. Beyond the product itself, we continue to focus on delivering a differentiated end-to-end consumer experience, anchored by compelling in-store presentations across our own stores and wholesale partners. This includes elevating how we educate our consumers around pain relief and the role of GelFlex Grid technology, which we are seeing drive strong engagement when brought to life through in-store demonstrations and digital content. We're also continuing to strengthen white-glove delivery services to ensure that Purple shows up consistently incredibly whenever the consumer chooses to engage. This focus is strengthening the brand and improving conversion by reinforcing the value of our technology across channels. Part of delivering better sleep is expanding our distribution presence, meeting more consumers where they shop. The premium innovation is translating directly into expanded distribution. With Purple Royale now launching across Mattress Firm, we've expanded our footprint and deepened our presence across their network. Additionally, we're seeing strong performance with Costco, where our program continues to resonate with members and provide an important opportunity to introduce Purple to new customers at scale. With both Mattress Firm and Costco, our initial launches significantly exceeded expectations, driving immediate demand for expanded placement. In Costco's case, early performance was exceptional, supported by the introduction of unrolled beds on floor displays, which allowed members to see and feel our differentiated product. The strength of those results led Costco to quickly expand the program in the fourth quarter to approximately 450 clubs bringing us to nearly nationwide distribution. We're also making progress in new channels, including Walmart and Sam's Club, which are helping us reach new consumers, diversify demand and drive incremental volume. Importantly, expanding into these large far-reaching retail platforms strengthens distribution for our pillow portfolio and positions us to drive meaningful incremental pillow sales through highly scaled high-traffic partners. And in owned retail, we continue to focus on showroom profitability. In 2025, we closed 4 underperforming stores as part of optimizing the sleep. And looking forward to 2026, we plan to open 7 new stores. Our showrooms continue to be an important part of the model that showcases our GelFlex Grid technology and premium positioning. Our showrooms drive traffic to wholesale locations, helping convert interest into purchases. Finally, let me talk about how we're executing with financial discipline across the business. Last year, our focus was on rightsizing the business, so we could operate profitably at current scale. That work is now behind us. And importantly, the actions we took were structural, not temporary. We're increasingly focused on driving growth from a much stronger foundation. Gross margin improvement remains a key focus, and we continue to see the benefits of the actions we've taken to simplify the business and improve efficiency across sourcing, operations, fulfillment and product quality. Mix has become an increasingly important tailwind led by the growth of Rejuvenate 2.0. The shift towards higher ticket products, combined with strong attachment rates for adjustable smart bases and pillows, is driving higher average transaction values and incremental profit dollars. As a result, the operating discipline we put in place over the past year is now clearly showing up in our margins and profitability. We continue to view 40% gross margins at a sustainable level, and we expect further improvement as we move into 2026 as efficiencies continue to flow through the business. Todd will provide more detail on specific margin drivers and cost actions in his remarks. Turning to our guidance. As we look ahead to 2026, we're entering the year with improved stability and a structurally stronger operating model. For the full year, we expect revenue in the range of $500 million to $520 million and adjusted EBITDA of $20 million to $30 million. This outlook reflects continued momentum in our premium product portfolio, expanded wholesale distribution and the operating leverage in the business as volume grows. Importantly, this guidance is driven by execution, not by a recovery in the broader market. It reflects the progress we've made across product, distribution and operations, with gross margin sustainably above 40% and disciplined expense management we believe we're well positioned to deliver meaningful earnings growth in 2026. Before I close, I'd like to briefly readdress the Board's ongoing review of strategic alternatives. The process remains ongoing, and we've engaged with multiple parties across a broad range of opportunities to maximize shareholder value, including a potential merger, sale or other strategic or financial transaction. We'll continue to evaluate all options and will provide updates as appropriate. As a reminder, we will not be commenting further or taking questions on this topic during today's Q&A. With that, I'll turn the call over to Todd. Todd Vogensen: Thank you, Rob. I'll begin by walking through our fourth quarter financial performance and then the year ended December 31, 2025. Net revenue for the fourth quarter was $140.7 million, representing growth of 9.1% year-over-year. The increase was driven primarily by wholesale, reflecting a full quarter of expanded Mattress Firm placements and continued momentum with Costco, partially offset by a decline in e-commerce. By channel, direct-to-consumer net revenue for the quarter was $71.9 million, down 9.9% compared to last year. Within DTC, showroom revenue increased approximately 4.5%, up for the second consecutive quarter and comparable sales were up 8.8%, reflecting continued strength in Rejuvenate 2.0. E-commerce revenue continued to be down with a decline of 15.3%. Wholesale revenue increased approximately 39.8%, driven by our expansion with Mattress Firm and Costco. Gross margin for the quarter was approximately 41.9%, remaining well above our 40% quarterly margin target and down 100 basis points from last year. We're pleased with the durability of our gross margin, particularly given the strength of last year's results when gross margin rose 970 basis points driven by sourcing initiatives and the profitable liquidation of inventories. Viewed over a 2-year period, gross margin increased by nearly 870 basis points, reflecting durable improvements to the business. The margin continues to be driven by direct material savings, plant efficiencies, restructuring benefits and volume leverage. On an adjusted reported basis, gross margins for the quarter, excluding restructuring costs, was 41.9%, down 300 basis points from last year. Operating expenses for the quarter were $61.2 million, down 2.9% versus $63 million last year. The decrease reflects the benefits from restructuring activities and other cost-savings initiatives. Our fourth quarter adjusted loss per share was $0.02 compared to an adjusted loss per share of $0.11 last year. Adjusted EBITDA in the fourth quarter was $8.8 million, a notable improvement over the $2.9 million EBITDA last year. Turning now to full year results. Net revenue for the full year 2025 was $468.7 million, reflecting a 3.9% decline versus the prior year. By channel, direct-to-consumer net revenue for the year was $261.3 million, down 7.9% compared to last year. For the full year, showrooms generated strength with sales up 1.5% versus last year to $78.5 million and comparable revenue was up 6.6%. We delivered net revenue of up 4% or more in 3 of the past 4 quarters with only the second quarter being impacted by the timing related to the Rejuvenate 2.0 launch. Wholesale has been sequentially improving over the last 4 quarters, up 1.6% versus last year to $207.4 million, benefiting from expanded partnerships and nontraditional revenue streams, while e-commerce remained soft throughout the year. Full year gross margin increased 310 basis points to 40.2% versus last year, reflecting the impact of restructuring, sourcing initiatives and manufacturing efficiencies. On an adjusted basis, full year gross margin, excluding restructuring costs, improved slightly to approximately 40.4%, up approximately 10 basis points year-over-year. Our cost initiatives delivered $25 million in annual savings in 2025, with $25 million to $30 million of sustainable savings expected going forward, giving us greater flexibility to reinvest in marketing and innovation while continuing to expand margins. Just as importantly, it reflects a business that is operating with greater discipline and a structurally stronger cost base. Full year operating expenses declined by 15.3% to $231.6 million, driven by restructuring savings and productivity initiatives. Adjusted net loss was $34.3 million versus an adjusted net loss of $55.1 million in the prior year. Adjusted EBITDA for the full year was $1.9 million, representing a significant improvement versus the adjusted EBITDA loss of $20.8 million last year and adjusted net loss per share in 2025 was $0.32 compared to an adjusted net loss per share of $0.51 in the full year of 2024. Now turning to the balance sheet. We ended the quarter with cash and cash equivalents of $24.3 million versus $29 million on December 31, 2024. Net inventories on December 31, 2025, were $59.7 million, up 5% compared to December 31, 2024. We're pleased to exit the quarter with cash over $24 million, and we believe we are well positioned from a liquidity standpoint. We also extended our debt maturities from December 31, 2026 to April 30, 2027, enhancing our financial flexibility and reflecting continued strong support and confidence from our lending partners. Now let's turn to the outlook. Given that we are through most of the quarter, we will be providing guidance for the first quarter. We plan total revenue to be in the range of $100 million to $105 million and adjusted EBITDA to be in the range of a loss of $7 million to a loss of $4 million. As Rob walked you through earlier, for the year, we expect revenue in the range of $500 million to $520 million and adjusted EBITDA of $20 million to $30 million. We plan for revenue to continue to be driven by strength in Rejuvenate 2.0 as well as our expanded distribution with Mattress Firm and Costco. We also anticipate continued improvement in EBITDA, driven by further operational efficiencies and ongoing restructuring actions benefiting both gross margin and operating expenses. These initiatives are expected to support improved profitability and cash generation, reflecting the full impact of our cost actions, product innovation and expanded distribution. Robert DeMartini: Thank you, Todd. This morning, we filed our annual report on Form 10-K for the fiscal year ended 2025. As disclosed in the filing, our independent auditor has included a going concern qualification. While this notification is not necessarily a surprise, given the liquidity challenges of the past year and our historical cash burn, we want to provide clear context why the decisive, transformative actions we've already taken are expected to continue stabilizing our financial position and driving the business forward. The fruits of our labors are already evident in our recently improved operating and financial performance. Following a rigorous period of restructuring, we achieved profitability levels in the second half of 2025 that we haven't seen since 2021. This momentum is driven by 3 core strategic pillars: supply chain reorganization. We've optimized our footprint to ensure a more agile, cost effective flow of goods. Disciplined cost management. Structural savings initiatives implemented in 2025 have led to significant margin expansion and profitability at revenue targets meaningfully lower than past years. Channel momentum. We're seeing robust volume growth across both our wholesale and showroom channels as our path to premium sleep strategy takes hold. We entered 2026 on much firmer footing. We expect to conclude Q1 '26, historically our seasonally weakest quarter with neutral cash burn. Furthermore, we're grateful for the strong continued support of our lenders. Our recent agreement to extend debt maturities to April 2027 provides us with the runway and the financial flexibility to execute our long-term vision. We believe these factors, combined with our improved liquidity profile, directly address the concerns raised in our 10-K and position us for a year of consistent growth and profitability, as evidenced by our 2026 guidance. We appreciate the patience and the confidence of our shareholders. Like you, we are disappointed by the current stock price. Our team remains focused on executing our clear plan to build on recent business momentum and deliver sustainable shareholder value on your behalf. With that, operator, we can turn it over for questions. Operator: [Operator Instructions] Your first question comes from the line of Brad Thomas with KeyBanc Capital Markets. Bradley Thomas: Rob, I wanted to start off asking about recent trends. There's no question that the fourth quarter showed some nice momentum and your outlook for this full year is very encouraging. It does look like maybe the first quarter had maybe a step back in the pace of the business. Can you just talk a little bit more about what you've been seeing here? Robert DeMartini: Yes, Brad, thank you for the question. And I think there's a couple of things going on. We had a very strong fourth quarter. And the way the fourth quarter shipped, it did impact demand in January as that sell-through and consumption happened. Particularly, we've got the club customer that had a significant buy-in in December that was part of loading the floor, and so there wasn't much follow-up in that. As Todd said, we think we'll be between $100 million and $105 million. And I think the momentum also includes all those floor samples at Mattress Firm going out, and that obviously has a short-term push down on revenue as they sell in at floor sample prices. So we're encouraged. Q1 has always been our weakest quarter. It's not a strong quarter, but we think the momentum in the business dictates the strong rest of the year that we've predicted. Bradley Thomas: And just to be clear, Rob, it sounds like aside from the January, you've seen an improvement in trends of late. Is that fair to assume? Robert DeMartini: Yes. I mean Q1 is not robust by any means, but we've seen us kind of lapping last year right at about equal to comp levels. And obviously, we're close to ending March, and we expect kind of the same performance in March. Bradley Thomas: Great. And then just following up about the outlook for the year, we can obviously back into it a bit through your guidance. But the question is really how to think about the flow-through margin? You've done a great job of improving the cost structure of the business. As you start to drive this volume, how do we think about it flowing through to the bottom line? Todd Vogensen: Yes, flow-through actually should be quite good for us. If you look at the guidance, we're guiding to revenue that's $30 million to $50 million better than last year and looking at EBITDA that's going to be around $20 million to $30 million better. That's a pretty healthy flow-through. I think on a normal basis, our sales should be generating about a 30% flow-through. This year will be a little bit more because we're also seeing margin expansion and a lot of cost control that is helping us along the way. Bradley Thomas: Great. And if I could squeeze in just one more regarding the macro environment as it relates to raw materials. Can you just remind us the degree that you have exposure to petrochemicals or other inputs that may be at risk of some price pressure here? And what are you hearing from suppliers? Todd Vogensen: Yes. So mixed bag, we obviously are not importing oil or anything like that directly, but we do have products that have a petroleum base to it. You can think foam, some of our -- to a lesser degree, the mineral oil that's going into the gel. Overall, we've looked at it. And if the price of oil stays around that $100 a barrel range, effectively, the savings we're going to get this year off of tariffs from being able to get -- well, lower rates on tariffs, but also tariff mitigation would roughly offset the exposure from any oil. We continue to monitor it. We're hearing noises about price increases, but it's just very, very early on at this point. Operator: Your next question comes from the line of Matt Koranda with ROTH Capital. Matt Koranda: I wanted to hear a little bit more about how you're thinking about the seasonality of the year, just given the visibility you have into the product launches with your wholesale partners. So maybe just a little bit more around the ramp that's implied in guidance for the remainder of '26. Todd Vogensen: Yes. So you should see revenue growing -- sorry, Rob. You should see revenue growing pretty consistently across the course of the year. In Q2 -- typically, Q2 would be relatively flat to Q1. But this year, we have the Purple Royale launch at Mattress Firm that literally just got out on floors last week officially. So that will help out the Q2 pace. And then we have a natural build that we see virtually every year going into Q3 and Q4. So it really should build pretty consistently as we go across the course of the year. Matt Koranda: Okay. And then maybe just wanted to hear you unpack the drivers of the flow-through. You mentioned there's likely some more restructuring actions. Does that benefit operating expenses? Or are there gross margin benefits embedded in the actions that you're taking? Are the actions already taken? Or is this incremental stuff that still needs to happen during the second quarter to hit the flow-through sort of that's implied in the '26 EBITDA guide? Todd Vogensen: Yes. So the actions that I kind of referenced were actions that have already been taken at this point. We don't have plans for additional actions that are needed right now. We feel like we're positioned very well for the full year. But we did take a little bit of an action in January that will continue to benefit the operating expense line. And then from a gross margin perspective, we actually just have a very strong team on the operations side of the world that is always looking for room for improvement from an efficiency perspective, overall scrap and yield, looking at sourcing opportunities. There's a number of opportunities that should play out across the course of the year to help that flow through. Operator: Your next question comes from the line of Dan Silverstein with UBS. Daniel Silverstein: Maybe just to start, looking at the sales guidance, up $30 million to $50 million this year. I think the Mattress Firm expansion was supposed to drive around $70 million of additional sales and it sounds like it's doing really well right off the gate. If this is the case, what other areas might be driving a bit of a drag to kind of net out below $70 million? Robert DeMartini: Yes. First of all, I think that the $70 million, we've got to grow into that number. It's probably somewhere between $50 million and $70 million. And obviously, it's just hitting the floor right now. But we've got -- we expect growth from Costco as well. We expect growth from showrooms, modest. And then we have assumed a flat e-commerce business in the roll-up. We want to do better than that. But given the performance of the last few years, we tried to show some conservatism there. Daniel Silverstein: Super helpful. And that was kind of my second question. Why is the Amazon business doing well relative to your own e-com channel? How can you capitalize on this? And how can you reinvigorate your own e-com channel looking ahead? Robert DeMartini: Yes, Dan, I'll separate the 2 questions because they really are different drivers. I mean our own e-commerce business, we've got to figure out a way as we've expanded our availability across both our own showrooms and partner showrooms. The specialness of reaching our product online has been challenged and the product assortment while proving to be a benefit in a physical environment is either a neutral or a negative in a digital environment, and we're still trying to figure that out. So that's what's going on with e-com. On Amazon, it's quite a different situation where because of the cube of mattresses, we have a very underdeveloped shape of business at Amazon. So the progress you're seeing is kind of getting our fair share relative to the pillow business that we have there. And so it is a bit of a development opportunity, and that has to do with availability and prime badging that we're starting to figure out. So it really is 2 different drivers across those otherwise seemingly consistent channels. Operator: [Operator Instructions] Your next question comes from the line of Bobby Griffin with Raymond James. Alessandra Jimenez: This is Alessandra Jimenez on for Bobby Griffin. First, I wanted to follow up on current demand trends. What are you seeing from growth in your retail partners outside of Mattress Firm and the incremental Costco program? Robert DeMartini: Alessandra, on our own business, you're asking not the overall market? Alessandra Jimenez: Yes. Robert DeMartini: Yes. It's a mixed bag. We've got some customers where we're seeing nice growth, and we've got others where we've got to figure out why we're not seeing that. So it is a bit mixed across total sale. I think if you backed out the 2 customers that we spoke about in our script, we're probably seeing a net down about 5%. And I think that's about consistent with the market, but it is definitely mixed in the performance. Alessandra Jimenez: Okay. That's helpful. And then what are you expecting from a cash flow perspective for 2026 on the improved EBITDA profitability? Do you anticipate positive free cash flow for the year? Todd Vogensen: Yes, we would expect positive free cash flow for the year. Apologies, I was getting an echo. Positive free cash flow for the year. And as we look at it, we'll have CapEx that we'll be reinvesting in and $20 million to $30 million of adjusted EBITDA that would get us modestly positive. And coming off of a Q1 where we're ending Q1 with our cash actually equal to where we ended Q4. That's the first time that we've been in that range in over 7 years. So we're off to a good start for the year for sure. Alessandra Jimenez: That's really helpful. And if I can just sneak one more in. I wanted to revisit the showroom channel. It's encouraging to see that strong comp growth. Can you speak to what you're seeing from a demand perspective and what's kind of accelerating there? And then how do you think about the roughly 20% of locations that are not yet 4-wall profitable? Robert DeMartini: Yes, Alessandra, let me try to tackle that. So Scott Kerby, who runs that channel, has been doing an excellent job in establishing a selling system. And what's driving the results is positive mix. As I mentioned in the script, our mattress percent to total of the premium line is now over 50% of dollar revenue. And so that obviously helps the stores be much more profitable. Of the 20% of stores, that's about 9 stores that are not 4-wall profitable, we think at least 5 of those can get there with continued development and maybe 3 to 4 of them we really have to look at and figure out if we have -- are we in the right location with the right rent structure. But it's been mix, tight labor discipline and really looking at the cost structure of those stores that have led to the significant improvement over the last 2 years. Operator: Your next question comes from the line of Brian Nagel with Oppenheimer. Brian Nagel: So I have a couple of questions. First off, just with regard to the newer products, the more innovative products, is that rollout now complete? Or should we expect further rollout here, I guess, through '26? And then my follow-up question, I guess, mostly for Todd. I mean maybe just outline kind of the capital needs from an operational standpoint, the capital needs of the business. Robert DeMartini: All right, Brian, let me take the first one, and then I'll let Todd answer the second one. Yes, that rollout is physically completed. We completed our Rejuvenate rollout probably in the middle of fourth quarter and then started the Royale, which is a curated version of similar price points. The official launch at Mattress Firm was March 20. It's on all the slots that it was aimed for at this point. But we still have significant opportunity to develop that line. I spoke about the percent to total in showrooms. It's much, much lower in wholesale and in e-commerce. And that's a business development opportunity. So we think we can continue to grow that as a percent to total, but the physical expansion is completed, and we're now looking to a very full innovation pipeline for other products starting in early '27. Todd Vogensen: And from a capital needs perspective, I should have said before, our target for the year is $10 million to $12 million in capital. That's just up modestly from the $8 million that we had in 2025. So the base CapEx is going to always be kind of the normal maintenance CapEx that we've had for the past several years, particularly in our operations. We do have a little bit of innovations CapEx this year as we innovate for new products going forward. And then the -- probably the big chunks that are incremental versus last year, with the new products going out this year, we are looking to expand some of the fixtures that go into stores. So you can think about that being the headboards. We have some branded walls that go in and a number of things that just help with the overall environment around the Purple products that we think help sell the products through. And then Rob mentioned, we have 5 new stores that we're planning for this coming year. There's a modest amount of CapEx that goes for those as well. Operator: I will turn the call back over to Robert DeMartini for closing remarks. Robert DeMartini: I just want to thank all of our shareholders and investors and lenders for the support we've gotten and I want to thank the Purple associates for the hard work they've put in on the business. I believe from the Q3 and Q4 results, you can see our turnaround is taking hold, and I want to say thank you to everybody for that. Todd Vogensen: Thank you, operator. Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
Operator: Good morning. At this time, I would like to welcome everyone to AlTi's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] I would like to advise all parties that this conference call is being recorded, and a replay of the webcast is available on AlTi's Investor Relations website. Now at this time, I will turn things over to Lily Arteaga, Head of Investor Relations for AlTi. Please go ahead. Lily Arteaga: Good morning to everyone on the call today. Today, we will hear from Michael Tiedemann, Nancy Curtin and Mike Harrington. Nancy and Mike Harrington, along with Kevin Moran, our President and COO, will be available to take questions during Q&A. I would like to remind everyone that certain statements made during the call may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, comments made during the prepared remarks and in response to questions. Forward-looking statements can be identified by the use of words such as anticipate, believe, continue, estimate, expect, future, intend, may, planned and will or similar terms. Because these forward-looking statements involve both known and unknown risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these statements. For a discussion of the risks and uncertainties that could cause actual results to differ, please refer to AlTi's filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. AlTi assumes no obligation or responsibility to update any forward-looking statements. During this call, some comments may include references to non-GAAP financial measures. Full reconciliations can be found in our earnings presentation and our related SEC filings. With that, I'd like to turn the call over to Michael Tiedemann. Michael Tiedemann: Thank you, Lily, and good morning, everyone. Before we begin, I would like to reflect on where AlTi stands today, 3 years since our listing. In early 2023, we entered the public markets with a clear ambition to build the premier global wealth management platform focused on the fastest-growing segment of the wealth landscape, the ultra-high net worth segment. I feel immense pride in what we've accomplished over this period and believe our team has created the most complete high-end investment solution set for large and complex families that exists. Today, AlTi delivers full-service global wealth management solutions in 19 cities across 9 countries. Since our listing, we've grown our AUM in our wealth platform by 70% while maintaining industry-leading client retention rates above 95%. We are established in the highest end of the wealth market with clients that average assets in excess of $50 million, a number that continues to rise as our prospects grow in size over time. Our team and the platform we have built is positioned to perform over both the near and long term. Now I want to turn to an important update, which also was announced earlier this morning with our earnings press release. After more than 25 years leading the company, I will be stepping down as CEO and Nancy Curtin, our Global Chief Investment Officer, will become Interim CEO. I've known Nancy for many years, and her leadership has been pivotal to the success of our business. I am confident the company is in capable hands and will continue to be supporting Nancy to ensure a smooth transition. Importantly, we've built a world-class team uniquely able to serve the most sophisticated client base in wealth management. I have immense respect and admiration for my colleagues all over the world for the dedication they have to serving our clients. Their relentless collaboration defines our corporate culture as a firm. And lastly, I would be remiss not to thank our incredible and loyal client base who've placed their trust in AlTi over the years, allowing us to serve their families across generations. With that, I will turn the call over to Nancy and the leadership team for their prepared remarks and today's subsequent Q&A session. Thank you. Nancy Curtin: Thank you, Michael. I'm grateful for the opportunity to step into this role and to work with our talented professionals and global leadership team as we continue to drive the business forward. I also want to personally thank Michael for his many years of dedication and focus, which has laid an excellent foundation to advance the company into its next chapter. As he mentioned, AlTi was built to serve the most sophisticated segment of the wealth market. This segment is looking for what we can deliver, holistic and independent approach to complex wealth management where client needs span family governance and education, tax and structuring and multiple generations and jurisdictions. We've been doing this for over 2 decades and are one of the few firms truly able to deliver customized solutions on a global basis. We're proud of what we've built. The same investment discipline and long-term client-centric approach also underpins how we serve clients on the platform today. Alongside our work with families, we have leveraged our institutional capabilities to build a leading global endowment and foundation or E&F business, using our institutional investment management platform and capabilities. This complementary and growing practice has grown to more than $8 billion in assets under management at year-end 2025, largely serving private and family foundations, and we view it as a natural extension of our wealth management business. Building on that foundation, growth across the platform has been strong. Since our listing, organic growth has been driven by both new client additions and continued expansion of existing relationships as families, endowments and foundations increase the scope of their engagement with AlTi over time. Over the past 3 years, we've generated over $9 billion of projected billable assets, including nearly $4 billion added in 2025 alone. Reflecting sustained demand from ultra-high net worth and institutional clients across our U.S. and international businesses. At the same time, we've been deliberate in where we focus the business. Over the past 3 years and especially in 2025, we have remained firmly focused on our core Wealth and Institutional Management business with continued emphasis on delivering excellence in client service. In parallel, we've taken meaningful steps to simplify the organization and address noncore costs, actions that are enabling continued investment in our platform and positioning earnings to scale over time as these initiatives progress. As part of that focus, a comprehensive strategic assessment led to the exit of our noncore international real estate business in 2025, eliminating the future costs and obligations associated with that platform. Complementing these efforts, we have adopted zero-based budgeting process as our budget methodology. Through the 2025 and 2026 process, ZBB has enabled us to identify approximately $20 million of recurring annual gross savings, with the majority expected to be realized by year-end 2026. Separately, our investments in alternative strategies continues to strengthen our capital and liquidity position and made a meaningful contribution to our results in 2025. Our interest in these internally and externally managed strategies provide a complementary source of cash flow to our core wealth and institutional management businesses and support future growth initiatives within that segment. With that context, I want to turn to our results highlights for the year. In 2025, AlTi generated $255 million in total revenues, representing 29% growth compared to 2024. Total revenues benefited from contributions from our alternative interest, while the core of our revenue base remained anchored in nearly $200 million of predictable recurring management fees. Adjusted EBITDA reached $35 million for the year. As we look ahead, we are increasingly excited by the opportunities to continue to grow organically while continuing to streamline the cost basis of the firm. With the platform now simplified following the restructuring of our noncore international real estate business, we expect our results to increasingly reflect the strong fundamentals of the company. In closing, I want to provide an update on our strategic review. As announced in December, a special committee was formed to review strategic options to maximize long-term value for shareholders. To date, the special committee has not received a proposal that it believes encapsulates the long-term value of the business, and it continues to evaluate a full range of alternatives with a clear focus on enhancing shareholder value informed by our clear strategy, strong management team and simplified platform. If any proposal received from any party, the committee will evaluate it consistently with its fiduciary duties. With that, I'll turn it over to Mike Harrington to walk through the financials. Mike? Michael Harrington: Thanks, Nancy. We made significant progress in 2025, and we expect to see the benefits that progress in 2026. The exit of noncore activities now complete and the impact of zero-based budgeting beginning to show, we believe the strength of our business will become increasingly evident in the years ahead. Total assets under management reached $50 billion at year-end, up 10% year-over-year, driven by strong investment performance and the acquisition of Kontora. That growth was achieved despite a more muted market impact in the international business stemming from foreign exchange headwinds related to the U.S. dollar depreciation, given that growth assets within these portfolios are typically unhedged. For the full year 2025, AlTi generated approximately $255 million of total revenue, representing a 29% year-over-year growth. The increase was driven by robust AUM expansion, along with meaningful contributions from incentive fees, reflecting the strong investment performance throughout the year across the alternatives managers in which we hold ownership stakes. Fourth quarter revenue totaled $88 million, up 71% from the prior quarter, reflecting continued AUM growth and a $29 million contribution from incentive fees associated with the strong performance of the arbitrage strategy in 2025, which generated an 11.3% return for the year. Stepping back from the contribution of incentive fees in the year, the underlying strength of our business continues to be reflected in the growth of our recurring management fees. Management fees totaled nearly $200 million in the year, up 9% year-over-year and $53 million in the fourth quarter, up 14% compared to the same period in 2024, supported by sustained asset growth. Before turning to expenses, I want to highlight some important nuances in our financials. The results we're presenting today continue to reflect the lag in actions taken and costs incurred in 2025. And as a result, the operating leverage of the business is not yet visible. That said, revenue growth remains strong, and we are seeing benefits from zero-based budgeting in areas such as occupancy, systems and marketing. At this stage, however, those benefits are being offset in our reported results by discrete onetime items, including temporary costs associated with the strategic review process. We expect these costs to subside in the coming periods and allow the underlying expense trends to become clearer. For the full year, reported operating expenses increased by $72 million to $329 million. The increase was largely driven by higher compensation costs, inclusive of an approximately $14 million bonus accrued associated with the arbitrage incentive fee recorded in Q4, the integration of Kontora in 2025 and other onetime items related to the strategic review process, zero-based budgeting program and the exit of the international real estate business. On a normalized basis, excluding nonrecurring and noncash items as well as the arbitrage incentive fee bonus accrual, full year operating expenses were $205 million compared to $182 million in 2024. The increase primarily reflects higher compensation costs, including the effect of the Kontora acquisition, increased professional fees and G&A expenses driven partially by the strategic review process as well as foreign exchange and VAT. Beneath these temporary and noncore items, our cost structure is improving as zero-based budgeting initiatives continue to progress and noncore items roll off, we expect these improvements to come increasingly visible in our reported results. For the full year, adjusted EBITDA increased 45% to approximately $35 million, reflecting the contribution from incentive-related performance during the year. Adjusted EBITDA for the quarter was $11 million, nearly doubling sequentially, largely driven by the net contribution from the incentive fee. Adjusted EBITDA margins were 14% for the year and 13% for the quarter. On a GAAP basis, we reported a net loss of $155 million for the year and $10 million, $15 million for the quarter, driven largely by noncash nonrecurring items. For the full year, other loss was $31 million, primarily attributable to a $35 million impairment charge of the arbitrage fund recorded in Q3. In the fourth quarter, we recorded a loss of $8 million, reflecting fair value adjustments on certain items. Looking ahead, we expect 2026 to mark a turning point for the business. As initiatives continue to take hold, progress should become increasingly evident in our normalized results, supported by additional savings from optimizing office occupancy and completing the wind down of legacy technology and vendor contracts. As revenues continue to grow and the platform scales, the impact of zero-based budgeting and platform efficiencies should become clear, allowing the financial profile of the business to reflect its underlying strength. With a focused strategy, durable client relationships and a simplified operating model, we believe AlTi is well positioned to deliver sustained growth and increased profitability over time. And with that, I'll turn it back to Nancy Curtin for her closing remarks. Nancy Curtin: Thank you, Mike. 2025 was a critical year for AlTi. While we continue to grow our business and deliver for our clients, we also made necessary decisions to simplify the business, sharpen our focus and position the firm for long-term value creation. As a result, we entered '26 with a cleaner structure, a stronger operating model the platform aligned around recurring revenue wealth and investment management. Thank you for your continued interest and support. We look forward to updating you on our progress in the quarters ahead. I'm now turning it over to the operator for questions. Operator: [Operator Instructions] And our first question will come from Wilma Burdis with Raymond James. Wilma Jackson Burdis: Could you provide a little bit more color on the decision to transition CEOs and just talk about what the search process looks like from here? Nancy Curtin: Well, first of all, well, it's Nancy, and thank you very much for your support of the company. I think it was a bit broken up, but I think you asked the question, can we give a little more color on the transition process? Is that right? Wilma Jackson Burdis: Yes. Nancy Curtin: Yes. Okay. Great. So it was a thoughtful discussion, as you can imagine, between the Board and management as part of AlTi's ongoing focus and next phase of growth. And I think we just decided it was the right time to appoint a new leader for AlTi's next chapter in growth ahead and continuing to execute our strategy. But I want to say upfront that while there's a change in leadership, obviously, myself our overall strategy of being a preeminent ultra-high net worth firm operating on a global basis with excellent client service, independent advice and all those characteristics that both Mike and I spoke to, that remains continuity, momentum and the strategy that's already in place is absolutely what we aim to continue to deliver on. And it might be helpful just to turn to Kevin, who's sitting next to me as well, and he can comment on it. Kevin and I are working side by side, and we look forward to the partnership together. Kevin Moran: Thanks, Nancy. Will, I've joined -- I've spoken to you in the past on some of these calls. So as I think you know myself, Nancy, Mike and Tied, like the management team here at the firm has been together for a very long time. I've been with the firm for about 18 years. That's the case for many at the management level. So as Nancy says, we believe in the strategy, there will be continued execution on the go-forward strategy that Mike Tiedemann put in place 25 years ago when he launched what was at that point, Tiedemann Advisors. And we, as the management team, it's a very cohesive, long-tenured team, and we remain absolutely focused on continuing to grow and execute the business strategy that Nancy and Mike Tiedemann laid out in their remarks. Wilma Jackson Burdis: Great. And I think you made a few comments on the process on the call, but can you just give us an update? I mean it sounds like is this more of a pivot towards focusing on operating. Can you just talk a little bit more about how that all fits together? Nancy Curtin: So let me take. I think what you're saying again, straight line. I think the strategy of being the preeminent global leader executing in a marketplace that is growing with ultra-high net worth, huge intergenerational wealth transfer and our already existing excellent clients that we have in place remains unchanged. But let me turn to Kevin because a core part of that is, of course, growing our business organically and from time to time, opportunistically and strategically looking at inorganic, but there's nothing on the horizon at the moment. But also continuing to be mindful of ZBB, which is a core part of our cost discipline and process and continuing to think about how we scale the business. So let me turn to Kevin to pick up on that because he's really led that over the last couple of years. Kevin Moran: Sure. Thanks, Nancy. So we're very focused, as we've talked about on previous calls, I think I'd like to talk again about today on further optimizing our cost structure. What we're really looking to do is make sure that our cost structure is as optimized as possible to allow us to continue to scale the business. So we're very focused on the cost structure. But at the same time, we're very focused on growth. So organic growth for us is really the hallmark of a really healthy business. So we're very focused on continuing to -- we think we have a terrific service model and one of the best platforms for servicing the ultra-high net worth client base that exists globally, certainly in the United States and elsewhere. So we're very confident in our ability to win business and bring on clients and service them in the best way possible in the industry. So that's on the growth side. Nancy said, we're uniquely positioned to also execute inorganic growth, both in the United States and elsewhere. So we have a just a terrific opportunity set in terms of both growing organically and inorganically. At the same time, we are really not taking our eye off the ball on the expense side. We're going to make investments. We're seeing that on the technology side. So we're making technology investments that we think will drive efficiencies over time. I think everything from mid to back office and even on the front office side, there's a lot to do in AI and technology initiatives. At the same time, looking to really streamline the rest of our non-comp costs. So we've been really proactive around occupancy as an example, and you're seeing that in the numbers. We're going to continue to make sure that we're rightsizing our occupancy expense. And then the major -- where you're going to see continued improvements is on tech spend. So I mentioned we're investing into technology. We are also actively managing the technology spend. So as some contracts were off, you'll see a continued improvement on the tech spend. And then professional fees, again, that's where Mike Harrington remarks talking about some of the noise that we've seen through from costs related to the strategic initiatives and elsewhere, as those onetime expenses come off, you also see improvement on the professional fees. So it's management team that's very focused on both the top line growth as well as bottom line improvement on the expense side. Wilma Jackson Burdis: Great. And then it look like you had pretty solid merger arbitrage performance in the quarter. Maybe give us a little bit more color on that. Kevin Moran: So the merger arbitrage strategy has been operating for a very long time. 2025 had a strong year. So I think performance was up a little over 11% for the year, and that correlated to the improving management fees, which took based upon improving AUM growth as well as a strong incentive fee. As you know, the incentive fees for that are crystallized at the end of the year. So those -- based on the performance for the full year, we earned a pretty strong incentive fee for 2025. We don't have a view on 2026 because again, we don't know what performance will be for the strategy, but that strategy has a very long track record of doing pretty well in most market environments. Nancy Curtin: I guess I would just add to that, Wilma I mean, we'll have to see what happens, of course, with the conflict in the Middle East, but M&A activity is broadly picking up both the volume and value of transactions, and this represents a pretty ripe opportunity for the arbitrage strategy. So we'll see what happens this year, but it's a good [indiscernible] he manages to produce performance in all sorts of years, but I would say M&A activity, it looks like, again, assuming we get through the conflict will be a strong year in 2026. Wilma Jackson Burdis: Okay. Great. And it looks like there were some pretty solid additions in AUA. Can you just touch on that a little bit? Kevin Moran: So I think you're seeing on the AUA growth, we did add Kontora acquisition, so was the acquisition of the German multifamily office that we completed last April that led to increased -- obviously, revenue -- our revenue numbers increased as a result of that transaction. But also, they have their business -- multifamily office, they have AUM and AUA. So you're seeing the uptick in the AUA really from that acquisition. Part of the business strategy behind that acquisition was over time to convert their AUA assets to AUM assets, which we have had a very long successful track record of be able to do with the rest of the business. That was really the main driver in the AUA uptick in 2025. Wilma Jackson Burdis: So I guess drilling into that a little bit more. I think there was some AUA that was added in 4Q. Just was curious on that. Kevin Moran: I think what you're seeing there is just the typical sort of movement of client assets in and out of their portfolios. We provide holistic services across a client's entire network. So everything from real assets like real estate to investment assets. And again, Nancy and the investment team have done a terrific job of managing client portfolios. So I think there's nothing unusual. It's just as we -- particularly if we can bring on large clients, they may have at times very large AUA as opposed to AUM assets. Just think of AUA is really nonfinancial assets, just anything else in ultra-high net worth clients could own. So real estate, hardware collectibles, those would all be flowing into our AUA as opposed to our AUM. But it's really core to the service model for us to be able to oversee and report and manage and advise on both the AUA and the AUM. Wilma Jackson Burdis: Could you give us a little more color on the 13D that was filed by Allianz. Nancy Curtin: Yes. Thank you for that question, Wilma. So as you know, Allianz has been a strategic partner of the firm for the last 18 months, and they filed a 13D. We have no further insight into what their intentions or plans are. But from a regulatory perspective, if they have any plans to increase their engagement, they are required to file a 13D. They've been a trusted and excellent partner. And if they decide to move forward, and we don't have any visibility into that at this point, that would -- could be welcome. Of course, in any event, as you're well aware, we have a special committee of the Board of Directors -- and any kind of proposal about the company strategically would go into our special committee who is committed of the independent directors to delivering the value for shareholders and representing all shareholders of the company. So that's all I can say at the moment, but thank you for the question. Wilma Jackson Burdis: And then could you just give us a little bit more detail on ZBB, where you stand with that? What's to come? What else you're doing there? Kevin Moran: Wilma, it's Kevin again. I can take that one, and Nancy or Mike may want to jump in. So zero-based budgeting is, I think, primarily one is the budgeting approach we're taking going forward. So the numbers -- the $20 million number that we talked about was based upon the zero-based budgeting approach that we used for the 2024 -- sorry, the 2025 budget. So of the $20 million, right, it's really -- it was across the entire scope of non-comp expenses. The expenses that we identified were expected to be realized over about 9 quarters going into the first quarter of 2027. The reason it's an extended period of time it's a lot of those expenses are subject to contracts. So think of anything from leases to technology vendors that as we identify and then we just don't renew the contract, we have to wait until the contract itself runs out. So what we saw in 2025 is really the noncontractual expenses. So what Nancy talked about or Mike Harrington we talked about things like marketing, travel and entertainment and tech expenses where we have contracts expiring in 2025. So that's what we've seen so far. Same thing with occupancy, we made a significant improvement in reducing our occupancy expense. So what we'll see in 2026 is continued cost reductions around technology and occupancy as we continue to move through leases and contracts that are expiring over the next 4 to 5 quarters. Wilma Jackson Burdis: Just following up on the earlier question on Allianz. Can you just remind us, it seems like I thought Allianz had a multiyear standstill. Can you just remind us where that stands, I guess, no pun intended. Nancy Curtin: Kevin take that, Kevin? Kevin Moran: Yes. So when Allianz invested, they did have a standstill, so they would need Board approval or Board consent for us to waive the standstill. So standstill can be waived. They do have one in place. So they will discuss that with the special committee in terms of how to move forward if they wish to do so. Wilma Jackson Burdis: Makes a lot of sense. And then could you just give us a quick reminder of where you stand with capital and potential to grow, acquire new advisers or new platforms? Nancy Curtin: So that's a core part of our strategy. It's both organic, which is the priority, but of course, inorganic as well. Let me turn to Kevin on that. It's -- so he can talk about the funding that we have and sources we have to continue to allow us to pursue inorganic opportunities. Kevin? Kevin Moran: Thanks, Nancy. So on the organic side, we don't see a need for funding to allow us to continue to execute on the organic growth initiatives. We have a terrific group of advisers and support staff business development teams globally to allow us to continue to pursue organic growth. We have -- in the event we identify an attractive sort of M&A opportunity or a larger lift out that would require capital. We have had discussions with capital providers and think that capital is readily available. For us, we can execute on a great idea, and we can show any capital provider, how accretive that transaction will be. So to sum it up on the organic side, we have -- we don't see a need for capital at this time to continue to execute. If and when we identify an inorganic opportunity, we are confident we'll be able to raise capital to fund and execute on that. Operator: [Operator Instructions] And this now concludes our question-and-answer session. I would like to turn the floor back over to Nancy Curtin for closing comments. Nancy Curtin: Thank you very much for joining us on the call this morning. Of course, we look forward to sharing updates on our progress on our first quarter call, and thank you for the excellent questions. Very much appreciated, and thank you for your time. Operator: Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.
Operator: Greetings, and welcome to Aqua Metals Fourth Quarter 2025 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, [ Dan Scott ]. Thank you. You may begin. Unknown Attendee: Thank you, operator, and thank you, everyone, for joining us today. Earlier today, Aqua Metals issued a press release providing an operational update and discussing results for the full year ended December 31, 2025. This release is available in the Investor Relations section of the company's website at aquametals.com. Hosting the call today are Steve Cotton, President and Chief Executive Officer; and Eric West, Chief Financial Officer. Before we begin, I would like to remind participants that during this call, management will be making forward-looking statements. Please refer to the company's report on Form 10-K filed today for a summary of the forward-looking statements and the risks, uncertainties and other factors that could cause actual results to differ materially from those forward-looking statements. Aqua Metals cautions investors not to place undue reliance on any forward-looking statements. The company does not undertake and specifically disclaims any obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur, except as required by law. As a reminder, after the formal remarks, we will conduct a question-and-answer session. With that, I'd like to turn the call over to Steve Cotton, President and CEO of Aqua Metals. Stephen Cotton: Thank you, Dan, and good afternoon, everyone. I appreciate you joining us for Aqua Metals Fourth Quarter and Full 2025 Earnings Call. Today, I'll walk through what was an active and milestone-filled year for our company, covering how we evolved our technology, what we accomplished on the product side, how our strategic partnerships developed and the financial foundation we built heading into 2026. Eric will then follow with a detailed financial review. Let me start with the overall frame for 2025. It was a year in which discipline and execution went hand-in-hand. We made deliberate adjustments to our commercialization approach as market conditions evolved, cleared important technical hurdles, extended our platform with new strategic initiatives and put the balance sheet in meaningfully better shape than where we started the year. On the technology and product front, I would call 2025 the most expansive year in Aqua Metals' history in terms of what the AquaRefining process demonstrated that it can do. We grew the product portfolio. We raised the bar with product specs and proved the feedstock flexibility of our platform in ways that matter commercially and allow us to address the variability of material, not only in the battery recycling market, but beyond to include other markets like rare earths and undersea mining, for example. One of the most important strategic decisions we made this year was to sharpen the commercial scope of our first ARC facility. With the AquaRefining platform that's capable of producing a broader range of outputs, we made the deliberate decision to simplify the first commercial plant around 2 core feedstock streams, NMC black mass and LFP black mass. From those inputs, our initial commercial focus will be on 3 primary outputs: battery-grade lithium carbonate, nickel, cobalt mixed hydroxide precipitate or MHP, and iron phosphate. We have already successfully produced these materials at our innovation center, which gives us confidence that this is the right first commercial configuration. That decision is expected to reduce execution risk, shorten time to market, lower upfront capital requirements and support attractive unit economics and a stronger payback profile. In short, we are intentionally designing the first commercial ARC to be simpler, faster and more capital efficient to deploy while preserving the flexibility to expand the product slate over time as we scale. We believe that it is the right disciplined approach to commercialization and long-term shareholder value creation. On product quality, our team delivered results that we believe set a new benchmark for the recycling industry. Our lithium carbonate achieved fluorine levels under 30 parts per million, a specification that to our knowledge, places us at or above the quality standard for any recycled lithium source globally. Material meeting this threshold has been produced at meaningful scale and distributed to strategic counterparties for evaluation. The responses have been substantive and encouraging. On the broader product side, we generated product qualification representative volumes of multiple products and advanced those materials through partner qualification processes. We also developed nickel carbonate, producing initial samples calibrated to specific downstream partner requirements, which opens additional product pathways and gives us greater optionality as partner discussions mature. Now an LFP or lithium iron phosphate battery chemistry, which is cobalt and nickel-free, I want to get this attention it deserves because I consider proving that we can economically recycle this type of material is one of the most significant technical achievements in this company's history. We moved from engineering analysis and bench scale work on lithium iron phosphate recycling all the way through to processing an entire metric ton of LFP cathode scrap at our pilot facility. Recovering battery-grade lithium carbonate that was validated by OEM and third-party testing. That is not a lab result. That is demonstration at commercially meaningful scale. And because LFP chemistry is capturing an increasing share of both EV and stationary storage deployments, the ability to handle it gives our platform a decisive competitive advantage in terms of addressable feedstock. We also initiated trials on sodium sulfate regeneration, a process that could allow P-CAM producers to convert a problematic waste stream back into a usable chemical inputs, creating cost and sustainability advantages for our partners. And we extended our alternative feedstock testing to include nickel refinery residue alongside polymetallic nodule materials, rare earth-bearing magnets and e-waste, which underscores the core flexibility built into our electrochemical process. One achievement from 2025 stands out beyond the product and process milestones. We were central to producing the first cathode active material made entirely from recycled nickel sourced within the United States. That material has now entered qualification at a Tier 1 battery manufacturer. This matters not just as a technical accomplishment for Aqua Metals, but as a demonstration that a fully domestic closed-loop battery material supply chain is not a theoretical goal. It is something that can actually be built. As the field of players in this market continues to consolidate, we intend to be at the center of it. On the commercial development side, we advanced our ARC facility design to support a processing range of 10,000 to 60,000 metric tons of black mass input feedstock annually. That flexibility is intentional. It allows us to size the first commercial facility to the specific partner configuration and capital structure we ultimately bring together rather than being locked into a single predetermined scale. We also conducted structured due diligence on several candidate sites for the first commercial ARC, working through factors like feedstock proximity, offtake accessibility, utility infrastructure, permitting pathways and the strategic alignment of potential partners at each location. The process has been thorough, and we are in a good position to move forward with final site selection later this year as the remaining commercial conditions come together. And I want to be direct about the build decision because I think our approach is sometimes misread as a hesitation. In fact, this is exactly the opposite. We are not going to build before we are ready. And what ready means is contracted feedstock, committed offtake and project financing that is genuinely bankable. Our posture is simple: build once, build right and execute from a position of confidence. That approach protects shareholders and gives us the best possible path to a facility that ramps to profitability on a reasonable time line. We also remain actively engaged in diligence with Lion Energy around a transaction structure that we believe could be highly strategic and meaningfully additive to Aqua Metals. If completed, this opportunity would not only provide immediate commercial revenue and extend our reach downstream into branded energy storage systems across portable, residential, commercial, data center and industrial applications, but it would also position Aqua Metals and its shareholders to participate more directly in 2 of the fastest-growing segments of the electrification economy, distributed energy storage and domestic LFP battery manufacturing of cells. Importantly, through Lion's existing relationship with an equity stake in American Battery Factory, or ABF, this transaction would also bring with it a meaningful equity interest in ABF, creating exposure to the emerging U.S. GigaFactory build-out and LFP cell production market. We view this as a compelling strategic fit that could broaden our platform, advance our long-term circularity vision, enhance our commercial relevance and create additional pathways for shareholder value creation. We remain disciplined and thoughtful in our process, and we look forward to updating the market in the near term. Let me now turn to our partnership activity in 2025, which was broad and meaningful. I'll walk through the key relationships because the pattern they reveal is important. With 6K Energy, we formalized a multiyear supply agreement that establishes the commercial terms under which we would deliver battery-grade nickel metal and lithium carbonate into their domestic cathode active material manufacturing operations. This moves the relationship beyond technical collaboration and into a defined commercial framework, positioning Aqua Metals as a main supplier into a domestic CAM production chain. With Westwin Elements, we entered a nonbinding LOI outlining terms for a potential supply of recycled nickel carbonate that would support Westwin's efforts to build a domestic nickel supply chain. What makes this relationship particularly interesting is the downstream implication. We believe that a Westwin Aqua Metals commercial partnership and relationship can help stand up nickel production and refining capability on U.S. soil that simply does not exist at scale today. We also signed 2 MOUs that extend the AquaRefining platform into adjacent critical minerals territory. The first with Impossible Metals explores applying our refining process to material collected responsibly from the seafloor, feedstocks that contain nickel, cobalt, copper, manganese and rare earth elements. The second with Moby Robotics evaluates whether AquaRefining can be applied to polymetallic nodules with the potential to recover true rare earth elements as well. Both extend our platform well beyond battery recycling and into strategic areas of focus on critical minerals in today's world. I want to address the strategic logic here directly. These are not departures from our mission. The chemistry underlying AquaRefining, electrochemical refining of dissolved critical mineral streams is the same whether the feedstock originates from black mass, refinery residue, e-waste or deep sea nodules. The intellectual property travels. What these agreements do is extend our total addressable market and create optionality that a licensing and partnership-oriented business model can monetize without heavy incremental capital. Battery recycling remains our primary commercial path to these adjacencies, add strategic depth. We also continued active industry engagement at our Tahoe Reno-based Innovation Center and demonstration plant throughout the year, hosting the National Battery Conference, automotive OEMs, battery manufacturers, recyclers and upstream material suppliers for facility tours and technical reviews. The consistency of the feedback about the quality of our output and the operational sophistication of our pilot plant continues to build credibility in commercial discussions. And you can see some of that feedback on our blog, the current on our website. On the governance front, we made targeted additions to the Board of Directors, bringing in directors with specific expertise in growth strategy, commercialization and financial markets. These additions reflect where we are in our development, a company that is transitioning from technology validation to commercial execution, and the Board now reflects that stage appropriately. We also completed a CFO transition with Eric West stepping into the role of bringing both deep Aqua Metals institutional knowledge and a fresh financial perspective to this next phase. On intellectual property, the U.S. Patent Office granted allowance of a foundational patent covering key elements of our lithium battery recycling process. This is a significant addition to an already substantial IP estate and reinforces the long-term defensibility of the AquaRefining platform at commercial scale. We also filed a provisional application covering a novel low-cost leaching approach applicable to mined manganese ores and deep sea nodule feedstocks, which is further evidence of the expanding reach of our IP program. As we enter 2026, our priorities are well defined. We are advancing engineering and permitting work to support site selection for our first commercial ARC. We are deepening commercial negotiations with supply, offtake and project financing partners. And we are moving strategic partner qualifications for our lithium carbonate and MHP forward in a deliberate milestone-oriented way. The broader environment for domestic critical minerals has continued to shift in our direction. The policy and geopolitical case for building domestic battery material production capability has never been stronger, and we are increasingly recognized as a technically validated credibly financed player in that space. We have the process, the people, the operating demonstration plant and the strategic relationships to move from validation to commercialization. Now it is about refining that momentum into commercial results, and I am confident in our team's ability to deliver. With that, I will turn it over to Eric for the financial review. Eric, over to you. Eric West: Thanks, Steve. We'll now provide an overview of our full year 2025 financial results and balance sheet position. Given this is our fourth quarter and full year call, I will focus primarily on annual figures while noting fourth quarter specifics where relevant. Let me start with the balance sheet. We ended the year with cash and cash equivalents of approximately $10.8 million. The significant capital raise activity in 2025 is the most important context for understanding our year-end position. In October, we closed a $13 million investment from a leading institutional investor, combined with approximately $7 million raised through our ATM and equity line programs. Our total new capital raised in 2025 was approximately $20 million. This was a proactive raise made from a position of strength and strategic momentum, and it provides us with multiple quarters of operating runway and the resources needed to advance engineering, permitting and site selection work for our first commercial scale AquaRefining facility. I also want to highlight a key balance sheet improvement that I'm particularly proud of. We ended the year with no long-term debt. This is the result of the deliberate financial management decisions made throughout 2025, including the completion of the Sierra ARC asset sale in the second quarter and the associated retirement of the $3 million Summit Building loan. Having fully eliminated our debt, we entered 2026 with a cleaner, more flexible capital structure than we have had in years. Now moving to the income statement. I will cover the full year 2025 results with prior year comparisons where described. Total operating expense for the full year 2025 was approximately $23.3 million compared to approximately $23.8 million for the full year 2024. While total expenses were relatively consistent year-over-year, 2025 included approximately $9.1 million of impairment and loss on the disposal charges, compared to approximately $3.1 million in 2024. These impairment charges are nonroutine and noncash in nature. Excluding these items, underlying operating expenses declined meaningful year-over-year, reflecting the sustained cost discipline we have maintained throughout 2025, including the benefit of workforce reductions implemented in the prior periods while continuing to support our key technical and commercial development programs. We are running a lean, mission-focused operation. General and administrative expenses for the full year were approximately $10.5 million, down from approximately $12 million in the prior year. The decline was driven primarily by lower payroll and related costs following prior year workforce reductions, reduced professional fees and broader overhead efficiencies. For the fourth quarter, specifically G&A came in at approximately $3.8 million. Research and development expense for the full year totaled approximately $1.3 million, reflecting our continued investment in process optimization and product expansion, including lithium carbonate quality improvement, MHP production, nickel carbonate development and LFP processing capability. For the fourth quarter, R&D was approximately $0.4 million. While we maintain disciplined cost controls, we are intentional about funding the technical work that derisks commercialization and advances partner qualification. Every dollar spent in this area has a clear commercial purpose. Our full year 2025 net loss was approximately $22.6 million or negative $15.15 per basic and diluted share compared to a net loss of approximately $24.6 million or negative $38.25 per share for the full year 2024. For the fourth quarter, our net loss was approximately $4.4 million or negative $2.97 per share. These figures reflect the pre-revenue development stage of our business, and they continue to trend in the right direction as our cost structure matures. I want to take a moment on the year-over-year net loss comparison because the 2025 figures also reflect some noncash items that are worth noting for investors evaluating our underlying operating trajectory. Our 2025 results include noncash items associated with warrant liability remeasurement, impairment on disposal of property, plant and equipment and other noncash adjustments similar to prior periods. We are pleased that the core operating cash consumptions continue to trend lower year-over-year, which is a direct reflection of the cost discipline we have discussed on every call this year. Moving to the cash flow statement. Net cash used in operating activities for the full year 2025 was approximately $10.3 million compared to approximately $13.6 million in 2024. This improvement, a reduction of more than 24.8% year-over-year reflects our disciplined overhead management and the lower cost structure we have built over the past 18 months. Investing activities for the year primarily reflect the Sierra ARC building and equipment sale proceeds received in Q2, partially offset by minor fixed asset activity. In December of 2025, we also provided approximately $2.1 million of short-term financing to Lion Energy, which remained outstanding at the year-end as a note receivable. Subsequent to year-end in February 2026, we entered into a nonbinding term sheet contemplating the potential acquisition of Lion Energy and contributed the outstanding note along with an additional $2 million to acquire a subordinated position interest in its senior secured credit facility in connection with our evaluation of the potential transaction. On the financing side, the year was characterized by meaningful capital inflows from our October institutional raise and ongoing ATM and equity line activities, partially offset by debt repayment activity completed earlier in the year. Looking ahead, as Steve outlined, we anticipate a measured increase in cash usage as we ramp engineering, process optimization and site readiness activities in support of our first commercial facility. We will continue to manage our spending with rigorous discipline. Every dollar invested must advance a clear strategic and technical milestone. The focus remains on maintaining adequate liquidity, aligning investment pace with commercialization progress and ensuring we have the financial platform to reach our goals. The balance sheet improvements we achieved in 2025, eliminating debt, raising $20 million in new capital and continuing to reduce our operating cash burn has positioned Aqua Metals to approach 2026 from a place of genuine financial stability. We have the runway we need and we intend to use it wisely. That concludes my prepared remarks. I will now turn the call back to the operator for the question-and-answer session. Operator: [Operator Instructions] Our first question comes from Mickey Legg with The Benchmark Company. Michael Frederick Legg, Jr.: Congrats on another quarter. Just a couple here on the Lion Energy acquisition. Assuming that it does get approved and closes, just what are your main areas of focus near term and some of the most natural areas of synergy you see for Aqua Metals? Stephen Cotton: Yes. Mickey, good question. And yes, so first off, we're really been very deep in due diligence across all the key work streams associated with this acquisition. That's like inclusive of financial, legal, operational and commercial. And that's included everything from auditing the financials to completing a detailed independent market, product assessment across Lion's revenue, generating portable residential, commercial, industrial and data center offerings. So we've had -- the team is spending a lot of time talking about synergies with each other in each other's facilities and working closely through all the discussions. So on the process, it's been very active, very substantive, and we expect to bring it to a conclusion in the near term and update the market accordingly. And in a greater sense, what we see with the synergies is an integrated battery materials and battery energy storage company is much stronger than those that stand on their own. And that's because of the synergies you can get with the circularity with the ingredients that go into the batteries, the production of the batteries, inclusive of the ownership that Lion Energy has in American battery factory with their planned GigaFactory in Tucson, Arizona, and being able to put that all together and expose the shareholder, frankly, to the optionality of having a stock they can buy that is really a combination of energy storage, battery materials and GigaFactory production. It's much how it's done in China. And the one reason that China has been successful is by integrating these solutions and creating those kinds of synergies to reduce costs, increase efficiency and have a better story about the overall solution. So we're really excited about that opportunity to work everything out with Lion Energy and come out swinging is what we think will be the first integrated energy solution provider and battery materials provider in North America. Michael Frederick Legg, Jr.: Great. Okay. Okay. That's very helpful. And then just one more on the acquisition. And I want to understand a little bit better the equity stake it could bring in American Battery Factory, how does that fit in there? Does it just sort of align with your closing remarks there, your ending remarks about fitting into the domestic end-to-end battery ecosystem? Stephen Cotton: Yes. So definitely, the equity stake in American Battery Factory is a huge value creator and a huge synergistic opportunity. But American Battery Factory is planning a first GigaFactory in Tucson, Arizona. They've already secured the land about 270 acres, where we see synergistic opportunities as one of the sites we're considering to deploy our ARC facility at a commercial grade plus Lion Energy having some battery fabrication. So if you can think of like a single location that would have cells being generated, the agreement that we already have with American Battery Factory in an MOU form today, which is that we would take the scrap from that GigaFactory as an input to our recycling facility and get lithium carbonate right back to that GigaFactory. While right in that same area, you've got Lion Energy putting together really innovative battery energy storage products for the various segments of the marketplace I was talking about earlier. So the GigaFactory plays are large plays. And what American Battery Factory is seeking is the final phase of financing to get that GigaFactory started this year -- later this year. And those are hundreds of millions of dollars of investment -- based on project finance, we think our equity position would still be still quite meaningful post financing and a GigaFactory produces a heck of a lot of revenue and a heck of a lot of product that also adds to those synergies. So we really see that as a key aspect of our relationship with Lion Energy and American Battery Factories kind of tying that all together. Operator: I would now like to turn the call back to Dan to facilitate questions that were submitted online. Unknown Attendee: All right. Thank you very much. First question for Steve. Could you give us a site selection update? Where does the process stand? And when can we expect an announcement? Stephen Cotton: Sure, sure. So the biggest gating factors now are really site selection, project structure, lining up the right capital and commercial partners. And as we've already mentioned, we're in active due diligence on 2 specific potential sites, looking at things like feedstock access, logistics, utilities, permitting and of course, the overall economics of the project in that particular type of location. And our goal is to settle on and secure the lead site and then spend the balance of the year making real progress on site-specific FEL2 engineering. And that's really basically the stage where you move from concept into a much more defined and specific plant design down to every nut and bolt for that particular location, cost estimate and the execution plan to begin executing a bond. Unknown Attendee: Excellent. The second question, Steve, is what is the status of the feedstock market? There's been a lot of volatility in battery metal prices. How does that affect your commercial position? Stephen Cotton: Yes, great question. So today, effectively all of the black mass produced in the United States and really North America is being exported offshore, simply because there really aren't yet commercial scale refining options here domestically. And that's exactly the opportunity we're pursuing with the first build of our commercial ARC. The market does demand competitive payables for feedstock, but we believe our lithium AquaRefining process puts us in a very strong position because of its potential CapEx and OpEx advantages. And importantly, we're already working to diversify through both end-of-life batteries and GigaFactory scrap, as I mentioned earlier. And that includes our announced MOU, like I mentioned earlier, with American Battery Factory in Tucson. So we can take end-of-life and beginning of life batteries that didn't make it. And that's about half of the scrap of the overall material is GigaFactory scrap at this point in time. It's also important to note that the overall economics around refining black mass have improved meaningfully over the last year. A number of projects across the industry, which including ours, slowed or paused when lithium carbonate prices fell to around $8,000 a ton in 2024. With pricing now having recovered to roughly the $20,000 plus or minus range per ton, we think that creates a much healthier backdrop. And that's, in turn, a real opportunity for the remaining U.S. players and especially for Aqua Metals given the stage that we're at today. Unknown Attendee: Thanks, Steve. Next one we got is, can you talk about the LFP breakthrough in more detail? Why is it significant? And what does it mean for your business model? Stephen Cotton: Yes, great. As I mentioned in my prepared remarks, the LFP breakthrough is really about our ability to economically recover lithium while also recovering the iron phosphate into a reusable form. And that's really a big deal. LFP does not have nickel or cobalt to support the economics. So you really have to run an efficient process. And that's exactly where our lithium AquaRefining technology stands out. That matters not just for future end-of-life batteries, but for the growing volume of LFP GigaFactory scrap such as American Battery Factory already being generated today and what we expect from American Battery Factory as they come online. As LFP continues to scale across energy storage and EVs, we really think that puts us in a strong position to be a leader in the new LFP batteries. Unknown Attendee: All right. Eric, next one is for you. Can you expand on your liquidity position coming out of 2025? And how long is the current capital -- and how long your current capital supports your operations? Eric West: Yes, definitely happy to expand on that. Point to, we ended the year with $10.8 million of cash, no long-term debt and a lower operating burn. This has put us in a pretty strong position as compared to prior periods. We continue to exercise cost discipline as we continue to progress. And just to add some additional context, the capital raised during 2025 was about $20 million in total, which really helped us to strengthen the balance sheet and put us in a position to fund all of the work that we're doing now. So really that gives us the solid flexibility as we continue to move forward on the overall engineering site selection and our partnerships that we've discussed that really lead us to our first commercial facility. So overall, we feel good about where we are. The focus now is just continuing to be disciplined and making sure that we deploy the capital against the right milestones. Unknown Attendee: All right. A couple more. Steve, you've announced MOUs with Impossible Metals and Moby Robotics for deep sea mineral applications and also an LOI with Westwin Elements. How do these partnerships fit with Aqua Metals core business? And what do they look like commercially? Stephen Cotton: Yes. So at a high level, all of these partnerships are about applying our core AquaRefining platform to new sources of critical minerals and importantly, opening up to a very large high TAM market set access to that, where we can really monetize that capability. So we view them as directionally aligned and not a distraction at all. Whether it's black mass or GigaFactory scrap or primary resources like deep sea nodules or refining intermediates from partners like Westwin, the common thread is our ability to process these complex materials efficiently and with a lower environmental footprint and have access to the TAM of those gigantic markets in addition to battery recycling in our sites. Unknown Attendee: Okay. The last question we have is, Steve, how do you view the ongoing consolidation in the battery recycling industry? And does it create opportunity or risk for Aqua Metals? Stephen Cotton: So we view the consolidation overall as a net positive for Aqua Metals. The reality is that the lithium price collapse that happened in 2024 exposed which models were resilient and which were not. And at the same time, the industry is learning that simply copying China's chemical-intensive hydro approach into North America is really a very tough economic proposition. That's why we built AquaRefining differently from the beginning. And that is inclusive, again, as a reminder of vastly lower chemical intensity and costs, lower waste because we don't produce sodium sulfate waste streams. Whereas the incumbent China hydro process produces more sodium sulfate waste stream than product, we produce 0 sodium sulfate waste stream and don't have all the costs associated with it. And it's a process that we believe is much better suited to North American permitting and operating realities with safe jobs and a much more clean type of an operation without the cost in those waste streams. So as the weaker models fall away, we think that our position does become increasingly and interestingly more differentiated and stronger. Operator: Okay. Thank you. There are no further questions at this time. I'd like to pass the call back over to Steve for any closing remarks. Stephen Cotton: All right. Well, thank you, everybody, for listening in. And for those of you that are reading the transcript in the future, we look forward to continued communicating our updates in the near future as we continue to develop Aqua Metals and the rest of 2026. We're really excited to keep everybody in the loop. Thanks again. Operator: This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.
Operator: Good morning, and welcome to the SPAR Group Fourth Quarter and Year-End 2025 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Sandy Martin, Three Part Advisors. Please go ahead. Sandra Martin: Thank you, operator, and good morning, everyone. We appreciate you joining us for SPAR Group, Inc.'s conference call to review the fourth quarter and full year 2025 results. Joining me on the call today are SPAR's Chief Executive Officer, William Linnane; and the company's Chief Financial Officer, Steven Hennen. This call is being webcast and can be accessed through the audio link on the Events and Presentations page of the Investor Relations section at investors.sparinc.com. The information recorded on this call speaks only as of today, so please be advised that any time-sensitive information may no longer be accurate as of the date of any replay or transcript reading. I would also like to remind you that the statements made in today's discussion that are not historical facts including statements, expectations, future events or future financial performance, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, by their nature, are uncertain and outside of the company's control. Actual results may differ materially from those expressed or implied. Please refer to today's earnings press release for our disclosures on forward-looking statements. These factors and other risks and uncertainties are described in detail in the company's filings with the Securities and Exchange Commission. Management may also refer to non-GAAP financial measures and reconciliation to the nearest GAAP measures can be found at the end of our earnings release. SPAR Group assumes no obligation to update or revise any forward-looking statements publicly. Finally, the earnings press release we issued today is posted on the Investor Relations section of our website at sparinc.com. Now I would like to turn the call over to the company's CEO, William Linnane. William Linnane: Thank you, Sandy, and good morning. I'm pleased to share our fiscal 2025 results. After our prepared remarks, we will open the line for questions. Fiscal 2025 was a transformational year for SPAR. We finalized the work connected to the divestiture of our international joint ventures, a deliberate decision that allowed us to concentrate fully on growing our business in the U.S. and Canada. Last week, we announced a strategic partnership with ReposiTrak, which I'll speak to in a moment. Today, SPAR is a nationwide retail service solutions company with deep expertise in merchandising, both traditional and our new on-demand model. We are North America-centric, people-powered and tech-enabled, and we are aligned around a clear vision of where this business is going. Before we get to the numbers, I want to walk you through how we fundamentally changed this organization. Last 2 years, we simplified the business, exiting international operations that added complexity without serving our core strategy and sharpened our focus on the U.S. and Canada markets, where we have long-standing relationships with retailers and CPG companies. In 2025, we rebuilt the leadership team from the ground up, eliminating management layers, bringing in proven operators with direct and varied industry experience, strengthening our data foundations and upweighting our advanced analytical capabilities. The result is a leaner organization that can scale profitably, leveraging a rightsized cost base and automating manual tasks to turn complex execution and related data into faster decisions and ultimately, better client outcomes. We are focused on delivering continued revenue growth, deliberately targeting higher-margin core merchandising business while building on new service offerings. These 2 streams are complementary. Together, they open a large and underpenetrated addressable market with a flexible, innovative approach. And each new contract improves the economics of our fixed cost base we've already built. Our partnership with ReposiTrak is a direct expression of this. It demonstrates how AI, data, people and in-store action can work together seamlessly to solve a problem retailers and the vendors cannot solve with technology alone. This brings me to our strategic thesis. We believe the future of retail execution lies in the intersection of human action and AI-enabled intelligence. Technology is transforming how retailers detect out of stocks, pricing errors, compliance gaps and execution failures. But detection alone doesn't fix shelves. Retailers and brands are flooded with signals. What they lack is reliable, fast, verified actions in store. That gap is where SPAR operates and where we are building something defensible. Our industry is long run on a dedicated and flexible time-based labor, pay for hours, assigned tasks has hope for outcomes. We are moving past that. SPAR is redefining retail execution around intelligent outcome-based action, a model where data, technology and in-store execution converge in real time on demand. The retailers and brands that will win over the next decade need a partner that can move at their speed, hold themselves accountable to outcomes, scale without breaking. That is what we are building, and we are just getting started. After Steve covers our detailed financial results, I will share additional thoughts and insights about the business. Steve? Steven Hennen: Thank you, William, and good morning, everybody. Fiscal 2025 net revenues totaled $136.1 million. During 2025, the company changed its reportable segments from Americas, Asia Pacific, APAC, and Europe, Middle East and Africa, following our strategic exits from several global joint venture arrangements. Today, we present geographic reportable segments that include the United States and Canada. All prior year segment information has been recast to the year-end presentation, which means that Mexico and all other international operation revenues are included as all other for the year ended December 31, 2024. On a comparable basis, full year revenues of $136.1 million for the United States and Canada increased by 3.3% over 2024. Drilling down, U.S. net revenues increased 3.9% to $122.1 million, while Canadian sales were essentially flat at $14.1 million. Our gross profit for the year was $21.7 million or 15.9% of revenue compared with $33.6 million or 20.5% of revenue in 2024. Gross margin compression in 2025 was primarily due to shift towards the remodeling business, which inherently carries higher labor and travel costs, market-driven wage pressure and shifts in workforce alignment. Full year selling, general and administrative expenses were $32.2 million or 23.7% of revenues compared to $33.9 million or 20.7% of revenues in the prior year. SG&A costs included approximately $7 million of onetime costs and out-of-period write-offs in 2025. We expect our annual run rate SG&A costs to be approximately $25.5 million to $26.5 million, excluding any unusual and nonrecurring costs. In addition, we recorded restructuring costs and severance of $4.8 million for the 2025 fiscal year-end. As a result, we reported operating loss of $16.9 million for the fiscal year 2025 compared to $700,000 of operating income in the prior fiscal period. Net loss attributable to SPAR Group, Inc. for 2025 was $24.6 million or $1.04 per diluted share compared to a net loss of $3.2 million or $0.13 per share in 2024. Adjusted net loss attributable to SPAR Group, Inc. was $10.7 million or $0.45 per diluted share compared to $707,000 or $0.03 per diluted share in the prior period. Consolidated EBITDA for the fiscal 2025 year was a negative $16.5 million compared to $3.5 million in the prior year. 2024 includes $2.5 million gain from the sale of the businesses. Consolidated adjusted EBITDA was a negative $8.6 million compared to a positive $6.7 million in the prior year. Fiscal 2025 adjusted EBITDA attributed to the SPAR Group, Inc. was the same as consolidated with a negative $8.6 million compared to a positive $5.6 million in the prior year. Turning to the company's financial position. As of December 31, 2025, our balance sheet remains solid with positive working capital of $14.7 million, excluding the balance owed on the line of credit and the current portion of the long-term debt. This includes $3.3 million in cash and cash equivalents, for the 12 months ending December 31, 2025, net cash used by operating activities was $18.4 million. With that, I would like to turn it back to William. William Linnane: Thank you, Steve. On March 26, we announced our strategic partnership with ReposiTrak. And I want to give you a sense of what that looks like in practice. When a truck arrives with promotional items, seasonal goods or high-velocity SKUs, a retailer and as importantly, the vendor needs those products on shelf immediately. They can't wait for scheduled labor. This is relevant to all vendors, but can be especially challenging for scan-based trading with direct-to-store vendors. SPAR teams are dispatched in real time to any store anywhere in the country. We call this surge or on-demand merchandising. It's a cost-effective, flexible labor buffer that activates exactly when and where it's needed without adding to the store's teams workload, providing a high return on investment. The ReposiTrak partnership adds the intelligence layer, out-of-stock detection, perpetual inventory accuracy and route optimization so that our dispatch decisions are data-driven, not reactive. The result is a seamless loop. Technology identifies the need and SPAR executes to fix. This model is applicable to grocery, mass, club, dollar convenience and specialty retail across the United States and Canada, depending on the data source. The addressable market is large and the need is immediate. We are bullish about what this partnership and other similar partnerships unlock for SPAR in 2026 and beyond. Turning to our fiscal year 2026 financial guidance issued today. We expect top line revenue to be in the range of $143 million to $151 million and gross margins to improve to 20.5% to 22.5%, primarily driven by our service mix with a growing percent of merchandising work relative to remodel work. We are encouraged by the growing strength of our business pipeline, driven by wallet expansion from existing clients and market share gains this year. We believe that SPAR will win because we are uniquely positioned to serve as a critical operating layer for leading retailers and brands with national scale, deep execution DNA and a large, highly flexible labor model. We've also invested in modern cloud and ERP infrastructure to enable fast, efficient recruiting and client services. And as we discussed earlier, we are successfully pursuing a partner-led technology strategy. With our strategic retail partners, we can move faster and more credibly than anyone else. In addition, our proprietary SPARview platform is a mobile-first tool that collects data as we perform projects and allows us to communicate with our people on outcomes. We are increasingly utilizing AI platforms to detect issues, help us prioritize what matters most. A trigger is signaled with ROI-driven tasks and SPAR deploys trained field teams dynamically soon after the execution is verified and outcomes are measured and reported. This creates closed-loop retail execution from signal to fix to ROI. SPAR is the execution engine that turns retail intelligence into revenue recovery. Turning to our strategic transformation. Our road map over the past year has been disciplined and deliberate. And now we are laser-focused on building a profitable business that generates free cash flow. Growth underpins everything we do. Our plans include growth in each of our core areas. We are deepening existing relationships and building new ones with mass retailers, grocery partners in the dollar channel and with leading CPG partners. We are expanding our services for existing clients and increasing wallet share. At the same time, we are investing in data integration, AI and technology partnerships, workforce intelligence, dynamic scheduling, automation and margin expansion. None of this works without the right people. That's why we've strengthened our leadership bench, simplified the organization, stabilized Workday, our ERP, invested in workforce management and focused on training, deployment and retention. Our ambition is not just to lead in technology but to genuinely lead in how people are managed, developed and valued because the future of this company is tech and people powered. We are developing SPAR's reliable and repeatable human operating layer for the retail and CPG industries, and we believe this will deliver sustainable shareholder value. The work ahead is significant, but the direction is clear. If we execute consistently, decisively and with discipline, SPAR will not just participate but will lead in the future of retail execution. With that, operator, I would like to open the line for questions. Operator: [Operator Instructions] The first question comes from [ Ross Davidson ] with Benetton Capital. Unknown Analyst: I know 2025 is a big transformational year. I think you guys have done a good job of laying that out. Just on Q4, though, can you give us any -- just a little bit of color around both the revenue decline and, I guess, the resulting negative gross margin? Just help us understand how we are inflecting from that Q4 into what you've described for 2026? William Linnane: Yes. Thanks, Ross, for your question. In terms of the shape of 2025, obviously, Q3 was significant growth rate, and we had some timing of projects in terms of how they land in 2025 and how they land in 2024. So that's part of the answer to 2025, Q4. I think you'll see a more stable growth rate as we go into 2026, and that's partly related to the focus back on to really growing merchandising as opposed to remodel business. So does that answer the question? Unknown Analyst: I think. So almost like a little bit of an air pocket as you kind of wrapped up some projects and then as we get into 2026, sort of work through that and on to the sort of the numbers you described, I guess. William Linnane: Yes, that's correct. And we've purposely pivoted the business development and sales team to really focus on the merchandising going forward given the margin difference between the 2 businesses. So obviously, we'll take the remodel work if it's profitable, but we want to focus this on where we see the headroom for growth and where we think we can add technology with partners to improve margin over the long term. So yes, that's correct. Unknown Analyst: Okay. Great. And that makes sense. And I think that you described that well. And then just in terms of expectations for the year, in no way am I trying to get to quarterly guidance, I don't think you should do that. But just as we think about the ramp and the transformation, should we expect a build up towards the gross margin you described? Or any seasonality, I guess, anything we should expect with respect to what we'll see in Q1, Q2 versus Q3, Q4? Steven Hennen: Yes. So this is Steve. When we provided the guidance that we released today, that is on an annual basis. Now the only quarter that we see kind of below that, potentially at the bottom end of that range is the fourth quarter, which is typically our slowest quarter of the year. William Linnane: And Ross, that's partly because within our gross margins, we have our field management costs, which is somewhat semi fixed. But we've intentionally pivoted strongly to focus back office merchandising. So I think we'll post Q1 here in the next 4 to 6 weeks. And as Steve said, they're full year numbers, but you'll see the story laid out as we post that and then refine the guidance. Unknown Analyst: Okay. So it's a pretty quick sort of -- well, it's a pretty quick turnaround for Q1, as you noted. And then the business, we should expect pretty clean numbers with respect to kind of all the transformation work we've done in 2025, even early in 2026, we'll see kind of the profile of -- or the result of that work, I guess, is kind of what I'm hearing. Steven Hennen: That is correct. Yes. Unknown Analyst: Okay. That's great. And then the ReposiTrak partnership, just to confirm, so is that -- that's "live" and that's something you're out now marketing and offering to potential customers? William Linnane: That's correct. Meetings are actually in progress in terms of conversations. So yes, it's live. And we're excited about it. It's the first of potentially some other announcements we'll make into the future, but it's -- it aligns to our strategy of where we can really add the most value, but also create a defensible model at a higher margin rate by having partners who can be data about different parts of the market. ReposiTrak specifically have a strong out-of-stock management tool, and they've got access to data across certain parts of the market that they're strong in. So yes, we're excited about the partnership. Operator: As there are no further questions from investors, I would like to turn the conference back over to William Linnane for any closing remarks. William Linnane: Thank you, and thank you for continuing to follow our company. I look forward to providing our first quarter results and updating our strategic initiatives in a couple of months. Have a great day, everyone, and thank you again. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Greetings, and welcome to the Faraday Future Intelligent Electric Full Year 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, John Schilling, Director of PR and Communications. Thank you, John. You may begin. John Schilling: Good afternoon, everyone, and thank you for joining Faraday Futures' Fourth Quarter and Full Year 2025 Earnings Call. My name is John Schilling, Global Director of Public Relations and Government Affairs here at Faraday Future. Joining me today are our Global Co-CEO, Matthias Aydt; our Global President, Jerry Wang; and our Chief Financial Officer, Koti Meka. Before we begin, please note that today's discussion will include forward-looking statements based on current expectations and assumptions. These statements involve risks and uncertainties that could cause actual results to differ materially. We encourage you to review our SEC filings for a detailed discussion of these risks. We undertake no obligation to update forward-looking statements, except as required by law. Following these prepared remarks, we will address a selection of stockholder questions submitted in advance. With that, I'll turn the call over to Matthias. Matthias Aydt: Thank you, John, and thank you to everyone who is joining us today. 2025 marked a fundamental transition for Faraday Future from strategy to execution. We are now entering early commercialization across both our EV and Robotics businesses, supported by growing demand signals and early validation of our gross margin profile. This is the first time in 12 years from company inception that we can expect to generate revenue with a positive margin. Most importantly, we are evolving beyond the traditional EV company into an embodied EAI ecosystem platform powered by a dual engine model of EAI EV plus EAI Robotics. The EAI strategy and the EAI industry Bridge Strategy are our core strategies. The EAI strategy is a 3-in-1 EAI ecosystem strategy driven by the EAI technology platform consisting of EAI devices, the EAI Brain and open-source, open platform and the EAI decentralized and centralized data factory, forming an open closed-loop EAI ecosystem. The EAI upgrade builds upon the IP and technology foundation of FF's original vehicle business. FF holds over 660 patents. The team is currently reviewing these existing patents to align with the EAI strategy. First, the devices under the EAI strategy, scalable embodied EAI devices for delivery include vehicles and robots. Second, the EAI Brain and open-source, open platform, this creates general purpose, Brain for multimodal embodied AI consisting of the EAI Brain, cerebellum and neural hub powered by EAI foundation models, EAI agents and skill technologies. Through an open-source, open platform we can unite the entire industry, empower each other and unlock massive value. Third, the EAI decentralized, centralized data factory. But on a multimodal all scenario common data infrastructure, this establishes a decentralized and centralized network ecosystem that integrates Web2 data monetization with Web3 data assetization, creating a new data business model. As the first U.S. listed company to achieve scale delivery of both humanoid and biomimetic EAI robot devices, FF not only has a unique first-mover advantage, but can potentially generate a series of chain reactions through this closed-loop ecosystem, internal ecosystem. The 3 businesses, devices, brain and data mutually fuel each other's growth. Mass delivery and adaptation of devices generate vast amounts of data, which enhance the EAI Brain's capabilities which in turn improves EAI terminal products and drives even larger sales, forming a close product technology loop. At the same time, this can reinforce the EAI business and accelerate the realization of fundamental value for the FFAI business. External ecosystem by open-sourcing FF's technology and platform and opening up protocol standards, FF can connect with industry partners and developers while organically linking shareholders, investors and users, creating synergies and co-creating shared value. Bridge strategy. With FF as the industry's bridge, the strategy can integrate global hardware strength with North American AI, R&D advantages, supports localized production and delivers affordable, high-performance intelligent products to target market users. Entering the U.S. Blue Motion market with a relatively asset-light fast iteration approach. The strength of this strategy lies in industrial efficiency and marginal cost benefits driven by deep synergies. Let me now walk through our business update. In the fourth quarter, we continued to move the reservation, production and delivery of EAI devices, highlights in the fourth quarter 2025, reached 2025's most significant milestone, the first FX Super One preproduction vehicle successfully rolled off the company's California AI factory, validating FF's ability to integrate resources across regions, industry and ecosystems, achieved a broad product competitiveness of Super One, a first-class MPV with 130 inches wheel-based flat floor, flexible zero gravity rear seats, FF EAI architecture and the world's first Super EAI F.A.C.E. System, emotional grill interface to be available in pure electric or AI hybrid extended range power options covering both urban and long-distance travel. Mass production preparation is on track as scheduled. A series of certification-related activities proceeded as planned. Additionally, purchase agreements for the first batch of FX Super One parts were signed in October. The final assembly line was completed in December. On the commercial front, we are building a 4-pillar sales architecture covering community, partner, B2B and third-party e-commerce channels. The B2B2C co-creation ecosystem expanded to 6 U.S. states. The cumulative non-binding, non-refundable pre-orders for the FX Super One reached over 11,000 units by the end of 2025. In the Middle East, the region transitioned from initial market entry to early commercial validation following the official launch of the FX Super One on October 28. Football legend, Andrés Iniesta became the world's first owner and co-creation officer in November, helping to strengthen regional influence. We are currently prioritizing deliveries to high-quality co-creation partners including local government entities while establishing operational foundation in Ras Al Khaimah. To support these global efforts, Faraday Finance, Inc. was established in October to provide diversified financing solutions. An application has been filed with the relevant order finance license with the California Department of Financial and Protection and Innovation. Meanwhile, the ultra-luxury FF 91 flagship continues its niche presence with a targeted delivery, and the company has released redesign sketches for our planned FX 4, which is positioned as the RAV 4 Disruptor in the AIEV Era. We also have amazing upgrades on the FFAI technology stack. The system now natively supports over 50 languages and includes real-time web searches with voice synthesis and RAG knowledge-based support. Technical improvements also include an AEC upgrade to support seamless conversation, interruption and the successful migration of end-to-end autonomous driving model. We have developed vision-based 3D object detection and a scalable automated labeling algorithm alongside the implementation of gesture-controlled door entry using the DinoV3 vision model. These are not isolated features. They form the foundation of a scalable cross-terminal intelligence system. Furthermore, FF has submitted a patent for a blockchain and Web3-based vehicle sharing system that allows for one-click sharing, automated credit verification and revenue distribution. Qualigen Therapeutics Inc., an independently operated company strategically invested in and controlled by FF was renamed AIxCrypto Holdings, Inc. NASDAQ AIXC. In November, FF expects to expand brand exposure and low-cost financing channels through potential cooperations with AIXC. Highlights of subsequent events, FF EAI Robotics was launched on February 4, and the deliveries officially commenced in late February. FF became the first listed company in the U.S. to deliver humanoid and bionic robots by March 2026, cumulative shipments of FF EAI Robotics, including predeliveries, reached 22 units, exceeding preset target, accompanied by the start of robot sales revenue and positive product gross margin in the first quarter. As of the launch event, total non-binding, non-refundable pre-orders of FF EAI Robotics reached over 1,200 units. FF EAI robots focus on education, home security and entertainment scenarios to drive product deployment and market awareness. By expanding the existing automotive sales system to include both EAI vehicles and EAI robots, we are maximizing our reach with limited incremental investment. Following the NADA Dealer Summit in January 2026, several memorandums of understanding have been signed with U.S. dealerships. By February 2026, the company upgraded cooperation with its bridge strategic partners, signing agreements for mass production component procurement and engineering services as it enters the final sprint towards full-scale production. In the U.S. market, 800-volt high-voltage drive systems are becoming a core label defining the product strength and technological leadership of high-end electric vehicles. We have already started work on product-related research and development. FFAI has achieved cross-platform sharing EAI vehicles and EAI robotics such as voice dialogue capabilities and multimodal interaction capabilities. Model training platforms and tool chains as well as multimodal environmental perception models have also been shared. Part 3, system building. Now let's discuss our recent progress on system building. Our update in the fourth quarter 2025 focuses on the reinforcement of our internal management systems, talent acquisition and regulatory framework, helping us transition toward AI-driven corporate management, effectively transforming our internal company processes through the integration of advanced AI technologies. We introduced the overall PPTIA governance methodology and implemented it across FFAI. To drive operational efficiency and strategic growth, Faraday Future continues to invest in world-class leadership and infrastructure. On the regulatory and governmental front, our leadership remains proactive in securing the company's position with the domestic policy landscape. FF and FX executives held a series of constructive meetings in Washington, D.C. with several U.S. members of Congress and government officials. These dialogues are essential as we continue to refine our corporate governance and ensure our strategic initiatives are well understood by key stakeholders. A major milestone was reached with the conclusion of the SEC investigation in March 2026, a result that we believe validates the significant reinforcement of our legal and compliance system. In March, our headquarters relocated to Silicon Beach, a strategic move that has significantly enhanced our ability to attract top-tier senior talent in the heart of major technology hub. By combining a validated compliance framework with a high-caliber talented pool and AI enhanced management tools, we have established a resilient organizational foundation to support the next phase of our global expansion. Now I will turn the call over to Koti Meka to discuss the fourth quarter and full year financial updates. Koti Meka: Thank you, Matthias. For the full year 2025, revenue was essentially flat year-over-year. This reflects early-stage commercialization with stable market engagement as we continue to refine our plan. Loss from operations was $32.3 million for the 3 months ending December 31, 2025, and $331 million for the full year 2025, primarily reflecting R&D investments, headcount growth and select asset-related adjustments. Excluding onetime impairments or losses, the operating loss was $185 million, reflecting the company's cost optimization efforts. The onetime asset impairment in 2025 resulted from the strategic shift from the FF 91 program to the planned FF 92 upgrade, along with reorganization and retooling for the FX Super One commercial production. The impaired assets are expected to be redeployed with limited additional investment in retrofitting and upgrades. Operating cash outflow was $107.5 million for the full year 2025, primarily driven by changes in working capital and the operational ramp-up of the FX platform. Financing cash inflow was $161.4 million for the full year 2025, a 100% increase from $80.7 million in 2024. Stockholders' equity was $7.7 million at the end of 2025, primarily impacted by manufacturing optimization expenses, fair value adjustments related to our convertible notes and impairment provisions for certain assets. As a reminder, our capital structure includes equity-linked instruments and as a result, reported figures may experience meaningful noncash volatility period-to-period. I will now turn the call over to Jerry Wang, our Global President, to discuss capital markets updates. Jerry Wang: Thanks, Koti. In 2025, we remain focused on aligning capital deployment with key milestones while maintaining flexibility to support execution and long-term growth. The company achieved a net financing inflow of $161.4 million, demonstrating an ability to raise capital despite a cooling electric vehicle financing environment. Throughout the fourth quarter, leadership maintained close communication with capital markets, participating in multiple conferences and roadshows to enhance visibility and active pursue analyst coverage. This momentum carried into February 2026 when the company successfully hosted an investor event in Hong Kong. During this event, we engaged with over 30 investment institutions to deeply record the result and future road map of the EAI Bridge Strategy, highlighting how the EAI EV plus EAI Robotics Dual Engine approach is driving a significant reevaluation of the company's market worth. We believe the market is beginning to recognize FF not as a traditional EV company, but as an EAI-driven ecosystem platform with a newly launched Robotic business. To optimize the capital structure, the company entered into agreements with several warrant holders in the fourth quarter 2025 to terminate and cancel a total of 44.5 million warrants previously issued under various of security purchase agreements. This decisive move aims to simplify the company's capital structure and reduce potential future share dilution. These structural improvements are being paired with aggressive measures to protect stockholders and investors. In March 2026, the company received a letter from U.S. SEC stating that the SEC has formally closed its investigation, which lasted more than 4 years and decides not to take any enforcement or legal action against the company, YT, Jerry or others. This removes the historical constraints and destabilizing factors that have hindered the company's development and stands as the most powerful and definitive response to illegal short sellers. The company will immediately launch an updated version of its [ term ] pronged transformation initiative to swiftly and cost effectively achieve 4 phased goals: short term, 180 days, mid- to short term, 1 year, midterm, 3 years and long term, 5 years. We will go all out to build sustainable and growing positive cash flow, rebuild market confidence and deliver returns to our shareholders and investors. In addition, on March 20, the company received a notice from NASDAQ regarding a 180-day compliance period to meet its share price listing requirement. We'll do our utmost to regain compliance without resorting to a reverse stock split. We have launched a collective share purchase plan by executives and employees and initiated steps towards legal action against potential illegal short selling as well as the dissemination of false and misleading information intended to manipulate the market and obtain improper gains. This collective action serves as a clear signal of our belief in the company's trajectory and our commitment to actively protecting the interest of the company and all stockholders. I will now hand the call over to Matthias to discuss our 2026 outlook. Matthias Aydt: Thank you, Jerry. Looking ahead to 2026, Faraday Future is focused on deepening strategic execution aimed at driving continuous growth of business and deliveries. In our Robotics division, we have set a clear trajectory for the year with cumulative shipment volume target of over 1,000 units by the end of 2026. Throughout this period, we will continue to ensure the positive product gross margin and ramp up production to prepare for high-volume delivery in the following years. For the FX Super One, our priority remains the enhancement of overall product competitiveness with stable cash flow as a prerequisite. With the initial deployment of the technology-driven ecosystem strategy and deeper open-sourcing of the EAI Brain and technology platform, we expect to generate software-related revenue within 2026. Considering EAI robotics to require considerably less investment than EAI vehicle, we expect the limited additional investment and the positive product gross margin of EAI robotics will improve our 2026 operating cash flow. On the capital and regulatory front, our objectives for 2026 are focused on restoring market confidence and ensuring long-term stability. This includes working towards regaining compliance with NASDAQ's minimum bid price requirement within the applicable 100-day compliance period and actively introducing strategic investments from top-tier global investment institutions. Our systems and corporate governance will undergo a major transformation to support the scale. We are establishing an advanced governance system aimed at maximizing the interest of stockholders and investors while embedding AI governance into our very core. By achieving the systemization and automation of AI governance, including risk identification, compliance control and token cost management, we will enable dynamic monitoring and intelligent optimization of our EV and robotics operations. This AI governance system is designed to achieve cross-regional compliance and optimal resource allocation, effectively transforming our operational capabilities into a core corporate competitiveness and strategic advantage. Simultaneously, we remain in continuous dialogue with government departments regarding the bridge strategy and tariffs to secure policy support and create value by bringing global supply chain capabilities back to the United States. Through these efforts, we are building an ecosystem supporting long-term valuation enhancement and our participation in the formulation of industry standards. In summary, Faraday Future has entered a new phase in 2026 from concept to execution, from single business to dual engine growth, from EV company to EAI ecosystem platform. We are approaching an inflection point toward a positive gross margin of robotics delivery and commercialization scale with continued creation of long-term value. We believe this transition positions us for long-term value creation and a potential re-rating of our market valuation. Thank you. To conclude, I will now hand the call over to John for the Q&A. John Schilling: Thank you to everyone who presented today. As we wrap up, I would like to briefly highlight the materials included in the appendix. In the appendix, you'll find our unaudited balance sheet and financial statements as of and for the 3 months and full year ended December 31, 2025, providing additional detail on our financial position. These materials offer helpful context to supporting everything we have shared today. John Schilling: With that, we would now like to open the floor for Q&A. Question one. Who is buying the robotic products today? And what are the primary use cases driving that demand? Matthias Aydt: Our Robotics business is structured across 3 core layers: robotic device deployment and decentralized data factory as well as the EAI Brain and open-source, open platform. In this context, robot sales represent only one component of our broader strategic architecture, albeit an important or complementary one. The robotic hardware deployment layer encompasses not only direct sales and rental, but also a full suite of user operation services, including aftersales support, spare parts, ecosystem products and financial services. Our goal is to become a U.S.-based leader in early-stage robotics deployment in North America, establishing a strong market presence and defensible moat. In terms of use case scenarios, our target customers span a wide range of industries, including high-end hospitality and vacation rentals, automotive dealership, showrooms, security and patrol, education, entertainment and life performance, agricultural harvesting and research laboratories. We have already achieved early deployment in several of these verticals. Our data factory business has completed its strategic planning and has now entered execution. Within the embodied AI industry, real-world robotic data collection and training serve as a critical complement to simulation-based data and are essential for validation. This creates a closed-loop system between sim to real and real to sim. Our data collection solution is already capable of seamless integration with the NVIDIA Isaac ecosystem. As our robot fleet continues to scale, it will become a key source of high-value data generation. In parallel, we are integrating this capability with AIXC's on-chain infrastructure, creating a differentiated and competitive advantage. On the EAI Brain and open developer platform, we have already made meaningful progress and plan to move into the implementation phase in the near term. John Schilling: Question two. How does your B2B2C model translate into actual revenue generation? Matthias Aydt: The so-called B2B2C model refers to FF working in collaboration with FF partners on the sales side to jointly engage and serve end consumers [ C-end ] users. FF's B2B2C model mainly relies on cooperation with various [ B-side ] commercial partners to convert high-end customers' resources into actual sales revenue. The company works with real estate agencies, high-end clubs, corporate clients, dealers and other partners to reach high net worth individuals through their channels, then completes vehicle sales and delivery to generate direct revenue from car sales. At the same time, the company incentivizes partners to acquire customers through reasonable commission and profit sharing arrangements, which not only lowers its own customer acquisition costs, but also quickly expands order volume. In addition to car sales, the company will also generate recurring revenue through value-added services such as aftersales maintenance, connected car services and automotive financing programs. This light asset model rapidly expands channels, targets high-volume customers and shortens the sales cycle, allowing orders to be converted into cash flow and revenue more quickly. As partner channels expand and delivery efficiency improves, valid orders driven by [ B-side ] referrals will keep growing, serving as an important pillar for the company to improve operating cash flow and restore market confidence. John Schilling: Question three. Following the approval to increase authorized shares, how are you balancing funding needs with dilution sensitivity? What principles are guiding capital allocation? Matthias Aydt: The increase in authorized shares provides us with additional flexibility, but it does not alter our disciplined approach to capital allocation. Our capital deployment remains milestone-driven and sequenced around clear value inflection points. We prioritize return potential, capital efficiency and importantly, the preservation of long-term shareholder value. Importantly, within our business mix, the EAI Robotics business represents a more capital-efficient growth engine compared to the EEI Vehicle business. It operates under a relatively light-asset model, requires less incremental capital and therefore, inherently carries lower dilution risk when funded. In addition, the Robotics business has already demonstrated revenue generation and positive product gross margin. This not only supports internal cash flow dynamics, but also contributes to expanding the company's valuation foundation, enabling the market to more appropriately reflect the intrinsic value of FFAI over time. John Schilling: Question four. What are the next steps for the EAI Brain and open-source, open platform and the data factory? Matthias Aydt: A good question. The FF EAI brain will evolve into a general purpose AI capability that can be migrated and reused across multiple scenarios, multiple tasks and multiple terminal devices, supporting the continuous evolution of vehicles and robots in different applications. Through open-source mechanism, open interfaces and ecosystem collaboration mechanisms, the open-source, open platform will potentially enable more developers, partners and various types of hardware to connect and co-build. By continuously accumulating high-quality scenario data and behavioral data, we will gradually build data commercialization capabilities for model training, capability optimization and industry applications. We plan to enter the AI infrastructure space, secure our first customer and generate revenue. In addition, we plan to actively establish broad partnership with data companies and AI enterprises to jointly promote data circulation, model coke construction and the deployment of scenario-specific capabilities. John Schilling: Question five. What measures will the company take to ensure compliance with share price requirements within 180 days? Matthias Aydt: One of the company's top priorities during the rectification period is to restore compliance with the minimum share price requirement to the greatest extent possible without conducting a reverse stock split. Firstly, the fundamental measure is to rebuild investor confidence through sustained improvement in the company's operating performance. FF Robotic has now commenced deliveries and started generating revenue with positive gross margins, making a positive signal for the company's fundamental operating performance and operating cash flow. We are focusing our strategy on business that enable rapid delivery and quick cash flow generation with a clear and progressively achievable path to profitability. Second, further optimize the company's cost structure and emphasize return on investment. Third, repurchase shares on the open market to signal internal confidence and better balance financing needs and equity dilution through strategic focus. Fourth, continue to strengthen information disclosure to stabilize market expectations and take legal actions against alleged rumor monitoring deformation and malicious stock price manipulation. Suffice it to say, our confidence is stronger today than it was a year ago. We look forward to restoring market confidence through consistent delivery positive margin products. John Schilling: Thank you for your time. This concludes our investor Q&A session. We appreciate all the questions submitted and apologize if we couldn't get to all of them today. We remain committed to maintaining open communication with our investors. That concludes today's conference call. Thank you for all of your participation. Operator: This concludes today's teleconference. You may now disconnect your lines at this time. Thank you for your participation.
Operator: Hello, everyone. Thank you for joining us, and welcome to the Bitgo Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions]. I will now hand the call over to Baylor Myers, VP of Corporate Development. Please go ahead. J. Baylor Myers: Good afternoon. Thank you for joining us. Our remarks today will include forward-looking statements, including those regarding our future operating results and financial condition, such as our outlook for the next year, our business strategy and plans, market growth and our objectives for future operations. Actual results may vary materially from today's statements. Information concerning risks, uncertainties and other factors that could cause these results to differ will be included in our SEC filings, including those that are stated in the Risk Factors section of our annual report on Form 10-K for the year ended December 31, 2025, and in our other filings with the SEC. These forward-looking statements represent our outlook only as of the date of this call. We undertake no obligation to revise or update any forward-looking statements. Additionally, the matters we'll discuss today will include both GAAP and non-GAAP financial measures. Reconciliations of any non-GAAP financial measures to the most directly comparable GAAP measures are set forth in our earnings press release. Non-GAAP financial measures should be considered in addition to and not as a substitute for GAAP measures. Joining me today on the call are Mike Belshe, Founder and CEO; as well as Ed Reginelli, our CFO. With that, I will now turn the call over to Mike. Michael Belshe: Thank you, everyone, for joining Bitgo's first earnings call as a public company. Since this is our first earnings call, I'm going to give a little more background on Bitgo than we will going forward. Some of you may have heard this before during the IPO process. So thank you for your patience as we go through it, but I want to make sure we're all starting from the same place. All right. So when we founded Bitgo over a decade ago, we wanted to create a company that could meaningfully contribute to accelerating the transition to a digital economy. At Bitgo, we believe that digital assets are already fundamentally reshaping the financial system and are going to continue to do so. The ongoing announcements and news from all major traditional firms from Fidelity to Morgan Stanley to SoFi demonstrate that this is true. Since Bitgo's inception, we've been building for a future where all assets will be digital. Early in my own crypto journey, it became clear that the infrastructure to support the shift to digital assets was nonexistent and the ecosystem was incredibly immature. Established financial institutions didn't have a compliant framework, secure custody or even institutional-grade security solutions to rely on. So we set out to build the technology to provide this institutional-grade infrastructure, which could elevate digital assets to a higher level. The product we created is now the industry standard, multi-signature threshold MPC wallets that protect against both theft and loss, and this is what Bitgo was founded on. While other early participants built retail products, we established our track record for building institutional-grade infrastructure. In 2014, we introduced enterprise policy controls to digital asset wallets. In 2018, we launched the first U.S. trust company purpose-built for digital assets. We expanded into prime services and liquidity in 2020 and became the first to support qualified custody under New York DFS framework in 2021. We built a globally regulated platform spanning the U.S., Europe, Asia and the Middle East. As you're probably aware, we recently received our National Bank Charter under the Office of Control of the Currency, OCC. That made Bitgo the first public federally chartered digital asset infrastructure company. And we scaled our business model support over 1,700 assets across thousands of institutions and over 1 million users. Through these accomplishments, we've continued to differentiate Bitgo in the broader digital asset industry. To start, we operate purely as infrastructure. We do not manage exchanges. We do not compete with our clients nor do we have the same kind of exposure to digital assets that retail platforms do. We exist to provide security and compliance that empower institutions to participate in the digital asset economy. Our institutional client base is investing in crypto for the long term and has proven itself much stickier and less impacted by short-term market cycles than retail users. It's also important to note that we didn't enter this industry during or because of a hype cycle. We were built and battle tested through many market cycles, fulfilling a growing and enduring need for our clients. Bottom line, Bitgo today is the digital asset infrastructure company, powering institutions, platforms and nations redefining the global economy, and we stand apart as the premier infrastructure provider. So you can think of us a bit like a hyperscaler for digital assets. We're a one-stop shop, multiproduct platform with institutional-grade infrastructure and mission-critical reliability that our partners can build and scale on regardless of where that takes us globally. We believe that no other company can provide the streamlined and comprehensive suite of solutions that we do. Institutions have been forced many times to piece together providers, opening themselves up to operational risk and increased inefficiency. Our vertical platform was built with security as the foundation and provides wallets, qualified custody, trading, staking, lending, settlement and compliance tools, all within one unified scalable infrastructure. Starting with wallets. These are developed in-house and integrated across our platform, driving client stickiness. We operate regulated trust entities globally and provide qualified custody under the most stringent and rigorous regulatory frameworks in the world. Our Go network allows clients to settle assets 24 hours a day, 7 days a week directly from cold storage, which is a significant differentiator. The liquidity services we offer enable institutions to trade, stake, borrow and lend without commingling assets. We're proud to have one of the largest institutional staking platforms in the world. Finally, we also provide Infrastructure as a Service capabilities. This includes token management, stablecoin issuance and crypto as a service. To briefly recap our most recent results, I'm proud of the impressive revenue growth of 424% we achieved for the full year, driven primarily by digital asset sales and gains in subscriptions and services, partially offset by a decline in staking revenue due to digital asset prices. Obviously, Bitgo is a long-term believer in digital assets, and we evaluate our business performance independent of short-term price volatility. So rather than solely citing the USD value of assets on platform, which fluctuates with market prices independent of our business activity, we'd like to also share coin unit growth and price normalized growth that more directly reflect Bitgo's performance rather than the market's pricing. On a unit basis, BTC on platform grew 8% year-over-year and our top 5 assets by volume grew 3% year-over-year, growth driven entirely by client inflows, not market price movement. On that normalized price basis, assets on platform grew 16% year-over-year. Asset states declined 7% on the same basis. This is a trend we continue to monitor as certain tokens unlock over time. We believe these normalized figures represent Bitgo's strong performance in an otherwise very volatile market. Moving on to our growth strategy. Our platform operates at the center of the digital asset ecosystem with each new integration, new asset and new user making Bitgo more useful, more defensible and more essential. When protocols, fintechs and issuers build on Bitgo, they bring assets and transaction volume onto the platform. That, in turn, increases demand for liquidity, staking services, financing solutions and compliance infrastructure. Growth in assets and flows naturally gives greater engagement across our product suite. And as we expand functionality, whether through new asset support, prime capabilities or infrastructure services, we increase cross-sell opportunities and deepen our client relationships. The result is a scalable platform model that underpins our growth strategy, driving market expansion, client growth and product expansion that reinforce one another, contributing to revenue growth over time. Now starting with market expansion. We are actively replicating our product in markets globally to ensure that we can serve clients wherever they operate. In 2025, we made more regulatory progress in international markets, notably expanding our license in Germany and becoming custody broker in Dubai. At the domestic level, our OCC license supports our expansion in the U.S. and allows us to provide digital asset services to clients across all 50 states under a single national regulatory framework. In 2026, we are actively expanding into additional regions with several new licenses and registrations already in progress in India, South Korea, the U.K. and the Cayman Islands. We see the biggest opportunity for expansion this year in the APAC region, which represents a significant share of global crypto liquidity and has already established regulatory frameworks for digital asset custody and infrastructure. These markets are seeing increased engagement from banks, asset managers and family offices exploring digital assets, stablecoins and tokenized financial products. Because Bitgo already has a strong presence across several of these hubs, we're well positioned to support institutional clients and adoption as it accelerates demand for regulated client custody, settlement and prime services. On to client growth. We've seen tremendous growth in our client base over time due to a number of factors. In 2025, we saw benefits from expanding internationally, which has helped us win more global clients. In 2026, we are focused on expanding Bitgo's role in institutional market infrastructure by increasing our market share in OTC and derivatives while continuing to build next-generation wallet capabilities. At the same time, we're also investing in agentic wallet infrastructure that enables programmable, automated interactions with digital assets, supporting more sophisticated trading, settlement and treasury use cases for institutional clients. Finally, product expansion. During the first half of 2025, we launched our Stablecoin as a Service and our crypto as a Service. We started as the issuer for USD1, which has grown to over $5 billion in market cap since its launch, making one of the fastest-growing stablecoins of all time. We also announced recently that SoFi selected Bitgo's Stablecoin as a Service platform for their SoFi USD stablecoin. Further, we started off 2026 with the launch of our derivatives business, which we believe substantially improves our trade offerings for 2026. So far, we've seen roughly $3 billion in notional trading volume and over $3 million in revenue. We also see opportunities to expand our lending and trading offerings as well as enter tokenized equities as real-world asset tokenization has surpassed $25 billion as of July 2025. Looking ahead, we believe growing regulation of the digital asset industry in the U.S. as evidenced by the passage of the GENIUS Act and ongoing discussions on the CLARITY Act positions us well to increase our total addressable market. As more regulation is in place, we expect to see more traditional firms come to us looking to get involved in the digital asset industry with solutions that are secure and safe. We're seeing this now with our ecosystem team in support of the Canton network, a blockchain designed for traditional finance, where Bitgo has been the sole qualified custodian for some time. All these efforts will help power our product expansion strategy. We also secured exciting partnerships in 2025 that meaningfully raised our profile, including with Fidelity and Bitcoin. We started 2026 off strong. We're supporting Investify with nationwide digital asset investing for banks and credit unions. We're selected for custody and staking with Fidelity's Solana ETF as well as being named for the Bitcoin ETF, and we are accelerating our global ETF partnership with 21 shares. This is a particularly exciting opportunity as we've seen ETF client count grow over 200% year-over-year. Finally, we can't ignore what's coming with tokenized equities. We see several models emerging to tokenize traditional U.S. equities and all of them require the infrastructure that Bitgo has been building. We're proud to be the custodian on the Figure platform, which launched earlier this year to directly issue equities on blockchain through Figures open network. To conclude, I'm proud of our achievements in the fourth quarter and full year 2025, and I'm incredibly excited about the start of our journey as a public company. Being public adds another layer of rigor to our business as we continue to operate with transparency and security. We also believe that access to public markets reinforces Bitgo as the steady-state infrastructure player for institutions. I'm confident Bitgo is uniquely positioned within the crypto industry as the digital asset infrastructure company, and we have the right strategy in place to drive growth and deliver significant value for our shareholders. Finally, I want to thank the Bitgo team for their continued hard work and dedication to our company and mission that's made executing our IPO and achieving our strong financial results possible. I now turn it over to Ed. Edward Reginelli: Thank you, Mike, and thank you all for joining us today. Before reviewing our financial performance, I'd like to build on Mike's discussion of Bitgo's growth drivers and connected to how we generate revenue. Bitgo makes money through 5 revenue drivers: digital asset sales, staking, subscriptions and services, Stablecoin as a Service and interest income. Starting with digital asset sales. We offer a secure, seamless liquidity solution that simplifies the complexities of digital asset trading. Our revenue reflects the total trading volume generated when the company acts as Principal, executing trades on behalf of clients through relationships that Bitgo has with various third-party liquidity providers and exchanges. Second, we earn staking revenue by participating in proof-of-stake blockchain networks where we validate blocks using either our proprietary staking technology or by partnering with our network of 25-plus leading third-party validators. In exchange for providing clients the ability to stake their assets, the company earns blockchain rewards in the form of the network's native tokens. Third, subscriptions and services revenue encompasses our core technologies. Wallet services, cold storage, development fees, lending services and crypto as a service. This service is very sticky and provides stability and predictability in our financials because our technology is highly integrated into our clients' operations. This relationship provides the opportunity to upsell additional products and services. Fourth, Stablecoin as a Service revenue, which is our newest product offering, launched in fiscal year 2025. This service allows institutional clients to issue U.S. dollar-backed stablecoins using our regulated trust infrastructure. We earn implementation and ongoing service fees for the issuance, reserve management and transaction processing of white label stablecoins. Lastly, interest income, which represents interest earned from the company's fiat treasury earned from deposits in various money market products. While we are not entirely immune to market volatility, our diversified revenue model helps insulate us from fluctuations in digital asset prices relative to others in the industry. In addition, a meaningful portion of our revenue is recurring and subscription-based and our performance is driven by a broader set of factors beyond asset prices, including interest rates, industry sentiment and continued investment in emerging ecosystem and products. Finally, our focus on institutional clients results in a stickier customer base, especially through periods of market volatility. Moving on to our results. Fourth quarter total revenue of $6.2 billion increased 440% year-over-year. For the full year, total revenue of $16.2 billion increased 424% year-over-year. Growth in both periods was driven by higher digital asset trading activity, increased subscription and service revenue and the launch of our Stablecoin as-a-Service offering, alongside deeper engagement from existing clients and continued expansion of our client base. This growth was partially offset by a decline in staking revenue due to lower digital asset prices. On our key operational metrics, as of the end of the year, number of clients grew 104% year-over-year to 5,322 and number of users expanded 14% year-over-year to 1.2 million users. Assets on platform of $81.6 billion decreased 9% year-over-year, while assets staked of $15.6 billion decreased 51% year-over-year. These declines were driven by lower digital asset prices. To reiterate what Mike noted earlier, excluding the impact of price by applying consistent pricing across periods, assets on platform increased 16% year-over-year, while assets staked decreased only 7%. On a product level, in the fourth quarter, digital asset sales of $6.0 billion increased 531% year-over-year. For the full year, digital asset sales were $15.6 billion, increasing 513% year-over-year. Growth during both periods was driven by higher digital asset trading activity resulting from the continued growth of our OTC services, the expansion of trading pairs on the platform, increased activity from existing clients and an expanding client base. With digital asset sales, there are corresponding transaction costs. In the fourth quarter, digital asset sales costs were $6.0 billion, resulting in a take rate of roughly 24 basis points. For the full year 2025, digital asset sales costs were $15.5 billion with a take rate of approximately 21 basis points. Staking revenue in the fourth quarter of $58.3 million declined roughly 64% year-over-year. Full year staking revenue of $385.0 million decreased 16% year-over-year. Decreases across both periods were primarily driven by volatility in digital asset prices. Similar to digital asset sales, staking revenue includes corresponding fees. In the fourth quarter, staking fees were $55.4 million, resulting in a take rate of roughly 7%. For the full year 2025, staking fees were $346 million with a take rate of approximately 11%. Subscriptions and services revenue in the fourth quarter of $39.3 million increased 75% year-over-year. Full year subscriptions and services revenue of $121.5 million grew 57% year-over-year, primarily driven by an increase in the number of clients, growth in development fees and higher lending activity. Custody and wallet solution clients increased to 1,534 with an average quarterly spend of [indiscernible] per invoice client. In addition, we exited the year with a lending book of approximately $207.4 million, representing an increase of 114% year-over-year. Stablecoin as a Service revenue was approximately $26.6 million in the fourth quarter with a take rate of approximately 20 basis points on assets under management. For the full year, revenue totaled $66.7 million with a take rate of approximately 16 basis points on assets under management. As a reminder, this service was launched in fiscal year 2025. Finally, interest income was $0.5 million in the fourth quarter, up 34% year-over-year. For the full year, interest income totaled $1.5 million, up 63% year-over-year, primarily driven by increased fiat treasury investments. Total expenses were $6.2 billion for the fourth quarter and $16.1 billion for the full year, principally driven by digital asset sales costs, staking fees and stablecoin sponsor fees as referenced earlier. Fourth quarter compensation and benefits were $27.9 million, up roughly 19% year-over-year and $104.2 million for the full year, up 30%, driven largely by continued investment in our engineering and commercial teams. Fourth quarter general and administrative expenses were $24 million, up 29% year-over-year and $76 million for the full year, up 44% year-over-year, primarily reflecting increased third-party costs associated with our IPO initiative, higher legal expenses and variable costs tied to customers and revenue growth. Net loss in the fourth quarter was $50 million compared to a net income of $129.4 million in the prior year. Net loss for the full year was $14.8 million compared to net income of $156.5 million in the prior year. Losses in both periods were primarily driven by unrealized losses on the company's digital asset treasury due to falling digital asset prices. Fourth quarter adjusted EBITDA of $12.1 million increased 188% year-over-year, while full year adjusted EBITDA of $32.4 million grew 904% year-over-year. We believe we are in the early stages of growth, and our priority is to accelerate revenue while expanding our product capabilities and global footprint. We will continue to make disciplined long-term investments to support these objectives, even if they temper near-term profitability. Fourth quarter diluted loss per share was $1.03 compared to prior year earnings per share of $1.07. Full year diluted loss per share was $0.38 versus earnings per share of $0.90 in the prior year. Moving on to our balance sheet. Our balance sheet remains strong as we ended the year with $318.5 million in total equity. Our balance sheet includes a Bitcoin treasury strategy under which we retain Bitcoin received or acquired in the ordinary course of business and at times, allocate cash flows to purchase additional Bitcoin. We remain confident in this strategy and our long-term approach remains unchanged. Looking ahead, we are committed to a balanced capital allocation strategy over the long term. As we invest to grow the business, we will remain disciplined in the way we allocate capital and operate as a business in order to minimize risk and maintain liquidity. As of December 31, 2025, total diluted shares outstanding were 119.9 million shares. As a reminder, we issued an additional 11 million shares in our January 2026 IPO. We hold no long or short-term debt on our balance sheet since any borrowings are primarily used to fund our lending business and are on a demand basis. Now turning to expectations for the first quarter of 2026. We've been operating as a publicly listed company for about 10 weeks. And while the quarter is not complete yet, we want to be transparent and share insights into the current market conditions. The macro environment in the fourth quarter was challenging, and those conditions have carried into the first quarter. Digital asset prices have remained under pressure and geopolitical tensions in the Middle East have added additional volatility. These macro conditions, along with the decline in digital asset prices have a direct impact on our revenue streams. We are not immune to these dynamics. With that said, our underlying unit-based metrics remain healthy. Our client pipeline is strong and the structural demand for our platform remains intact. As Mike noted, we are executing on our 2026 growth strategy and continue to see strong growth in our client base and pipeline. In our trading business, we expect strong year-over-year growth in the first quarter compared to Q1 2025, supported by the momentum built during fiscal year 2025. We launched our derivatives business in the first quarter of 2026. As spot trading volumes have declined from the fourth quarter of 2025 amid lower digital asset prices and market volatility, client interest in derivatives has increased as a way to generate yield and provide market downside protection. Please note that a portion of our existing spot trading activity is transitioning to derivatives. While spot trading volumes are reported on a gross basis, derivative trading is reported on a net basis. Other areas to highlight include continued growth in our Stablecoin as a Service business, where assets under management exceeded $5 billion during the first quarter, alongside the addition of new notable clients utilizing the service. We expect solid year-over-year growth in subscriptions and services in the first quarter compared to Q1 2025. However, revenue is expected to be lower than the fourth quarter of 2025, primarily due to a decline in development fees, partially offset by strong recurring revenue base from custody and wallet services and increased lending business. Staking fees, which are most directly impacted by digital asset prices are expected to be significantly lower in the first quarter compared to Q1 2025 and down sequentially from Q4 2025. However, we anticipate a meaningful improvement in take rate relative to Q4 2025, driven by the onboarding of a significant token. Bitgo has been around since 2013, and we have experienced many different market environments over the years. I remain confident in our ability to weather the current dynamic macro environment as our near-term opportunities are strong, underpinned by a deep client pipeline and several active projects. With a constructive and evolving regulatory backdrop, we continue to see strong momentum and remain positive on the digital asset industry as a whole. To close, we are pleased with our strong fourth quarter and full year 2025 results, which position us well to continue executing on our long-term growth strategy. We remain confident in our ability to drive client growth, asset growth and product expansion and to deliver long-term value for our shareholders. Thank you for joining us today. I'll now turn it over to the operator for our Q&A session. Operator: [Operator Instructions]. Your first question comes from George Sutton with Craig-Hallum. George Sutton: Congrats on your first quarter. So I wanted to ask on the CLARITY Act, Mike, in terms of -- obviously, we're starting to get some sense of what that might look like. I'm just curious if we could use your informed thought process on what you'd like to see or what you're expecting to see relative to how it will impact your business. Michael Belshe: George, thank you for the question. Let's see. We're excited to see CLARITY pass. We hope that it comes about. I know there's been a lot of debate in the industry about, in particular, some of the relitigation of stablecoin points. From my view, most of the work with CLARITY actually comes in the next 18 months after CLARITY is passed because what it sets up is okay, CFTCs can do most of the work in the regulation. And that's going to really determine the bulk of what matters. So we hope that it passes soon. I would take it in almost any form. I don't think we should be worrying about the interest that's being returned or not returned. I think we need to get to the next stage, which is getting this fully enacted and legislated so that we don't have to worry about whether we have a full path forward from Congress. So we're very much in favor of getting CLARITY passed, and I think we're at the finish line. George Sutton: There was a lot of reference to a very strong client pipeline. I wondered if you could just give us any more sense of what you're seeing from a pipeline perspective. And how much of that is TradFi focused? Michael Belshe: Great question. Glad you asked. So look, I mean, you're reading announcements almost every week, Morgan Stanley, Citibank, et cetera. All of these large major players were not participating in digital assets just a short 18 months ago. And with infrastructure, I think you also know that it goes through a pretty significant amount of process. It goes through an RFI, then it goes through some iterations to an RFP and then finally to a close. So we can't announce everything that's done until the client wants to announce it. But the pipeline has been super strong. And in fact, if anything, I just want to make sure that we have enough sales team out there to make sure that we're connecting with everybody that we need to. So we've been growing the sales team over the last 3 to 4 months, just there's a lot of work out there. Operator: Your next question comes from Brett Knoblauch with Cantor Fitzgerald. Brett Knoblauch: As we look at maybe the broader crypto space, obviously, there's some weakness here. In your prepared remarks, you guys said you guys are a bit different of a platform and business isn't entirely correlated to where digital asset prices are going, but then also alluded to the fact that lower digital asset prices will weigh on some of the segments. Can you maybe frame it a bit better, like which segments are you expecting to kind of be pressured with, call it, broader crypto down 20% year-to-date versus which segments do you think can grow strongly irrespective of, call it, the macro market for crypto? Michael Belshe: Yes. Thanks, Brett. Good to hear from you again. Let's see. I mean, in general, I don't want to sugarcoat it, right? Like the asset prices being down, it affects everybody in the sector. And I think we said during the IPO roadshow, I will say it again, like Bitgo has some amount of correlation to digital asset prices, and you kind of see it in many aspects of our business. We've got a few that are less correlated. One of them is stablecoins, of course. Those are not directly correlated to the crypto prices. The other one is trade volume, which we sell a lot of trade volume in up and down markets, those volumes will increase. So it's not a direct correlation to just the asset prices. But of course, it is a direct correlation to what's going on in the space broadly. Lastly, we do have subscription service -- subscriptions as part of our services. So sometimes people are buying a subscription, which caps a monthly minimum, which includes some amount of custody, some amount of trade volume, et cetera, transaction volume, all under a constant price. So it's a little bit less volatile than the digital asset prices. Brett Knoblauch: Awesome. And then maybe just as a follow-up, you mentioned like agentic wallets, which I think is a really interesting area and kind of a hot topic right now. How do you -- or how are you guys kind of positioned for that with respect to your subscription services product? Is it a different bundle? Is it included in maybe the same package? Just broadly, how should we think about maybe just agentic wallets and Bitgo together? Michael Belshe: Yes. Great. Well, actually, we think the product offering that we have is really well suited actually for all of the Agentic needs and capabilities. So we got our MCP server up by the way we've seen it, like where AI picks up on that and is able to help put together products and code on it. We're watching that carefully to make sure that we fully understand exactly what clients are looking for, and we react to that as quick as we can. Then in terms of why our products are kind of designed for this. I mean when we started doing our institutional-grade wallets back in the beginning, I mean, first, you've got the basic security components, which is how do you have no single point of failure, how do you have protection against loss. But then the next thing you're doing is you're making it work for an institution, a business, a group of people, right? And so there's multiple people on the wallet. There's a policy that you can set. You can say, hey, these types of accesses need these permissions, the other types need these other permissions, you can do it risk-based. This turns out to work really well with agents, right? So the agents are effectively like other participants on the wallet. And you can actually do it in both directions. You can both have the agents spending money on your behalf and then going through your controls to approve. And also, you can do the reverse where you're doing the spending of money and then the agent is kind of watching that. So if you have a large organization and maybe you've federated out different parts of your digital assets to multiple parties, that agent can put other controls on it that you can watch and then they'll decide whether or not to improve. So anyway, I think everything we've built is like perfectly in line for agents. And if you are looking for an agentic wallet, like please try out Bitgo, give us feedback. We are always iterating and improving. Operator: Your next question comes from Joseph Vafi with Canaccord. Joseph Vafi: Congrats to you and to Bitgo on getting to this stage of the journey in the company's evolution. Maybe just staying on the agentic for a second. I've been kind of noodling what's going to move the industry forward other than just spot prices. And I think everyone's been thinking that clarity could be a big driver, but agentic AI combined with programmable money and assets and blockchain are kind of all coming into view here. Do you think that agentic could move the industry forward faster than CLARITY? I'm just trying to get a view from your point of view and then a quick follow-up. Michael Belshe: Well, thanks, Joseph. I think it's a little bit apples and oranges. I think they'll move in different speeds. So first off, on CLARITY, I didn't quite say this in my previous answer. Having done the roadshow, having spoken to all kinds of potential investors, many of whom have not been in the digital asset space very much kind of prior to the unlock of 2025, all of those guys are looking for CLARITY to kind of be the permission that this is not just something where like under the Biden administration, you have one set of regulators and then under the Trump administration, you have a different set of regulators. And under the next administration, we're going to have yet a third set of regulators, each with their own agenda. CLARITY puts a pathway forward where Congress has said, yes, they support this, and they've asked the regulators to officially take on that thing. So I believe there's a significant amount of traditional finance that is very much waiting on CLARITY. And if CLARITY doesn't come through, those folks may be kind of in and out as the market goes up and down. So that's a risk. Let's see, on the agentic side, I think we're going through an early phase where people are learning how to use agents. You see some of the almost [indiscernible] that happens where we're all learning it. We're so excited about it, and yet we're not quite as productive as we hope that we will ultimately be. So I think the innovation and this kind of exploration wave is just starting. Clearly, there are going to be very -- a lot more robots than there are humans, a lot more AI brains than there are human brains. And so I think it's only natural that you will see agents operating on our behalf in all kinds of ways. But we're in the early days of figuring out how those get deployed. So both CLARITY will help us and agents are going to help us grow, but I think they're almost as different paths. Joseph Vafi: All right. And then any other thoughts Ed here? It sounds like take rate may go higher on staking due to adding a new token. Any other color that you may be able to provide there? Edward Reginelli: Yes. So -- on the staking side, we did add a significant token. Canton was the asset we added, and that has brought a tremendous amount of margin to the product line. Also on other product lines, including our trading business, we referenced earlier in the conversation about the introduction of derivatives, and that has been really successful in Q1. So that's also going to help improve margins. And then as we continue to grow our overall customer base, we'll get incremental revenues from subscriptions and services. The difficult part of the business right now from a revenue perspective because it's so tied to digital asset prices is our staking product line. But we still are very confident in that overall product line and expect that to continue to grow. We'll grow adding new assets to the platform, more units. And hopefully, we see a recovery in prices. Operator: Your next question comes from Brian Dobson with Clear Street. Brian Dobson: Congrats on your first quarter. So maybe we can take a step back and a longer view. As you're contemplating, say, the next year or 2 for the business, which global catalyst do you expect to be most meaningful for the company and call it, the sector at large? Michael Belshe: Sure. There's a lot of questions about like digital asset prices. One thing that we're trying to help describe and always open to feedback on this as well is how do you differentiate how the market performed versus how Bitgo performed. And so the reason we were citing earlier, if you take a look at assets under custody from a normalized price perspective, you can either do it normalized at the beginning of the period at the end of the period, it doesn't really matter. Our assets under custody grew 16% during this year, irrespective of the asset price on the market. So hopefully, that indicates we're doing something right. It's not easy to add billions of dollars of new asset into custody. And then where is that next thing going to come from? Look, I think mostly, it's that the TAM is growing. So the regulatory unlock of 2025 started with just what was now legal in the U.S. to do. The second unlock is the increase of participants in the space. And so kind of back to that comment earlier about pretty much every traditional financial firm has a significant investment in digital assets going right now. You've heard me say this before. Larry Fink of BlackRock says every asset, every bond, every token is going to be digitized. I think there's an increasing number of people that believe that. We just had Paul Atkins this week also saying that within 2 years, everything is going to be digital. So this is just a huge growth in the total addressable market for us. And we think as an infrastructure provider, we will be able to serve those clients, whether you're talking about self-custody, whether you're talking about custody, whether you're talking about financial services on top. Operator: Your next question comes from Pete Christiansen with Citibank. Peter Christiansen: Congrats Mike, Ed, Baylor on the successful IPO. I wanted to ask about attach rates. You've had some really impressive client growth over the last couple of quarters. I'm assuming a lot of that is custody led. Can you just give us a sense of how you're seeing the attach rates to some other services, in particular, maybe like prime brokerage, how you're seeing that trend? And then I guess as a follow-up, I want to double tap on TV a little bit. How should we think about Bitgo's competitive moat there? Is it, hey, we've got best-in-class capabilities and it also stretches on to our custody capabilities, what have you? -- but there's other players out there that may have bigger balance sheet. Just help us understand what is the competitive strategy there to grow some of these other ancillary services. Michael Belshe: Sure. Thanks, Pete. I'll take part of this, and I'll hand it to Ed for the attach rates afterwards. So look, I mentioned custody, and I always kind of hate mentioning custody because I don't want people to think of us as just a custodian by any means. We've had significant attach rates across the product lines. I think Ed's got the official stats, but we're really trying to move all of the revenue up the stack. And so that's why we care a lot about the trade volumes increasing significantly on Bitgo. So increasingly, we hope to move as many participants up there. I think when you're helping people make money, whether it's by trading, whether it's by staking or by using their assets, it's a much stronger position to be in. So as it relates to prime brokerage, look, the lending book is larger than it's been in the past. The trading volumes are up. The culmination of these 2 things is where you start to put together and build leverage for your clients. Right now, I'd say that we're still increasing kind of these individual services and then ultimately, we get to prime brokerage. As the competitive moat, I think the difference is a couple of things. A, we have the foundation at the bottom of the stack, which you can actually build on and understand the risk. A lot of prime brokerage is understanding what are the risks that you're taking and too much of the early prime variance that came a few years ago from various players was not adequately taking into account what the risk that's being taken is. Obviously, if you don't have custody -- if you don't have a solid risk around how you're holding it, it's difficult to even talk about like the market risk and counterparty risks that happen on top of it. So we have that strong foundation at the bottom. The fact that our trading volume grew so well in the last year as we finally have turned that on, partially just unlocked by the new regulatory environment here in the United States. We think all of this grows. So we are differentiated in that we do cold storage for that. We've got a solid foundation for that. We support more coins than anybody. I think we have some stats coming out probably in some press releases soon around just how broad the asset support is. I think when you look at other players, they're probably going to start with Bitcoin, they're going to start with Ethereum. And look, Bitgo supports just a much broader spectrum of products today. Ed, do you have the specific numbers on the attach rates on the various services? Edward Reginelli: Yes. So I believe as of end of last year, about 70% of our revenue-generating clients use 2 or more of our products and about 50% use 3 or more. As Mike pointed out, the clients are really focused now on yield-generating activities, and they would much rather be sharing some of those profits compared to just paying for stand-alone services. So we'll continue to keep driving customers of our products stack. And we also appreciate that, too, from the standpoint of increasing our margins. Instead of talking basis points, we're talking percentage points. So we're actively trying to move more and more clients to trading staking, lending and other value-added products that we currently offer. Operator: Your next question comes from Edward Engel with Compass Point. Edward Engel: Could you please talk about the launch of derivatives trading in the first quarter? It looks like it's been a strong start so far, but just wanted to get a better idea of when exactly that was launched and then, I guess, how you see that ramping throughout the year? Michael Belshe: Yes, sure. Yes, we're very pleased with how it's been going so far. Actually, let's see to [indiscernible] say here. Okay. I don't think so. All right. We launched on January 1. And one of the things that, by the way, I want to note you've got this terrible way of like aggregating gross revenue, which includes gross trading of spot then derivatives, of course, is not quite equivalent to trading volume. It's equivalent to the derivatives component. So it makes it hard to tease out. But we've seen substantial clients moving from pure spot trading over to derivatives. We've seen multibillions of trade volume already in 2026, and we just launched it, I guess, 3 months ago. So we think this is where the bulk of our trading volume will be probably in about another year or so, but very happy to be having this offer to our clients. Edward Engel: Great. That's helpful. And then just to try to sneak one in here. Just given that successful launch and then maybe just some of the recent volatility -- is there a world where we could see net trading revenue maybe kind of flat Q-on-Q? I know you said higher year-on-year, just that 1Q is a pretty low base. Michael Belshe: Ed, do you want to take this? Edward Reginelli: Yes. We are projecting that our overall gross trading volume will be down. On a net basis, we will also be down quarter-on-quarter, but will be up substantially versus Q1 of 2025. Q4, we appreciated the benefit of a lot of digital asset trading companies, treasury companies that came to the platform, and we had a tremendous amount of volume through them. What we've seen there is behavior changing. Those same clients are now using our derivative products, looking for yield, looking for market protection. So overall, we are very positive on our trading and derivative business and expect that to be a huge driver of our future growth. Edward Engel: That's great color. Congrats on being a public company. Operator: Your next question comes from Brian Bedell with Deutsche Bank. Brian Bedell: And also congrats on your first quarter here. Very exciting. First question, just on the -- going back to some of your comments, Mike, on CLARITY Act and the pipeline. How do you see that progressing during the year? Obviously, you mentioned that the CLARITY Act can be an unlock for traditional finance firms. And the pipeline is strong coming into 1Q. But do you see this being actioned upon relatively quickly if just the Act passes? Or do you expect more of a lagged response as we go throughout the year? From a revenue perspective, I'm thinking about the custody wallet component of subscription and services. Michael Belshe: We have not seen any slowdown in terms of readiness to adopt digital assets from traditional financial firms. If anything, I'd say it's been just as strong. So I think most people had been expecting CLARITY would get passed kind of over the last 3, 4 months. Maybe the -- probably market would probably tell you exactly what the predicted odds are, maybe that's come down a little bit, but it doesn't seem to have slowed anything down. And I'm not entirely sure that just because we don't -- that even if we didn't get CLARITY, I'm hopeful that it will, but even if we didn't, that it would cause a slowdown. It could. But I guess I just don't know exactly. So far, there's been no slowdown. So I think it's all positive. Remember, these build-outs take a long time, like the decision process for large firms moving into digital assets, the decision alone is 6 to 12 months. After that, there's the build-out and then there's finally the deployment. And usually, when they deploy, they do it kind of on a risk-adjusted basis where they do a small amount first and then grow it slowly. So because they've already started the process, I think it takes a while before they drop out. But I guess we're going to see exactly how they go. So far, it's been no problem. Brian Bedell: Yes. That's great. And then maybe an interesting press release on the Prediction markets venture. And it certainly seems like a differentiated way to go about the market. Can you talk a little bit more about that in terms of the OTC platform and how that -- you expect that to work? Is that going to sit at Bitgo? And then just talk about what types of contracts you're creating? It sounds like it's mostly in the crypto asset class right now. And how you're seeing that institutional demand play out? Michael Belshe: Sure. I think you're referring to our partnership we just announced with Susquehanna, right? Brian Bedell: Yes. Yes, that's absolutely, yes. Michael Belshe: Yes. For those that may not have seen it, we did announce a partnership with Susquehanna that -- you can have your assets at Bitgo and then we can -- through our OTC capabilities, we can help you place investments over at Polymarket and Kalshi, and we do that in partnership with Susquehanna. Look, that's just started. So I don't have any positive data that -- positive or negative to share with you just yet. We did have a lot of reach out and excitement about it. I think it creates a differentiated way to access these markets that wasn't there before. So look, we're excited to see what happens. Why don't you refresh that one for maybe the next quarterly report. Operator: Your next question comes from Dan Dolev with Mizuho. Dan Dolev: And also congrats from our end at Mizuho. Really quick question for you. It sounds like Stablecoin as a Service has been a huge success. I think you -- you recently launched it in the first half of '25, and it's already grown to like a very significant AUM. I think you mentioned $5 billion. So how big could this become? And what are maybe potential new ways to monetize beyond what you're doing today? -- congrats again. Michael Belshe: Great. Thank you for the question, Dan. Yes. So we started with USD1 last year. We helped them get from 0 to fully launched in about 6 weeks on top of the Bitgo Stablecoin as a Service product. It's a modular service. So you can kind of pick and choose some of the components that go into that. We announced just earlier this year that SoFi USD is going to be built on top of the Bitgo Stablecoin as a Service platform as well. I think that will be -- the first Stablecoin as a Service platform, I'll probably get to $1 billion each. SoFi is not there yet, but I think it will be the next one. We think there's tremendous opportunity. Like stablecoins are super easy for pretty much everybody in finance to understand. And in terms of payments, it's just better. I know there's some debate that's going on at the CLARITY Act, whether or not interest gets passed or not, there's a tremendous amount to be done here. So as the payment rails change, that changes how people are moving money locally and internationally, especially if you ever try to wire money internationally, it's very hard. People are opting to use stablecoins. You're going to start hearing like regular people outside of the business talking about, hey, I want to use some tether to send some money to a supplier across the globe. These are real things that are going to happen. At Bitgo, we've got increasing improvements around what we call our mint and burn dashboard, our ability to convert between these stablecoins, so we're going to have kind of an explosion of different stablecoins available and people might have some USDC, but they want to move to USD1. They got some USDT, but they want to move that to SoFi USD. And on the banking side, we haven't even seen the tokenized deposits quite come live yet. If you read up on the SoFi dollar, you can see how they're addressing the combination of both tokenized deposits and stablecoins. So I think we're in the early innings here. I think it's going to completely revolutionize how we're doing payments. I think you're going to see a use for settlements kind of everywhere. And then that will carry over, hopefully, into our Go network in the coming quarters. Operator: Your next question comes from Chris Brendler with Rosenblatt Securities. Christopher Brendler: I also add my congratulations on your first quarter out of the gate. I wanted to ask about the OCC approval process. I think it's now complete, but what does that mean for your business? And sort of which areas can you leverage that new charter? And it seems like it's somewhat unique as well. So it could be a competitive advantage, at least in the near term. I'd love to get a little color there. Michael Belshe: Yes. Thanks, Chris. Yes, for those that didn't notice, we did get converted over to the OCC National charter. So it's Bitgo Bank and Trust at this point. And it's been huge for our business actually. Now interestingly, from an operational point of view, we've been ready for this for quite some time. You probably know we operate multiple regulated custodians around the planet. We've had a couple in the U.S. We have in Switzerland. We have in Germany, we have in Dubai. We have in Singapore, coming hopefully in 2026 in South Korea. So we've built a playbook for how you run these that incorporates, of course, all of the U.S. things that you would expect, but also all of the things from other regulatory regions, et cetera. And I think we've got the most robust custodial platform of anybody in terms of being on top of all the regulatory components. Just being able to call yourself Bitgo Bank and Trust, actually, you're speaking the language of traditional finance. You say the word Bitgo it doesn't say bank in it and people don't quite know exactly what that is. Believe it or not, that does matter. But overall, you can't get a more respected regulatory framework. So it's been great. And of course, it cuts out any ambiguity. I see a few different states are looking to potentially try to regulate stablecoins in their own way, and we could end up with kind of the money transmission licenses of the states, but now it played out for crypto or played out for stablecoins. And by having that national charter, we are immune from that. So it's very good for our business. It's very good for our clients. And I'm proud that it shows that the Bitgo team has met the highest standards that are required. And one last thing that's interesting, we are a fiduciary for our clients' funds that are held at Bitgo Bank & Trust. And when you take a custodial duty over 100% reserve accounts, like what we do, that's fiduciary. Interestingly, when you go to roll up to your bank, he's not a fiduciary to you. It's a depository, it's a different relationship. So we think this is the right relationship for holding on to billions and billions of dollars of assets. Our clients do seem to value it, and it's been really good. One last thing, our crypto-as-a-service product has really taken off in 2026 already. We signed more new clients on crypto as a Service this year than we did all of last year. And we're only 3 months in, I think the OCC charter had a lot to do that. Christopher Brendler: That's fantastic and really looking forward to seeing how that progresses throughout the year. A separate question sort of related to the last question, which is on the Stablecoin as a Service, really great to see the SoFi news. I would love to hear just that pipeline because it feels like stablecoins is an area where it's not as impacted by crypto asset prices volatility. It's not as impacted by the regulatory environment since GENIUS Act is already done, although the interest exemption that fight might have a little bit impact. But I'd love to see more and more stablecoins being issued through Bitgo. And how does that pipeline look as you enter 2026? Michael Belshe: Yes, there's been a number of others. We haven't mentioned them as much because they're not as big of brands, but FY USD launched on top of Bitgo Stablecoin as a Service as well as a few others. There's a healthy pipeline more. Also the conversion component between all these different stablecoins is an area that we've been growing partnerships with some of the existing players everywhere from PayPal to Fidelity. Then in terms of how this grows, there's an interesting point that goes with CLARITY. If you're not allowed to get interest on stablecoins, then it kind of encourages everybody to want to be an issuer. Imagine your role as a bank or a business, you've got some distribution channel of parties and you want to use stablecoins, you've got 2 choices, either use an existing stablecoin, in which case somebody else gets all the interest or you build your own. And then you get to participate and figure out how you're going to use the interest that you get off of the reserves. And a lot of parties that have an existing distribution channel, of course, they want to tap into that. Eventually, I believe I don't know what arc of time it's going to take to get there. Eventually, we will have interest on stablecoins. And when that happens, the calculus changes. Now being an issuer is no longer so much about keeping the interest from your own distribution channel. Instead, you'll pay somebody much like an ETF, you'll pay them an administrative fee, probably 40 to 80 basis points and then you'll be able to get the interest from them. So suddenly, the need to be an issuer will be less. So it's an interesting place where I think, on one hand, we here at Bitgo are very much in favor of, yes, you should be able to provide interest on stablecoins, and that should be the way it works. I don't think that, that's going to happen. I think whether CLARITY Act passes or not, it's going to remain kind of constrained, and that's going to lead to more people wanting to be their own issuers, and that leads to more people wanting Bitgo stablecoin as a service product. Christopher Brendler: I was thinking as well. Operator: Thank you for your participation. That is all the time we have today for the question-and-answer session. I will now turn the call back to Mike Belshe, Founder and CEO, for closing remarks. Michael Belshe: Thank you, everybody, for joining us today. I appreciate your interest and support of Bitgo. Thanks, everybody, for saying congratulations. I think it's not entirely necessary, but it is appreciated. The entire team here at Bitgo works super hard. We've been doing it for 12 years. The people feel we're on a mission to really change the way the financial system works, and we're really proud to be a part of it. So thank you and look forward to keeping in touch with all of you on this journey. Operator: This concludes today's call. Thank you for attending. You may now disconnect.
Operator: Good morning, and thank you for your participation. [Operator Instructions] As a reminder, this conference call will be recorded. I would now like to turn the call over to Lee Roth, President of Burns McClellan, Investor Relations Adviser to LENSAR. Mr. Roth, please go ahead. Lee Roth: Thanks, Josh. Once again, good morning, everyone, and welcome to the LENSAR Fourth Quarter and Full Year 2025 Financial Results and Strategic Update Conference Call. Earlier this morning, the company issued a press release providing an overview of its financial results for the fourth quarter of 2025. This release is available on the Investor Relations section of the company's website at www.lensar.com. Joining me on the call today is Nick Curtis, Chief Executive Officer; and Tom Staab, Chief Financial Officer of LENSAR, who will provide an overview of recent developments, our go-forward strategy and our Q4 financial results. Following these prepared remarks, we'll turn the call back over to the operator to answer your questions. Before we begin, I'd like to remind you all that today's conference call will contain forward-looking statements, including statements regarding our future results, unaudited and forward-looking financial information as well as information on the company's future performance and/or achievements. These statements are subject to known and unknown risks and uncertainties, which may cause our actual results, performance or achievements to be materially different from any future results or performance expressed or implied on this call. We caution you not to place any undue reliance on these forward-looking statements. For additional information, including a detailed discussion of the risk factors, please refer to our documents filed with the Securities and Exchange Commission, which can be accessed on the website. In addition, this call contains time-sensitive information accurate only as of the date of this live broadcast, March 31, 2026. LENSAR undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this live call. With that said, it's now my pleasure to turn the call over to Nick Curtis, Chief Executive Officer of LENSAR. Nick? Nicholas Curtis: Thank you, Lee. Good morning, everyone. I appreciate you joining us today. It is no doubt an understatement to say 2025 was a unique and unprecedented year for LENSAR. We take great satisfaction knowing that the leading eye care company in the world, Alcon, publicly recognized the value of ALLY and LENSAR given the joint acquisition announcement made in March of 2025. This validates our statement that ALLY is the best next-generation technology, delivering significant and relevant performance improvements in each of the critical elements of laser-assisted cataract surgery, including advanced ergonomics, efficiencies, imaging and automated treatment planning with a dual modality laser. ALLY is the only system that employs machine learning and compute power during treatment planning and optimized treatment to deliver outcomes that are better than any first-generation competitor. The termination of the acquisition agreement was a mutual pragmatic decision made after a year of focused effort and considerable expense from both sides. While this acquisition was approved overwhelmingly by our stockholders, ultimately, we made the decision to terminate because the Federal Trade Commission would seek to enjoin the merger. While both parties work towards offering acceptable accommodation to allow it to close, it became clear the FTC was not open to changing their position. We were disappointed in the outcome. However, the upside of this process is the validation of the ALLY Robotic Laser Cataract System superiority compared to all other first-generation lasers available today as well as the value attributed to LENSAR based on the success the product has achieved since its launch and its future potential. Therefore, with new resolve and new purpose, we're excited to emerge and reengage as an independent company, picking up where we left off 12 months ago. We've spent the last 2 weeks working on initiatives and jump-starting relationships with key stakeholders. I'll briefly discuss the last 2 weeks and share our high-level go-forward strategy today. Relationships are important. And before I present our strategy, I would like to take a minute to thank our partner vendors, agents and suppliers who not only provided excellent support and counsel, ultimately shared that disappointment and financial burden with us through granting reductions in fees as well as extended payment terms. These partnerships are beneficial in LENSAR returning to our prior operating cadence, allocating more of our financial resources and attention to operations. We can immediately start getting back to our business as usual and smooth return to focusing on growth and expanding our presence with increased installed base and procedures. We appreciate their collaboration and contribution to our future success. Additionally, in association with the termination of the acquisition, we received the $10 million transaction deposit that had been in escrow. In the last 3 quarters of 2025, we operated with an increasing degree of uncertainty among our partner customers, potential partner customers and distributors regarding our future and the timing of the close of the acquisition. Despite the uncertainty that delayed U.S. customer decision-making on ALLY and LENSAR and halted OUS distributor activities and purchasing systems, we expanded the ALLY installed base by nearly 50% compared to year-end 2024, while achieving 20-plus percent year-over-year growth in procedure volume for both the fourth quarter and full year 2025. There's no question the last 9 months of 2025 were negatively impacted by the acquisition process and extended time line and not just by the increased SG&A expenses associated with supporting the transaction. While our 2025 results include a 9% revenue growth, I need to be transparent and clear. We expect through the next several quarters of 2026, a gradual return to our historical operating performance. When you consider our longer-term growth metrics, the trajectory has been impressive. Our full year 2025 procedure volumes are up 50% compared to 2023, the first full year of ALLY commercial availability. By reflecting on a longer-term vantage point, you get a much better picture of what we see as the future opportunity for LENSAR and ALLY. Since the launch in August of 2022, we grew our installed base to approximately 200 ALLY systems and grew our procedure volume, gaining market share from 14% procedure share in the U.S. to 23.4% as of the end of 2025. I want to say we gained almost 9.5% of market share points in 3.5 years. These market share gains come from 3 specific areas. First, it comes from competitive accounts, replacing first-generation lasers with our ALLY Robotic Laser Cataract System accounts for the largest gain in share. Second, the gain in share is demonstrated by what happens after we replace a competitive system. LENSAR on average performs 27% more procedures annually than the national average per laser, providing evidence that we are growing the overall market for robotic laser cataract procedures. Third, nearly 50% of our systems in Q4 2025 were from Femto-naive surgeons, further expanding the market for laser cataract-assisted surgery. The data provides evidence LENSAR is addressing the shortcomings of the first-generation laser-assisted cataract surgical lasers by delivering the most technologically advanced next-generation robotic laser for cataract surgery in multiple ways. Significantly improving efficiencies and patient throughput, allowing for more procedures with faster treatments and fewer staff interactions, leading to the potential for fewer mistakes, less anxiety and a better overall patient experience. Second, customizing precise, specific reproducible treatments optimized by utilizing features such as machine learning and surface anatomy recognition, imaging and optimizing data for treatments by communicating with preoperative devices in the surgeon offices, leading to better outcomes in refractive cataract surgery using astigmatism management. To put in perspective, our competitors have the ability to bundle more products using cataract procedures, more feet on the street and much deeper financial human and operational resources. Despite this, we've been incredibly successful in increasingly growing ALLY's market share. Why? LENSAR is a small, nimble and resilient organization. We're known for innovation that aligns with surgeons' practices and patients' objectives. LENSAR is and always will be a surgeon and practice-centric organization. We have extensive clinical evidence that is giving surgeons the confidence to make the decision to implement ALLY in their practice. Over the last 3 years, ALLY's performance, placements and procedure volume speaks for itself. All I can say as we start the second quarter of 2026, we expect to compete as we have in the past. Listen here, we are back. I'd like to spend a few moments talking about our business outside the United States. As a reminder, while LENSAR started commercializing ALLY in the U.S. in August of 2022, it wasn't until 2 years later that we received the European certification and began to sell ALLY internationally. Looking at the time line, ALLY had been on the market outside the United States for roughly 7 months when the transaction was announced. The uncertainty over the post-acquisition ALLY distribution landscape had a greater impact on our outside United States distributors than our U.S. customers, and that uncertainty caused a meaningful slowdown in our international business expansion over the last year. With our distributors, the ALLY launch got off to a very successful start, quickly gaining acceptance with new sites and meaningful momentum, which came to a hard stop. After meeting with the distributors post-acquisition termination announcement, I believe we will begin to return to significant system growth in these international markets over time. Most, if not all, the distributors were both happy and relieved with the termination of the merger. Although they have all indicated their enthusiasm and are ready to support the business going forward, their conservative immediate forecast indicate this will take some time. We will work together on the transition timing to regain the lost momentum and begin to contribute to an increase in worldwide system and procedure market share. I'm confident in our ability to drive long-term success and create value for our surgeon partners in the United States, our distribution partners overseas, our global customers, the patients they serve and our shareholders. We also continue to rely on our long-term existing physician partners and private equity groups as they are our partners in success. These partners recognize we are working hard to deliver and provide the most responsive service, support and best product in the market. Going forward, we'll be focusing on a few key areas. Continuing to grow our procedure volumes and recurring revenue will be critical to our success. This will come through a combination of additional system placements and increased utilization on the 200 ALLY systems currently in the field. Our procedure revenue is recurring in nature. It is stable. It has a predictable trajectory following an install and importantly, carries a significantly higher margin than system revenue. The acceleration of system growth discussed in my remarks will contribute to significant long-term growth in procedure volumes, which will further strengthen our recurring revenue base. An important statistic to consider here is system utilization rates, another area where we are well positioned for success and driving overall market growth. Once again, LENSAR systems in the U.S. perform an average of 27% more procedures than the national annual average of lasers currently installed. There is not another robotic femtosecond laser available in the marketplace. We're excited to speak with you, answer your questions, and we appreciate the confidence and support you put into the LENSAR team. Now let me turn the call over to Tom, and he'll cover our financial highlights for the quarter. Tom? Thomas Staab: Thank you, Nick. I'd like to discuss our fourth quarter and fiscal 2025 results. However, my remarks will be succinct and pointed for 2 reasons. One, our fourth quarter and 2025 results were impacted by conducting our operations under the previously contemplated acquisition by Alcon; and two, we start the second quarter as a stand-alone company tomorrow. So I'll highlight the relevant aspects of Q4 and our 2025 results as they relate to our future results and operations. In association with the termination of the merger, there are some significant adjustments to our future financial statements that I'd like to highlight. First, the $10 million merger deposit that was being held in our bank account becomes ours. Thus, the cash that we report at December 31 of $18 million is ours with full title and the $10 million deposit liability will be eliminated in our first quarter 2026 results. Second, we recorded $17.1 million in total acquisition costs in 2025, with $14 million of those expenses unpaid as of December 31. With the termination of the merger, approximately $4.3 million of the unpaid balance will be eliminated or written off by concession of our acquisition advisers and then $5 million of the remaining liability will be payable starting in May 2027, a significant payment deferral. Lastly and importantly, as Nick has mentioned, we have reengaged with our key stakeholders, including our distributors, and we start today with the help of these key stakeholders to reestablish our stand-alone operations at an operating cadence more similar to prior to the announcement of our acquisition. Our performance in the fourth quarter was solid with a total revenue of $16 million, representing a 4% decline year-over-year, primarily as a result of lower system sales. As you look at regional sales, U.S. ALLY sales were 12 systems, increasing 1 system from Q4 2024. However, there was only 1 ALLY sale outside the United States in the fourth quarter of 2025 compared to 10 ALLY systems sold outside the United States in the fourth quarter of 2024. We attribute the fluctuation in ALLY unit sales year-over-year, largely due to our distributors' uncertainty as to when their collaboration with ALLY and LENSAR would end. You can understand our excitement as initial conversations with distributors demonstrated their willingness and enthusiasm to reengage. This will be an important growth driver to top line revenue, recurring revenue as well as enhanced cash flow. The quicker our distributors reach out to potential ALLY customers and reengage in ALLY's promotion, the faster our operations outside the United States begin to meaningfully contribute to our total system sales and enhance our cash flow. Another important aspect of our business is recurring revenue. While total 2025 revenue increased a respectable 9% over 2024, 2025 recurring revenue increased 15% over 2024, offsetting the decrease in system sales for the year. The decrease in system sales for 2025 was entirely due to sales outside the United States, decreasing to 20 systems in 2025 from 23 systems in 2024. This is especially noteworthy as 8 systems, 40% of our fiscal 2025 system sales occurred in the first quarter of 2025 prior to the acquisition announcement. And the comparable 2024 period, as Nick mentioned, was only 5 months of activity as we did not receive regulatory approval and launch in Europe and Taiwan until August 2024. Recurring revenue grew 17% in the fourth quarter 2025 to $12.7 million, annualizing to over $50 million, and we exited the full year 2025 at $46.3 million, up 15% compared to the $40.1 million in 2024. This performance reflects the continued expansion of our installed base as well as increased system utilization with procedure volume remaining a key driver. Fourth quarter procedure volume increased approximately 20% year-over-year and full year procedures grew 22%, surpassing 206,000 globally. We placed 15 ALLY systems in the fourth quarter, bringing the installed base to just over 200 ALLY systems, up 48% year-over-year, while our total combined installed base of ALLY and LLS systems grew to approximately 435, an increase of 13%. We exited 2025 with a backlog of 13 systems pending installation. Gross margin for the quarter was $6.9 million and represented a gross margin percentage of 43% compared to a 42% gross margin in the fourth quarter of 2024. Our gross margin for the full year was 46% versus 48% for fiscal 2024. The decline in margin percentage represents the impact of inflationary cost increases to our raw materials and production processed accompanied by tariffs assessed in 2025. We did not pass on tariff costs to our customers. We are forecasting an increase in our gross margin percentage and expect it to be in the 46% to 49% range for fiscal 2026. The more successful we are with system sales, the lower we will be in this gross margin range. However, increased system sales will have a more beneficial impact on our recurring revenue as gross margin percentage and recurring revenue factors are inversely correlated when it comes to ALLY sales. Other than the recurring revenue, another important aspect of our 2025 results is that we maintained a positive adjusted EBITDA for the year with a fourth quarter adjusted EBITDA of $595,000, thereby indicating operating cash flow positive operations, excluding any working capital impact. We are proud of our positive adjusted EBITDA operations for the year, considering we operated 9-plus months under the pending acquisition. And during that period, we were missing top line revenue and cash flow from our typical system sales outside the United States. From an expense perspective, our fourth quarter results were impacted by approximately $3.5 million in merger-related costs, which drove a 51% increase in SG&A year-over-year to $10.3 million and a 41% increase in total operating expenses to $11.9 million in the fourth quarter. Going forward, we expect that the underlying expense profile of the business will become more stable with our cash-based operating expenses being a reasonable guide for 2026 with us expecting no more than a 10% increase in cash-based operating expenses and the majority of this increase devoted to commercial activities. As we look ahead, our focus is on transitioning from this 12-month period of disruption to one of execution and growth with 3 clear priorities: first, accelerating revenue growth. We expect continued expansion of our installed base and increasing system utilization, thereby increasing recurring revenue. Second, maintaining our cost discipline. This priority continues and has been a focus since launching ALLY. Third, enhancing cash flow, especially as it relates to increasing system sales, particularly outside the United States. We believe that the combination of cash on hand as well as the discounted and extended payment terms of acquisition costs provide us with the necessary flexibility and financial resources to effectively restart our operations and return to our previous growth run rate and operating success. We would now like to turn the call over to Josh for Q&A. We're happy to answer your questions. Operator: [Operator Instructions] Our first question comes from Frank Takkinen with Lake Street Capital Markets. Frank Takkinen: A lot to cover. So maybe I'll start with the distributor commentary, Nick, it sounds like the conversations you've had over the last few weeks have been really positive, but I did hear the comment of exercising a little conservatism as you reengage with those folks and think about kind of how that's going to actually translate to OUS system revenues. What more can you tell us there? And how should we be thinking about reading into that commentary and applying it to our models as we think about growth reaccelerating throughout 2026 or 2027? Nicholas Curtis: Sure. Frank, good to hear from you. It's been a while since we've done these calls. So the business outside U.S. is different in a lot of cases, particularly in a few of the countries where you don't have as many private practice and, let's say, ambulatory surgery center owners where they can make the decision or a private equity group that makes the decision, for example, in Germany, where we have a large private equity group, and we are one of the primary suppliers there. And so in some of the -- particularly Southeast Asia, some of these go on tenders. And given the uncertainty, they were hesitant to engage in a tender because they're over an extended period of time. So for example, they'll start reengaging in these tenders and those tenders take time. And quite frankly, we may have lost a few renewals in the short term from some of these deals, not our deals where they had our systems, but where we had an opportunity to, let's say, quickly replace a competitive system. And so I just expect that it's going to take us several quarters to really reinvigorate, get out and assess where some of those tenders are, where we have opportunities and begin to do that as well as participating in some of the various conferences like we do here. And so I just caution to say that -- because we had this massive quick start when we got the ALLY approved 2 years later, now essentially, there's been 0 activity for the last 9 months and so there'll be some restart-up. And it's not like there's a backlog sitting there because essentially, these distributors didn't -- again, we're planning for life without LENSAR that they didn't expect to be distributing on a going-forward basis. So they're really enthused. And I just say it's going to take us a little time to get back to that sort of momentum that we had in the last quarter of 2024. Frank Takkinen: Yes. Very helpful. And then as we think about placements going forward, it's -- to me, it seems like there's 2 phenomenons going on. OUS likely more capital placement oriented. And then in the U.S., with each incremental placement, it gets incrementally harder. So maybe there's less upfront payment and more kind of lease-based placements. How should we think about that throughout the year and a mix of maybe kind of more lease-based or usage-based placements versus actual capital sales throughout the year? Nicholas Curtis: Yes, great question. So as you know, and as Tom had indicated, when we sell a system outside the U.S., when it leaves our dock, we essentially we recognize revenue on the system sale itself. And so it's a very quick recognition. In the U.S., the rev rec is different. You have to get the system installed. You have to begin training and the system is accepted by the customer, the end user, before you begin to recognize revenue. And on procedure deals or when we do placements and really even when we sell a system in the U.S., usually, you're looking at in the neighborhood of close to 60 days before you really start getting into the revenue phase that they get to some normal procedure volume because you're training people and you're getting the systems put up in place and procedures and whatnot. Traditionally, we've been in the neighborhood of somewhere north of 50% sold systems in the U.S. and, let's say, 50-50 or perhaps even a little bit more on the sold versus the placed. And I would expect that, that's probably going to drop a little bit. What we've seen is that the competition, they lack the system, they go out with procedures, and they try to drive a price competitive versus what we do with the value proposition with a much more efficient, faster, better treatment overall. So I think that over the next couple of quarters, you'll see us go from that sort of 50%, 55% sales sold systems versus placed systems in the U.S. to a lower percentage, particularly as OUS takes a little time to sort of ramp up there. Does that help you in terms of the percentage? Frank Takkinen: Yes. No, that's very helpful. I appreciate that. And then maybe just the last one for Tom. I heard the comment, a 10% increase in cash OpEx. So I just want to make sure I understand that. Essentially, if we look at 2025 OpEx and back out the $17.1 million of M&A-related expense and then grow that 10%, -- is that what you're inferring? So you would be in the neighborhood of kind of $38 million, $39 million of operating expense for 2026? Thomas Staab: That's exactly right, Frank. The only thing that I'll say is the way we look at things is cash-based operating expenses. So we threw out sort of amortization as well as stock-based comp and then it's the 10% off that base. But yes, you're correct. Operator: Our next question comes from Ryan Zimmerman with BTIG. Ryan Zimmerman: So maybe just to start, I don't think I heard the procedure growth was still really good worldwide. And I'm wondering if you could comment, Nick, on U.S. procedure growth because I think you also faced a tougher comp there. We saw a bit of a slowdown in cataract volumes through much of 2025. Maybe you could just comment on kind of where that stands? And then as you think about the business going forward, I appreciate that the system dynamics will be choppy as you kind of get the train out the station. But talk to us about the recurring revenue side of things, particularly around procedures and how you think that will kind of function as we look ahead to 2026? Nicholas Curtis: Yes. Thanks. Good to hear from you, Ryan. I appreciate your questions. So as Tom had mentioned, we exited the year with $46 million, approximately $46 million in recurring revenue, and that was ramping closer to $50 million when you look at the fourth quarter and on a rolling forward basis. And so we're really -- our business is becoming very healthy on the recurring revenue side. It was 79% of our revenue in the fourth quarter. And so as we go forward, we expect that those 200 installed systems will continue to produce. We're doing approximately about 600 procedures a year or so on average on the ALLY units in the U.S. on a going-forward basis on average. And so that's quite a bit higher than what the average installed base is. We expect that, that's actually going to continue. And because of what we do with astigmatism management, we started to see more femtosecond laser naive, we refer to as femto-naive, which represented 50% of our new business in the fourth quarter. So we expect that to continue and to continue to grow as well. Now those accounts of caution take a little bit longer to get to the -- they take longer to ramp because they've never done lasers before and they're putting in a new system and they're getting trained and they have to train staff and educate patients and whatnot. So that will take us a quarter, 2 quarters to get those folks sort of up to speed as more new customers come on, but representing a pretty large segment and a lot of -- particularly when you look at cataract surgery reimbursements and the need to deliver better outcomes, our astigmatism management over 65% of procedures that we do involve some form of astigmatism management. So I think you'll see the mix of customers that heretofore are replacing older competitive devices and so on average, we do 20%, 27% more procedures than the national average 0of systems. And so we take about a 60-day ramp and you see those procedures coming up to where our averages are or more. And then you'll see a mix of newer customers and maybe some of the office-based surgery centers, which is trending moving into office-based suites, where those are lower volume accounts take a little more time. So you may see the average number of procedures drop slightly, but you'll see more systems doing those and whereas the current installed base will continue to grow. Ryan Zimmerman: Okay. Very helpful. Just to circle back, Tom, on expenses. I appreciate the math and commentary that you gave. It's very helpful. But I guess my question is, in this transitory period, I imagine expenses came down artificially. Now you do also need to kind of, again, get the train up the station, if you will. And so when you think about kind of the cadence of expenses and appreciating kind of where it's going, shouldn't we see some type of kind of acceleration, foot on the gas pedal, if you will, to get things -- get kind of operations coming again. I'm just wondering if the 10% is the right number as I think about kind of into '27 and beyond, I guess. I know it's a little premature, but it just seems like there's kind of multiple vectors here, cross currents around operating expenses for '26. Thomas Staab: So very astute question and a very good observation, Ryan. I mean, yes, we're -- our expenses did go down over the last 13 months just because of being under the acquisition process. And with the -- even though our advisers discounted and extended the payment terms, that's still a big nut for us to cover as a small company. And so we're being very judicious in our expenses and the increases are all going to be commercial for the most part in 2026. And then as our distributors come online and we see a larger contribution of sales outside the United States and more cash flow coming in, I fully envision ramping up our commercial activities in 2027 well beyond 10% -- but we're kind of in this moderation phase until we're certain and how quickly our distributors can come back after this 13-month lag where they effectively put their pencils down. Ryan Zimmerman: Right. No, understood. And when you think about kind of what's entail, and this is more direct to that, Nick, I guess, like yes, you've had conversations with the distributors outside the U.S. They understand where you guys are at as a company now, not going through with the merger. Does your thinking around your OUS efforts change? Does it -- do you see bigger opportunities than maybe you thought about before? And is there room to go beyond kind of the markets that you were in kind of premerger. Some of those approvals were really good. We saw a really good uptake in Europe. But now the question is, as a stand-alone, does your aperture change, I guess, particularly outside the U.S. Nicholas Curtis: Yes. So a really, really great question. So you're starting to delve a little bit into some strategy here. So I've seen -- it's really interesting because in terms of especially replacing some of the older systems from competition that are out there. And so I've seen some interest in a few other countries that heretofore, we have not gone into. And so I'm going to be looking at a few opportunities such as Australia and New Zealand, in particular, where there's actually quite a bit of interest in replacement of older systems there. And that would be one market that we haven't been into that we may look into. I think that we'll see in Southeast Asia, our activity come back there. Like I said, there's more of a tender business there. And so it's going to take us a little more time where I see there'll be some systems there this year. But I think that really as we get into 2027 into first, second quarter of 2027, we'll see quite a bit more growth in that Southeast Asia market. And I think there's a lot more expansion growth in Europe into countries where heretofore, we haven't been in because, again, not to underemphasize or overemphasize, ALLY addresses a lot of the shortcomings as to the reasons why people abandon femtosecond laser-assisted cataract surgery before. And because we have this good installed base in the U.S. and our business is growing, it's almost been an advantage getting the approvals later outside the U.S. because it's helpful for the distributors where they see that there's uptake here in the replacement of competitive devices. And so there's a lot of systems outside U.S. where they're sitting in accounts that are just not very productive. And I feel like competitive systems. And so we'll have some opportunity there. I don't see the opportunity coming back in South Korea anytime soon. As you know, they've got big issues around reimbursement and insurance company reimbursement there, but that's been away from us for quite a while. So it doesn't impact our business negatively or positively, if you will. And I think we probably need to look at some other markets in South America, Latin America, where heretofore, we haven't been either. But I think now we can address some of these things. But those are longer term. I think we'll see Europe come back, and we'll have some opportunity outside of Germany that we hadn't really gone after before. I think our distributors are interested in doing that, and we've made some additional relationships there. And I think we'll see Southeast Asia in various countries there we do business come back strong, and then we'll look at a few of these other markets. Ryan Zimmerman: Okay. I appreciate it. I know this -- again, this call was a maybe change in plan from what everyone expected, but it's good to hear from you guys, and we'll get the dust off and move forward. Nicholas Curtis: Ryan, you know what, that's life and life throws your curves. And the reality is what you do to adjust and how you pivot and how you decide to move from there. You've got 2 choices. You can quit or you can come out fighting. And I've never quit, and I have to come out fighting so. Operator: Thank you. I would now like to turn the call back over to Nick Curtis for any closing remarks. Nicholas Curtis: I really appreciate everyone joining us today. It's been invigorating to do a call after not having the call for about a year now. While the termination of the merger was not the outcome that we anticipated, I think it really positions us to -- the positive there is it positions us to move forward with a much greater focus and control as an independent company. As a stand-alone company, we certainly know we have the best product available. I think it was -- came out loud and clear through the process here, and we're ready to capitalize on the significant market opportunities that lie ahead. Rebuilding momentum is going to take several quarters, but our priorities are very clear, and I believe our team is aligned to deliver. We're confident that on the path it really is enabling us to unlock even greater long-term value for our surgeons, patients and shareholders, and we look forward to sharing our progress with you all as we move forward. And so in closing, I just want to say once again, LENSAR is back. Thank you. Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.
Operator: Good day. Thank you for standing by. Welcome to the Solesence Fourth Quarter and Full Year 2025 Conference Call. Today's call is being recorded. During this call, management will make statements that include forward-looking statements within the meaning of the federal securities laws, which are pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. This conference call may contain statements that reflect the company's current beliefs, and a number of important factors could cause actual results for future periods to differ materially from those stated on this call. These important factors include, without limitation, a discussion of a customer to cancel a purchase order or supply agreement, demand for acceptance of the company's personal care ingredients, advanced materials and formulated products, changes in development and distribution relationships, the impact of the competitive products and technology, possible disruption in commercial activities occasioned by public health issues, terrorist activities and armed conflicts and other risks indicated in the company's filings with the Securities and Exchange Commission. Except as required by federal securities laws, the company undertakes no obligation to update or revise these forward-looking statements to reflect new events, uncertainties or other contingencies. I'll now hand the conference call over to Kevin Cureton, President and Chief Executive Officer. Please go ahead, sir. Kevin Cureton: Thank you, operator, and thank you to our investors, brand partners and teammates who are joining us today. Today, we will provide more guidance on our 2026 plan and the strategy we initiated at the end of 2025, which aims to take our company forward to enhance consumer health and well-being while delivering outstanding results to our investors. This initiative is called Transform and Transcend. Before we delve into our plans, we will review our 2025 results. To walk you through how we wrapped up 2025, I'll turn the call over to our CFO, Laura Riffner. Laura? Laura Riffner: Thank you, Kevin. I will begin with a review of our fourth quarter 2025 results before moving to full year performance and our 2026 outlook. For the fourth quarter, revenue was $12.5 million, roughly even compared to the previous year. Fourth quarter 2025 gross profit was $3.4 million compared to $2.8 million for the same period in 2024. Gross margin was 27% in the fourth quarter of 2025 compared to 22% in the same period in 2024. Our results were affected by transition costs and operational inefficiencies in manufacturing resulting from our facility consolidation. Operating expenses in the fourth quarter of 2025 were $3.2 million compared to $2.8 million in the same period in 2024. This figure included relocation charges as we transitioned from 3 facilities to 2. Solesence reported net income for the quarter of $163,000 compared to a net loss of $558,000 the previous year. Turning to the full year 2025. Revenue reached a record $62.1 million, up 18.6% from $51.9 million in 2024. This was primarily driven by a large-scale launch in the first half of 2025 as well as 20 new brand partners who launched products in 2025. While revenue growth was substantial, full year gross profit was $16.1 million compared to $16.2 million in 2024. As Kevin noted in our third quarter call last November, our margins were compressed by 3 key areas. The first is labor costs. Elevated labor costs this period were primarily driven by extended process changeovers and related downtime as we scaled our production volume. The second is product design, which relates to start-up and quality costs associated with a complex launch in the first half of 2025. Third, inventory control, which represented the most substantial headwind to margins this period. Driven by our efforts to grow while scaling production, we experienced yield volatility and associated losses, which impacted our bottom line. We are now prioritizing cycle counting and preproduction staging to improve production flow as we continue to expand. With the above results, we delivered adjusted EBITDA of $4.2 million, less than 7% of revenue. As we look ahead, our 2026 guidance focuses on operational health. As a result, we are establishing a 30% gross margin floor as our target for the year. We expect EBITDA improvement in 2026, returning to double digits as we realize 6-figure annual savings from our facility consolidation and the elimination of 2025's operational inefficiencies. A critical goal in 2026 is to increase our free cash flow by reducing safety stock and improving procurement operations. We began 2026 with momentum from 2025, driven by organizational changes and the launch of the Transform and Transcend initiative. Still, our first quarter results will be impacted by investments in training and restructuring associated with Transform and Transcend as well as by changes in customer order patterns, largely due to retail dynamics and weak sell-through from one of our large mass market customers. Our current ship in open orders stand at just under $33 million as compared to a year ago when they were at $38 million. While we anticipate a period of revenue normalization, we plan to improve EBITDA relative to 2025 and remain confident in our ability to achieve our full year guidance. I'll turn it back over to Kevin to provide more details about our transform and Transcend initiative. Kevin? Kevin Cureton: Thank you, Laura. As we look back on 2025, it is important to reflect on our company's journey over the last 12 months, indeed, the past 2 years. During that period, our company nearly doubled its revenue. As I noted in our press release, this affirmed both the value we bring to the industry and our ability to establish ourselves as a leading innovator and manufacturer of SPF-infused beauty products. We increased our patent portfolio by 20%, which now numbers over 120 and through this expanded position, created a valuable picket fence that protects our market position and provides one-of-a-kind leverage for our brand partners as they grow. While we achieved these important business milestones, we invested in building our manufacturing infrastructure which both modernized our production capabilities and expanded capacity, which will enable us to generate over $200 million in revenue without further major investment. In October of 2025, we showcased a new product, Day Mode Hero Concealer. Day Mode is a hybrid product that combines skin care and color cosmetics with skin longevity claims, including UV protection and leverages 2 new technology platforms that we will bring to market in 2026. This prototype product was recently named a finalist across 4 categories of the Cosmetics & Toiletries Alle Awards. These categories are wellness, anti-aging and skin care, color cosmetics and UV protection. While the winners will not be announced until later in 2026, the cross-category recognition for this multifunctional concealer demonstrates the broad and enduring appeal of our innovations and affirms that our technology and product stories resonate with brands and industry experts alike. Through these developments, we have built a company on the cusp of changing the health and well-being of millions of people while dynamically growing our enterprise value, but there is still more work to be done. In our Q3 call, I spoke about 3 specific areas where our operating model needed changes that were revealed by our rapid growth. These areas are product design, labor efficiency and inventory control. While we achieved record-breaking revenue this year, our business processes were tested by the sheer volume and complexity of our success. As Laura highlighted, these challenges led to lower-than-planned income performance. As we face these challenges, we also saw that our opportunities to simultaneously increase profitability and growth were being limited by our execution. As a result, we launched the initiative that today we are formally introducing to our investors, Transform and Transcend. It is a framework we will use to ensure our financial performance aligns with our technological excellence in order to secure a path forward for sustainable profitability. This is a road map designed to fundamentally correct the operating challenges we have identified while amplifying the innovation platform we created, ultimately resulting in what we believe will be significantly increased enterprise value. The Transform and Transcend initiative is built on 4 core pillars. The first pillar is operational excellence through the implementation of lean management principles. We began work on this first and foundational pillar in November 2025. Through lean management principles, we are equipping our company with the processes and discipline to meet or exceed our brand partners' requirements while aggressively eliminating the inefficiencies we have identified across our business. A key tenet of this is a modernized sales inventory and operations planning process, or SIOP. These improvements will address the labor inefficiencies, inventory control issues and yield losses we saw in 2025. We plan to increase our gross profit margin by at least 5% by the end of this year compared to 2025. The second pillar is technology-driven expansion. Starting in late Q2 to early Q3 2026, we plan to expand our addressable market by introducing new product categories. These include bringing the technologies behind the prototype Day Mode Hero Concealer product to market. We are leveraging our 120 patents with new formulation innovations to move into adjacent prestige beauty segments like scalp care, where our technologies can provide an immediate competitive advantage. The third pillar is our shift toward a product development and supply model that enables us and our brand partners to capture more value and a greater share of wallet. This includes an emphasis on turnkey supply and collaborative marketing to drive sell-through and leverage increased consumer recognition of Solesence branded technologies. We kicked off our first major co-marketing activation 2 weeks ago with brand partners, Colorescience and Bloomeffects. The fourth and final pillar is collaborative globalization. Beginning in the first quarter of 2027, we plan to support select brand partners as they expand into international markets. Given the regulatory complexity of the global SPF market, this pillar represents an opportunity to modify our service model in those regions, increasing margins by 10% or more relative to our domestic benchmarks. The change in leadership, starting with my appointment as President and Chief Executive Officer, was made to achieve profitable growth for our company, including the development and implementation of the Transform and Transcend initiative. As you know, in support of our profitable growth objective, we also added a seasoned CFO, Laura Riffner, to our team in September of 2025. This represents the first time that we added a C-suite level of finance and accounting professionals to our team who has demonstrated success in our industry. We also recently added Yoolie Park as Vice President of Brand Partnerships. Yoolie brings over 20 years of experience in component supply and turnkey manufacturing. Her mandate is to institutionalize our new commercial strategy and help us further deepen and expand our relationships with existing and new brand partners. Looking ahead into 2026, beauty sectors remain resilient and consumers continue to view beauty as an affordable luxury with SPF-infused skin care at the intersection of essential and discretionary spending. Consumers are more critically examining how protecting their skin, their largest organ impacts their overall well-being. As a result, we believe SPF infused beauty will be a central aspect of the more than $500 billion global beauty and personal care market. We remain excited about how closely our products and technologies are aligned to consumer demand and the value our strategic brand partners see in our consumer products. Before we go to Q&A, please keep these thoughts in mind. Following 2 years of growth that significantly outpaced the industry average, 2026 will be a year focused on execution, which is at the heart of what the Transform and Transcend program will yield. It is this focus accompanied by the associated restructuring and investment that is a necessary step to transform our operational execution in order to transcend beyond the traditional CDMO model. Ultimately, this will turn Solesence into a strategic innovation partner that drives superior financial performance for both our brand partners and our company. Operator, we are now ready for the Q&A. Operator: [Operator Instructions] Our first question comes from Tony Rubin, who's an investor. Unknown Analyst: So I heard a lot of interesting words in the call, but I was hoping you could drill down to [ GrassTechs. ] In 2024, you had EPS of $0.07 per share. And Laura, you talked about increasing EBIT, but didn't really provide an EPS goal. So my question on that aspect is, will EPS in 2026 be at or above the 2024 levels? And kind of a related question is, Kevin, previously, you had suggested that gross margins would return to at least the mid-30s level. And on this call, Laura mentioned a floor of 30%. So I hope you would both agree that maximizing shareholder value is the purpose of a company. So with those goals in mind, could you address those 2 specific items? Kevin Cureton: Thank you, Tony, and thanks for joining. So what we'll do is have Laura address your first question and also can provide some color on the gross margin area, and then I may offer additional color to that. Laura? Laura Riffner: Thank you for joining us today. Regarding the EPS, we aren't prepared to provide guidance on that this morning. As I did mention, we are expecting and targeting an increase in EBITDA to return to double-digit numbers in 2026. Regarding the 30% gross margin floor. On that, Tony, our guidance is intentionally conservative. And while we are -- we have that as our guidepost, our intention is to leverage the Transform and Transcend initiative to improve that number. Kevin Cureton: I think Laura has answered both those questions very well. So there's nothing additional I can offer at this point other than, again, reaffirming our guidance is on an annual basis and that we are taking a conservative approach to that guidance, but expect to obviously focus on improving enterprise value, which ultimately will increase the value to our shareholders. Operator: Our next question comes from James Lieberman with American Trust Investment Services. James Lieberman: And I want to actually congratulate you for all the transitions that are going on. Most people don't fully appreciate what you've accomplished over the last couple of years. And in terms of consolidating manufacturing into your new facility, I'm sure that's a major step, and you have to be extremely careful about doing that transition so that you don't have real supply issues and manufacturing issues that could have been more difficult to meet your customers' goals. But can you address some of the questions of if you have an aspirational say that you could grow the company to be $200 million, is there sort of like a some sort of road map to get there in terms of the kind of new products you're coming out with, the relationships with your customers and how you see the market sort of, say, like a 2- to 3-year period? And also, can you give us an aspirational profit margin? So you're hitting on all cylinders. Could you reach as high as like a 40%? Can you address those areas? Kevin Cureton: Jim, thank you for your thoughts, and I appreciate your involvement in our company for as long as you have been. So thank you. There's a lot you offered there. We'll try and start by addressing, yes, the consolidation was successful. And in fact, through that consolidation, we did not have any impact or negative impact on OTIF. We actually continue to have a high performance on time and in full while we conducted that consolidation. So we're excited about that and excited about what contributions that consolidation will have in terms of improving our overall financial performance. When looking beyond the current state and being aspirational in a careful manner this morning, that is really at the heart of the Transform and Transcend plan. What we talked about in our prepared remarks was to really address some of our operational execution challenges so that we could amplify our innovation platform. We're really in a unique position based upon the type of IP that we've created, the type of protection that it builds around our brand partners and for us and uniquely addresses what's really the most important or really preferred area for consumers, which is mineral-based sunscreen is preferred by all consumers or at least at 70% of women as one of our resources say. So we're building a platform that really is targeting the areas that are growing the fastest. We're working with brands that are the fastest growing. We work with the middle market brands primarily, and those are the brands that are the fastest growing in the industry, and we're addressing a critical area that also is driving the change in the marketplace. So all of those things point to us resuming the type of growth that we've had in the past, which is growing at a multiple of the industry's growth rate. And so we anticipate that to happen. We also have talked in the past, Jim, about getting full value of the technology that we provide through the Transform and Transcend initiative, we also mentioned some of the changes that we're making relative to increasing our share of the value chain. And quite honestly, along with that, the share of the value chain that our brand partners have as well. Those initiatives or that specific initiative, along with the rest of what we've described in Transform and Transcend will help to significantly increase our gross profit margin performance and therefore, in the end, our EBITDA, so that we are targeting levels that you mentioned and maybe even greater. All of that takes time, as you know, and as you have appreciated over the many years you've been part of our investor community. And so we're excited about what's going to start, but we know that it will take some time for us to get to all of those objectives, but we're really excited about where we are and where it's headed. Operator: [Operator Instructions] Our next question comes from Stefano Bolis, an investor. Unknown Analyst: I have 2. The first is, are you still planning to have a dedicated investor call, as you mentioned last time? And the second is on the BASF volumes. In the last 3 years, they have been decreasing. So one would have expected after the lawsuit story that this is because they needed more, not because they needed less. So how do you see this trend moving forward on BASF? Kevin Cureton: Thank you, Stefano. I appreciate your call in today. So a couple of questions there. Let's take the last one first and just guide that as with many of our brand partners, even those that we are well known like BASF or publicly known, maybe a better way to state it, like BASF, we are very careful not to provide specific guidance on their performance. There -- we are permitted to acknowledge those brands, but not really provide specific guidance on their performance. So I'll not be able to provide more than that. We certainly continue to partner with them closely and have a good working relationship with BASF. Operator: Our next question comes from Wayne Rowan, who is an investor. Wayne Rowan: Yes. I'd like to thank you for your integrity and not trying to gloss over things. That's much appreciated. Nobody likes BS. Why have we struggled so much on production? Because it seems like we've been struggling with that for quite a while now. And then the other thing is, did we lose a brand partner, a place where we sold a lot of product? Or did I mishear that? I'm a little old and sometimes my hearing ain't so good. And then do you anticipate -- the other thing I'd like you to address is why it took so long to get this call this quarter. And then you anticipate an improvement in sales this year, and thank you for your hard work and tell Jeff hello too. Kevin Cureton: Thank you, Wayne, for continuing to be a committed investor in our company. We certainly are committed to providing as much transparency as we can. And I hope as you -- and Stefano, I did not address your first question, which was related to the investor call. It is our intent to provide improved communications to the investors. Now that we've communicated a little bit more relative to the Transform and Transcend program, we will be prepared to continue that process going forward. What we had talked about, again, I'll first finish up by addressing Stefano's question regarding the investor call. What we really talked about was an investor presentation. We do believe that is something that is important for us to present, and we will have further information and guidance that we'll provide in the months to come. So thank you again for that question, and we'll move on to some of Wayne's questions now. So Wayne, you had several questions, and thank you for our team helping me to track all of them. The first one is related to production. And I believe, as we mentioned in the script, one of our challenges has been that we've simultaneously grown at a multiple of the industry's growth rate and installed new capability. And what our emphasis has been over that time has been to make sure that we met the quality standards that are necessary for a cGMP production, which has its own unique challenges, but also to make sure that we're meeting the on-time and in full performance that's necessary to keep products on the shelves for our brand partners. So that simultaneous challenge certainly has been one that hasn't translated into the gross profit margins that we would like to see, but we've now reached a place through the plans that we have in front of us that we are confident in our ability to perform well in the future. I think the next question that you had, Wayne, was related to a brand partner. We did not mention in any of our guidance that there was any loss of any brand partner, just to be clear. What we guided was that there were some challenges that one of our brand partners was having in sell-through in the mass market. Laura Riffner: The next question, Wayne, I believe, was why it took so long to schedule the call. We prefer to schedule the call after our year-end audit is completed. And the scheduling of the audit gets done quite literally almost a year in advance. So by the time the audit was scheduled with our auditing firm and finalized, it's simply just how long it took to get it scheduled. Kevin Cureton: Yes. So the last question was related to the sales target. And again, thanks, Wayne, for all the questions. The sales targets, as we've guided, is that this year will be a period of normalization. And so that is on a full year basis, the guidance that we can provide at this point. We are excited about the future of our business. We continue to be excited about the addition of our new Vice President of Brand Partnerships, Yoolie Park, who brings over 20 years of experience in turnkey manufacturing. And that in and of itself has already helped us in terms of our ability to more effectively deepen the relationships that we have with some of our key brand partners and put new brand partners in front of us in a way that will materially improve and grow our company over the years to come. Operator: I'm not showing any further questions at this time. I'd like to turn the call back over to Kevin for any further remarks. Kevin Cureton: Thank you, Kevin. Before we sign off, I wanted to just give you a final thought on our future. Back in 2019, when our consumer products line was less than $2 million, we said the future of Sun Care is the future of beauty. Today, with over $50 million in revenue from our consumer products line and a global patent estate to support it, that vision has been validated. However, our 2025 results showed us that scale without operational excellence will not enable us to create a platform for our company to achieve our goal of dynamic growth in our enterprise value. That is why 2026 is our year of transformation. Through Transform and Transcend, we are removing inefficiencies from our operations, modernizing our supply chain and refining our partner base and ways of working with them to ensure mutual success at both the top and bottom lines. We are doing the hard work now to ensure that our proprietary technologies and consumer preferred products translate into the best-in-class financial returns our shareholders expect. We are confident by stabilizing our foundation this year, we are setting the stage for the next 5 years to be the most profitable in our company's history. Thank you for your continued support. Have a great day. Operator: Thank you. Ladies and gentlemen, this does conclude today's presentation. You may now disconnect, and have a wonderful day.
Operator: Good day, and welcome to the Dawson Geophysical Fourth Quarter 2025 Earnings Conference Call. Statements made by management during this call with respect to forecasts, estimates or other expectations regarding future events or which provide any information other than historical facts may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and include known and unknown risks, uncertainties and other factors, many of which the company is unable to predict or control, that may cause the company's actual future results or performance to materially differ from any future results or performance expressed or implied by those statements. Wherever possible, we will try to identify those forward-looking statements by using words such as believe, expect, anticipate, pursue, forecast and similar expressions. These risks and uncertainties include the risk factors disclosed by the company from time to time in its filings with the SEC, including in the company's annual report on Form 10-K, expected to be filed with the SEC on March 31, 2026. Furthermore, as we start this call, please also refer to the statement regarding forward-looking statements incorporated in the company's press release issued yesterday, and please note that the content of the company's conference call this morning is covered by those statements. During this conference call, management will make references to adjusted EBITDA and free cash flow, which are non-GAAP financial measures. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures can be found in the company's current earnings release, a copy of which is located on the company's website, www.dawson3d.com. The call is scheduled for 30 minutes, and the company will not provide any guidance. Shareholders who might have questions are encouraged to contact the company directly. I would now like to turn the call over to Tony Clark, President and CEO of Dawson Geophysical Company. Please go ahead, sir. Anthony Clark: Thank you, Olivia. Good morning and welcome to Dawson Geophysical's Fourth Quarter 2025 Earnings and Operations Conference Call. As Olivia said, my name is Tony Clark, President and CEO of the company. Joining me on the call is Ian Shaw, Chief Financial Officer. Before I start the call, I have a few items to cover. If you would like to listen to a replay of today's call, it will be available via webcast by going to the Investor Relations section of the company's website at www.dawson3d.com. Information reported on this call speaks only of today, Tuesday, March 31, 2026. And therefore, you are advised that time-sensitive information may no longer be accurate at the time of any replay listening. Turning to a review of our current operations, outlook and fourth quarter year-end December 31, 2025 results. I am proud of the continued progress the Dawson team made during 2025, generating $14 million in cash from our operations and reinvesting a portion of that into new single-node channels to increase our capacity and strengthen our foundation for profitability and our future. We purchased $24.2 million of new equipment, primarily new single-node channels, and received our first delivery in August 2025. Due to demand from our customers, we accelerated our delivery time line throughout the fourth quarter and received the final delivery in January 2026. This equipment has been highly utilized in our U.S. and Canadian operations. These single-node channels weigh approximately 1 pound, compared to our legacy equipment which weighs approximately 10 pounds. We believe this lighter-weight equipment will provide us with improved efficiency in our operations. Currently, we have over 180,000 channels of legacy and new equipment available to service the industry. And we are increasing our efforts to secure passive seismic monitoring with positive activity. We believe that we have a significant competitive advantage for larger seismic jobs due to our higher channel count and our quality of operated energy source units. While we continue to grow our top line and invest in our future, we are continually monitoring our cost structure and reduced our general and administrative expenses 9% in 2025 compared to 2024. We believe that the Dawson team has shown continuous improvement over the past 2 years, which is evidenced by the continued improvement in our profitability metrics. We expect that improvement to continue into 2026. I will now turn the call over to Ian Shaw, who will review the financial results. Then I will return with some final remarks on our operations and outlook into the first quarter of 2026. Ian? Ian Shaw: Thank you, Tony, and good morning. For the fourth quarter ended December 31, 2025, the company reported fee revenues of $22.9 million, an increase of 67% compared to $13.8 million for the fourth quarter of '24. The company reported net income of $0.6 million or $0.02 per common share, compared to a net loss of $0.8 million or $0.03 per common share for the quarter ended December 31, '24. The company reported adjusted EBITDA of $3.3 million, compared to $0.9 million quarter-over-quarter. Now I'll cover some results for the year ended December 2025. The company reported fee revenues of $16.9 million (sic) [ $61.9 million ], an increase of 16% compared to $53.5 million in 2024. In 2025, the company reported a net loss of $1.9 million or $0.06 per common share, compared to a net loss of $4.7 million or $0.13 per common share in 2024. The company reported adjusted EBITDA of $4.7 million for the year in 2025, compared to adjusted EBITDA of $2 million for the year in 2024, which was a 139% increase year-over-year. Regarding our capital budget and liquidity, in 2025, we generated $14 million in operating cash flow and increased our cash balance to $4.9 million as of the end of the year, compared to $1.4 million at the end of 2024. In October '25, we entered into a revolving credit facility with a maximum lender commitment of $5 million, and had a borrowing base of $4.9 million and no balance outstanding on our revolver as of December 31, 2025. The company's Board of Directors approved a capital budget of $3 million for 2026, which included the final payment under the equipment single-node channel purchase of $0.9 million, which was made in January of 2026. And with that, I'll turn the call back to Tony for some comments on our operations and outlook. Anthony Clark: Thank you, Ian. As indicated in our earnings release issued yesterday, activity levels during the fourth quarter increased with 4 crews operating in the Lower 48 and 2 crews operating in Canada. The company was operating 1 large channel crew and 3 smaller channel crews operating in the United States and into the first quarter of 2026. High crude utilization in the fourth quarter resulted in healthy margins and profitability. And we are experiencing an increase in utilization and revenue in the first quarter of 2026. We resumed our Canadian operations in the fourth quarter of '25 with 2 crews and moved to the first quarter of 2026 with 3 large channel count crews. We anticipate our Canadian operations to have a successful first quarter. We've expanded our customer base to include more unconventional exploration, such as carbon capture, geothermal and critical rare earth minerals, as well as other uses of seismic acquisition capabilities. And we are seeing an increase in bid activity for these projects, as well as oil and gas exploration. I wish to thank all of our hardworking employees, valued clients and trusted shareholders. Now we will open up the lines for any questions. Operator: [Operator Instructions] And we have a question coming from the line of John Daniel with Daniel Energy Partners. John Daniel: I've been away from the seismic market for some time so my question might show some ignorance, and for that, I apologize. But how would you characterize sort of the quality of the service technology that you all provide today versus maybe what you would have had 5 to 10 years ago? In other words, just what are some of the key developments that you all have accomplished over the last several years? Ian Shaw: Tony? Anthony Clark: I'm sorry. What was the question again? I'm sorry. You said that what are some of the key developments that we have the last couple of years? John Daniel: Well, I'll dumb it down for me. I haven't been super-close to this part of the space for a while. And so I'm just curious like how has the service, the technology, how has it evolved over the last, say, 5 to 10 years? Just a little bit of history would be hugely helpful. Anthony Clark: Okay. Well, obviously, the big factor is going to these single nodes, which I quoted going from a 1-pound node to -- from a 10-pound node to a 1-pound node, it certainly helps in our acquisition characterizations of mob and de-mob, getting the equipment to the job site, from the job site, reduces our footprint in the field with less personnel, less equipment, decreases the HSE portion of our operations. And it's a higher technology. We went down from a 10-hertz phone to a 5-hertz phone. So that's the main movement of our operations. John Daniel: Okay. And then an unrelated follow-up. I know you don't want to give guidance, and that's fine, but just in light of what's going on in the Middle East, have you seen any early signs or changes in demand for services as a result of the conflict? Anthony Clark: Well, we saw an uptick for the last 3 quarters of increase in bid opportunities and utilization, as shown in our quarterly reviews. We're not sure that the -- there's been a major uptick coming around because of the war or the conflict. These budgets were set last year for exploration this year, with projects identified. So there may be some. But we anticipate if this conflict would resolve soon, that the activity level would remain at its present consistency. Operator: [Operator Instructions] And I am showing no further questions in the queue at this time. I will turn the call back over to Mr. Tony Clark. Anthony Clark: We want to thank everybody for attending and listening this morning. We wish you all well. That concludes our call. Operator: Ladies and gentlemen, that does conclude our conference call for today. Thank you for your participation, and you may now disconnect.
Operator: Good morning, everyone. I will now turn the call over to Elizabeth Hamaue, Aya Gold and Silver's Director of Corporate and Financial Communications. Please go ahead. Elizabeth Hamaue: Thank you, operator, and welcome, everyone, to Aya's Fourth Quarter and Full Year 2025 Earnings Conference Call. Here with me today, I have Benoit La Salle, President and CEO; Ugo Landry-Tolszczuk, Chief Financial Officer; Elias Elias, Chief Legal and Sustainability Officer; Raphael Beaudoin, Vice President of Operations; and David Lalonde, Vice President of Exploration. We will be referring to a presentation on this call, which is available via the webcast and is also posted on our website. We will be making forward-looking statements during the call. Please refer to our cautionary notes included in the presentation, news release and MD&A as well as the risk factors included in our AIF. Technical information in this presentation has been reviewed and approved by Raphael Beaudoin, Aya's VP of Operations; and David Lalonde, Aya's VP of Exploration, both of whom are Aya's qualified persons as defined under National Instrument 43-101 Standards of Disclosure for Mineral Projects. I would also like to remind everyone that our presentation will be followed by a Q&A session. With that, I would now like to turn the call over to Benoit La Salle. Benoit? Benoit La Salle: Elizabeth, thank you. Welcome, everybody, to this Q4 2025 presentation and full year 2025 as well. I would like to remind everybody that for Aya, the year 2025 is a ramp-up year. That's when we started the -- after the commissioning, which was in December of 2024, we did the commissioning of the new plant and then we went into the ramp-up year. So obviously, each quarter saw some improvement. And today, we're pleased to report that the fourth quarter was an excellent quarter and that the year overall is finishing very, very strong. So in the presentation that you have, I would ask you to go to Page 4 and you see here that we have record revenue, record net income and operating cash flow. So for the year 2025, our revenues are at $202 million, always reporting in U.S. dollars. So $202 million compared to $39 million for the previous year. Our net income stands at $46 million after tax and compared to a loss of $26 million in 2024. I also would like to point out that the $46 million is after more than $14 million of stock-based compensation, which is our 3-year option program for senior management, which is being expensed. So when you look at it on an earnings per share basis, at $46 million after tax, it's an earnings per share of $0.32 or $0.33 per share. But when you look at it on before stock-based compensation, you need to add $0.10 to the earnings per share basis. The cash flow is very strong. We had a cash flow of -- operating cash flow of $72 million compared to $9 million negative on the previous year. So we have a very strong position. And we're ending the year with a cash balance unrestricted of $136 million. And to that, you need to include $16 million of restricted cash, which is in an account for EBRD just as part of our long-term $100 million loan that we've obtained from EBRD for the construction of Zgounder. So globally, a very strong Q4 and a very strong year, knowing that it's a ramp-up year. Moving to Slide #5, which is where the KPIs are, which I've been telling you about and how we manage starting on the left-hand side on the mining tonnage. If you see in Q4, we've mined more tonnes than we've processed, which is a great sign, meaning that now the mine is putting through more ore than we need at the plant. Therefore, we are increasing our stockpiles. So you recall that in Q1, Q2 and Q3, we were processing more than we were mining. Now in Q4, we are mining more than we're processing. If you look at it on a yearly basis, you can see that we mined 1 million tonne and we processed 1.1 million tonnes. So for the year, we did eat up a little bit of our ROM pad. But for the quarter, we have changed the trend and we're now building ROM pad, which is excellent. The total mining came 62% from the open pit. Our goal is to be 70%-30%. We're getting there. But for the year 2025, we are at 62% from the open pit. The milling rate, which is in the middle on Page 5 is, you see the milling rate, how interesting it is. If you look at Q4 of last year, we were at 1,200 tonnes a day. You recall that historically, we were at 700 tonnes a day. We were just commissioning the new plant. By the end of Q1, we were at 2,800 tonnes a day nameplate capacity. So it took 1 quarter and we were at nameplate capacity. And then you see Q2, we were at 3,000 tonnes a day. Q3, we were at 3,300. And now Q4, we are at 3,800 tonnes a day average. So by 1 year of ramp-up, we're 1,000 tonnes a day above the nameplate of 2,700. So it's about 40% higher than nameplate. Exceptional plant, very well built. And if you go to the right and you look at the recoveries and the availability, well, that tells you everything. So not only are we operating 40% above nameplate is the recovery for the year is at 88.4% but the recovery for Q4 is at 91%. Again, you recall that in Q1 2025, we had issues with the oxygen plant. The recoveries were in the low 80%. We told you we would fix that. It was under designed during the construction and the planning, we corrected it. And now you have a recovery rate of 91.2% in Q4, which is exceptional. It's actually above the design when we did the feasibility study. Our average was supposed to be around 88%, and now we're exceeding that by 3 to 4 points. Plant availability, you see it on the right-hand side of the slide, Page 5. Plant availability in Q4 is 99%. I don't think you can beat that. It's extremely high. For the year, we're at 96%. Obviously, it's a brand-new plant. So we're comfortable with this. But all in all, what this is telling us is the plant is absolutely running well. It was built, you recall, a little bit under budget. We commissioned it on time. We ramped it up in 1 year or in 3 quarters and now we're running above nameplate. So it's a very robust plan that we have. We produced in Q4 1,547,000 ounces, some of which came from Boumadine because you know that Boumadine, we're processing stockpile. So globally, it was a very strong quarter. Going to Page 6, I think that is the summary of our industry. On the left-hand side, you see it's all about now margin. It's all about margin. Q4 2024, the margin was at the time because we were in ramp-up and in commissioning even -- so the margins were very, very small. And then you see to Q1, we get into a margin of $13. Q2, we have well, $13 margin. And then in Q3, the margin becomes almost $20. Now the margin is $38 in Q4 and the margin for Q1 because we're now done Q1, we know that the average realized price for the period of Q1 is more like $80. So we're about $20 above Q4. But that is everything. This is what our industry is all about right now is the margin. So the margin is very high. It's something that helps us manage the mining, the grade, the cutoff, but also is showing us and is creating a lot of liquidity. So on the right-hand side of the slide, you see the revenue from Q1 at $34 million to all the way up to Q4 at $75 million. And that Q4 at $75 million is based on a net realized silver price of $58. So you can imagine that going forward, we are a believer in the silver price. I mean, it's just going to get better. If you look at the net income, Q1 in the ramp-up, and I said that in the previous quarters, how many times you see net income in a ramp-up period. So net income of $7 million in Q1 of $9 million in Q2, $12 million in Q3 and $18 million in Q4. So very strong Q4 again and within Q4 with an earnings per share of $0.12 and for the year of $0.32. Again, and this is after $0.10 of stock-based compensation. So a very strong quarter. The plant is running well. The profitability is there. The margins are there, and we have enough cash, and that what takes us to Slide #7 is we have a very strong balance sheet with $136 million in cash. In Q4 of this year, we generated before working cap, $68 million of cash flow before working cap changes, $68 million for Q4, it was $35 million. So $68 million for the year, $35 million for the quarter. That pays for all of our expenses. So the CapEx, the capital expenditure for the year was $33 million. The exploration was $42 million. That's for 2025. Now for 2026, capital and exploration are similar, a bit higher on exploration, but you can see that the cash flow generated covers more than the capital expenditure and the exploration expense. So very strong year again. The cash position unrestricted is at $136 million. And we also have a little credit facility of $10 million available with EBRD. It's a $25 million. We did draw on $15 million on it just because we have it and we did not want the credit facility to end and -- but we still have $10 million readily available. So these are the results, but we're looking at the year 2025. So we just talked about the financial results, the operation, the fact that the mine is producing more than what the mill needs. So the mine is running well. The underground is running where we want it to be. The open pit is running where we want it to be. The open pit needs to increase a little bit its throughput, but it's -- we're exceeding what we need at the plant. What we did as well in 2025 was a new resource, a reserve resource update at Zgounder. So we reviewed the mine plan. We've reviewed all the geological model. We've changed the mining approach going from selective, very restrictive mining where we would take the high-grade zone, and we went to more of a bulk mining scenario. And the reason is, is because Zgounder is very unique geologically it's not a vein system. You're not following a vein like most silver mines where you mine what you see and you mine the vein and you have most of the time, silver, a little bit of gold, some have lead and zinc. Here, it's not the case. Here, the Zgounder mine is a loaf of bread. It's 200-meter wide, it's 1.4 kilometer long. It's 700 meter deep and it's mineralized. In there, you have some structures where the fluids went by and those structures are extremely high grade. But globally, the envelope is mineralized. So we've changed the approach, we've reviewed what was there. Of course, with the new silver price, it's extremely important to understand the geology because we do not want to leave behind pockets of 100 gram per tonne silver, though they're not in the model or they were deemed to be noneconomical 4 years ago. Today, this is absolutely economical. So what we have is we now mine the entire structure. We have created stockpiles, so a lower grade stockpile between 40 and 80 grams, which is set aside for later. We have the regular stockpile, which we quantify. Of that, we have 250,000 tonnes on the regular stockpile and we follow the mining based on our mine model. But what we are mining is not, again, not a vein, but a really a mineralized loaf of bread, which is we've gone from selective mining to bulk mining, makes a big difference. And you see it on Page 9. So on Page 9, you have the new mine plan. The new mine plan accounts for 6 million ounces of production per year for 11 years. It has an average cash cost for the period of $16.26 and AISC of around $19. And if you look at the mine plan in the 43-101 document, you see that for 2026, we're forecasting in that mine plan 5.8 million ounces per year with a cash cost of around $21. And the reason is because of the strip is we're at the beginning of the open pit. We have a lot of strip, strip ratio is between 13x and 15x. So we have a lot of strip and hence, that increases the cash cost in the first few years, and it reduces -- the cash cost will reduce in the later years as the strip is going to be coming down seriously. So today's Zgounder is done. It's built, it's debugged. It's running smoothly. It has its own team. It's accountable, and we know and it's predictable. So it will be 6 million ounces right now based on what we know in geology because, of course, we're always looking for more. But what we know, it's 6 million ounces per year for 11 years with an all-in -- with a cash cost of $16.26. Also this year and going to Page 10, this year being 2025, we've completed the PEA on Boumadine. Now that's been in the making for a couple of years. We've done a lot of drilling. We knew that this was a very robust project and we did it on the 2024 resource, which was available at the beginning of 2025 and we did a very thorough PEA with a lot of the work done to -- higher than the PEA level. And what this is showing us the highlight of the PEA is the low initial CapEx. That's the highlight of the PEA, $446 million of CapEx to build a company or a project that will be producing per year for the first 5 years, 400,000 ounces of gold equivalent or 37.5 million ounces of silver equivalent. Now we're showing it to you on 1 to 5 years because year 6 and after will be compensated by putting in the 2025 drill program, which was not put in at the time, and we are doing this as we speak, and that will be ready for the end of June, beginning of July. And that's going to change the mine plan, and it's going to change the production profile in the later years. But based on the 2024 results, we do have a project using $2,800 gold and $30 silver, you have a project on a pretax basis that gives us $2.2 billion of net present value. It's got a CapEx efficiency ratio of 5:1, CapEx to NPV and internal rate of return of 69% and a payback of 1.3 years, and that is using $2,800 gold and $30 silver. So you can imagine that at the current price and with the production that's going to be updated, this project is even more robust than what we're seeing. And all of that for year 1 to 5, the AISC on a gold equivalent production will be around $920. So where do you have that kind of a project that can produce 400,000 ounces of gold equivalent on an AISC of low $900 and a CapEx of $446 million, extremely unique, extremely rare in a great jurisdiction, and that's what Boumadine is all about. So when we look at Boumadine on Page 21 -- on page -- sorry, 11, it's a district scale project with low initial CapEx, extremely rare, extremely unique. It has a strong production profile with high-grade material. The mining permit is in hand. Strong economics based on production of 3 marketable concentrate. Now that's very important is you have a lead concentrate, you have a zinc concentrate and then you have a pyrite concentrate. And out of the 3 concentrate, we will recover silver or gold, silver, lead and zinc. Now the pyrite concentrate, which historically people thought was a problem, well, it's actually now an asset because following the war and following what's been happening in the Middle East, sulfur has gone from $100 a tonne to $500 a tonne and is expected to go as high as $800 a tonne. Sulfur comes from the pyrite concentrate because we have sulfur in the pyrite concentrate. So the value of our concentrate has never been as good as it is right now and is expected to continue. So historically, when people were saying projects like that are complicated and all that, sure, if you have low-grade material, it can be more complicated. But in this case, with a project where the -- on a silver equivalent basis, you're at 450 gram per tonne or on a gold equivalent basis, you're almost 5 gram per tonne. You're in an open pit situation and underground and you have 45% sulfur in your pyrite concentrate, this is really a valuable concentrate. So we're fast tracking this. We're pushing now on the revised PEA which to show you exactly how profitable this project is going to be once we've inputed the new resource, reserve resource model and some of the new data that we have, especially on the marketing side of the concentrate. Again, to close the year 2025, we did a lot of drilling. As I always say, Aya is an exploration company, but it has one project in operation, one project in development, and we do a lot of drilling. So at Zgounder this year, we completed 28,000 meters of drilling. The budget was 25,000 meters and the average cost of meter is $144. So extremely good cost, very -- this is all core drilling. It's all diamond drilling, giving us a lot of information. We have many new targets. We have discovered extension to the Zgounder main project, and we also have many new targets that we will be drilling this year. At Boumadine, we've drilled 150,000 meters this year, this year being 2025. The target was 140,000 meters. We exceeded the target. Our cost of drilling is also similar at $144 a meter diamond drilling. We have discovered or we have discovered extension to the zones, the 3 mineralized zones that we have, and we've also discovered new zones in the Boumadine complex. Boumadine is a very large piece of land. It's a district. We have -- this year, we've added 10 new permits. We have a footprint that is in excess of 300 square kilometers under the exploration permit and we have an additional 500 square kilometer under a [indiscernible] permit, which is an exploration permit, but not yet turned into the exploration permit that gets transferred into a mining permit. So it's different steps in how they approach exploration in Morocco. So we had a fantastic year drilling almost 180,000 meters in 2025 with beautiful results at Zgounder and at Boumadine. Moving just to the guidance. This is already public. We told you that this year, we expect to produce between 6.2 million ounces and 6.8 million ounces. We know that in the mine plan at Zgounder, it's based for 5.8 million ounces. Again, just to be conservative, we've given a guidance of 5.2 million ounces to 5.8 million ounces. And we've put in 1 million ounces of silver equivalent at Boumadine, where we're treating tailings. The cash cost at Zgounder is as per the mine plan. Again, I would refer to you to the 43-101 document of $21.50 and Boumadine is at $10. That is extremely conservative. You'll see that in Q4, we were a lot lower than this. Sustaining and growth capital for the year is at $36 million, which is at Zgounder mainly is to push the ramp down to the granite to the contact of the granite where we see high-grade mineralization. So we're going to be pushing this all the way down. We will also be putting in an ore sorter, and we are working on increasing throughput capacity, though we are at 3,800 tonnes per day. We're putting a little bit of work to bring our throughput capacity to exceed 4,000 tonnes per day. So very reasonable capital to be spent this year and the exploration program, of course, the $60 million in exploration program, and that is mainly 200,000 meters at Boumadine, which we really hope to exceed. And I have to say that as of now, we are ahead of schedule there on our drilling, and we will be drilling 20,000 meters at Zgounder as well. So going forward, for 2026, the guidance is straightforward. The costs are well under control as we are now in cruising speed at Zgounder. So just to close, what's the focus and where are we going? So the focus is to accelerate Boumadine. We do not need debt financing. We don't need new equity financing. We can do Boumadine with our own cash. We totally have $130 million in cash. If everything stays where we are right now, we could be generating net-net of all expenses, $200 million this year. So we can fast track the feasibility study in which we are fast-tracking feasibility study, all the work that needs to be done, every chapter in the feasibility study is being worked on right now. And we will start the construction of every element that is completed in this feasibility study as quickly as possible. The drilling, as I've mentioned, is ongoing, 180,000 meters of infill drilling on the main structures, which is to convert inferred resource into measured and indicated. And regional is really depending on what we see and what we find, but currently budgeted at 20,000 meters but again, this is completely open as we're drilling some very high priority targets on the Boumadine regional play. At Zgounder, we will continue to optimize mining operation. As I said, we want to increase the open pit a little bit more. We want to better control the grade in the open pit. We still need to work on that. Of all the KPIs, the only one left is to really control the grade in the open pit a little bit better. The underground is done. The throughput is done with the underground. So we will continue to optimize mining operation. We have steady-state production. Of course, our goal is to take the 3,700 tonnes per day and push it up to 4,000 tonnes per day. And we always look at other means to increase plant capacity. So the story is very simple is you have an asset that's in production, that's built, that's debugged, that has 100 million ounces of measured and indicated resource that will give you 6 million ounces a year at an AISC of $19, let's put it, $16 cash cost plus about $3. So let's say, $20. So you have 6 million ounces with a $20 all-in cash cost or cost, not cash, cost. And with that, it generates enough money to build the second asset, which is currently in development, which is called Boumadine. Boumadine today stands at 450 million ounces of silver equivalent, but that is being updated because that did not take into account the 2025 drill results. That's being put in as we speak. We'll have the revised PEA available for you in a couple of months. But on Page 15, to the right, that, to me, is the future of Aya is you look at Aya and what kind of strength it has, well, it has a project that will produce 6 million ounces called Zgounder. And it has a second project, which is discovered, geology done, metallurgy done, flow sheet done, water identified, power from the grid, people available. We're taking the same construction team, many suppliers are the same. And that project, once built, will produce 37 million ounces per year of silver equivalent. So as a company, we will be approximately 43 million ounces silver equivalent as a company. So when you look at this and you compare this level to others, we're clearly the up-and-coming silver producer with these 2 assets, not taking into account Zgounder Regional, Boumadine Regional and the other assets that we have. So going to Page 16 to close is I always say that to be successful, you need 3 things, and these are the 3 -- the end of each of the triangle is you need geology, which we have in Morocco. You need jurisdiction, which we have in Morocco because it is absolutely one of the best jurisdiction in the world. And you need the people that have done it, that have built mines, have developed mines, have made discoveries, and we have that. So if you have geology, you have jurisdiction, you have people and you are disciplined in not issuing too many shares, this is the success to have the best return on equity, meaning you have strong production and we have here. So if you look at our triangle, geology is at the top, strong growth profile, absolutely moving from 6 million ounces to 43 million ounces of silver equivalent. Core asset strength. We have 2 districts, and we're adding more districts to the story as we're putting in more permits. Exploration track record, I think we have the best in the industry, having discovered 550 million ounces of silver equivalent in the last 5 years. So you have a tight capital structure with only 141 million shares outstanding. No need to increase that number. We have cash in the bank. We are generating cash, and we're building a Tier 1 asset, which is Boumadine that will add 37 million ounces of silver equivalent as soon as it's ready to get into production. So when you look at this triangle, this is the -- why you want to be with us in Aya because you have the 3 elements that really create success. So this completes the formal part of the presentation. I will now, operator, open it up for questions. Operator: [Operator Instructions] And our first question comes from the line of Justin Chan of SCP Resource Finance. Justin Chan: Congrats on a big year. And yes, my first question is just you touched on sulfur today. I was just curious, I guess, maybe on both the positive and negative aspects of current events. Could you talk us through -- are you seeing any changes in terms of fuel pricing? And I guess, how do you plan ahead for that this year? And then on sulfur, for the updated PEA, could you give us a sense of how the payabilities might look? I realize like today's terms might not be what you've modeled long term, but I'm just curious if you can kind of give us a quantum on the payabilities for the prior PEA. Benoit La Salle: Yes. Thanks, Justin. It's a very, very good question and very current question. We're on that on a regular basis. I'll turn this over to Ugo and Ugo and Ralph are managing that part, you can imagine of the PEA. So Ugo, do you want to go ahead? Ugo Landry-Tolszczuk: Yes. So on sulfur, there's a few things. Obviously, sulfur pricing has gone from, call it, $150 when we did our PEA to close to $700 today. And also gold and silver prices have significantly increased since our PEA. The second thing is that because we're selling our tailings, we also have a much better idea of the market. We actually have some guys in China right now meeting with some of our clients. And so we expect that the payabilities that we have in our PEA to go up pretty substantially. Will we get paid for sulfur? I don't think we're going to have that as a base case in our update, but we are looking at some stuff in Morocco. We do have one of the largest purchasers of sulfur in the world in the OCP and with current price environments, obviously, us exporting a pyrite, which is very high sulfur content, I think they'd like to have some of that. So we're looking at that as well, but I think that's going to be kind of a separate thing from the main project. Benoit La Salle: But Justin, just in the PEA, the payability was established at 73%. Since then, they had revised their offer to 75% payability, and there's no long-term agreement yet signed because they're indicating to us that this will also improve, as Ugo said, considerably. So we're keeping all of the options open. We have an agreement that is signed for the Boumadine tailings because that is being exported every quarter right now to the probably similar clients or the same clients that we're going to have for the Boumadine main production in a couple of years. Unknown Executive: [indiscernible]. Justin Chan: Yes. So above 75% and potentially materially above that? Benoit La Salle: Exactly, yes. Justin Chan: Okay. Perfect. And yes, just maybe the other part of the question was just in terms of, I guess, what are you guys seeing in terms of fuel prices, consumables. I'd imagine where you are, it's not a question of availability, but just curious how do you guys -- if you have anything to manage with regards to price and protecting yourselves, I guess, in the long term? Ugo Landry-Tolszczuk: Yes. So on that, look, for sure, what's happening right now is affecting fuel prices everywhere. Morocco is not special. Morocco's fuel prices have gone up basically $0.30 in the last -- it's by law. So the law states the fuel prices. And so they've gone up pretty substantially. So we have that. We have zinc and we have cyanide. Those are our 3 main aspects. Our procurement teams are on it. We have quite a bit of cyanide and zinc on site already. So I think on that, we're quite fine. And then fuel, we have to manage and it's not so much a price. It's obviously going to affect cash costs like everybody else. And then on availability, we're keeping a close eye on it, and we're working with our contractors and ourselves to see if we can get more storage locally. And we have a pretty healthy stockpile as well. So even if ever we'd have to stop the mine, we don't run. We run our plant on electricity. And so we can still run for a good while even if we had -- if there was ever a constraint on fuel. Benoit La Salle: Yes, Justin, the big element here is our energy is from the grid. It's solar and wind, as we know. And unlike many other production assets in Africa where they have to buy fuel for energy, we do not have to buy fuel for energy. So our consumption is actually quite low when I compare that to what we were doing historically at SEMAFO and what we're buying right now in Aya, it's much, much lower. So the risk exposure is quite -- is much smaller. And as Ugo said, we have stockpiled, but we don't see any issues at the moment, except for a small increase in the price. Justin Chan: Got you. That's really helpful. And just one last one is we're almost through the first quarter now. I know it's Q4 reporting, but just curious in the -- I guess, we've almost done a quarter, I'm just curious what you're seeing in terms of mining from the open pit and underground. So in Q4, you did really well on grade from the underground, good on volume. The open pit had a tonne of volume, a little bit lower grade. I'm just curious if Q1 looks similar to Q4 or quite different actually. Benoit La Salle: Well, Raph, do you want to take this question? Raphael Beaudoin: Yes. Justin, so the beginning of the year went quite well. We have continued to increase our stockpile. We have continued to increase our mining rate in the open pit. As I've mentioned before, what we call the super pit and our change in mining strategy, everything is focused on ounce recovery to increase the recovery in the mine of silver, especially in this pricing environment. So this is what the team is focusing on, continue to accelerate the open pit, sustain the underground as it is and focus on ore recovery. So if there's silver in it, we mine it. The head grade has been stable as what we've seen last year. And we continue to evaluate what's the best way, the most cost effective and the fastest way to increase and to sustain plant throughput. So this year, we have several projects on the go to sustain throughput and to even increase it further, and that's reflected in our guidance. Now as for the grade, as you said, Q1 is almost over, and it's been quite similar, but the strip is slowly decreasing, throughput is stabilizing, and we continue to increase our stockpile. And as the year goes on, we will also continue to at least sustain the throughput and find ways to improve it. Operator: [Operator Instructions] And our next question comes from Don DeMarco of National Bank. Don DeMarco: So Benoit, you mentioned that a focus is to accelerate Boumadine. And of course, we're looking forward to the updated PEA later this year. But what are the levers or potential bottlenecks that you have to fast track the FS and then even looking ahead to construction beyond that, how can you potentially expedite that? And how much wiggle room is there in the schedule in certain optimal scenarios? Benoit La Salle: Well, the fact that you don't need debt is major because, as you know, if we needed some debt, you'd have to complete the feasibility study, give it to the lenders, they would hire outside consultants that would come over for a couple of months, review the work, question the work. We'd have to answer. You're looking at 6 to 9 months of time that is needed just to put the debt facility in place as we did with when we did Zgounder with EBRD, and we went through the whole process. In this case, assuming the silver price stays where it is and is -- or increasing, we don't need that. So the team is doing like let's take water. So water, we're putting together the strategy where the water is coming from. We probably will have to build some pipelines in between some of the villages where we're going to take gray water. We're also going to use one of the aquifer. So we as soon as that's done, the team will look at what can be done immediately, and we will start that right now. Same thing for power. Power will come from the grid. Power is built, as you know, with the national utility company. We're not going to wait for a banker to accept the PEA and give us the depth. We will get going immediately. So every chapter that we do, we look at what we can do and how fast we can do it. So it's -- of course, it's not as nice as having a gant chart and you say we'll be ready by the mid-2027, and then we'll do the debt financing and then we'll do the construction. Our mind is let's get this done as quickly as possible. So we are not cutting corners on technical things. We're not cutting corners on the flow sheet or because it's still an 8,000/10,000 tonne per day flotation plant. So not complicated, but you still have to build it. So we're not cutting corners. But clearly, the fact that you don't need equity or debt is -- will accelerate the construction of this project. Don DeMarco: Okay. Yes, that's a good point. And on the debt, I mean, you've got a little bit of debt on your balance sheet right now and looking at the cash flows that are coming in, are you thinking that maybe you might delever some of that ahead of -- as the FS gets finalized and ahead of a Boumadine construction decision? Benoit La Salle: Yes, absolutely. So the debt, as you know, is with EBRD. They're very, very good financial partners. They've been great. They are important in the country. We don't want to pay them down. And if we have even small penalties to pay, which we do have as per the agreement. So we're looking at what we can do with them. On the other hand, the fact that it's a repayment over 4 years allows us -- we think of this EBRD facility today as funding for Boumadine. We could pay it down almost today if we wanted to and be done with the debt. But we're also keeping it there while we see where the silver price goes, what's the cash flow per quarter because think of it as being utilized, whatever is generated is utilized on accelerating Boumadine. But we do have the flexibility. And yes, you will see over the next quarters and next year that the debt will be lower, knowing that if we wanted to at one point in time, in country, we could utilize Zgounder to -- if we needed some debt, which we don't, but if we needed some debt, Zgounder could be also the backbone of a special financing, balance sheet financing, not project. Don DeMarco: Okay. That excellent color there. And then just finally, as a last question, what are your thoughts on M&A at this stage? I mean, I think over time, there's been some discussion about there might be some smaller opportunities in Morocco, whatever stage that might be, maybe even close to production. But is that part of your strategy going forward over the next few years? Or is it more singularly focused on Boumadine? Benoit La Salle: No, it is, and we do review opportunities all the time, but we're extremely, extremely disciplined. So we have something fantastic 2 district, Zgounder and Boumadine. Often people say, what after Boumadine? I say, well, there'll be Boumadine 2, Boumadine 3, Boumadine 4 because of the size of the district. So there's a lot to come. And we do look at things. And if we don't like the price because they are asking too much and we don't think it's justified, we are extremely disciplined. You're not going to see anything outside of Morocco. We have a lot of work to do. We have a lot of potential in Morocco. So we're staying focused to this jurisdiction. We like it. We're comfortable. We have our team there. And so we are disciplined. Are we looking to buy Morocco? Absolutely, but very small transactions that's not going to affect really -- and most of that is not for share. Most of it is also for small cash payments and payment over time. So yes, we are looking to increase the portfolio. We do want to have a third and maybe a fourth district, but it will -- I'm quite comfortable that something is going to get done in 2026. Don DeMarco: Congratulations and good luck with Q1. Benoit La Salle: Thank you. Operator: Ladies and gentlemen, that concludes our Q&A period. I'd now like to turn the call back over to Benoit La for closing remarks. Benoit La Salle: Thank you, operator. Thanks, everybody, for being on the call today. Look, Q1 is done. It's done today. So what's coming for Aya in the coming few quarters is you will still see some Zgounder and Boumadine drill result. We have a very large program at Zgounder and an extremely large program at Boumadine. So you will see drill results on a regular basis. You will see, of course, our Q1 financial results mid-May. I believe May 15, we'll be issuing our Q1 financial results. Also, we didn't talk about this yet, but we are completing our U.S. listing. We were waiting to have our financial statements for the year 2025. Those are going to be filed with the American -- with the NASDAQ Stock Exchange. And hopefully, in a couple of weeks, we'll be able to announce that we will start trading on the NASDAQ in the States. Coming is the Boumadine technical report, as we said, over the summer. As soon as we have that available, we will be putting this out to show you the strength of this Tier 1 asset. And as Don asked, for 2026, there's going to be in-country consolidation of new districts that we like, that we see and we believe that there's a silver component to it. Some may have silver, gold, others that we look at our silver, copper, but we definitely are looking to increase our land package with silver exposure. So look, that is the end of this call. I believe we had a very good year 2025. The ramp-up is a ramp-up. It ended very, very well. We had a strong performance. We're getting into 2026 with a very strong view on silver, and we're very happy with our new mining method at Zgounder, where we go bulk mining because we believe that bulk mining silver is extremely rare, but it's also very appropriate when you have a strong silver price. Thank you all of you for being there. We will see you in 45 days in May for the Q1 financial results. Thank you, and have a good day. Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.
Operator: Greetings. Welcome to the Abra Group's Q4 FY 2025 Performance Call. [Operator Instructions] Please note, this conference is being recorded. I would now like to turn the conference over to your host, Maria Ricardo, Head of Investor Relations. You may begin. Maria Cristina Ricardo: Thanks, operator. Good morning, and thank you for joining us today. With me are Adrian Neuhauser, Chief Executive Officer of Abra; Manuel Irarrazaval, Chief Financial Officer of Abra; Gabriel Oliva, President of Avianca; Nicolas Alvear, Chief Financial Officer of Avianca; Celso Ferrer, Chief Executive Officer of GOL; and Julien Imbert, Chief Financial Officer of GOL. Our financial statements for the year ended December 31, 2025, as well as the presentation we will reference today are available on our investor website, abragroup.net. This call is being recorded, and a replay will be available shortly after the call concludes. Before we begin, I would like to remind you that on June 6, 2025, GOL successfully emerged from Chapter 11 reorganization, at which point, Abra became the controlling shareholder of GOL and began consolidating its financial results. Accordingly, GOL's results are included in Abra's consolidated financial results from that date forward. To facilitate comparability of financial and operational performance, our remarks today will reference pro forma results as if Avianca and GOL were combined for the full year periods presented for both 2025 and 2024. Today's discussion may include forward-looking statements, which are not a guarantee of future performance or results and involve a number of risks and uncertainties that are outside the company's control, including those related to the company's current plans, objectives and expectations. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations. The company assumes no obligation to revise or update any forward-looking statements. We'll begin with an overview of the business, followed by a review of our operational and financial performance for fourth quarter and full year 2025 and closing remarks before opening the call for questions. With that, I will turn the call over to Adrian. Adrian? Adrian Neuhauser: Thank you, Cristina. Everyone, thank you for joining us. If we can turn to Page 4, please. This is the first quarter where we are presenting our consolidated results as a group. We're really excited about this and proud of what we're going to show you. Slide 4, for those of you that have not joined us before, is just a summary of really what we are. We are today the second largest airline group in Latin America with the result of the consolidation of 3 main carriers: Avianca, which is the #1 airline in Colombia, Ecuador and in Central America; GOL, the second largest airline in domestic Brazil; and Wamos, a European ACMI provider. By putting together those groups over a few short years, we've created -- or those airlines over a few short years, we've created the second largest group in the region with over 300 aircraft, 375 routes, over 70 million passengers a year, 30,000 employees. Importantly, the strongest order book in the region, both on the narrow-body and wide-body side and also an agreement in principle to acquire SKY, which would add to our footprint domestic Peru and domestic Chile. Turning to Page 5. What did we achieve this year? First of all, we -- as Maria Cristina highlighted, we successfully completed GOL's restructuring, emerging as the -- with GOL emerging from its bankruptcy as a more sustainable and competitive airline and with Abra resulting as the controlling shareholder of GOL. We continue driving synergies. Today, we have over $180 million cumulative in value creation by increasing coordination across fleet, procurement network, commercial and loyalty. And we strengthened our leadership team as we drive more coordination through the group. We now have a Chief Procurement Officer, Chief Loyalty Officer and Chief Corporate Responsibility Officers at the group level. On the operational side, we announced a robust incremental fleet plan and the expansion of our wide-body strategies, adding 330s and 350s to enable the future growth and drive more efficient operations. We enhanced our value by coordinating our airlines more and beginning the process of aligning our products to drive an improved travel experience and operational excellence. And we continue progress in sustainability, delivering ongoing improvements in fuel efficiency while improving connectivity in the region. What does this mean financially? It means we achieved a pro forma adjusted EBITDAR growth of 26%, $2.7 billion for the year at a 27.4% margin. That's an over 300 basis point increase. We ended the year with liquidity at over $2.5 billion, about 25% of our LTM revenues and net debt to LTM EBITDAR decreasing sequentially to 3.3x. Both of our important additional business units, Cargo and Loyalty delivered strong performance. Cargo, in particular, delivering approximately $1.6 billion revenue generation on a pro forma basis. And importantly, and we'll talk about this later on, we aligned accounting policies across the airlines in line with market standards. Turning to Page 6. So what are we today? As we said, second largest group in the region, both of the key airlines in the region performing admirably, 98.3% schedule completion for Avianca and 99.2% for GOL. Both airlines with some of the strongest on-time performance in the world, continue to drive brand loyalty, one of the largest loyalty programs in the world combined with over 46 million members, a 34% increase in premium customers through our networks, 7% increase in gross billings and the program member share of our total passengers on average at about 50%. We drove an enhanced customer experience. We upgraded our premium offering through Avianca and VIP lounges and Insignia check-in in Bogota, and we enhanced our long-haul Insignia experience on the transatlantic routes. We've rolled out Business Class across the entire Avianca network, and we announced the fleet expansion, adding 7 A330-900s to support international growth for the group. Up to 5 of those will initially go to GOL and 2 to Avianca. Turning to Page 7, consolidated business indicators. ASKs growing nearly 12% on -- for the group with load factors holding at above 80%, passengers increasing by 5%, average fare in the network increasing, PRASK holding almost flat and PAX CASK holding about flat. Turning to Page 8. If you look at the 2 carriers to understand what's going on in the underlying, both carriers showing strong growth in their networks. GOL, if you'll remember, putting its fleet back in the air and recovering its operations as it worked through its bankruptcy, but also an important redesign in the network with GOL increasingly focused on strengthening its Rio hub. Avianca continuing to grow by extending stage length and expanding flights out from Bogota into the rest of the region. Passengers in Avianca decreasing slightly as we extended the stage length over 7%, average fare increasing at GOL, passengers increasing pretty much in line with the growth of the network. PRASK at both companies holding in spite of the very strong network expansion and CASK at both companies -- at Avianca continuing to decrease slightly and at GOL holding basically flat, passing through a little bit of inflation at about 4%. Turning to Page 9, handing it off to Manuel Irarrazaval, our CEO -- our CFO, sorry, to continue with the conversation. Manuel Irarrazaval: Thank you, Adrian, and good morning, everyone. I'll walk you through our financial performance for the full year. Maybe we start in Page 9 on the pro forma revenues. Pro forma revenue for this year has increased 11% to $9.7 billion. That is driven in about 8% by passenger revenue and as Adrian was explaining before, and a very strong increase in other revenues in cargo and others with that increase is about 31%, right? In terms of EBITDAR, we -- the company delivered a very strong pro forma adjusted EBITDAR growing almost 26% to almost $2.7 billion for the full year with a margin of 27%. If you look at that number as of the fourth quarter, in particular, it had a margin of 30.6%, which is a very strong margin and reflects the great performance of bringing in GOL and the improvement of GOL's margin over the fourth quarter and a very favorable seasonality in the fourth. I would like to highlight that we are not highlighting the metrics below EBITDAR as depreciation and interest are available under our current accounting policies and therefore, kind of the year-over-year comparison is not very meaningful. However, the numbers are in the back of this deck. If we go to Page 10 and we look at the balance sheet, we have ended the year with a strong liquidity, almost $2.5 billion of liquidity, which implies a 25% ratio of liquidity over revenues for the year, which we believe is a very strong point. In terms of net debt, we had a 16.6% reduction of net debt over the year, mainly coming from the restructuring of GOL, right? That has taken our net debt to EBITDAR, the net leverage metric down from 5x before in '24 to 3.3x. And this is an important driver for us, and we will continue kind of deleveraging as time goes on. If we go to the next slide, Slide 11, you can see the performance for the fourth quarter in particular. You can see ASKs at 31.2 with a load factor of 82.6%, which has helped us deliver an EBITDAR margin of 30.6%, as I said before, and again, highlight to you the level of leverage and liquidity that we are finishing the year. Going next to Page 12 exactly. I will also I will also touch on the point of the fuel volatility. As you all know, we have been monitoring very closely the events happening in Middle East and the impact that fuel has on our operations. In general terms, in these months, a $1 increase in jet fuel price has resulted in a $70 million impact on our monthly fuel expense, which means that to compensate that, we would need to increase prices in about 10% for every dollar that has increased. What have been we doing? On the right side, you can see that we have hedged 50% of our fuel needs for the months between March and May. putting in place a zero cost collar with a call strike at $2.45. That was a very good protective measure that we took right before the war started. And we have increased that hedging recently with another 14% of the fuel needs until the end of August at a strike price higher, of course, because the market has moved up significantly. In Brazil, in particular, the fuel pricing mechanism going through Petrobras allows the companies to feel the impact of fuel with a month of delay, and that has given the company time to try to pass through some of this into price. We continue to work with -- our commercial teams continue to work very disciplinedly on price management and being able to pass prices over to the tickets and to compensate for the increases of cost. With that, I finish this section on the financial results, and I will pass it over to Gabriel so that he can cover Avianca's full year performance. Gabriel, all yours. Gabriel Oliva: Thank you so much, Manuel, and welcome you all. If you turn to Page 14, I will give you highlights of Avianca's full year performance in 2025. More on the operational level, as Adrian commented, we're pretty proud of what we achieved. We continue expanding our network. We launched 13 new international routes with 4 new, completely new destinations, reaching more than 160 routes finishing the year, 83 destinations in 27 countries. As it was commented before, we finished that reallocation of capacity, moving -- expanding our stage length, moving capacity from Domestic Colombia into international markets, driving more than 7% our stage length and a much more healthier and balanced supply-demand dynamics. We continue -- and we continue investing. We invested and we continue investing in our product and brand loyalty. Right now, we have completed our rollout of Business Class in the entire network, including all our domestic markets. We opened new VIP lounges and dedicated Insignia, which is our transatlantic business class check-in space in Bogota and strengthening our premium customer and loyalty value proposition. And in the operational level, as it was touched upon before, we delivered a very robust performance, which we are proud of, while we navigated 3 industry-wide challenges with the engines that affected most of our family types of aircraft. On the financials, we achieved at Avianca an adjusted EBITDAR of $1.5 billion, which was more than 20% growth year-over-year at 26.5% margin, more than 200 basis points growth year-over-year. As Manuel was saying, on Avianca, we continue reducing our net leverage sequentially to 2.7x and liquidity reached $1.4 billion, which is close to 25% of last 12 months revenues. And that includes a $1,200 million undrawn revolving credit facility. And our business units were very proud of the performance they achieved. Cargo, a strong performance with market dynamics supporting that, and we completed our strategy of a network redesign, refleeting our cargo network right now having 9 A330 freighters across our cargo network. And in Lifemiles, we reached 16 million members and customers by year-end, which is more than 14% growth year-over-year. And at Wamos, we delivered its full year -- first full-year performance within the group, supported by very strong widebody demand. So turning to Nico to get more into the financials. Thank you very much. Nicolas Alvear: Thank you very much, Gabriel, and good morning, everyone. Turning to Slide 15, delving deeper into financial performance. You can see that Avianca generated EBITDAR of about $1.5 billion, up 21% year-over-year, with margins expanding by over 200 basis points to 26.5%. Importantly, fourth quarter EBITDAR, which you can see in the appendix, reached $463 million at a margin of almost 30%, which is about 60 basis points stronger versus last year. So overall, this reflects the combination of disciplined capacity growth, improved network efficiency, continued cost control and higher premium revenue generation driven by the rollout of Business Class across our network and the strengthening of our loyalty program. Also, as Gabriel mentioned, our Cargo business, Lifemiles and Wamos posted remarkable performance during the quarter and the year. You can appreciate that EBITDAR generation translated into continued balance sheet strength with liquidity increasing $110 million to roughly $1.4 billion, representing about 24% of last 12-month revenue. And notably, our net leverage declined to 2.7x, down sequentially from 2.8x in the prior quarter and from 3.3x in the prior year, driven by EBITDAR growth and relatively stable net debt. Between early 2025 and early 2026, we continue to strengthen our capital structure, refinancing approximately $1.75 billion of debt, mostly our bonds to 2028, pushing out maturities to 2030 and 2031 and optimizing the use of our collateral. So overall, our operating performance is giving us greater flexibility to manage through the cycles, continue investing in our business and our customers and contribute to the broader Abra platform. And with that said, I'll turn it over to Celso to discuss GOL's 2025 performance. Celso Ferrer: Thank you, Nico. And moving forward to Page 17. I want to share the GOL highlights for 2025, which was a really transformational year for GOL, as mentioned, marked by a successful completion of the Chapter 11 process in June and strengthening the capital structure of the company, which provides a solid foundation going forward. Operationally, the focus has been on increasing capacity with discipline. We saw a strong year-over-year capacity growth in international markets, reaching more than 13 countries. Domestic growth was supported by 11 aircraft returning to service and improved fleet availability. Importantly, that capacity has been deployed where the demand is strong and where returns justify it, consistent with the strategy that GOL has outlined over the course of the year. At the same time, GOL continues to benefit from its leading position in Brazil with a strong presence in key markets such as Sao Paulo, now more than ever, Rio de Janeiro and Brazil, including slot-constrained airports that support frequency and commercial relevance. The network is a high frequency with strong connectivity that drives both cost efficiently and customer preference, supporting health load factors as capacity increases. GOL is also beginning to selectively expand its long-haul operation in international markets, including the recently announced Rio JFK service. Operational quality remains a clear strength. GOL was the #1 airline in Brazil for on-time performance for the second consecutive year, which supports both customer loyalty and commercial performance. From a commercial perspective, Smiles continue to be the core driving of earnings quality with a large engagement from its base and diversified partnerships ecosystem that supports recurring high-margin cash flow generations. In Cargo, GOLLOG continues to perform very well, supported by the addition of 2 dedicated cargo aircraft, totaling 9 aircraft at the year-end, strengthening the Mercado Livre partnership and benefiting from a strong demand in e-commerce and express logistics. So overall, what you see in GOL is a disciplined recovery, increasing capacity, maintaining strong operational quality and strengthening the business commercial and earnings profile. Julien will speak about our financial results. Julien Imbert: Thank you, Celso. Moving to Slide 18. We are very happy to report that once again, we're outperforming on our plan since emergence. So it's the third quarter that GOL has been outperforming the [ 50 ] that we had published at emergence. If you look at EBITDAR, we reached an EBITDAR of $1.2 billion, which is an increase of 32% versus last year and a margin of above 30%. This is driven mainly by our growth on capacity growth plus price growth in local currency and our continued control on our cost. Liquidity also is ever stronger at $1 billion in liquidity, representing 25% of our last 12 months revenue and a significant increase versus the position of last year with 43% increase versus 2024. Regarding net leverage, we've been able to reduce our net debt over EBITDAR to 3 turns in 2025, accelerating the deleveraging of the company and pursuing our commitment to a healthy balance sheet. We are very happy with those results that underline our purpose of being the first airline for everyone, our clients, our investors and our teams. And we continue to deliver on our plan with consistency and discipline, building an ever stronger goal. With that, I will now turn the call back to Adrian for closing remarks. Adrian Neuhauser: Thanks so much, Julien. So to summarize, and as I said, really, really proud of the network of the results we're delivering this quarter. First of all, a continued focus on customer experience, boosted by differentiation and brand loyalty as we integrate the power of the 2 brands, but also take advantage of the increased connectivity and frankly, of the know-how that each of the 2 companies brings in creating a unified customer experience. Number two, revenue growth and disciplined cost management that drove higher margins; three, adjusted strong adjusted EBITDAR and liquidity and continued balance sheet deleveraging and very, very proud of the results our business units are delivering through the year. With that, I'd like to turn it over to I'd like to turn it over to Q&A. Operator: [Operator Instructions] Your first question for today is from Mike Linenberg with Deutsche Bank. Michael Linenberg: Great way to finish up 2025. And obviously, now as we look into 2026, the high energy prices are kind of the front and center of focus. I saw that you have these hedges, clearly opportunistic. What are you currently paying for jet fuel? I mean I saw that in the context of that $4 per gallon jet fuel hedge. What are we seeing today? And then can you kind of give us a view on how you're thinking about your capacity plan for this year? I mean I know we're starting to see other carriers sort of rethink near-term growth plans as they deal with higher fuel prices. Manuel Irarrazaval: Thanks, Mike, for the question. And yes, I mean, it's been an interesting start of the year with these movements. In terms of what are we paying for fuel today, there is a certain delay in kind of the cost of fuel as kind of our suppliers have some inventory. So we are today kind of spot price today where kind of outside of Brazil, I would say, is around $4, a little bit under that. In terms of the -- that is the fuel price that we're paying without kind of taking into account the hedging, right? In Brazil, it's going to be lower. I don't have the exact number here, but it's going to be lower than that. Then on top of that, you have the compensation that is coming from the hedges, right? From March, April and May, we have -- half of our volume is capped at the $2.45 that I referred to before. So that's what we're paying. And that is mostly -- that is the fuel that is being consumed outside of Brazil, right? And Brazil still hasn't seen -- we're just starting to see kind of the new price -- the price reset now on the 1st of April, right? So you're going to start to see an effect of the price increase going forward, right? Adrian Neuhauser: And so with regard to capacity, Mike, if you were to look at our sales curves today, what you'd see is the following, right? We've started pretty aggressively passing through the increased cost of fuel, right? So we're not relying on the hedges to boost margins. We're basically using them as a way to soften the transition to new pricing as we drive the pricing up. And obviously, there's a lag there, right? If you were to look at pricing in Brazil today, we're up, and I think the industry broadly is up about 30% from where we started a little over a month ago, which if that holds, right, that's pretty much a full pass-through of [ mid-4 ] fuel. Now obviously, because you've sold lots of bookings forward, there's a mix of bookings that you sold at lower prices, bookings that you sold at high prices, and it's going to take the better part of 3 months even with the new pricing levels for your average pricing to catch up. And then the second part of that is how much of that turns into reduced demand because that will ultimately answer your question, right? What we're seeing so far is that the short end of the booking curve is holding up pretty well. And -- but you're seeing the later bookings not come in, right? And the question is, do they show up later? Or do they -- which interestingly, if you think about what later means today, later sort of means the beginning of summer high season, right? And so it's not a crazy bet to assume that they will or do they fall off, right? We've started in Brazil, in particular, thinking about some tactical reductions sort of in the single -- low single-digit percentages of ASKs. But the reality is we don't know yet, right, how elastic is that going to prove and how much we need to react to that, right? So we're looking at it constantly. And as soon as we sort of start to see near-term bookings taper off, that will be a strong sign that we need to cut back on supply, right? On the Avianca side, the pass-through has been, I'd say, less effective. It's a more complex competitive set, right? You have over 20% of your ASKs deployed into Europe. The Europeans are largely hedged. You have 35% of your ASKs deployed into the U.S. The U.S. carriers, in spite of their big talk have actually been slower at sort of driving pricing up, at least in our region [indiscernible] and they've been slow followers as well. So we're slightly under 10% increase in pricing at Avianca. And again, we need to get to sort of the mid-20s, right? So call it 1/3 of the way there. And sort of the same dynamic, right, less to no impact on the near-term bookings, which is interesting because we've been in a low season. But a pretty strong drop-off in the long-term bookings, which is interestingly because -- which is interesting because those are high season bookings, right? So right now, I don't want to sound sanguine because this is obviously an unexpected sort of shock to the system, right? And it's not a positive shock. But between the hedges, between the effectiveness of our ability to pass through and between the near-term booking curve holding up even in low season, we're pretty optimistic about summer demand. You may see us pull back a little bit of capacity here and there, but we haven't yet decided to sort of make wholesale reductions, certainly not into the summer, right? If we see this dynamic holding up for a few more months and then sort of have to extend higher pricing into the much more elastic sort of post-summer shoulder season, that's a different discussion. Michael Linenberg: All right. Well, very encouraging that you guys are -- you appreciate the elasticity and are considering tactical moves if this fuel regime or environment continues, or it persists. So thanks for the thorough answer. Manuel Irarrazaval: Mike, to go back to your question around the fuel, in Brazil, in particular, the price announced by Petrobras for April is BRL 6.85 per liter, right? That translates into about $4.9 per gallon, which remember, that includes a non -- insignificant amount of taxes. And that -- so you have a reference is about a 55% increase against the price that was -- that we paid during March, right? Remember that in Brazil, the price kind of reflects the average of the previous month, right? So you're seeing -- you saw 55% increase when kind of world jet fuel prices increased kind of on spot is more, it's double, right? So it's a moderated increase by Petrobras for the month of April and then probably May, you're going to see the pull back, right? Adrian Neuhauser: And Mike, one more comment on your comment. We are cautious on elasticity. Again, like I said, we're monitoring it. The bigger concern, I think, for everybody should be less the price elasticity side, if you think. If you think about -- and this is an interesting data point, right? Because both GOL and Avianca have been pretty effective in keeping their costs in line and in driving higher loads, a 30% pass-through to fares would put 2026 fares on real terms at the same price we were charging in 2019, right? So you're actually interestingly not talking about sort of taking pricing to where it's never been, you're really sort of catching to inflation. So we are concerned about elasticity, but we're not panicked about it on the price elasticity side, right? If you have to think about what are we monitoring more long term, we're monitoring economic slowdowns and then income elasticity, right? Because that would have a much more significant impact, we believe, on demand than the fare pricing that we're passing through, in particular, when the entire market passes it through as well. Operator: Your next question for today is from Savi Syth with Raymond James. Savanthi Syth: I just -- maybe I appreciate the tactical capacity adjustments you might make. But I was wondering if you could talk a little bit about maybe the core capacity plan at Avianca and GOL this year and kind of where that kind of growth might be focused? Adrian Neuhauser: Sure. Celso, do you want to start with GOL and then we'll hand it to Gabriel for Avianca. Celso Ferrer: Yes, Adrian, I can. Savi, thanks for the question. And we have -- as I mentioned, 2025, we were like catching up the capacity that we lost during the pandemic. And basically, by creating connectivity, design the new network with the entire Abra team focused in regions where GOL used to be strong, but we see even higher potential for the company right now. I can give you two examples. One is Rio, the other one is Salvador that we are -- that both concentrates more than 86% of our growth in 2026. In Rio International, we have created a very strong position, high frequency where we believe if we need to do some tactical reductions, we will be able to recapture most of the demand as the whole industry continues to be and follow the rationalization. So we are monitoring very close. As Adrian mentioned, no decision, and we are not looking for restructuring of the network. We are confident. You saw our results, I mean, with ASK growth and unit revenue growth. So we are, I mean, monitoring close and doing these adjustments so far, okay? Gabriel Oliva: Sorry, Celso, go ahead. Celso Ferrer: No, no, please Gabriel. Please, go ahead. Gabriel Oliva: So on the Avianca side, as we commented and we were talking last year, we did this capacity shift to have a more healthy supply and demand balance, right? We extended the stage length more on the international side, and we did some adjustments in Domestic Colombia. As we think about 2026, our initial plan was a modest growth within the mid-single digits, right? And that comes on really not getting so much narrow-body fleet this year. So adjusting the network throughout the same pattern, but not a high growth. And on the wide-body side, it's really, as I said before, and we commented before, right, last year, we had this -- all these disruptions due to the wide-body engines that we commented on the last call. So it's more about putting our network on the wide-body side that getting all the [ 78s ] and all the 2 A330s that Adrian commented. So in a nutshell, we were not thinking on a high growth in the network this year, and it's basically keeping kind of the same pattern that we were having last year into this year. Operator: [Operator Instructions] Your next question for today is from Pablo Monsivais with Barclays. Pablo Monsivais: Just a quick question in terms of OpEx and CapEx. At this point, are you thinking of any measures to reduce the cash outlays, assuming the situation continues with a very high oil price? Manuel Irarrazaval: Pablo, thank you for the question. We are always looking at ways to optimize our OpEx and CapEx in particular, where kind of the amount of the CapEx around engines has turned to be more significant. We're also looking at ways, Pablo, of taking advantage of facilities or kind of using local facilities to be able to fix engines in Brazil, for example, which would give us also some kind of support in terms of being able to finance those. But yes, we are, of course, working on optimizing the CapEx and the OpEx plans. Operator: Your next question for today is from Guilherme Mendes with JPMorgan. Guilherme Mendes: I appreciate the comments on the first question about the demand outlook. Just following up into that, if you can break it down between different segments, think about leisure and corporate and domestic and international. When you say that you're increasing prices by 30% in Brazil and roughly 10% in Colombia, is this across the board for different segments? Or there's a difference between leisure and corporate and domestic and international? Adrian Neuhauser: No. What I'd say, we can dig into this more, right, offline. But what I'd say is, look, conceptually, it's across the board, right? We've tried to increase across the board. Obviously, there's some self-segmentation, right? If we're saying the shorter end of the booking curve is holding up very strong, the longer end of the booking curve is where we've seen some still TBD, if it's reduced demand or simply delayed demand. The shorter end of the booking curve tends to be more business focused, right? So we're passing through on everything. But what you're seeing is the leisure customer not book up as early as they would. And that's sort of natural, right? You'd expect the people that they thought the summer ticket was going to cost X, right now it's costing 1.3x. They look at it and they say, well, let's wait a bit before we book it and see if it drops, right? So I think there's some sort of self-selection there that's not us segmenting where we raise prices and where we don't, but sort of how people -- how different parts of the market react to changes in our pricing curves. In Colombia, as I said, it's a little different because even though we raise fares across the network and we intend and push for our pricing to go up and hope that our competitors will follow. The nature of the network means that you've got different competitive sets, right? So when you say international, again, our U.S. fares, we've been through -- don't quote me on this, but 3 or 4 price increases. I'd say 3 have stuck and we've had to pull back. And it has to do with whether competitors follow or not, right? And that has to do with sort of the competitive set you're playing against, right? In Europe, the European carriers have been much less willing to raise fares. I think that the position they're taking is they're more hedged and they're using that to try to capture market share. They're also driving some pretty extraordinary margins on their Far East routes, right, as connectivity sort of goes through Europe and avoids the Middle East, that's also giving them some incremental margins and allowing them to not pass through as quickly on the Americas route. So in those cases, we're probably 25% of the way passed through instead of 30%, right? So it depends more on who you're competing against than us segmenting international versus domestic versus what have you. Does that make sense? Guilherme Mendes: Very clear. Operator: Your next question for today is from Gavin McKeown with Amundi. Gavin McKeown: Just last question I have is in relation to the additional hedge that you mentioned. Can you give us any color as to whether or not that was at GOL or at Avianca? Manuel Irarrazaval: No. Look, the hedges themselves, we take them at Avianca, which is the company that has less -- has a more direct impact from changes in fuel prices, right? And of course, the company that has more ease to find with banks and other things, right? So -- but yes, they're being taken at Avianca today. Operator: Your next question for today is from Nicolas Fabiancic with Jefferies. Nicolas Fabiancic: Just had a few quick questions here. On GOL, if you could please expand a little bit about liquidity, especially when we look at liquidity without the credit card receivables, any thoughts there in terms of alternatives, things you could do with the intercompany loan or any contemplated reshuffling of the GOL capital structure at this stage? Regarding Abra, similar question. We have the '29s bond. I see that it's callable in October. So just any updated comments around liability management or refinancing for the Abra '29s or the term loan? And then at Avianca, you've made great progress with the refis there. There is the stub left over for the '28. If you could give us an update on liability management at Avianca. And also, I just wanted to ask about Avianca, the CapEx plan if you could give a little bit more detail on CapEx for 2026. Manuel Irarrazaval: Listen, let me -- thanks, Nicolas. Let me start by addressing Abra in general, and then we can go into the different points, right? The liquidity position that we have across each of the companies is very strong. In the case of Avianca, we have -- we finished the year with $1.4 billion of liquidity. That includes the revolving credit facility. At the level of GOL, we have about $1 billion, which includes the receivables, which, as you know, in Brazil, is a fairly liquid asset that you can get -- you can sell off. It's like having a revolving credit facility. Now in terms of kind of you're asking about the capital structure of GOL itself, there is no plans today to do anything around that. The company is in a strong position and has been deleveraging over time. Of course, we are looking at CapEx and OpEx and kind of how do we make sure that we keep our liquidity levels and our cash levels, in particular, at a reasonable amount going into this. But there is no plans or kind of things that I would comment on doing liability management at this point, right? And that's in general for the group. I think that given kind of the market environment today, I think liability management are not in discussions today. Same thing with Avianca, right? In Avianca, if you remember, we did a couple of refinancing at the beginning of the year. We brought down -- we repaid a big part of the '28 notes with a bond that we did at the beginning of the year and recap that we did in later in January. And there's about $400 million of the '28 notes outstanding. We have no plans on doing anything with those in the short term, right? And our financings at Abra, yes, we're approaching kind of the end of the non-call period, but that's a bigger question. In the market that we have today, I don't see that we're doing anything in the short term. And just to be clear, on the GOL liquidity that you see and the cash that you have there, that is real cash and liquid facilities, right? I mean, and liquid assets. So it's not -- we're just showing you there the cash and the factorable receivables. Anything -- any kind of receivables that is not factorable, we will not include there. Operator: [Operator Instructions] We have reached the end of the question-and-answer session, and I will now turn the call over to Adrian for closing remarks. Adrian Neuhauser: Thank you, everyone, for the time you spend looking at us. Again, really proud of the quarter we've delivered of the evolution of the company as we put it together in a very short time. The synergies we're driving, the growth that we've driven, the margins that we think are second to none in the region. We're really proud of what we've delivered. We're working through the fuel situation, as you can see, pretty effectively, the hedges have put us in a great position to work through it and pass through pricing as we head into summer high season. So all in all, even with the geopolitical backdrop that we're dealing with, very, very excited for what the year will bring. So again, thank you all for spending the time, and we'll be talking to you shortly. Manuel Irarrazaval: Thank you very much. Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
Operator: Good morning. My name is Desiree, and I will be your operator today. At this time, I would like to welcome you to Imunon's Fourth Quarter and Full Year 2025 Financial Results Conference Call. [Operator Instructions] I would now like to turn the call over to Peter Vozzo of ICR Healthcare Investor Relations representative for Imunon. Please go ahead. Peter Vozzo: Thank you, Desiree. Good morning, everyone, and welcome to Imunon's Fourth Quarter and Full Year 2025 Financial Results and Business Update Conference Call. During today's call, management will be making forward-looking statements regarding Imunon's expectations and projections about future events. In general, forward-looking statements can be identified by the words such as expects, anticipates, believes or other similar expressions. These statements are based on current expectations and are subject to a number of risks and uncertainties, including those set forth in the company's periodic filings with the Securities and Exchange Commission. No forward-looking statements can be guaranteed, and actual results may differ materially from those such statements. I also caution that the content of this conference call is accurate only as of the date of the live broadcast, March 31, 2026. Imunon undertakes no obligation to revise or update comments made during this call, except as required by law. With that said, I would like to turn the call over to Dr. Stacy Lindborg, Imunon's President and Chief Executive Officer. Stacy? Stacy Lindborg: Thank you, Peter, and good morning, everyone. Joining me on the call this morning is Dr. Douglas Faller, our Chief Medical Officer; and Mr. Jeff Church, our Interim Chief Financial Officer, who likely needs no introduction given his tenure with Imunon. He'll be walking through and reviewing our financial results for the fourth quarter and full year of 2025. Mr. Michael Tardugno, the Executive Chairman of our Board, is also on the line and will be available for Q&A. We entered 2026 with strong momentum following a truly transformational year in 2025. Our proprietary IL-12 immunotherapy, IMNN-001, continues to demonstrate its potential to redefine frontline treatment for women with newly diagnosed advanced ovarian cancer based on all available data thus far, both translational and clinical. And IMNN-001 is rapidly advancing in the OVATION 3 pivotal Phase III study. The urgency of this program remains front and center for our efforts to create value for our shareholders and to address the unmet need in ovarian cancer, which continues to claim far too many lives as the standard of care traditional chemotherapy in the frontline setting has not advanced in over 30 years. In our OVATION 2 study, IMNN-001 demonstrated the first ever overall survival benefit in a randomized frontline clinical trial for this patient population with a final overall survival readout showing continued improvement in median overall survival across the trial through 3 different analyses that were conducted. Starting first with the original Phase II clinical trial data readout in July of 2024, which was across all endpoints. The median overall survival benefit was reported as 11.1 months. The median overall survival improvement observed in the subsequent clinical data readout in December 2024 was 13 months. And as we disclosed this week, has now expanded to 14.7 months in the final review of the trial results. Moreover, patients treated with PARP inhibitors as maintenance therapy in addition to IMNN-001 and standard of care chemotherapy demonstrated a median increase in overall survival of more than two years. The timing of this final analysis was defined in the protocol to occur when the last patient enrolled in the trial had reached three years post treatment, and these truly unprecedented Phase II results have given our laser-focused execution of the ongoing rigorous Phase III trial, which was as agreed to with the FDA, is designed to confirm the Phase II results and support full regulatory approval. Throughout 2025, we showcased the strength of these Phase II clinical data and the compelling translational insights at major scientific forums highlighted by the platform presentation at the 2025 ASCO Annual Meeting and the simultaneous publication of the OVATION 2 study results in the peer-reviewed journal, Gynecological Oncology. We capped off the year with a highly successful R&D Day we hosted in November in New York City, and the investment community and leading clinicians heard directly from key opinion leaders about Imunon's ability to turn immunologically cold tumors hot, to remodel the tumor microenvironment and deliver meaningful clinical survival benefits to women with newly diagnosed advanced ovarian cancer where none had existed before. This momentum carried into 2026 with OVATION 3 trial enrollment well ahead of plan. In a protocol that is virtually identical to the Phase II study, OVATION 3 is a 1:1 randomized trial to evaluate IMNN-001 plus standard of care neoadjuvant and adjuvant chemotherapy, which includes interval debulking surgery versus the standard of care alone in women with treatment-naive advanced ovarian cancer. The adaptive trial design with interim analyses for early efficacy stopping rules provides 95% power on the primary endpoint of overall survival while offering the potential for accelerated time lines of a BLA for full approval. Key updates since our Q3 2025 results conference call underscore the strength of our Phase II foundation and the accelerating progress in Phase III based on the strong response from patients, our clinical trial investigators and the broader medical community. And I'll just highlight a few areas, starting with site activation status. Phase III trial enrollment remains strong with 7 clinical sites actively enrolling patients and up to 43 additional high-quality centers under evaluation or in start-up mode. Returning investigators from the OVATION 2 study have been joined by new top-tier centers, many proactively reaching out following our data presentations and publications. We have contracted a global CRO to support rapid advancement of Phase III trial site activation and the study overall. Turning to enrollment velocity. Building on the strong progress we reported in late 2025, patient randomization and treatment in the Phase III trial have continued at an impressive pace and enrollment remains ahead of plan. The early sites have delivered higher than the assumed rate of 0.3 patients per month with some sites delivering as high as one patient per month. This early momentum driven by the compelling Phase II study overall survival benefit positions us well for continued acceleration of site activation and patient enrollment. Our goal is to have approximately 80 patients enrolled in the trial within the next 12 months and enrollment completed in 2029. Turning to regulatory and design validation. Based on the FDA's endorsement of overall survival as the primary endpoint of the Phase III trial combined with a robust statistical framework and precedent in oncology clinical drug development, OVATION 3 continues to derisk the path to a potential regulatory approval in both the U.S. and Europe. On translational data and the MRD trial data, we have data from the ongoing Phase II minimal residual disease or MRD study in collaboration with Breakthrough Cancer Foundation. This trial further reinforces IMNN-001 novel mechanism of action with demonstration of preferential uptake of peritoneal macrophages, profound tumor microenvironment remodeling, complete pathological responses and durable IL-12 and interferon gamma expression with excellent tolerability, even in combination with bevacizumab. We've successfully capped our enrollment in the MRD study at 30 patients, allowing the trial to meet all core objectives and upon completion, channel resources and highly productive sites fully into the Phase III OVATION 3 trial. Preliminary data from the Phase II MRD study continue to align with the overall survival benefit shown in the Phase II OVATION 2 study and support potential label expansions in the future. I'll now turn over the call to Dr. Douglas Faller for clinical commentary. Douglas? Douglas V. Faller: Thank you, Stacy. The enthusiasm within the gynecologic community that we saw at our R&D Day in November and throughout 2025 has only grown. The Phase II OVATION 2 clinical data showing a clinically meaningful 14.7 month median overall survival benefit and the ability of Imunon to activate both innate and adaptive immunity continue to resonate strongly with our investigators. Our multiple presentations at leading congresses in 2025 highlighted Imunon's unique profile, localized IL-12 delivery with negligible systemic exposure, favorable safety and clear signals of immune activation predictive of superior outcomes. Interestingly, after seeing our data presentations, many investigators have been approaching us asking us to join our Phase III OVATION study rather than vice versa. I find this kind of initiative to be most unusual in my long experience conducting clinical trials and also very gratifying. It further supports the consensus of the significant potential of IMNN-001 to address the unmet medical needs in newly diagnosed ovarian cancer. OVATION 3 has leveraged this interest from day 1. As Stacy said, study start-up was completed in record time and early sites have exceeded enrollment forecast. Safety data remains clean, mirroring the excellent tolerability seen across our IMNN-001 clinical programs. The Phase II MRD study has provided real-time confirmation of the favorable safety profile with no dose-limiting toxicities, no discontinuations due to IMNN-001 and very encouraging trends in progression-free survival and MRD negativity. These consistent findings across our studies give us high confidence as we scale the Phase III pivotal trial. Back to you, Stacy. Stacy Lindborg: Thank you, Douglas. Before turning to our financial update, I want to highlight that 2025 was defined by disciplined execution and strategic focus. We advanced the most important development program in our history while navigating a challenging capital markets environment with prudence and foresight. Our multipronged financing strategy, combining targeted equity raises, opportunistic ATM usage and ongoing partnership discussions has allowed us to extend our cash runway while minimizing dilution and advance IMNN-001 as quickly as possible. Shareholder equity remains paramount. Every decision is stress tested against our commitment to fully fund the OVATION 3 study with long-minded investors. We're making solid progress on this front and believe that once we secure a lead investor, we will be able to assemble a syndicate quickly. While the markets are improving and our ongoing calls with strong investors remain highly encouraging, we recognize that this time -- this process inherently takes time. We will continue to balance the ultimate goal of financing the trial with long-term oriented investors against the need to prudently extend our cash runway. We firmly believe that successfully completing this full financing is in the best interest of all of our constituents, including patients who are at the center of everything we do and all shareholders as we believe this will enable our investors to realize significant value. We are encouraged by continued interest in potential nondilutive partnerships for our TheraPlas technology platform and IMNN-001. On the financing side, prudence of our -- prudent use of our ATM facility and warrant exercises supplemented our cash position in 2025. Monthly cash usage has been further optimized, and we announced a strategic reorganization in February 2026 to reduce nonessential costs and to sharpen our operational focus exclusively on OVATION 3, streamlining operations and focusing scientific leadership while preserving all critical expertise in the interest of all Imunon stakeholders. These actions, combined with our continued manufacturing efficiencies, which are great, are designed to deliver on our milestone with maximum efficiency. Now over to Church for a review of our fourth quarter and full year 2025 financial results. Jeff? Jeffrey W. Church: Thank you, Stacy. Details of Imunon's fourth quarter and full year 2025 financial results were included in the press release we issued this morning and in our annual report on Form 10-K, which we filed before the market opened this morning. As of December 31, 2025, cash and cash equivalents were $8.8 million, reflecting disciplined cash management and net proceeds from warrant exercises and targeted ATM uses during the year. We project that this cash balance, together with our ongoing financial activities and cost-saving initiatives extends our operating runway into the second half of 2026. Research and development expenses for 2025 were $7.8 million, which was significantly lower than 2024, primarily due to the completion of the OVATION 2 study, optimization of the MRD study and focused spend on the OVATION 3 study manufacturing and start-up activities. General and administrative expenses were down 8% year-over-year through streamlined operations and renegotiated commitments. Net loss for 2025 was $14.5 million or $6.83 per share compared to $18.6 million or $16.94 per share, reflecting meaningful improvement driven by our cost discipline. I just would like to remind everyone that all share and per share amounts reflect the 15-for-1 reverse stock split effective in July 2025 and the 15% stock dividend declared in the third quarter of 2025. With that financial review, I'll turn the call back to Stacy. Stacy Lindborg: Thank you, Jeff. And Desiree, with that, we'll open the call for questions. Operator: [Operator Instructions] Our first question comes from the line of Emily Bodnar with H.C. Wainwright. Emily Bodnar: My first one, have you presented the final data from OVATION 2 to the FDA, particularly on the PARP inhibitor patient population? And have you received any feedback from the FDA on focusing on this patient population first in your OVATION 3 study? And then maybe if you could just kind of outline how you're thinking about upcoming milestones and catalysts for 2026 and any OVATION 3 updates that you're considering for this year? Stacy Lindborg: Thanks, Emily. A very well formulated and comprehensive question. So let me take it in steps. So first, we have not presented the OS data to the FDA. We are incredibly excited by the fact that it continued to improve. But really, this last analysis reinforces exactly the plans that we have in place. I think you specifically asked about the PARP-treated patients. And while this is even a larger effect than what we see in the intent-to-treat population, we know that this is a relatively small group in the trial, and it becomes important that we're replicating the findings. So we will be presenting the data to the investor community, and we'll also be presenting it to the clinical community. In fact, we got an abstract submitted over the weekend to a meeting that will really afford us to have some great discussions with potential new principal investigators. So our focus right now is really around the Phase III trial ensuring that we're continuing to build the amazing momentum and excitement in the medical community around this data and then ultimately delivering on the trial. So maybe I'll stop there really quickly and see if there's anything else, Douglas, you want to add to the latest data. Douglas V. Faller: Just that although we're very excited about the results in the patients treated with PARP inhibitors, we're equally excited about the results that we see in the entire population. And this greater than a year increase in survival is, as you know, Emily, unprecedented in ovarian cancer. No one has seen anything like this in the entire time I've been practicing medicine. So the ability as we replicate this in the Phase III, this will be incredibly meaningful for patients and the whole population of patients is what I'm getting at, not just the patients who received PARP inhibitors. If they continue to benefit as much as they did in the Phase II, that's wonderful. But we're focused on benefiting -- providing benefit to the entire population of newly diagnosed women with advanced ovarian cancer. Stacy Lindborg: Thank you. Emily, if I remember correctly, the other questions were focused around upcoming catalysts and our plan for this year and beyond. And I would say that we have catalysts that we're going to be very excited to report back, one of them being around the momentum of the trial. And so you heard in my prepared remarks, that we are -- our goal is to have 80 patients enrolled by this time next year. And reporting our momentum will be a very critical component of ultimately the overall time line that we've been committed to. So that will be one catalyst. We will continue to have presentations at medical and scientific congresses. We have samples -- tissue samples still from OVATION 2 that we intend to analyze and have in the near term, a comprehensive analysis and publication around translational data that we think will really be very compelling for the scientific and medical community that we'll be able to go beyond what we've presented to date. And I think that will be a very meaningful contribution. We have the potential for partnership progress that may provide opportunities to extend the runway further. And of course, we are continuing with our strategic goal of financing the trial with long-minded investors. And those are all things that we're very, very actively involved with. So our plans for 2026 really are going to be focused on our funding for the company, making sure we have the cash runway and that we are really increasing our institutional base in the -- in parallel. And then second, enrolling the trial and ensuring that we're spending a lot of time with our partners that are involved in this trial and the broader medical community as we're really helping translate the value for women newly diagnosed and bringing forward a product that really should revolutionize the standard of care. Operator: Our next question comes from the line of James Molloy with Alliance Global Partners. James Molloy: Could you walk us through -- I know you gave excellent guidance, very clear guidance on 80 patients by this time next year and 2029 to complete enrollment of the trial. Could you walk us through what potential cut points for interim looks we might be able to anticipate going forward over the next 12 months? Stacy Lindborg: Yes. Great question, James. Thank you. So the interim analyses, which have been laid out are all very carefully designed through comprehensive simulations, which are always looking at the time frame in which you might expect to be able to see a successful hit, if you will, so a p-value that would allow you to file your BLA. And as you know, we've described this in the past, and we've had reviews of our protocol. We've designed these steps for there to be 2. So the important component, given what we know very well from the literature and other Imunon agents, we need to observe patients long enough to be able to see events in the control arm for there to be really the ability to have success. So we've designed these interims to occur after the point that we would have fully enrolled trial. And we expect based on the simulations that we've done in the past that the first interim would occur about a year after that. So that is what we're actively working towards. And it's, as always, designed to allow for if we see a bigger effect than we have assumed in the protocol, this interim, in fact, the first interim may provide and would provide an opportunity for us to act more quickly than waiting. But it also is important that we're being very careful with these interims and of course, because you're using type 1 error rate as you're ultimately doing these formal analyses. So that's kind of a bit of an insight into how we balance the various dimensions and what we can expect going forward. James Molloy: And then maybe a follow-up question on the final data on the OVATION 2 showing the excellent survival data. How did that change the potential partnership environment, if at all, that you can share with us? Stacy Lindborg: So it's obviously very early. We just released the data last week. We are participating tomorrow in the MedInvest Biotech & Pharma Investor Conference, and we are getting new inquiries that are occurring even as of this week. But I expect that to continue to develop. These kinds of partnerships, whether they're geographic in nature or they're more fundamental with big pharma really ultimately has to fit with a strategy and an interest and an intent from a timing standpoint. So -- but we're very pleased to see renewed and new inquiries. Operator: Next question comes from the line of Jason McCarthy with Maxim Group. Jason Mccarthy: Going back to OVATION 2, is there going to be an opportunity when you continue to mine that data? Will you have anything related to minimal residual disease or any SLL, looks for MRD or any more immune data that might be suggestive of T cell memory or something that's keeping these patients' disease kind of in check and that could be driving these longer-term survivors? Stacy Lindborg: Yes. Maybe I'll start and then I'd like Douglas to pick up. So we won't have anything from OVATION 2 that relates to the minimal residual disease or second look laparoscopy because it's an additional procedure that is not part of standard of care, and therefore, it wasn't implemented in OVATION 2 nor will it be implemented in OVATION 3. So that is an exploratory and it's an endpoint that I think has gotten a lot of interest as a potential predictor of overall survival that was incorporated into what we call the MRD study. So the OVATION 2 won't give insights into that, but we will continue to contribute not only to our own learnings, but also the literature from the trial that we're doing in combination with breakthrough cancer. But we do have other data that we'll be able to get from OVATION 2, and I'll let Douglas go into some of that. Douglas V. Faller: Yes, we've been -- over the last 9 months or so, as you know and alluded to, we've been releasing more and more translational data, and we have additional translational data to present, and we will -- we're planning on publishing that also. This may include looking at peripheral responses in addition to the responses that we've shown so dramatically in the tumor and the tumor microenvironment. So we're very excited about the translational data. Just to expand on what Stacy said, even though we call one of our trials MRD, MRD is not really officially established for ovarian cancer. There's no -- there are no criteria that have been shown to be predictive of a patient's outcome. The MRD study is an approach to start working on that. But that data has yet to evolve. And we will try to determine over time what the best approach to MRD might be for it to be predictive in ovarian cancer. It's something of great interest. This is in part why breakthrough cancer got involved in the MRD study because they also would like to be able to generate a test like MRD, which could be predictive of patient outcomes. And in addition, in our Phase III, we will be looking at circulating tumor DNA. This may end up being a marker for MRD. It's not established yet in ovarian cancer, but our trial might be one of the ones that could establish circulating tumor DNA as a predictive marker. So that's yet to come. Jason Mccarthy: Great. Are there going to be updates from the MRD study in 2026 that we could look towards as potential catalysts? Stacy Lindborg: It's possible. I think that it will ultimately depend really on the -- our interactions with the study PI, [ Dr. Amir Jazaeri. ] We know that he presented data that was very exciting to see the analytical data, and he decided to really take a cohort of patients and analyze them together rather than continuing to analyze patients over time, individual patients over time. And the clinical data, of course, will be continuing to evolve. So we're in early discussions with him around where we may present that in the medical community, and we'll be thinking very much about bringing forward insight. It will be an exciting other arena for information. Jason Mccarthy: And I don't know -- last question. I don't know if I'm overlapping what James had asked previously about enrollment timing. But when you get to the 80, are you going to release any details on the HRD status of the patients just so people can get a sense of the percentages that are in the trial or maybe in the trial? Stacy Lindborg: It's an interesting question. I think right now -- and if I just step back and I look at what we've learned with this final analysis, our -- the overall effect that we've observed in the all-comers population has continued to grow so substantially that while the underlying genetics, which right now plays a critical role in the maintenance therapy and become central to how the treating community is taking care of patients. What's interesting is that our principal investigators are probably as excited about the effect in the HR-proficient patients as they are in the HRD positive. And so it will continue to be a very interesting and important part of our Phase III trial. But I think that we will really be looking holistically at the full trial and be very excited because we're able to influence and extend the life of an all-comers population. So it's -- that's my thinking of this. And I think that we'll have to think very carefully about the exposure that we give to an ongoing Phase III trial. It's an open-label trial, and we'll have the ability where we find it important from an investor standpoint to think about maybe secondary endpoints and provide updates, but those will be taken with great caution just to preserve the integrity of the trial. Douglas, anything more? Douglas V. Faller: Yes. The only thing I wanted to add is, although this is an open-label study because to preserve data integrity, we and the company are blinded in terms of efficacy, not safety, but efficacy. So we will not even ourselves be seeing the efficacy data as the trial progresses in terms of the primary endpoint. Jason Mccarthy: Okay. So just also -- sorry, one more, just a hypothetical. I'm not sure if you'd have the answer for this or not. There is a trial that's going to read out in the second half of this year for an oncolytic virus in the relapsed/refractory setting for PROC for ovarian cancer that the expectation is that it can resensitize to platinum. So for chemotherapy, it suggests that if they're successful that it could change the standard of care potentially even in the neoadjuvant setting. And I'm bringing it up because this trial is going to take a long time OVATION 3 and if you thought about how some potentially new therapies that could be on the market could influence how patients are managed by the time you get to the OVATION 3 full top line data. Douglas V. Faller: Thank you for that question. We're certainly very aware of the drugs that are being developed in the relapsed/refractory space, both platinum-sensitive and platinum-resistant. The most patients, interestingly, their tumors are sensitive to platinum. The idea that you'd have to sensitize patients in the neoadjuvant setting or the adjuvant setting really is not something that is at all mainstream. Most patients do respond to chemotherapy. Unfortunately, durable responses are rarer and then you get into second and third-line treatments. As you know, there have been at least one and soon two drugs approved in different settings in second, third, fourth line patients who are not being treated with platinum again. And that's wonderful. We're very happy that there are drugs that provide a bit of a survival benefit in second or third line. But as we all know on the phone and in this call, putting the best therapy upfront and making the biggest impact on the tumor is critical if you're going to treat ovarian cancer successfully. So we're very happy to be in frontline, very proud of the fact that we're in frontline, and we believe that we will be providing advantage over time in terms of increases in survival to the patients that we are treating. Operator: Next question comes from the line of Kemp Dolliver with Brookline Capital Markets. Brian Kemp Dolliver: First, are the savings from the restructuring of any significance that we would see them -- the impact of them in the first half of this year? Stacy Lindborg: So Kemp, really, what we reported as a strategic restructuring really is around ensuring that we are using all of our resources to the best of our ability and focused on Phase III. So we're ensuring that we have the ability to hire and bring in needed expertise for the future as we're thinking about the commercial setting, and we're looking to the upcoming year and beyond. So it really is not about a pure number, but it is about just an ongoing evolution of making sure that we're taking the talent we have in-house that we're focusing our attention for each person to ensure that we're bringing the most value possible and that we're really removing anything that is off target from the OVATION 3, which is our sole focus right now. Brian Kemp Dolliver: Okay. And with regard to your commentary regarding the pace of enrollment at the site level, I'm going to split a hair, if I can, because it may be informative. Is that pace increasing, say, month-to-month? Or is it just -- has it just been consistently above your forecast? Stacy Lindborg: So I'll give you -- we only have, of course, the time frame from the very first patient to now. But we see that for the entire trial, we are above the assumption of 0.3 patients per month per site. So the -- if you look across all the sites, the average is above that. And when we -- the numbers that I was reporting of these sites that actually are delivering one patient per month or even just slightly below, that is across the whole time period that they're delivering. So I do think you tend to see kind of episodic enrollment that can happen, but the numbers that we're reporting are not singular months. They're summarizing the entire time thus far. And I do think we're hearing phenomenal feedback. We're spending time in the site -- in our sites that are actively enrolling patients. We're having calls regularly as well. These conversations in terms of the data, we get to see a broader set of the community, for example, with the abstract we were putting in over the weekend, you have quite a few PIs that were part of OVATION 2. They all got to be on this abstract and to see the excitement and their responses. Gratitude for being included and really just pure excitement with the data. Douglas, why don't you comment more? Douglas V. Faller: No, that's exactly right. This is the first time that they had seen the final data in terms of survival, and there was a great deal of enthusiasm. As you might expect, they were very happy that their patients have seen this much benefit. Stacy Lindborg: So we really think this will be a difference maker for OVATION 3 compared to OVATION 2. Going into OVATION 2, we had a lot of promise. We had a mechanism of action that made a lot of sense, was very clearly established in the literature. Phase III now, we have evidence of a clinical effect that's never been seen. And we continue to really hear that, that becomes very critical. We can actually see the numbers that are entering prescreening, and we see a very high rate ultimately coming through to randomization with really the exceptions being things like inclusion criteria not met, that will always be the case or inability, perhaps somebody that's traveled a very long way and doesn't feel like they can make the schedule. But really, the rate of being exposed to this potential the way that our -- one of our PIs who's been involved with our program for a long time, talks about this with patients is you're going to get the standard of care, which you'll get in this trial. If you do not have interest in research and in this protocol, if you want to consider being in this protocol and if you're randomized to the experimental arm, then you have a chance at a product that may extend your survival. So it's been a very straightforward discussion as they're describing it to us, and we're getting, as we might expect, a positive response from patients and from the sites. Operator: And our last question comes from the line of David Bautz Bouts with [indiscernible] Research. Unknown Analyst: So I just have a couple of financial questions. So as resources become available, is the company going to look to open additional sites in the U.S.? Or will you be looking ex U.S. to get any international sites open? And then as far as payments for the Phase III trial, I guess I'm just trying to look at how is it being paid for? Did you have a bulk paid upfront? Is it pay as you go? Like how is it structured? Stacy Lindborg: So David, great questions. I was having a little trouble hearing you. So let me respond to your questions. And if I don't hit on them, we'll have you ask further. So we are actively enrolling and accelerating the enrollment of trials. And right now, those are focused in the U.S., although we have sites in Canada that we know are very interested, and we have had conversations as we're looking to consider the strategy of if we want to accelerate further adding a European country as well. So we've already had some discussions with leading sites in Central Europe. So that's a conversation that we expect to advance over the next year. But right now, we believe that we'll be able to meet our enrollment accelerations, and we have a lot of confidence with the sites that we're going after and we're starting with in the U.S. So we think that's actually the best way to start. In terms of payments for the trial, these trials are structured -- this trial is structured pretty traditionally. You have contracts with individual sites. There are start-up fees and then fees as patients are being treated as part of the protocol. We have an ability to take advantage of what is standard of care and to have that be paid through the traditional routes and some of the procedures not be due to be paid by Imunon and we've taken full advantage of that to really structure the contracts accordingly. Operator: This concludes the Q&A. I'll turn the call back to Dr. Lindborg for closing remarks. Stacy Lindborg: Thank you, Desiree, and thank you all for joining this call. With the Phase III study enrolling ahead of plan, as we've just been talking about, the enduring strength of our Phase II overall survival data and the compelling translational evidence that Douglas spoke about and our sharpened financial discipline, we really know that Imunon is well positioned for milestones that will create value inflection in 2026 and beyond. We remain steadfast stewards of the resources you have entrusted to us and are fully committed to delivering a potential paradigm shift for ovarian cancer treatment while creating lasting shareholder value. We thank you for your continued support and look forward to future calls. Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining in. You may now disconnect.
Operator: Good morning, ladies and gentlemen, and welcome to the Serica Energy plc Full Year Results Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question it receives during the meeting itself; however, the company can review all questions submitted today and will publish responses where it's appropriate to do so. Before we begin, we would just like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from Serica Energy plc, Chris. Good morning, sir. Christopher Cox: Good morning, and welcome to our 2025 full year results presentation. I'm joined as usual by Martin Copeland, CFO; and Andrew Benbow, our Head of Investor Relations. Thank you to everyone who has submitted questions ahead of the call, but please feel free to post any further questions you have during the presentation. And should we not get time this morning, then please contact Andrew directly. We will respond promptly to every question we receive. Martin and I will now run through a short presentation and then answer as many questions as we can in the time available. This slide is a reminder of our strategy and our purpose. We're here to produce hydrocarbons safely and efficiently while creating value for shareholders and also helping to deliver energy security, jobs and investment for the country. You may be aware that this has been our purpose unchanged for some time now. And I know that such statements can sometimes sound like typical corporate speak. But as we speak today against the backdrop of the terrible events in the Middle East, the importance of our contribution to domestic energy security has never been more apparent. We are unapologetic about the role we play in providing much-needed energy products for society. We have a two-pronged strategy for creating value. Our DNA is taking on mid- to late-life assets and then extending their field life and optimizing production. We've been delivering on that strategy recently with a number of M&A transactions, and we expect that to continue. And we are well positioned at present with a highly cash-generative production portfolio with organic growth options fighting for capital allocation. Our strong positioning is partly as a result of strategic delivery last year. We invested in our existing portfolio, carrying out significant work on resilience and asset life extensions as well as completing a highly successful 5-well drilling program around Triton. These wells will help retain robust production at the FPSO, and the success of that campaign gives us confidence to continue to exploit multiple organic investment opportunities elsewhere in our portfolio. As we continue investing, we also continued our track record of shareholder distributions with dividends amounting to 16p per share. As announced today, these distributions are continuing in 2026, as we recommend a 10p final dividend in respect of last year, continuing to strive to offer investors a compelling mix of growth and returns. And of course, key to our strategic delivery in 2025 were multiple acquisitions. We were one of the more active M&A players in the U.K. sector last year, announcing multiple acquisitions that increased and diversified our portfolio, enhanced cash flows and added to our opportunity set. In total, we increased our reserves by 19%, adding some quality long-life fields to our portfolio. The impact on production will also be material, adding over 20,000 barrels a day to our production capacity. The deals were done at very attractive prices with reserves added at a low cost of $3.30 per barrel. The acquisitions, which we have completed, being Prax Upstream and now TotalEnergies, which completed today, have resulted in the net receipt of cash by Serica amounting to $75 million in aggregate. And the ones still to be completed, from ONE-Dyas and Spirit Energy, will also result in net cash receipts or only limited cash paid out on completion. Hence, these acquisitions will be cash flow accretive this year, thereby supporting further portfolio investment and returns to our shareholders. Looking ahead, our strategy remains unchanged as we seek to acquire assets that may be non-core to others, but can be enhanced by Serica through extending field life and delivering further value, both corporately and through the subsurface. We will continue to look for potential acquisitions in the U.K., although the amount of recent consolidation means there may be fewer opportunities in the near term. As a result, and as we previously signaled, we will continue to explore opportunities overseas, but only in areas where we are confident that we can deliver our clear value creation strategy. As we grow, we are ensuring that the capabilities of our team grow with us. We are confident in our strategy and confident that we have the right team to deliver it. Since joining, I felt there were some areas in which Serica lacked the expertise required to excel as a North Sea producer. And as our portfolio has grown, the need to strengthen our capability has grown with it. We've made a number of targeted senior appointments that have materially improved our decision-making, our talent management and our ability to deliver for shareholders. We have established a quality executive leadership team and are putting in place the wider organizational structure and processes to position us to deliver on our strategic and operational goals. We are not finished, but I believe we are close to achieving the goal of establishing the right team to lead a top-performing FTSE 250 company. We need a team with depth and breadth, as we are now building a broader and more complex business. Our portfolio is more diverse and robust with assets that will encompass the entirety of the U.K. continental shelf from the West of Shetland to the Southern North Sea. Our new assets will significantly enhance the predictability and quality of our overall production and cash flows with less reliance on the 2 main hubs and the number of producing fields set to more than double. By the end of the year, we will have equity in a total of 26 producing fields. We are growing our presence in the basin and keen to continue growing. We now operate around 10% of the U.K.'s natural gas production. And today, having assumed control of the Shetland Gas Plant, we have the potential to play a key enabling role in the most prospective gas basin in the UKCS. The projected decline in North Sea production, we often see reported, is one enforced by policy and not geology. As our Chairman has said today, we urge the government to unblock the logjam in its approval of the development of new oil and gas fields, change its stance to the award of new licenses, scrap the onerous and counterproductive EPL and replace it with the already announced OGPM as soon as possible and to change its tone towards the sector. The opportunities in our portfolio alone show there is more to be delivered from the UKCS, much of which is short cycle in nature, and we're keen to play our part. And we are set to increase our production materially in 2026. As you can see from the chart on the right, our expectation for 65,000 barrels a day by the end of the year is not aspirational. It is, in fact, less than what we would be delivering today had all the asset transactions completed. That figure does include Lancaster with production scheduled to cease in May as expected, when the FPSO moves on to its next project. But of course, we need to actually own these assets first. And I'm pleased to say that completions remain on track with the previously stated timetables. We targeted the end of the first quarter for the TotalEnergies acquisition, and that completed today, slightly ahead of schedule. This transaction brings into the portfolio over 5,000 barrels a day of unhedged gas production. We also remain on track for midyear completion for the ONE-Dyas transaction and later in the second half of the year for Spirit Energy. On our Core portfolio, production has increased in 2026 year-to-date compared with Q4 last year, but it's still not where we would want it to be. Production at the Bruce Hub has largely been robust, and we are regularly producing 20,000 barrels a day net from the hub, which is a real positive given the current gas prices. Unfortunately, some further unscheduled maintenance at Triton needed to be carried out in February and early March that required a shutdown for just over 3 weeks. The operator, Dana, concluded that due to overdue maintenance on some production and power generation systems, they could not wait until the summer shutdown to complete work on those systems. They, therefore, took the proactive step to fix the issues immediately rather than to continue to run the equipment that could potentially fail. This work was completed on the 9th of March, and Triton has been running continuously since that time. As indicated in our January trading statement, we also lost production from Orlando for much of the period due to wave damage caused to the Ninian host platform, but this is now also back online and producing over 3,000 barrels a day. Since production restart at Triton, we have seen a fortnight of stable production averaging over 50,000 barrels a day in that period. Over the last few days, we have also seen the first production from Belinda, the last field in the U.K. to receive development consent. It is too early to determine a stable rate for Belinda, but early indications are promising. Triton is currently running with a single gas export compressor as the second compressor is offline awaiting a spare part. Maximum production in this operating mode is roughly 25,000 barrels a day net to Serica. And as we now have excess well capacity, we can anticipate being able to flow at that rate at least through the end of 2027. Once the second compressor is available, we will need to decide with Dana whether it makes sense to keep the second compressor as a backup to give more stability at 25,000 barrels a day or to run the 2 compressors in parallel at a higher rate, but with more vulnerability to downtime. Our production guidance of significantly over 40,000 barrels a day was based on very conservative uptime, effectively building in a weaker month of downtime at Triton. As such, with a significant production uplift to come, we are comfortable in retaining our guidance is unchanged. Going forward, the predictability of our production will be enhanced by the new assets coming in with some, notably GLA and Cygnus having historically very high uptime. But for now, we continue to be focused on delivering improved performance from our existing assets where there's still plenty to do. We are working to embed a culture of operational excellence, where we are not satisfied if we produce anything less than the maximum possible on any given day. In the last few years, there have not been enough maximum production days, and we are reenergizing our entire workforce to pull together to deliver more. There is also work to be done this year to help deliver production well into the future. At the Bruce Hub, there is exciting subsurface potential, and we are doing the necessary work this year to prepare for potential drilling in 2027. At Triton, we are working closely with Dana, and the focus is very much on delivering stability of operations. Dana have been taking many of the same actions that we have taken at Serica to improve performance, in particular, with strengthening of their team with new offshore installation managers, maintenance team leaders and safety advisers as well as bringing in-house some key technical specialist roles, which were previously outsourced. We are also, of course, working hard to integrate our new assets, and I am delighted to welcome our new colleagues from TotalEnergies into Serica and those transferring across to our operations and maintenance contractor, px, today. Even without the addition of reserves from new assets, I'm pleased to say that our reserves replacement effectively achieved 100% in 2025. This was achieved through the excellent work of our subsurface team and largely by 10.2 million barrels being moved from resources into 2P reserves due to the maturation of the Kyle redevelopment, which has now been renamed Kyla. This effectively offset the 10.1 million barrels of production in the year. With the addition of the newly acquired assets, our 2P reserves rise 19% on a pro forma basis. We will continue to be balanced between oil and gas. But on completion of the acquisitions, we will become slightly more gas-weighted as our acquisitions are mostly gas fields. I'm pleased to say we have also delivered a 16% increase in 2C resources, indicative of our attractive opportunity set. This increase was driven by the extensive work on maturing the potential Bruce drilling program as additional infill well opportunities delivered an 18.2 million barrel increase in 2C resources. This outweighed the relinquishment of the Mansell license and transfer of Kyla to reserves. The addition of Wagtail, which we announced during the year, also provided an uplift of 8 million barrels of 2C resources. In total, we now have over 100 million barrels of 2C resources, constituting a diverse and attractive opportunity set. These are projects of various types and across our asset base, but are all tangible and deliverable opportunities. With prudent investment, there is plenty in the hopper to sustain our production at or above current levels into the next decade. We are continuing to high-grade the suite of opportunities and plan to share considerably more detail on these at a Capital Markets Day in early June. We are focusing at present on those opportunities that have the potential for rapid payback, and there are a number of projects that fit that description. One that we have talked about before is Bruce. Bruce is a huge field, and there is plenty of remaining potential there, as can be seen by the increase in resources we have been able to share today. There has been no drilling on Bruce since 2012, and drilling on the field, which sits with our -- within our subsidiaries that do not have tax losses, would be highly tax efficient. First hydrocarbons are possible within 1 year of drilling, and we see a first phase of wells that could add over 10,000 barrels a day to production. This is a significant opportunity to deliver greater production of critical gas supply to the U.K. in a relatively short-term time frame. This opportunity is the result of work done over more than a year now across the integrated disciplines within our exceptional subsurface team, which, as I may have mentioned before, is the best in the business. Market screening for a rig is currently underway to enable us to potentially take an investment decision later in the year, which could enable drilling to begin in 2027. There is still more work to be done, and there are other opportunities also battling for capital. Kyla also offers a material production uplift. This was a previously producing field, which ceased production due to the host infrastructure being decommissioned. A horizontal well drilled into the best part of the reservoir and producing into Triton could also, therefore, add 10,000 barrels a day to our portfolio. And then, we have the opportunities just welcomed into or to be brought into our portfolio via acquisition. Glendronach is a compelling opportunity, and there are others not even mentioned on this slide that we look forward to discussing at the Capital Markets Day. And we are very excited by the overall potential West of Shetland. I realize this is quite a busy map, so let me give you a quick overview. We've acquired the acreage, which is shown in blue, which includes the Laggan and Tormore and other producing fields as well as a number of exploration prospects plus the associated pipelines in orange and the Shetland Gas Plant. Further west and north of our acreage is an extensive area colored in gray. This acreage is owned by Adura and Ithaca, 2 of the largest U.K. producers who are bullish about the drilling prospects in the area. The industry consultant, Westwood Global Energy, recently published a report identifying that the West of Shetland Basin holds an estimated 5 trillion cubic feet of gas. Of course, that sounds like a big number, and it is. In fact, it's equivalent to supplying every household in the U.K. for 5 years. And yet some people continue to say that the amount of gas we can produce in the U.K. is not significant. With 1.5 billion barrels of discovered and prospective resources situated within tieback distance of our existing infrastructure, this is an area of material potential for the industry and for Serica. And the Shetland Gas Plant is an asset of strategic importance to the country. While we are not primarily a third-party infrastructure company, as well as processing our own gas through the plant, we are currently processing gas for Adura from their Victory field, which only started producing last September. And we hope soon to be doing the same for Ithaca and Adura, Tornado field, which they are looking to move to final investment decision by the end of the year. But as well as exciting third-party opportunities, which all add value for Serica, there are also opportunities for the GLA joint venture to develop and add value from the assets on which we have completed today. These include the Glendronach tieback and a possible infill well at Tormore. And now that these are in our portfolio, they will be assessed and ranked against the other development opportunities we have in the battle for capital allocation, about which, again, we will give more detail at our Capital Markets Day. And with that, I will hand over to Martin to give you more on our finances and how we are seeing things in the near-term market situations. Martin Copeland: Thanks, Chris. As we largely preannounced with our January trading statement, the story of last year is mostly that despite a challenging year operationally, our relative financial strength and our confidence in the resolution of those issues enabled us to continue delivering on investment in the portfolio and on healthy shareholder returns, including maintaining the full year dividend at 16p, inclusive of the 10p proposed final dividend we are announcing today. When it comes to how we generated and used cash during the year, this waterfall chart shows the picture of what actually happened to gross cash from our year-end 2024 to our year-end 2025 position. But the real story of the business potential lies in understanding what the deferred production cost us in foregone 2025 revenues from the unscheduled Triton interruptions. Based simply on adjusting for what would have happened if Triton had delivered operating efficiency in line with our 2025 budget and factoring in the actual prices of oil and gas, which prevailed, we estimate we missed out on some $250 million of revenues last year. And because those missed revenues were at Triton, where not only do we still have material tax losses, but we were also investing heavily, which is the key method of sheltering the EPL and that our cost base is very largely fixed in nature, those foregone revenues would have flowed almost directly to additional free cash flow generation. We were, however, helped last year by the receipt of $63 million tax rebate in respect of overpaid taxes from 2024, but also from a low cash tax bill during the year, given we were able to factor in the impact of group relief into the installment payments made during the year. These are the reasons why the tax bar is, in fact, a positive on this chart. So we very much do not see 2025 as representative. And indeed, as we indicated in January, we are confident of material free cash flow generation this year, and that outlook has, of course, only improved in the current market conditions. In fact, as it says on this page, with the completion of the TotalEnergies deal today, we have more than halved our net debt as compared to the year-end level and are on track to be in a net cash position by the end of H1. Turning in a little more detail to the income statement. While realized prices were generally not materially different than in 2024, being marginally lower in oil, but higher in gas, our revenues of $601 million were down 20% from the prior year, essentially in line with the lower volumes. But the truer comparison of the impact of Triton issues can be seen in the comparison with the 2023 pro forma levels. On this basis, production was down some 4.5 million barrels or approximately 30%. Our hedge book was in the money at year-end and delivered unrealized hedging gains of $75 million and just under $8 million in realized gains, as we benefited especially from protection against the lower prices seen in Q2 in the wake of the liberation day tariff announcements. Operating costs were roughly 10% higher than 2024, largely as a result of increased maintenance activity at the Bruce platform, as we sought to reduce maintenance backlogs, but also because of a slight weakening of the dollar versus our largely pound-denominated costs. G&A costs were up by just under $2 million, as we made choices to add capabilities to set us up for future success, and we incurred transaction costs of $5.5 million associated with the extensive M&A activity. Despite the challenges in the year, we still delivered a profit before tax of $80 million, but at half the level of the prior year. Our current tax charge was only $2 million, as we benefited from in-year group relief associated with losses made in the Triton subsidiaries. However, in common with all our North Sea peers, and as we also reported in our H1 results last year, we had a material deferred tax charge of $130 million, including a $65 million charge relating to the enactment in Q1 of the extension of the EPL from 2028 to 2030. The result of these noncash accounting impacts is that we reported a book tax charge of 165% and posted a loss after tax of $52 million for the year. Turning now to the balance sheet and notable changes in the year, which result mostly from acquisitions. Our exploration and evaluation balance doubled to $43 million, primarily as a result of the completion of the Parkmead acquisition, as we became operator and brought into a greater share of the Skerryvore exploration prospect. We also consolidated the acquisition of Prax Upstream, which completed on the 11th of December as a business combination. As preannounced in January, we ended the year with net debt of $200 million, being effectively 1x EBITDAX. But as already explained, we see this as something of an anomaly and would have been net cash pro forma for the deferred cash flow from the Triton issues. And as already noted, we have more than halved our net debt since the balance sheet date. Finally, inclusive of the impact of new drilling at Belinda and Evelyn as well as bringing Lancaster into the portfolio from the Prax Upstream business, we ended the year with the exceptionally low level of decom provisions of less than $2 per 2P barrel of oil equivalent. While we always update on our hedging with our results, given the dramatic events in commodity markets year-to-date, we felt that a slightly deeper dive is merited today. Before turning to how we positioned -- we are positioned and what we expect to be doing in the future, we wanted to give a bit of background on what's been happening in oil and U.K. wholesale gas markets year-to-date. We came into the new year with all market fundamentals in terms of physical supply of oil and, to a lesser extent, gas pointed to a weak Brent prices during 2026 and medium-term weakness in gas prices. Bearish sentiment was evident in the market, and this was apparent in that despite unusually low European storage levels, U.K. gas prices averaging around 84p per therm for January and February were roughly half the level of the equivalent mid-winter period in 2025. However, of course, things changed dramatically after the war in Iran commenced on the 28th of February. For the 3 weeks of March so far, NBP day-ahead pricing has averaged 127p per therm, and Brent has averaged $103 per barrel. But as the charts on this page, which show the shape of the forward curve for Brent and for NBP at various dates since early January right up to a week ago on the 19th of March, things really elevated in reaction to the de facto closure of the Strait of Hormuz and the physical attack on the Ras Laffan and Pearl GTL plants in Qatar. But although near-term prices, the front end of the curve have risen sharply, the prices further out in time have not risen nearly as much, and the forward curve for both oil and gas are in very steep and, in fact, unprecedented backwardation. These forward prices should not be seen as predictors of future prices, but they do represent the levels at which Serica would be able to hedge in the market through swaps. So with this backdrop in mind, we turn to where our hedge book stands today. We've been building our hedges materially during the first quarter, and the reason for that goes to the reasons why we hedge. Firstly, we have an ongoing requirement by our banks to hedge a certain amount on a rolling basis, being 50% of the current year and 30% of the following year. But beyond that, we are always striving, appreciating that we cannot predict events and prices to find the Goldilocks solution, not too little and not too much. On the one hand, we seek to ensure that we protect downside sufficiently to ensure that we can cover our cost base in tougher times as well as to support our capital allocation priorities, including the dividend. This also includes maximizing the liquidity available to us through the borrowing base under our RBL. But on the other hand, we do not want to overhedge so that events, even if they are the kind of tail risk events we have seen this month, which cause prices to spike, can benefit our shareholders. So we were always looking to protect the downside, but leave as much as possible of the upside potential. In common with our peers, we do this both by imposing policy limits on our absolute amount of hedging and by the choice of instruments that we use for hedging. As shown on this table, Serica is currently hedged for about 60% of our forecast production in 2026 and about 50% in 2027, which is inside our policy limits. When we combine the impact of the unhedged part with the use of zero-cost collars, which retain an element of upside exposure, we retain about 40% upside exposure in 2026 and around 55% in 2027. The position in gas is actually more exposed to upside than in oil with only around 50% of our gas volumes hedged this year and less than 40% for next year. While we have built the book since the beginning of the year, about 50% of the hedges we've built have been taken on since the start of facilities from the 2nd of March, and we've been able to capture some very attractive opportunities. For instance, although the table show averages for the quarter, we have, in fact, recently placed some swaps for March at levels up to $111 per barrel for oil, which is especially pleasing given our most recent Triton lifting concluded only earlier this week. We appreciate that it can be confusing to understand the intricacies of hedging approaches. And although we hope the floor prices are quite clear on this table, it is tough to figure out what the foregone upside price implications are. So, as a bit of a guide, we estimate that our current hedge book for 2026 with oil prices at a notional $100 a barrel, we realized roughly $80 a barrel. And at 150p per therm for gas, we realized roughly 130p per therm. Taking a look at this slide, you may think you've seen this before, and that is because you have. We're pleased to say that we are simply reiterating our guidance across production, OpEx and CapEx at the levels we set forth with our trading statement in January. What we have though updated on this page is the carry-forward tax loss balances that we've reported today as of the 31st of December 2025. As you can see from a combination of our own activities during the year as well as M&A that we completed during 2025, we ended the year with essentially double the level of tax losses as we started with. We now have roughly $2 billion of corporation tax and SCT losses and roughly $500 million of EPL losses. And using the simple math that we've applied before of corporation tax loss times 30%, SCT times 10% and EPL times 38%, then the notional value of these losses is around $1 billion. Finally for me, I wanted to say a few words to add what Chris has already covered in relation to the M&A we announced in the year. In my previous career as a banker, we would tend to consider that the M&A was done when the deal was signed. But what I've since learned is that to ensure we deliver value, we need not only to be capable of efficiently delivering complex operated asset transactions through to completion, but also to ensure that the businesses are integrated efficiently into Serica and set up to realize their value potential. Serica has, therefore, invested in human capital to ensure that we have the skills and processes that are needed to be successful in an M&A growth strategy. This includes being agile and opportunistic in the execution phase and ensuring that we always do what we say we will do. So we sustain Serica's good reputation in the M&A market as a credible and trustworthy counterparty. That also means having the people, processes and systems that are set up to deliver in a repeatable way to coordinate and drive forward the multiple work streams needed to get to completion and day 1 in the fastest possible time, all while also ensuring safe and reliable continuous operation of high-sensitivity assets and complex IT systems. The process we have just completed to see GLA and the Shetland gas plant come under our control today is a great example of this. Finally, this also means doing the necessary work upfront to protect value from the transaction and to ensure that the people and systems can be integrated as smoothly as possible to ensure that the value can be realized in practice. One example of this is the approach we've taken with the Spirit Energy deal, which is not yet completed. Although we only assume completion from around end September, we know that future gas prices were key to value realization on this deal. So based on a very constructive relationship with Spirit Energy and with their parent, Centrica Energy, we have been able to put in place deal contingent hedging for roughly 50% of the production, but on a basis which protects the value of our deal, but still leaves ample upside potential for Serica to enjoy. This was made possible in part thanks to Centrica Energy being a leading participant in gas markets and working through the complexities of a structure like this with us. With that, I will hand back to Chris for some concluding remarks. Christopher Cox: Thank you, Martin. This is another slide that should look quite familiar, and that's because our focus areas remain unchanged. Safety is, of course, the #1 priority and delivering reliable production this year that will generate material free cash flow. We are integrating acquisitions, progressing organic growth projects and still looking in the market to continue prudently adding to the portfolio to deliver for our shareholders. In addition, we continue to plan to move from AIM to the main market of the London Stock Exchange during the year. We are very excited by the opportunities ahead and look forward to updating you on progress throughout the year. And with that, I will hand over to Andrew to run the M&A (sic) [ Q&A ]. Andrew Benbow: The M&A, I hope not. Christopher Cox: Q&A, the Q&A. I'm sorry. Andrew Benbow: I think we'll keep other people with the Q&A -- with the M&A. Andrew Benbow: Right. So the first question actually is about the last thing that you mentioned. When are you anticipating being admitted to the main market? And what impact do you think this might have on the share price? Martin Copeland: So probably I'll take that one. Yes, we -- I think we put in our detailed announcement today that we expect now that will be in Q3. It's -- the work is ongoing for it. There's a lot of process. And I know, as Andrew often says, a surprising amount of process just to move from one part of the London Stock Exchange to another. But nonetheless, there is, and we are working it hard. We expect it will be during Q3 of this year. So very much on track to get there during the year. In terms of what it will do for the share price, I mean, it's very -- obviously, our main reason for wanting to do that is to get a greater degree of exposure for Serica to investors generally. And the wider the exposure we get, the better it is generally for support for our share price. And in particular, certainly at anything around our current market capitalization, we would be very comfortably inside the FTSE 250. So one of the 350 biggest companies in the U.K. And the benefit of that is once you get into the FTSE 250, there are a lot of tracker and index funds that have to follow stocks in that segment. So that's one of the main reasons why we see a benefit in moving to the main board, and we remain very much on track to make that move during the course of the year. Andrew Benbow: Moving on to Triton. We've had a few questions come in unsurprisingly. So I'll try and amalgamate in a way that makes sense. There's kind of 3 questions really. One is, why couldn't the maintenance have been done last year? Second is a similar one, which is, will the work at Triton reduce the maintenance period later this year? And then the general question, which I think is the one that everyone wants to know is, how much should the reliability of Triton concern shareholders? Christopher Cox: Thank you. I'll try and address all 3 of those. So the work that had to be done in February and March was not something that we actually even knew about when the last shutdown took place. What happened was in doing some inspections of key equipment, Dana discovered that they could not vouch for the status of some of that equipment. They could not prove that they've been maintained properly or inspected properly, and they didn't have the records to be able to prove that. So there wasn't necessarily evidence that there was anything wrong with the equipment. They just couldn't show from their maintenance systems that it had been inspected when it should have been inspected and maintained properly. And so what that meant was when they put all of that together, they felt that there was a risk that was intolerable and equipment could break before it got to the next shutdown. And so rather than take that risk, they took the decision that they would shut down and fix it now. I think you asked, does that shorten the shutdown in the summer? It doesn't because some of the things they discovered that need maintenance, they haven't done now and they haven't to the summer shutdown. However, I will say that in our planning for the year, we assumed that Triton would be off essentially for 3 months in the summer, whereas Dana is planning for a 65-day outage. So we've built in a buffer there to some extent. And as I said during the presentation, we've also assumed a week's downtime on Triton as we go through the year outside of that summer shutdown window. So we think we've made some fairly conservative estimates around Triton for the year. So how much should shareholders be concerned about Triton? Look, it's still not as reliable as we want it to be. That's clear. And we are working with Dana on a number of things to try and improve the reliability. And the key is, frankly, it's the power turbines and the compressors where we're reliant on one of each at the moment, and there are 2 of each on the vessel. And we need to get to a point where we've got 2 power turbines and 2 compressors available. And that's -- it's going to take a few months before we're in that position. In the meantime, we're quite vulnerable to outages. But as I've said, I think we've been quite prudent and put in place some fairly conservative assumptions this year such that we're confident with the production guidance that we've given. And we're going to be part of -- Dana has just formed a compression improvement task force, which is targeting getting 90% efficiency with a single compressor and figuring out what else needs to be done in order to have 2 compressor operations. And we're going to be involved in that work ourselves. So I think, as we move forward, things will get better. But for now, it's -- we still have that vulnerability. We can't shy away from it. Andrew Benbow: And just briefly to clarify, our guidance takes in effectively 1 week of downtime each month over the course of the year. Keeping on Triton for another one, would you be comfortable bringing Kyla into the FPSO? Christopher Cox: So -- yes, I'll take that one. So, Kyla, just to be clear, we've announced that we've moved the barrels from Kyla into reserves as of the end of last year. That doesn't mean we've taken a sanctioned decision on it yet. As I mentioned during the presentation, it's fighting for capital with a lot of opportunities in our portfolio. And we will make a decision on which ones we're going to pursue in which kind of time frame as we go through the year, and more detail at the Capital Markets Day. So we haven't taken FID on Kyla yet, but it's mature enough. We know enough about it. We like it as a development. So we were at a point where we could move it from resources into reserves. Now, of course, we're not going to bring in another field into Triton until we're comfortable that we can produce it safely and efficiently. And the fact is we've only just brought on Belinda in the last few days. And we had anticipated that at the end of January, and it didn't happen because we had a shutdown. So there's no way we're bringing another development into Triton until we get stable operations there. But as I've said, I think Dana is doing a lot of the right things to achieve stable production and 2 compressor operations. And I'm hopeful that we get to the point where, yes, we can sanction Kyla and bring it into Triton. Andrew Benbow: Somebody on the side actually has just said that they're a bit bored of talking about Triton's compressor... Christopher Cox: Me too. Me too. I'm fed up with talking about it, too, but it's what we get asked questions about and for good reason. Andrew Benbow: They do have a question with it as well, which is -- which I think I'll take the time to broadly think about it, which is what percentage of group production will come from Triton in 2027? Now, we obviously haven't guided for 2027 as yet. But if you look at analyst expectations, it's probably somewhere in between 1/4 and 1/3 of production will come from Triton next year. So it clearly becomes of significantly less importance to the portfolio, albeit still being highly cash generative. Next question, I think, is one for Martin, actually. Why do companies who acquire assets from [ TotalEnergies ] sometimes pay Serica rather than Serica paying for the assets? I presume they're concerned about the decommissioning costs at the end of field life. What value is it that you can see that vendors can't? Martin Copeland: Good question. So yes, there's a bunch of things embedded in that, obviously. One is companies like TotalEnergies makes a strategic decision that they basically want out of an asset like this. And you can understand why because we think it's got amazing potential, we're buying it as it is, but they thought it was going to be a lot bigger than it actually is. And so it's kind of got -- it's been something that's been strategically on the decision to exit. So, therefore, price is not the most important thing. But add to that, yes, why -- they're not -- obviously, they're a commercial and sensible company, and we are too. And therefore, they -- whilst we're receiving cash, that's because the effective date, the historic date at which the deal we economically owned it was the 1st of January 2024. So the $57 million odd that we received today is basically the after-tax cash flow from that asset for that period until today. So that effectively, we economically owned it, and we receive it today because we've legally completed today. And then, when you think about how that works, yes, we are taking on the decommissioning liability associated with that asset in the future. The thing about decommissioning liabilities are that they are obviously an obligation to decommission in the future, but the timing of that decommissioning, and indeed, the absolute amount of the cost of it are not certain. And absolutely, our objective, which is different than that of, say, TotalEnergies when they owned it, is to continue to invest in the portfolio through some of the things that Chris talked about, like maybe Glendronach, maybe a Tormore well, but also getting the benefit of third-party gas into the plant like Victory that's already there and Tornado that we hope to come in the not-too-distant future. All of those things would just push out the time at which decommissioning happens. And all of that is very significant in terms of additional value for us. So for us, it's about delivering on those things, which TotalEnergies was not going to do because the capital investment associated with them just didn't screen for them relative to all the other global opportunities they have. It does screen for us, and we, therefore, look forward to doing it. And it's a case of, again, as Chris indicated, it's right assets, right hands, and it's just the natural kind of food chain, I would say. One other little point is there's also a tax differential. And TotalEnergies was being fully taxed on it under their ownership. And indeed, the receipt of cash we've had today is after it's been taxed for that whole period at 78%. But when in our hands, we're buying it into some of the entities we acquired through Prax Upstream, and that means it will be sheltered from a large amount of the tax now as of from today when it comes into our ownership. So there's a different valuation reference point for us as well. So I hope that answers the question. And that's just using GLA as an example, but you could play that across to other things as well. Andrew Benbow: And speaking of some of the other things that we're acquiring, given the context of very high commodity prices, could you talk about the expected payments on closing of the acquisitions of the ONE-Dyas and Spirit's assets? Assuming oil and more particularly gas prices stay where they are, those payments could be very favorable to Serica. Martin Copeland: Yes. I mean, clearly, they will -- we do -- as we track them, they're going to be up versus where our original planning for them was when we did the M&A because we weren't planning for prices where they are right now. So yes, the net impact of that is going to be that we expect to get higher payments than we would have done or in the case of Spirit Energy to essentially probably the net payment by us will probably be lower. The exact numbers of those is obviously something that needs to be worked through based on what actually happens to commodity prices between now and when we actually complete. The only other cautionary note I'd say is that, again, just as I mentioned for TotalEnergies in the case of both ONE-Dyas and Spirit Energy, under their ownership, they're being fully taxed with the full EPL rate. And so whatever the increment is, it's going to have a higher tax rate against it than it would under us. So that does help to dampen the impact of higher prices a little bit. Andrew Benbow: A more general question on the M&A landscape in the North Sea. How is the current market? And how has the M&A dynamics changed after Adura and NEO NEXT+? Martin Copeland: Yes. I mean, I think Chris alluded to that in his remarks that -- we'll have to say that we think the opportunity set in the U.K. this year is going to be down on last year. And I guess, it's kind of easy to say that because there was a hell of a lot of activity last year, right? So the bar would be very high to be able to repeat the level of activity in the basin this year that we saw last year. But that impact of the significant consolidation that we've seen is probably a reason why we think there'll be less M&A this year. It doesn't mean to say there won't be any. And I do think in time, as the likes of an Adura or a NEO NEXT+ and some of the others, Ithaca, as they look at their portfolios, they may well see that there are assets within there that in the normal course, they look to divest and move on. And that's kind of normal course business that we would expect to carry on. But overall, we just think the activity in the U.K. is likely to be down. The other cautionary note on M&A is that whilst we see these very high prices, high -- not just high, but volatile prices, prices that move all over the place are very difficult to transact M&A in, right? It just makes doing deals really hard when prices are moving really fast. So that's not a comment specifically about the U.K. It's just a general comment about doing M&A in the upstream. Andrew Benbow: And while we're on the discussion about U.K. M&A, then how about overseas? You mentioned it's something that you're looking at. So what kind of areas could people expect an acquisition to be made in? Christopher Cox: Do you want me to take that one? So look, we are starting to look overseas and get a bit more serious about that. And there's really a couple of reasons for that. One is what Martin just mentioned, there are fewer and fewer opportunities in the U.K. We're still working on a few opportunities, but not as many as they were a year ago. And we want to have a sustainable business. And at some point -- the U.K. is in decline. And at some point, you'll get to a point where there's not enough production left for us to maintain the kind of size of business that we are. So sooner or later, we have to look overseas anyway if we want to have a sustainable business. So look, we don't want to limit ourselves too much to where we might go. We do quite like Southeast Asia. So why would that be of interest? Really, it's an area where we can see playing out our strategy in a similar way to we do in the North Sea. Southeast Asia in general is a bit less mature than the North Sea, but it's -- most of the fields are kind of mid- to late life now. So you're getting to the point where a number of the majors are thinking about exiting fields there or just reducing their exposure in the area. So we're at that point now where -- probably where we were in the North Sea 10 or 15 years ago, frankly, where opportunities are coming available for companies like us to go in. And as we said, push out the decommissioning, extend the life of fields, drill more wells, find more reserves. So we just see that it's a ripe area for that kind of an opportunity. Yes. And I don't really want to comment too much on other areas because as soon as we say we're ruling something out, and then, an opportunity comes up, who knows where we could go. So never say never, but I think Southeast Asia is probably first on our list of places that we like for the reasons I've just mentioned. Andrew Benbow: I'm aware we're running out of time. We've got quite a lot of questions still to go through, so I'll try and group them together. Dividends, quite a lot of people have asked about dividends. So a question for Martin. Do we see a return to dividend growth? The dividend looks quite small considering the free cash flow to come. Martin Copeland: It's a really good question. And look, the way we think about the whole capital allocation piece is we've got to balance the dividends to shareholders with investment in the portfolio and with M&A growth. And it's the -- we're not alone in that. That's kind of the conundrum for all of us and our peers that are involved in this. It's probably going to sound a bit like a stuck record in saying, wait for the CMD, but we are definitely planning to give a great deal more detail about how we balance all of those things at the Capital Markets Day. I guess, it's a sign of confidence we felt to show that we were able to continue the dividend at the same level as before despite the fact we had a challenging year last year, but -- now, but we expect to give a lot more clarity. And we've got to -- and show the really interesting and exciting returns can come from the investment in our portfolio, but it always while ensuring that we also pay a sensible amount of dividend. So I know that's not going to directly answer your question, but that's probably what we can give for now. Andrew Benbow: Another quick one for you, Martin, about tax losses. How long do you think they'll last for? And which of your assets do they cover? Martin Copeland: Really good question. And we -- you probably noticed that we've sort of stopped giving guidance on how long we think they're going to last for, and that's because we used to give it. And then, we found that they lasted for a lot longer. And as it happens last year, we created a lot more losses either through our own activity because the silver lining on Triton performance was that, as I probably indicated, we actually added to the loss pool there rather than reducing it during the year. But then, of course, we also did some transactions that brought some losses with them. So in terms of -- and then, of course, how quickly use it is also a function of what happens to the commodity price, which is incredibly difficult to predict. So it sounds like a bit of a cop out. We've got a lot of losses now. They basically will -- are reasonably balanced across our portfolio with the exception of Bruce, Keith and Rhum, which is in the entities that basically don't have any losses. But that, as Chris indicated, is one of the key areas we're looking to make investment into. And investment is not only needed to bring short-cycle gas to the U.K., which it desperately needs, but is also efficient when it comes to the use of tax because if we can invest, we get still strong capital allowances against the 78% tax rate that applies there. So we have a strategy which is kind of fit for all seasons in that respect. Andrew Benbow: And speaking of tax rates, I think we should finish with politics and apologies to people whose questions we haven't got around to, but please do e-mail them over to me directly if you'd like a response. Are you talking face-to-face with Ed Miliband or Rachel Reeves? With such pressure from so many sources, do you feel the logic of the message is getting through? And are there any milestones going forward? And do you feel more positive in the stance of Whitehall? Christopher Cox: So we're speaking with everybody that will listen, both individually and as part of industry bodies. I was personally in the meeting with Rachel Reeves, #11, whenever that was, just around the spring statement time. The message is definitely getting through about the need to stimulate the North Sea before it's too late. We have a tax regime that's been designed by this government in consultation with the industry. And yet, as we sit here today, that won't come into force until 2030. And our argument is just bring that in now. Treasury absolutely get that. I guess all I'll say is there are other parts of the government that are not necessarily sold on that idea. So I'm not going to try and predict where we'll end up on that because at the moment, I don't think anybody in government really knows where we're going to end up on that. Andrew Benbow: Martin, anything you want to add? Martin Copeland: No. I think Chris has covered it very well. I mean, look, everyone in this call will know, we've seen the volume of really quite broad-based sentiment now to recognize the importance of security of supply. And that's an argument that we've clearly been supporting for a long time. We just hope that a sense of pragmatism, the recognition of the importance of security of supply from a sort of defense and just national security perspective will begin to carry more weight than it perhaps does -- has done in recent times. Andrew Benbow: And with that, Chris, would you like to give any closing remarks? Christopher Cox: Well, just that we've got another exciting year ahead of us. We are integrating new assets into our portfolio. We're seeking to do more M&A still on top of that. We will be growing production as we go through this year, both on our existing portfolio and the new assets. We will be moving to the main market this year. And we've got lots of exciting investment opportunities in our portfolio, about which we will speak at the Capital Markets Day, which is the next time we will see you. Operator: Perfect, guys, if I may just jump back in there. Thank you very much indeed for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback. On behalf of the management team of Serica Energy plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.
Operator: Good day, and welcome to the American Shared Hospital Services Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Kirin Smith. Please go ahead. Kirin Smith: Thank you, Chuck, and thank you, everyone, for joining us today. AMS' fourth quarter and full year 2025 earnings press release was issued today before the market opened. If you need a copy, it can be accessed on the company's website at www.ashs.com at Press Releases under the Investors tab. Before turning the call over to management, I would like to make the following remarks concerning forward-looking statements. Please note that various remarks that may be made on this conference call about future expectations, plans and prospects for the company constitute forward-looking statements for the purposes of safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may vary materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the company's filings with the SEC, including our annual report on Form 10-K for the year ended December 31, 2025. The company assumes no obligation to update the information contained in this conference call. Before I turn the call over to management, I'd like to remind everyone about our Q&A policy where we provide each participant the time to ask one question and one follow-up. As always, we'll be happy to take additional questions offline at any time. With that, I'd now like to turn the call over to Ray Stachowiak, Executive Chairman. Ray, please go ahead. Raymond Stachowiak: Thank you, Kirin, and good afternoon, everyone. As I reflect on 2025, I'm reminded of the strength and importance of our health system partnerships, which continue to be our foundation to our business and a key driver of our long-term strategy. Over the past year, we've worked closely with both long-standing and new partners to position our company for success in 2026 and beyond. These alliances have allowed us to expand our clinical capabilities, strengthen our operational foundation and enhance patient access to advanced cancer care. 2025 was a year of transition and investment. While our total revenue remained relatively stable at $28.1 million, the underlying transformation of our business was significant. We continued our shift toward a direct patient care model, which now represents the majority of our revenue and provides a more stable and scalable platform for long-term growth. At the same time, we encountered challenges across certain areas of our business, including physician turnover, reimbursement dynamics and expected headwinds in our Leasing segment. Importantly, we took decisive actions to address all these issues. A key highlight of the year was the strengthening of our partnerships, including our new collaboration with Brown University Health in Rhode Island, which has helped us rebuild our physician base and improve treatment volumes. We're also very pleased to have -- to announce our long-standing relationship with Orlando Health has been extended by a 7-year lease extension for our proton beam radiation therapy system. I would like to highlight our long-standing partnership of over 2 decades with Orlando Health, which clearly exemplifies the long-term nature of our relationships and reflects the ongoing collaboration in delivering advanced cancer treatment services. In addition, as part of our broader focus on strengthening our financial position, we're actively engaged with our lending partners as we evaluate opportunities to enhance our capital structure and support our long-term growth initiatives. We have a long-standing relationship with our lenders and these discussions are constructive and ongoing. Looking ahead, we believe we've laid a strong foundation for future growth, supported by new and old partnerships, expanded clinical capacity and a clear development pipeline. With that, I'll turn the call over to Gary. Gary? Gary Delanois: Thanks, Ray, and good afternoon, everyone. 2025 was a foundational year for American Shared Hospital Services as we expanded our direct patient care services platform and strengthened the operational infrastructure needed to support long-term growth. Our strategy is centered on building and leveraging strong partnerships with leading health systems, and we made meaningful progress on that front throughout the year. In Rhode Island, we worked closely with Brown University Health, Care New England and CharterCARE Health to stabilize and rebuild our radiation oncology physician team. Through these efforts, physician staffing has now been stabilized, and we're beginning to see improvements in treatment volumes, which we expect to continue into 2026. We also took important steps to enhance our operational capabilities, including improving our revenue cycle management infrastructure. This gives us greater control over billing and collections and positions us to improve financial performance over time. From a growth standpoint, our Direct Patient Care Services segment expanded significantly, driven by a full year of operations at our Rhode Island centers and our center in Puebla, Mexico. These centers are increasing patient access to advanced radiation therapy treatment options and are central to our long-term growth strategy. Additionally, we saw strong growth in LINAC treatments with volumes increasing significantly year-over-year, reflecting the contribution from our Rhode Island and Puebla centers. At the same time, Gamma Knife volumes improved on a same-center basis following technology upgrades, while proton therapy treatment volumes reflected variability. Our international business continues to be a strong contributor and meaningful source of future opportunity. In 2025, we successfully relocated our Lima, Peru center and upgraded our Gamma Knife to a state-of-the-art Esprit platform. We continue to deliver strong performance in Puebla, which has exceeded our expectations, and we maintain leadership positions in Ecuador and Peru with the only Gamma Knife centers in those countries. Looking ahead, we see significant opportunity in international markets, including the development of our Guadalajara, Mexico center, which we expect to begin operations in 2026. In Rhode Island, we have also created a clear runway for expansion through our certificate of need approvals for both a new radiation therapy treatment center in Bristol and a proton beam radiation therapy center in Johnston. These projects represent major long-term growth drivers and further strengthen our partnerships with leading health systems in the region. From an operational and financial perspective, we are also focused on strengthening the overall foundation of the business, including improving cash flow generation and aligning our cost structure with the scale of our operations. As Ray mentioned, we're working closely with our lending partners as we continue to invest in the business and position the company for long-term growth. We believe the steps we are taking operationally will support these efforts and enhance our financial flexibility over time. While 2025 included operational challenges, we addressed them directly and made the necessary investments to position the company for improved performance. Our priorities going forward are clear. increase treatment volumes across our existing centers, drive operational efficiencies and margin improvement, expand our footprint through disciplined development and continue to leverage our partnerships to scale our platform. With the foundation we've built, we are optimistic about 2026 and confident in our long-term growth trajectory. With that, I'll turn the call over to Scott. Frech Scott: Thank you, Gary, and good afternoon, everyone. I'll begin with our fourth quarter results, followed by a review of our full year 2025 performance and key financial drivers. For the fourth quarter, total revenue decreased 14.8% to $7.7 million compared to $9.1 million in the prior period. This decline was primarily driven by the expiration of 3 Gamma Knife contracts and lower proton beam radiation therapy volumes. Revenue from our Direct Patient Care Service segment represented 63% of total revenue, increasing 2.6% year-over-year to $4.8 million, driven primarily by increased procedures at our Puebla, Mexico facility and in Rhode Island. Revenue from our Medical Equipment Leasing segment declined 33.9% to $2.9 million, reflecting lower PBRT volumes and contract expirations. Gross margin for the quarter was approximately $906,000 or 12% compared to 35% in Q4 2024, reflecting both lower treatment volumes and the continued shift in revenue mix towards direct patient services. Net loss attributable to the company improved to $631,000 or $0.09 per diluted share compared to a net loss of $1.6 million or $0.23 per diluted share in the prior year period. Adjusted EBITDA was $868,000 for the quarter compared to $3.8 million in Q4 2024. For the full year, total revenue was $28.1 million compared to $28.3 million in 2024. Direct patient care services revenue increased 23.7% to $15.5 million, while leasing revenue declined to $12.6 million, reflecting the company's ongoing strategic transition. For additional perspective, LINAC revenue increased 35.4% to $11.5 million, while Gamma Knife revenue decreased 5.5% to $9.2 million and proton beam radiation therapy revenue declined 26% to $7.4 million. LINAC treatment sessions more than doubled to 28,147 in 2025, the first full year of operation for both Puebla and Rhode Island. Gross margin for the year was $5.1 million or 18% of revenue compared to $9.2 million in 2024, reflecting increased operating costs and lower leasing segment contributions. The net loss attributable to the company was $1.6 million or $0.23 per diluted share compared to net income of $2.2 million in 2024, which included a $3.8 million bargain purchase gain related to the Rhode Island acquisition. Adjusted EBITDA for the full year was $5.5 million compared to $8.9 million in 2024. Turning to the balance sheet. We ended the year with approximately $3.7 million in cash compared to $11.3 million at the end of 2024. The decrease was primarily driven by $7.5 million in capital expenditures related to our Rhode Island expansion and international investments. Total debt at year-end was approximately $17.3 million, primarily associated with our credit facilities. As previously disclosed, certain financial covenants were not met at year-end due to lower profitability during our transition, higher operating costs and reduced leasing contributions. We are in active and constructive discussions with our lender regarding amendments and potential restructuring of our credit facility. Based on these discussions, we believe we will reach an agreement that provides the flexibility needed to support our business plan. While these conditions raise substantial doubt about our ability to continue as a going concern if unresolved, we are confident in our path forward based on our ongoing lender engagement and improved operational performance. Finally, I would like to point out that as of December 31, 2025, our shareholders' equity, including noncontrolling interests, was $24 million or $3.66 per outstanding share compared to $25.2 million or $3.92 per outstanding share at December 31, 2024. And when comparing this to our current market valuation, we'd like to highlight the steep discount in our market value. This concludes the financial review. I'll now turn the call back for Q&A. Operator: [Operator Instructions] And our first question for today will come from Mim Marin with Zacks. Marla Marin: So it seems clear from your remarks and from what we've seen that when you upgrade equipment, which is obviously a positive over the long run. But in the short term, there's a temporary distortion because the absence of that equipment sort of distorts the year-over-year comparability. So first of all, thank you for providing some same-center volumes. I think that's helpful. But long-winded way of getting to the question, which is, as you deepen your footprint in Rhode Island, will you be able to help offset some of that noise by referring patients from one center to another? Or is that just not something that's easily done? Gary Delanois: Well, thank you for your question. That is certainly part of the strategy in Rhode Island. Once we establish the infrastructure that we have in place, we are able to leverage that infrastructure over a bigger footprint, and there are the economies of scale, and that certainly is part of our strategy in building out our regional development in Rhode Island. Marla Marin: Okay. Great. And then one follow-up. So if you could just remind us of the time line for constructing the first new facility in Rhode Island, but also importantly, how early before the center actually opens do you begin initiatives to staff the facility? Gary Delanois: We anticipate that the Bristol facility will come online in late '27 and followed by the proton facility in '28. In terms of staffing, we normally start staffing up several months in advance. Again, that's one of the advantages that we have. We have a team, for instance, of radiation therapists or physicists or dosimetrist, physicians that we can spread over that certainly in the -- at the start or at the initial ramp-up period, so we can very closely manage our expenses. And then as we need to add additional headcount, we'll do that over time as the volumes increase. Marla Marin: So could I sneak one follow-up in very brief follow-up. So should I -- should we interpret that as there really won't be that much downtime for some of the professional staffing because of the time line between hiring and then actually opening the facility and the possibility of utilizing some of those resources at other sites? Gary Delanois: That is correct. Operator: The next question will come from Anthony Marchese with Investor. Anthony Marchese: Question for you regarding the 3 expired contracts. Did you know about these contracts in the last conference call? So I'm trying to figure out why we can't -- why we're constantly surprised with, oh, revenue was lower this quarter because contracts expired. Isn't that something that ordinarily you should give out to investors if you know that these contracts are expiring? Gary Delanois: Ray, I'm just going to ask you just by way of history of other calls, our disclosures on expiring contracts, but we did have 3. And in all 3 of those cases, they were centers, health systems that -- basically decided to do the update themselves rather than utilize us as part of that financing of their capital expenditure. Raymond Stachowiak: Yes. Tony, I think there's nothing new really being disclosed here. We've mentioned it in past calls and disclosures. But when you do a fourth quarter -- well, 2025 comparison to 2024, if those agreements expired in the third quarter '24, you're going to see negative variances when you compare the full year. If they expired in first quarter '25, you're going to see negative variances when you compare fourth quarter '24 against fourth quarter '25. So I think we've been pretty consistent. There's no really new contracts expiring. We have one, but it's low technology, and we're kind of just keeping it extended with low volumes. There's little or no cost to that situation. Anthony Marchese: Right. Right. Okay. And my follow-up question is, do you anticipate being profitable for 2025 -- I'm sorry, 2026 overall? Gary Delanois: Yes, go ahead and please take it. Raymond Stachowiak: Yes, Tony, we really can't speculate on that. We really have not ever been in the habit of giving forward-looking statements. So we really can't comment on that. And those foundational issues have been addressed. We've addressed them. Anthony Marchese: Got it. I assume that your credit agreement or even one that you're -- that you would be entering into at some point, hopefully in the near future. Would that prevent you guys from buying back stock? Gary Delanois: Tony, could you restate the question? I'm not sure. Anthony Marchese: I'm just asking your ability to buy back stock, is that constrained by a credit agreement or you guys have just decided that you don't want to buy back stock? I mean my point is you guys are go out of your way to say that you're trading at half of book, but there's no stock buyback and your directors basically own 0 stock. I mean 2 directors own 2,000 shares, 1 director owns 0. So I don't see a lot of -- and I'm sorry, I have to be so harsh, but as an investor, I like to see the Board aligned with investors. And frankly, 3 of your Board members own virtually 0 stock. And so I'm asking if they're not going to buy stock and show some confidence in the company, then perhaps the company might want to demonstrate some confidence to investors by buying back stock. And so I'm just asking, is that a possibility? Or are you constrained from buying back stock because of other factors? Gary Delanois: Yes. I know Ray's addressed this on prior calls, and I'll turn it over to him. Raymond Stachowiak: Yes. So thanks for the question. In the past, the company has not really been interested in a buyback -- stock buyback program. So under this situation with our lenders, it's unlikely to change that stance. And I have continued to align -- I remain very bullish on the company. I know our stock has not performed. And it's disheartening to report a loss for a year. But I'm still very bullish on the future of our company. Anthony Marchese: I know you are, right? 100%. I know you are. And we've had calls and private calls. I know you -- I guess it would be helpful, and I'll just leave it at this. I'm not trying to "die on the hill" so to speak, on this comment. But my point is it would be really helpful and a show of confidence if the 3 directors who own basically 0 stock would step up and buy something. I mean you got -- you pay them $50,000 a year in compensation. Maybe as a way to preserve cash or extend your cash runway, you might want to consider having them take their compensation in the form of stock as opposed to cash, thereby, I think, helping to align their interests along with mine. And I'll leave it at that. Raymond Stachowiak: Yes. I think it's duly noted. We'll take that under consideration, Tony. Operator: [Operator Instructions] And this will conclude our question-and-answer session. I would like to turn the conference back over to Mr. Gary Delanois for any closing remarks. Please go ahead. Gary Delanois: Thank you, Chuck, and thank you all for joining us today. 2025 was a year where we laid the foundation for future growth. Through strong partnerships, expanded clinical capacity and targeted operational improvements, we position the company for the next phase of its evolution. While we encountered challenges during the year, we took decisive actions to address them, and we're already seeing the benefits of those efforts. With a strengthened management team, a growing direct patient care services platform and a robust development pipeline, we're optimistic about '26 and beyond. We remain focused on delivering high-quality cancer care, expanding patient access through the advanced treatment technologies and creating long-term value for our shareholders. Thank you again for your continued support and interest in American Shared Hospital Services. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the Inventiva Full Year 2025 Financial Report Webcast and 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, David Nikodem, Head of Investor Relationship. Please go ahead. David Nikodem: Good morning, good afternoon, everyone, and thank for joining Inventiva's Full Year 2025 Financial Results and Business Update. Our press release was issued yesterday evening, and this webcast and slides will be available in the Investors section on our website following the call. Joining us on the call today are Andrew Obenshain, Chief Executive Officer; Jean Volatier, Chief Financial Officer; and Dr. Jason Campagna, Chief Medical Officer and President of R&D. I would like to remind everyone that statements made during today's conference call and during the Q&A session may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Please refer to Slide 2 of the slides and our SEC and AMF filings for a discussion of associated risks. These statements reflect our views as of today and should not be relied upon as representing our views at any later date. With that, I will now turn it over to Andrew, starting on Slide 3. Andrew? Andrew Obenshain: Thank you, David. Good morning, good afternoon to everyone, and thank you for joining us. Since joining Inventiva 6 months ago, I've been struck by the depth of scientific conviction behind lanifibranor and the dedication of this team. Today, every resource, every decision and every member of this team is now aligned behind a single objective, advancing lanifibranor towards approval for patients with MASH. Let me start with our main focus, our global Phase III clinical trial NATiV3. Enrollment was completed in April 2025 and represented a landmark operational milestone for this company. Today, we are updating the expected timing of our top line readout to Q4 2026, reflecting the disciplined sequencing of our clinical and biostatistical milestones. We believe the data from the NATiV3 trial, if positive, has the potential to carry weight with regulators, physicians and most importantly, with patients. And we believe we are running this program with the rigor and precision all stakeholders deserve. On our pipeline and organizational focus, in the first half of 2025, we made the strategic decision to concentrate all of Inventiva's resources on lanifibranor and MASH. As part of this plan, in Q4 2025, we sold our global rights to odiparcil to Biossil and we may receive up to $90 million of potential regulatory and commercial milestone payments, as well as potential high single-digit royalties on future net sales if approved. While this transaction frees up our internal resources to fully focus on lanifibranor, we are pleased that odiparcil has found a new home where its development can continue, potentially in offering patients with MPS VI an opportunity for treatment. At the same time, we strengthened our leadership team to align with the level this opportunity demands. Jason Campagna joined as CMO and President of R&D. Martine Zimmermann joined as new EVP and Head of Quality and Regulatory Affairs; and Nazira Amra joined as our Chief Commercial Strategy Officer. We are building towards launch in a lean and targeted way, advancing our readout and NDA preparations while laying the early groundwork for commercialization in anticipation of potential approval of lanifibranor. And the opportunity is real. MASH has been underdiagnosed and undertreated for too long, but that is changing. More patients are being identified, more being diagnosed and entering care. Awareness is growing, screening is improving and metabolic disease is finally getting the attention it deserves. The numbers tell that story clearly. There are an estimated 18 million people in the U.S. living with MASH, but only around 10% have been diagnosed, and that number has grown by 25% compared to 2024 estimates. Among those diagnosed with clinically actionable F2 or F3 disease, only around 40% are currently under the care of a treating position. So while diagnosis rates are improving and the market is evolving, far too many patients with significant fibrosis remain without the care they need and face a real risk of progression to cirrhosis and liver failure. If our NATiV3 trial can replicate the 18% fibrosis improvement seen in Phase II, we believe lanifibranor could be well positioned as a potential best-in-disease oral therapy with significant commercial impact. Ultimately, our goal is to make a meaningful difference for patients and that is what drives everything we are doing. I will now turn the floor over to Jason, who will give a brief update on lanifibranor, our differentiated oral anti-fibrotic, and a potential new treatment option that we believe addresses the remaining unmet medical needs in MASH. Jason Campagna: Thank you, Andrew. Good morning and good afternoon, everyone. Let me start by reminding you of the mechanism of action and the development pathway of lanifibranor. Lanifibranor is a small molecule designed to induce anti-fibrotic, anti-inflammatory and beneficial vascular and metabolic changes by activating all 3 PPAR isoforms, alpha, delta and gamma in a balanced manner. This broad mechanism of action is designed to target the hepatic and extrahepatic drivers of MASH simultaneously and in one oral therapy. Lanifibranor was the first asset to achieve statistically significant improvement in the composite endpoint of both fibrosis improvement and MASH resolution in our Phase IIb NATIVE trial, after just 24 weeks of treatment with a favorable safety and tolerability profile. On the basis of these results from our Phase IIb the FDA granted lanifibranor breakthrough therapy and fast track designations. NATiV3, our pivotal Phase III clinical trial was designed to confirm and extend those findings in a larger, more diverse global population over 72 weeks and is intended to provide the data to enable successful marketing authorization in the United States and Europe. NATiV3 is a randomized, double-blind, placebo-controlled trial in patients with biopsy-confirmed MASH and stages F2 or F3 fibrosis, the core of the MASH treatment population. Those with significant disease burden and a high risk of progression to cirrhosis, liver failure and liver-related mortality. We specifically chose a clinically meaningful primary endpoint for NATiV3, fibrosis improvement and MASH resolution. And at 6 months in our Phase IIb the 1,200-milligram dose of lanifibranor showed a 24% treatment effect. NATiV3 was also deliberately designed to mirror the patient population of our positive Phase IIb and the real world as it exists today. A meaningful proportion of our patients have type 2 diabetes and other metabolic comorbidities, and a number are on background GLP-1 and/or SGLT2 inhibitor therapies, mirroring the patient's physicians actually see in their clinics, which we believe will ensure that we generate clinically meaningful data to support both NDA and MAA submission. In April of 2025, we completed enrollment, exceeding our original targets with over 1,000 patients in the main cohort and additional 410 patients with MASH and fibrosis stages F1 through F4 in an exploratory cohort. We anticipate sharing the top line results of our pivotal Phase III trial in Q4 of this calendar year, a moment, I believe, will be significant for the field and for the patients who need new treatment options. I will now turn the floor over to John for our financial review. Jean Volatier: Thank you, Jason. Good morning and good afternoon, everyone. So yesterday evening, we issued our press release with our full financial results for the year ended December 31, 2025. I will focus on the highlights. As of December 31, '25, we held EUR 230.9 million, close to EUR 231 million in combined cash, cash equivalents and short-term deposits. This position was built by 2 significant financing events in '25. First, the execution of the second tranche of our 2024 structured financing in May generating approximately EUR 108 million in net proceeds. And second, our U.S. registered public offering in November generating approximately EUR 139.4 million in net proceeds. We estimate that we are funded beyond our anticipated NATiV3 readout. Based on our current operating plan and cost structure, we estimate that our cash runway extends to the middle of Q1 2027 and to the middle of Q3 2027, assuming the full exercise of our tranche 3 warrants, which could generate up to an additional EUR 116 million. We confirm this way the cash guidance provided earlier. Our R&D expenses for the full year were EUR 87 million, primarily reflecting our pipeline prioritization and, to a lesser extent, the completion of NATiV3 enrollment in April 2025. Marketing and business development spend increased to EUR 5 million primarily due to expenses related to a planned pre-commercial investment as we prepare for a potential launch of lanifibranor if approved. G&A expenses of EUR 47.9 million include approximately EUR 20.3 million of noncash share-based compensation tied to the governance and organizational transition we implemented this past year. I will now turn the floor back to Andrew for closing remarks. Andrew Obenshain: Thank you, Jean. Inventiva enters 2026, well-funded, operationally focused and ready for a consequential chapter in this company's history. NATiV3 is fully enrolled. We've built a leadership team with deep medical, regulatory and commercial expertise, and our regulatory and commercial readiness work is progressing in parallel. Our anticipated top line readout in the fourth quarter of this year represents a genuine inflection point, not just for Inventiva, but for the millions of patients living with MASH, who still have no adequate treatment options. We are truly executing with the discipline and urgency this moment demands. Thank you for joining us today. We will now open the floor for questions. Operators, please go ahead and provide instructions for the Q&A session. Operator: [Operator Instructions] We will now take our first question. And our first question for today comes from the line of Seamus Fernandez from Guggenheim. Seamus Fernandez: Just a few quick questions. First, can you update us on how the performance of the trial has been in terms of dropouts? I know that there were some requirements from the tranches that were coming in that were successfully completed. But just wanted to get a sense of where the dropout rate was as you were kind of wrapping up enrollment. Second question is, can you help us understand how you're thinking about the performance of the 800 versus the 1,200-milligram dose in terms of both weight gain and then ultimately on fibrosis? Is the sort of change from a more typical 12-month endpoint to the 18-month endpoint geared to have the 800-milligram dose catch up to the 1,200 but also manage the potential tolerability or weight gain issues? And then to the last question is just what you're seeing in terms of the overall market interest. Madrigal continues to see very strong uptake in the U.S. How are you thinking about the opportunity to compete with Madrigal? What do you think is the threshold necessary? Andrew, you mentioned 18%. Just interested to know if you think 18% is the threshold where the impact is going to be substantial or is that more reference to the powering of the study? Andrew Obenshain: So, Morning, Seamus. Thanks for the questions. I'm actually going to take your third one first and then hand the first 2 over to Jason. So yes, just to be really direct, we think that if we replicate the Phase II trial and have an 18% effect on a fibrosis, we have an excellent drug. That is the clearing efficacy that we need for in order to have a very attractive market opportunity. We continue to see a lot of market growth, thanks to the entry of the 2 approvals and a lot of awareness around MASH. And there still continues to be unmet need, especially we see in that F3 diabetic patient population, where we think there'll be a very good entry point for lanifibranor. And then at 18% of fibrosis effect with our HbA1c lowering, we have a very good profile for that. Let me then turn the question over to Jason first on the drop-offs and what we've last discussed publicly there. And then the second question about the 800 catching up the 1,200 dose. Jason Campagna: Seamus. So let's take the first one. So you are correct. As part of the structured financing from 2024, there were covenants in there around the release of follow-on tranches that the early termination rate for the trial needed to be below 30%. That number was selected because the original powering analysis from the trial was built allowed for up to a 30% dropout rate. So that was the metric that was used, and we have disclosed publicly at the time of both the first and the second tranche release, which would have been in April of 2025, that we were below that threshold. I think now that we're tightening the guidance to Q4 of this calendar year, I think we were able to confirm we are well within that range and feeling quite good about where we've landed and are reaffirming that the trial is well powered to detect the primary endpoint with the size of the trial that we have and the early termination that we've seen. So the second question you asked about the 2 doses, I think you're landing sort of in the right mixture of elements that are important to us. So we agree with you that in theory, with additional time just because of the way PPARs work and the biology of the liver that that 800-milligram dose will have time to sort of catch up to the 1,200. It was already quite a good dose back in NATIVE, as you recall. But 6 months is relatively thin for a PPAR, which is a transcriptional modulator to sort of do its work. So the idea that you could see a deeper effect with that 800 dose at 18 months, it's very reasonable. But I think where you're landing around the potential dose responsiveness of the tolerability concerns, that is also very important to us. So take weight gain, which you mentioned. Weight gain is a traditional PPAR gamma mediated fluid retention event, and we know that, that fluid retention is highly likely to be dose dependent just from what's been shown with other PPAR agonists and our own data from NATIVE. So we think that potential to have really strong efficacy with both doses, which we were able to show in NATIVE, but may have a different tolerability profile at the lower dose could be meaningful for patients. So it's our hope that both will be positive, and we'll have that opportunity to discuss that with regulators. Operator: Our next question comes from the line of Yasmeen Rahimi from PSC. Unknown Analyst: This is Dominic on for Yas. The first one, we know that NATiV3 is a very large data set. As we're getting closer to top line data in 4Q, what are some of the quality control, I guess, protocols going on in the background to analyze the biopsy samples and what procedures are in place to ensure timely and thoughtful assessment of these biopsies? And then our second question is, can you just talk or help us understand, I guess, how you have how -- if you had any recent safety monitoring committed? And are you seeing anything on a blinded basis on the safety profile? Any color there would be helpful. Andrew Obenshain: Good morning, Dominic. So 2 questions. Let me take the second one first, and the first one over to Jason. Just on safety monitoring, there are periodic monitoring committee meetings every 6 months. You would know if they had said anything. Other than that, we really can't say anything about those meetings. Go ahead, Jason, on the biopsy. Jason Campagna: Yes. Thanks, Andrew. Dominic, so quality control and biopsy. Let me start by saying that the team we have here is outstanding. The clinical operation, the clinical development team have been immersed in the world of MASH clinical trials for the better part of a decade. So this is something that they know well and we carried that expertise forward. So you could think of quality control biopsy around 3 issues. Are we hurting the patient? Meaning at the bedside, are we doing the right things. Second, are we capturing the biopsy according to standard practice? So that's the length of the biopsy, the overall quality of the core, if you will. There's measurements and things that sort of go in and say check or not check. We have reviewed all of those and continue to do so right up until when we get to last patient, last visit later this year. And then lastly, finally, when the slides are sectioned prior to going off and being read, there's a quality control set there that looks at what actually gets made on to the slide. Afterwards, at that point, we are obviously blinded to all of that information. But there is a quality check in terms of are the reviewers, the readers staying on time and on track reading biopsies in the paired matter that's specified both in the protocol and the analysis plan. So I like the teams that we have in front of it and more importantly, I think that they are doing exactly the right work to keep us on track. Operator: Our next question for today comes from the line of Ritu Baral from TD Cowen. Ritu Baral: I want to drill down a little bit more upon final powering. You guys disclosed the over 1,000 final patient number. I think it's 1009 and the 90% powering. What's the effect size that, that powering is for on the primary combined endpoint? And what are your expectations for potential movement around placebo of that, I think it was 7% at the 6 month upon the final primary endpoint? And then I have a follow-up on market expectations around that F3 diabetic population that was mentioned. Andrew Obenshain: Thank you, Ritu. Jason, why don't you go ahead and answer that question? Jason Campagna: On the first one, we are not guiding to the actual effect size, but I can reiterate for you and for everyone what we have been saying. So first, we are with the sample size of over 1,000 patients. We are powered to over 90% on a primary endpoint of the composite fibrosis improvement 1 stage or more MASH resolution. That one has a higher placebo response than we showed in NATIVE, which as you know, was 7%; and two, a smaller treatment effect than we showed in NATIVE data about the 1,200 milligram dose. So that means the overall effect size that we are powered to is smaller. So a much more conservative view than the actual data that we showed in the Phase II program. We just talked earlier with Seamus that, that alongside our comfort with the early termination rates we have, we feel very good that the trial is structurally sound and that will give us an answer to the question one way or the other. Did lanifibranor work first at the 1,200-milligram dose? The testing is hierarchical. We can't get to the 800, unless you went on the 1,200. But that is the core question. We think the trial was well set up to deliver an answer to that question that is well powered and highly confident. I think to your second question around placebo response. The individual endpoints of fibrosis alone. I think everybody on the call knows this, fibrosis alone improvement or MASH resolution alone can be quite noisy. It's not clear after all these years of study why that is, but we do know that they're noisy. On the other hand, the composite endpoint, the primary endpoint of NATiV3, are with us and other sponsors have shown that, that endpoint is much less prone to placebo response. And that makes sense, Ritu, biologically, right? You have in 1 patient, they may on a placebo response move their fibrosis stage by 1 point or more, but the idea that they can also resolve their MASH spontaneously. What that 7% tells you was that in the wild, in the real world, that's incredibly uncommon and that makes total sense with the actual way that patients walk in. It's unusual if you leave them sort of sitting along without treatment, that both of those things will get better on their own. So the placebo response there actually reflects, we believe, the underlying biology, and it should remain very low. We've seen it by precedent, and it's our expectation for the trial that we're running. Ritu Baral: Very helpful. And then, Andrew, a question on how you guys and your own market research is viewing that F3 diabetic population. Do you have an approximate patient number? How is the diagnosis rate in that population changing versus the overall MASH population given the ADA focus on MASH and its messaging to diabetologists? Andrew Obenshain: Thanks for the question, Ritu. So in terms of size, there's about 375,000 patients total F2, F3, in under treatment of care right now. The largest segment is -- one of the largest segments is that F3 diabetic patient population, being 55% to 65% of the patients are diabetic, and about it splits roughly 50-50 in our market research between F2, F3. So that patient population is quite a large patient population overall. In terms of growth, we don't have the granularity down to that segment. However, I would just know anecdotally that F4 is one of the fastest-growing segments. And I think the diagnosis rates are increasing quite a bit overall for F2, F3, F4, just to the number of entrants into the market. So they are growing a minimally proportionate with the market in that segment. Ritu Baral: To that point, Andrew, can you tell us of the 410 expansion cohort patients, how many are F4. Do you know at this point? Andrew Obenshain: I'll pass that question. Jason Campagna: Yes. Confirming you're talking about the exploratory cohort, correct? Ritu Baral: The exploratory cohort, yes. Jason Campagna: We do have F4s in that cohort. They would have screen failed in that case, by histology, potentially other lab values for the actual main cohort in NATIVE. So they represent a sort of range of F4 from. They're all compensated by definition, meaning they have no clinical outcome events, decompensation events. But the range of severity with portal hypertension can be from none to evidence of clinically significant. And those -- that data is going to be quite interesting to us. We're not yet guiding on when we'll have an opportunity to get those data out. It's unclear right now if we have them at top line per se, or in the weeks that follow it in one way or another. But I think as we get closer to top line data, we should be guiding on that more tightly. Operator: Our next question today comes from the line of Thomas Smith from Leerink Partners. Thomas Smith: Just wanted to follow up on that F4 population. And I know you're capturing some of those patients in the exploratory cohort. Can you just expand a little bit on what you hope to learn from that exploratory cohort and how you're thinking about planning for the outcome study in F4s pending the NATiV3 data and perhaps how you're thinking about perhaps how some of those plans could change. We know we're going to get F4 outcomes data for Rezdiffra also in 2027. So some interesting timing around that data set relative to when you're planning on starting this F4 outcome study. Andrew Obenshain: Thanks for the question, Tom. Jason, go ahead. Jason Campagna: So there's a lot there. Let me make sure I get it all for you. So one, just in general, what are we expecting to learn from that cirrhotic population in the exploratory cohort. First, above all safety of lanifibranor in that population. Clearly, right, if you're going to bring in a new therapeutic into a more, let's say, sicker population, you want to obviously want to have safety headroom to do that. So approximately 75 patients we have in that cohort safety above all else. Second, it's not that, as you know, that cohort is not tracked systemically -- systematically, excuse me, for efficacy. That being said, we do anticipate having data of things on like LFTs, transaminases and other things that would point directionally towards whether the drug is biologically active. So really a pharmacology question, very important. We have done hepatic impairment studies with the drug, but looking at it in a real world and a clinical trial would be incredibly helpful. And I think lastly, it will give us a sense in our own hands of how those patients progress over time to later-stage disease. You could read about it, you can model it, you can look at other people's trial, but in your own trial we will see how many of those patients go on to actually have liver related or other events. And that will be incredibly helpful as we think about powering and sizing of an outcome-driven trial, which is what we're right now calling NATiV4, for lack of a better term. But make sure that, that gets to your question, Tom, on the value of that cohort to us? Thomas Smith: Yes, that's helpful. Jason Campagna: Great. So now look, you know the Madrigal data coming. I think yet we acknowledge that. We agree. I think our view is that positive data, if Madrigal were to show it, would only be helpful for the field period, full stop. The idea that we have now finally shown that the surrogate endpoint does correlate with clinical outcomes would be an enormous one for the field. Look no further than what happened in the cardio renal division with proteinuria in the last 6 years. Proteinuria was issued as a surrogate in 2019. I have 5 or coming 6 approved therapeutics for IgAN, that's an enormous win for patients. So we expect something like that would hope would happen here. But clearly, that would influence our thinking about how we think about populations and the ones that are most likely to develop liver-related outcomes because we want to get more of them since we know that the sort of door is open to show that the histology will map to clinical outcome. Operator: Our next question comes from the line of Michael Yee from UBS. Michael Yee: I have [ 32 ] myself. First question is on weight gain, can you remind or confirm the views that based on the phase II also, I think what you're sort of said in the ongoing Phase III that there is some initial weight gain, but that it plateaus and that you don't really see anything beyond a modest increase in some patients, at least in the phase II, and that plateaus and that was initially seen in the Phase III, and therefore, no concerns. The second question is, is there any view that either because of other drugs or because of longer time duration of 18 months versus 6 months here that, that could actually come down in some of those patients or at least come back down to baseline, is that possible? And then the third question is around getting the regulators comfortable with that, what I guess fluid retention effect in some patients and that there would be presumably no at least initial cardiac imbalance in any of the arms that you see and which you'll be able to talk about no imbalance in any cardiovascular events numerically or any SAEs of that nature when you disclose the data in the fourth quarter? Andrew Obenshain: Mike. You were a little soft, so I'm just going to repeat some of it. So there was a question about does weight gain indeed plateau and number one, if in the Phase II. Number two, does that weight gain -- is there a chance of that weight gain would actually go down in the Phase III, either due to concomitant medications or longer treatment? And then number three, some of the weight gain do -- if the weight gain is due to fluid is there any concerns about a cardiac imbalance in the trial. So for those 3 questions, I'll hand it over to Jason. Jason Campagna: Yes. Mike, good to talk to you again. So we have previously said and we'll reaffirm it here that the data that we have previously shown from the blinded look at NATiV3 back in September of 2024, and that we also disclosed at that time the FASST clinical trial in systemic scleroderma, which was a year trial with treatment of lanifibranor same doses in NATiV3, 800, 1200 milligrams, that the weight -- the fluid retention weight gain appear to plateau. I think we don't have any additional information to guide on that publicly, but I think that is what we've seen in both of the clinical trials so far. I think second, do we expect the weight to come down? It's well possible. I think there are a couple of factors at play. Take the LEGEND study, for example. We show that when patients are given SGLT2 inhibition in parallel with lanifibranor that there's almost no weight gain at all. There are many patients in the trial that are on SGLT2 inhibition and do not have the number for you off the top of my head. And we know that patients can be started on those therapeutics for management of diabetes or any other reason. So it is entirely possible and reasonable to believe that if patients are getting SGLT2 inhibitors or other diuretics to manage blood pressure, et cetera, that, that weight gain either the fluid retention, could be blunted or resolved so that the final landing spot, if you will, for any patient, might be lower than the peak weight gain that they had in the trial. But I think we'll see what the data show. Lastly, in terms of regulators, I think I can't speak for the FDA, but I can only speak to what I've read of everything they've put out. The fluid retention is a known phenomenon with PPAR gamma agonism, the thing about lanifibranor is it was designed to be different than other PPAR gammas, and we'll see what the data show. Our view is that it is a very different type of PPAR agonist. But that being said, the PPAR gammas is a known effect. It is on target. It is not idiosyncratic in any way. So FDA has shown with labeling and other work that they are comfortable with fluid retention, I think you're hitting on the right point, the cardiac. And as we've talked about and guided publicly over the years, we are not seeing congestive heart failure as a clinical issue in our program. It doesn't mean that we don't follow it. And it doesn't mean that you're thinking about how fluid retention may lead to that. That's certainly in the PPAR labels today, the gamma agonist, but it is just not something that we are generally seeing in our program, but we will be paying careful attention to it, and it's a dialogue we'll have with FDA. Operator: [Operator Instructions] Our next question comes from the line of Ellie Merle from Barclays. Unknown Analyst: This is Jasmine on for Elie. So as kind of a follow-up to Ritu's question. You talked about the overlap of MASH in type 2 diabetes as a segment where lanifibranor can be particularly attractive. But do you have a specific bar for what competitive data would look like in this population? And then specifically, how many type 2 diabetes patients do you think have undiagnosed MASH, and how do you plan to work to increase the diagnosis in this population and unlock that segment? Andrew Obenshain: So I'll take those 2 questions. First of all, just the diabetes and overlap with MASH, it is enormous, right? And there's -- I think there's about 18 million patients in the U.S. with undiagnosed MASH. At least half of those or more have diabetes at it's obviously way, way more than 375 under the treat or care. The way we see the market evolving is we've seen since about 2004 that market has grown about 20%. So it's clearly quite robust growth, and we do anticipate that to grow nicely. We, as a company, probably will not be pushing diagnosis, at least initially, there are enough patients coming in that we can focus on the patients being diagnosed -- the existing patients being diagnosed. That would obviously, maybe a later marketing strategy would be to actually increase diagnosis. And then your first question about -- I'm sorry, I forgot your first question already. Unknown Analyst: Just if you have like a specific bar in that population for what competitive data looks like? Andrew Obenshain: Yes. So the -- in terms of competitive data, the way we look at this is that the differentiated profile that we have is we work both on the liver and we're extrahepatic. We work on the body and we work on the liver. So we have direct anti-fibrotic effect. Again, as I said, that an 18% effect size, if we duplicated that in the Phase III trial, we feel it's a very competitive drug. And then the other thing we'll be looking at is HbA1c lowering, which was on average across the whole patient population, diabetic and nondiabetic in the Phase II, with just over 0.5 point, that would be an approvable diabetes medication years ago. So that combination of HbA1c lowering, combined with triglyceride lowering, HDL raising and the fibrosis effect, we think, has an extremely attractive profile for that diabetic F3 patient. Operator: Our next question comes from the line of Lucy Codrington from Jefferies. Lucy-Emma Codrington-Bartlett: Just one left, please. Regarding the confirmatory trial, just wanted to confirm, do you have an understanding with the FDA in terms of what underway means when it comes to granting accelerated approval? Is it enough just to have started that trial? And does this need to be by the time you file or by the time you get to approval? And then related to that, is starting that trial included in that mid 3Q cash runway with the third tranche of warrants? Andrew Obenshain: Yes. So yes, it is included. Starting that trial is included in the cash runway of that mid-Q3 runway. Jason, you want to talk about what's necessary for the trial? Jason Campagna: Yes. Lucy, I think you have the broad brushstrokes of it, right, but just something on the language. So accelerated approval is only at the time of the review. What we're looking to get is conditional approval under Subpart H, which is you've got marketing authorization and then the trial, as you note, confirms your surrogate and then you get full approval. Whether accelerated is only a question of how long it takes the FDA to actually review the file. With that, I'm just trying to make sure that we're all clear on that, that we -- you have the broad brushstrokes, right? But the individual rules are discussed with each sponsor at the time of the pre-NDA meeting and then during the mid-cycle review. But the general framework is you need to have most of the trials structurally in place, protocol approved at the time you were filing the drug and it needs to be moving on the definition of moving is going to be something FDA will define for us. We will be prepared. We have our CROs selected, the protocol is approved, may even have sites open. All of that is in the future. But at the time we file, we will meet the FDA position of trial meaningfully underway. And then at the mid-cycle review, you need to show continued progress on that. So they will check again that made a much more detailed look around enrollment nerves, site activation curves, et cetera. Again, each sponsor has their own detailed agreement with FDA on that, and it is our plan, of course, not only to have those conversations, but to make sure that we're meeting those requirements. So that when we are offered if we're fortunate enough to make it there, and we offered, the conditional approval, that trial will be well underway at that point. Lucy-Emma Codrington-Bartlett: Got it. Thank you, and thank you for clarifying on the terminology. Operator: Our next question for today comes from the line of Annabel Samimy from Stifel. Jayed Momin: This is Jayed on for Annabel. Congrats on the progress. Just 2 for me. The first one is around the use of background GLP-1 in the trial. What are your expectations on the potential impact of having that background GLP-1 use on [ lani ] effect size of those patients? And my second question is around the AIM-MASH tool that was nearly FDA qualified as a supportive tool to help with histological assessments. Do you have any plans to maybe leverage that to control or minimize variability? Andrew Obenshain: Yes. Thanks, and thanks for the question on the impact on the lani effect size based on background GLP-1 and the tools. So go ahead, Jason. Jason Campagna: Yes. So in confirming we do have, and we've previously shared that we have about 14% or so of the population in NATiV3, that's across both cohorts, that have background GLP-1 use at the time of randomization. That could be semaglutide, older drugs, liraglutide, dulaglutide, et cetera. So it's not only limited to the modern GLP-1. And I think its effect on treatment response should be minimal, and that should -- it will sound tongue in cheek, it's not intended to be. It's because that when you enter the clinical trial independent of what drugs you're on, whether you've lost weight by any other measure, independent of a GLP-1, you're entering the trial issue have that F2, F3 disease with active MASH. So whatever it is, one, those drugs are not doing it for you or your lifestyle modifications; and second, that the doses that we're using are really the diabetic doses. So they don't -- they are not anticipated to have much of an effect at all. We're simply seen that in the clinical trial data. I think to the second question about the tools, are you talking about PathAI specifically or just more general non-invasives? Jayed Momin: Yes, no, it's the PathAI tool. Jason Campagna: Yes. It's an interesting idea, right? But if you -- looking at it really simply, what PathAI lets you do is substitute one human pathologist for a digital pathologist and then you need a second pathologist to read. It's still the same idea of 2 plus 1 consensus. In this case, 1 of the 2 is PathAI. It's interesting. It's not something that in NATiV3, we anticipate taking much advantage of. But it is something we're thinking very closely about for NATiV4, potentially using that as the -- in the exploratory cohort presently from NATiV3 to see how we may be going to pull more data out of those patients that happen to have a biopsy. Operator: Our next question for today comes from the line of Rami Katkhuda from LifeSci Capital. Rami Katkhuda: I guess can you remind us of lanifibranor's FC and F2 versus F3 patients in the Phase II study and how those differences may impact expectations for NATiV3 just given the higher proportion of F3 patients enrolled? Andrew Obenshain: Go ahead, Jason. Jason Campagna: Rami, just to qualify, you want the proportion of patients in NATiV2 or the responses of the F2, F3? Rami Katkhuda: The responses, please, between the F2s and F3s. Jason Campagna: The sample sizes are simply too small to break out what we have done. We think the analysis that's more helpful, it's in our corporate materials, is that when you strip away the F1s in that trial. You get down to about 188 F2, F3 across all 3 arms. You can see that the effect size actually slightly goes up. What we guide to is that it remains unchanged. So the drug seems to work equally well in more advanced fibrosis in patients with earlier disease. So you're not getting much of a free glide on those F1s, if you will. I think second, when we look at NATiV3, as Andrew talked about earlier, this is a contemporary MASH market. The majority of patients showing up and clinics today that have F3 disease, will have diabetes. So we think that aligns pretty well with the outside world. And we're pretty comfortable with what we've seen from our Nature publication back in 2024, that the drug not only works equally well in earlier and late-stage disease, but the adiponectin levels actually go up equally well across all cohorts and it's that adiponectin that's really driving, we think, well correlated with the clinical response. So we like where we're landing with NATiV3 and the likelihood of efficacy in both those F2 and F3 patients. And as a reminder, we're stratified by fibrosis stage and diabetes and NATiV3, so we're going to cut those data in a number of different ways to sort of get where you're headed with your question. Operator: Our next question comes from the line of Srikripa Devarakonda from Truist Securities. Unknown Analyst: This is Anna on for Kripa. So 2 questions from us. First, looking ahead a little bit in terms of the MASH guidelines, would you expect an update on the MASH guidelines this year? And how are you thinking about getting [ lani ] into the MASH guidelines? And then second question, in terms of cash, what kind of needs to happen for you to have access to that third tranche? Is it based on kind of Phase III success only? And are you looking at any other non-dilutive sources of funding such as partnerships? Andrew Obenshain: Thanks for the questions. So on the MASH guidelines, I think we will wait -- we need to get data first before we have any conversations about putting lanifibranor into the MASH guidelines. On cash, the tranche 3 is a positive endpoint, and we hit a positive endpoint in our trial, and then when those 77 million shares of EUR 50 become exercisable, and the investors have 45 days to exercise them. So that's how that mechanically works. So positive trial equals cash coming in, so as long as the stock price is above the EUR 50. We are always looking for ways to increase our cash runway. And we've obviously in a very strong cash position right now. In terms of partnerships, right now, our plan is to commercialize lanifibranor ourselves. Going forward, we think that there's plenty of access to capital, either in the equity markets or other kind of capital sources that we don't necessarily need to partner lanifibranor. Operator: Our next question comes from the line of Sushila Hernandez from Van Lanschot Kempen. Sushila Hernandez: Could you elaborate on your regulatory and commercial infrastructure? What steps are you taking to act with speed once the data is here, also considering your cash runway? Andrew Obenshain: Yes, good question. So yes, so we are being very careful stewards of our capital right now before data. So a lot of -- the regulatory team is fully staffed, and I would include the quality team on that, too, because that's necessary, to make a really good filing with the FDA. So we have invested. We've increased the size of that team and the talent on the team in the course of this year. From a commercial standpoint, really focused on strategic commercial execution. So being led by Nazira Amra, really focused on market access, the market research. I'm going to include in the broad commercialization medical affairs there. So the strategic role that won't really set us up for success in the future. We will not staff up aggressively in commercial until we have positive data. Operator: This concludes today's question-and-answer session. I will now hand the call back to Andrew Obenshain, CEO of Inventiva for closing remarks. Andrew Obenshain: Thank you so much. Thank you, everyone, for joining the call this morning. We certainly have an exciting remainder of the year coming up for Inventiva, and we look forward to engaging with you all as we go forward. Thank you. Operator: This concludes today's conference call. Thank you for participating. You may now all disconnect.
Operator: Greetings. Welcome to the AirJoule Technologies' Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. It is now my pleasure to turn the conference over to your host, Tom Divine, Vice President of Investor Relations and Finance. Thank you, you may now begin. Tom Divine: Thank you, and good morning. With me today for our full year earnings call are Matt Jore, Chief Executive Officer; Pat Eilers, Executive Chairman; Bryan Barton, Chief Commercialization Officer; and Stephen Pang, Chief Financial Officer. During this call, we'll be referring to a presentation, which is available on the webcast platform and on the Investors section of our website. I would like to point out that many of the comments made during the prepared remarks and during the Q&A section are forward-looking statements that involve risks and uncertainties that could affect our actual results and plans. Many of these risks are beyond our control and are discussed in more detail in the risk factors in the forward-looking statements sections of our filings with the SEC. Although we believe the expectations expressed are based on reasonable assumptions, they are not guarantees of future performance, and actual results or developments may differ materially. And now I'll turn it over to Matt Jore. Matthew Jore: Thanks, Tom. Good morning, everyone, and thank you for joining us for our full year 2025 earnings call. This is an important call for AirJoule. 2025 was the year we built the foundation for commercialization and 2026 is the year we intend to convert that foundation into a commercial pipeline to revenue. Before I review our accomplishments and outline our plan for the year ahead, I want to take a moment to talk about something that has become impossible to ignore, the growing urgency of water resilience. In Corpus Christi, Texas, home to one of the nation's largest petroleum ports, the main water reservoir has dropped below 10% capacity, its lowest level on record. The city's own projections indicate it could reach a water emergency within months, meaning supply will be unable to meet demand. The Governor of Texas has publicly warned that the state may need to intervene. Industrial operations that produce jet fuel for Texas airports and supports billions of dollars in economic activity, faced the prospect of curtailment due to lack of water. The city's proposed long-term solution is a desalination plant that will cost over $1 billion and is years away from producing any water. Meanwhile, in the Middle East, the unfortunate ongoing conflict has caused immense human suffering. Our thoughts are with the people and the communities affected there. It has also exposed the critical vulnerability for the more than 100 million people who depend on desalination for their water supply. Desalination plants in Bahrain have been damaged by military strikes, facilities in the UAE and Kuwait have been hit by missile debris. As Bloomberg columnist, Javier Blas, recently observed, water is now more strategically important than oil. These desal plants are centralized facilities that represent single points of failure for entire populations. These risks are real, and they are often underappreciated until they become urgent. They stem from the same structural problem, the world's water infrastructure is concentrated, brittle and increasingly vulnerable to disruption. Whether the stress comes from drought, Industrial and population growth or geopolitical conflict, the result is the same. Communities and industries are exposed to water supply risks with very limited alternatives. AirJoule offers a fundamentally different approach. Distributed water generation from the atmosphere that operates independently of pipelines, reservoirs and centralized desalination. AirJoule systems generate water on site behind the meter and at the point of need. They require no municipal water connection. These systems produce pure distilled and potable water from ambient air using waste heat. We've proven this in the field. Over the past year, AirJoule systems have operated in Texas, Arizona, California and Dubai. The macro tailwinds that we discussed on prior calls remain in full force and have been exacerbated and exposed by the current war. Data center expansion and the onshoring of advanced manufacturing is exponentially driving an increase in industrial water and power demand. But the events of recent weeks have elevated the conversation from efficiency and sustainability to resilience and security and even survival. That shift is accelerating interest in exactly what AirJoule can deliver. In our year-end call in March of last year, we laid out a clear set of objectives for 2025, validate our technology in the field, develop products for commercial launch, strengthen our partnerships towards building a commercial pipeline and ensure sufficient capitalization to support commercialization. We delivered on these commitments. On technology validation, we said we would move from laboratory demonstrations to real-world field deployments. In Dubai, we operated an AirJoule system at a government advanced technology facility showcasing our technology to public and private sector customers across the Middle East. In Hubbard, Texas, we deployed the first U.S. field demonstration of AirJoule, showing our ability to produce pure water from air and generating months of operational data across diverse environmental conditions. At Arizona State University, an independent academic evaluation is ongoing in one of the most demanding air environments in the United States. On product development, we said we would advance our products toward commercial readiness. Last year, we made a deliberate engineering decision to focus our initial builds on our so-called A250 platform, which we'll now be referring to as our AirJoule Core product. This is our core 2-chamber system optimized for industrial dehumidification and water generation. This allowed us to build, deploy and learn from multiple systems in the field, and those learnings have directly informed the design of our A1000 which we'll now be referring to as AirJoule Prime. This is our larger water generator for industrial scale applications that we're currently building. Both products share a common sorbent chamber architecture and produce distilled and potable water that meets FDA bottled water standards. On partnerships, we said we would leverage our strategic relationships to accelerate commercialization. GE Vernova invested additional capital and commenced a strategic waste heat integration project with us. We'll also be deploying an AirJoule system at GE Vernova's New York facility to support our waste heat strategic project with them and to be used as a demonstration system for GE Vernova's customers. Additionally, we were selected for the Net Zero Innovation Hub to showcase our AirJoule system for Google, Microsoft, Data4 and other leading data center infrastructure companies. We established defense sector credibility through ACRADA with the U.S. Army and an agreement with a defense contractor for anti-corrosion applications. And we announced an exclusive Middle East distribution agreement with TenX Investment, an Emirati owned company with well-established relationships across government, commercial and industrial sectors throughout the Gulf. On commercial pipeline, we said we would develop strong customer engagements with a path to commercial sales. We are now actively engaged with customers across several industry verticals. We introduced the water purchase agreement business model, and we developed a defined, repeatable customer engagement process that is advancing prospects toward commercial deployment. Bryan will take you through that process in detail shortly. On the balance sheet, we said we would ensure sufficient capitalization to support commercialization. We completed a $15 million private placement anchored by GE Vernova, filed an S-3 shelf registration and completed a $23 million equity offering in January 2026, ensuring that we have the runway to execute on our plans with 0 debt. Let me highlight the key milestones from the fourth quarter and the first several weeks of 2026. Some of these were discussed on our third quarter call in November, but I want to place them in the context of the full year and the momentum we're carrying into 2026. During the fourth quarter, we continued to advance our defense sector relationships. ACRADA with the U.S. Army, which we announced in October, is focused on integrating AirJoule with tactical waste heat recovery systems to deliver resilient water supply for forward-deployed troops. In December, we announced a collaboration with Red Dot Ranch to bring off-grid water solutions to rural residential communities in Pescadero, California, demonstrating AirJoule's value proposition for distributed residential water generation. We deployed an AirJoule Core system in January and completed the first stage pilot in February. In December, we also commissioned an AirJoule Core system at Arizona State University for independent academic evaluation by Dr. Paul Westerhoff and his team of globally recognized experts in atmospheric water harvesting. In January, we announced an exclusive distribution agreement with TenX, providing AirJoule with market access across six Gulf countries, and we commenced our partnership in the Net Zero Innovation Hub program in Denmark that I mentioned earlier. Looking ahead, 2026 is the year when AirJoule transitions to commercial pipeline building. We expect to secure multiple long-term customer commitments across data center, industrial, defense and international markets. Importantly, the customer relationships we build in 2026 are laying the foundation for scaled commercial business in 2027 and beyond. As I mentioned earlier, one of our recent announcements was our exclusive distribution agreement with TenX across the Middle East, a region where water demand has far exceeded natural supply and where recent conflict has further exposed its fragility. I'd like to turn it over to Pat Eilers to discuss the significance of this part of the world in terms of energy, water and the opportunity it represents for an AirJoule solution in that region. Pat? Patrick C. Eilers: Yes. Thanks, Matt. I have spent a considerable time in the Middle East region over the past 2 years with AirJoule and the last decade since my BlackRock days and I want to share some perspective on why it is an important region for AirJoule. The Middle East is one of the most water-stressed regions on earth. Gulf nations depend on desalination for 70% to 90% of their drinking water. At the same time, the region is experiencing massive growth in data center development, advanced manufacturing and infrastructure investment. Each of these sectors require substantial quantities of water. Governments and enterprises across the Gulf are actively seeking technologies that can strengthen water security while reducing energy intensity. Matt described the recent attacks on desalination infrastructure in Bahrain and elsewhere in the Gulf. Those events have exposed the vulnerability that has concerned regional leaders for years, with the concentration of critical mineral supply in small number of centralized coastal facilities. Communities have already lost access to drinking water when individual plants have gone off-line. The fragility of this infrastructure is now visible to the entire world. This is exactly why distributed water generation matters. AirJoule systems operate independently of desalination infrastructure and can be located where water is needed rather than relying on pipelines or trucks. It can be deployed on site at industrial facilities, military installations and community water systems to produce pure distilled water from the atmosphere. This capability has significant value in a region where water resilience is now a national security priority. We recognize that the current conflict in the region creates uncertainty around the near-term timeline for deployments. We are monitoring the situation closely and working with TenX, our partner, to ensure we are positioned to move forward when conditions are favorable. At the same time, these events are reinforcing the strategic urgency of water resilience across the Gulf and the conversations we are having with prospective customers reflect that urgency. We are confident that the long-term opportunity in the Middle East is substantial, and we intend to support the increased need for water resiliency. Now I will turn it over to Bryan Barton, our Chief Commercialization Officer, to discuss our product road map and commercialization plans for 2026. Over to you, Bryan. Bryan Barton: Thanks, Pat. Let's start with the AirJoule A250, which we're now referring to as AirJoule Core. As Matt mentioned, we made a deliberate decision in 2025 to focus our initial system builds on the Core platform. The Core is a 2-chamber system that shares the same sorbent chamber architecture as our larger AirJoule Prime water generator. By building, deploying and iterating on the Core systems throughout the year, we accomplished two things simultaneously. First, we gained important engineering learnings that helped us improve the overall design of the system. Second and equally important, we used the Core system as a proof-of-value surrogate for the Prime system. Every Core deployment demonstrates to customers the performance, water quality and economics of the AirJoule platform, directly derisking the pathway to Prime commercial deployment. We are finalizing the Core product design and preparing for UL and NSF certification, which are required steps before commercial launch. We expect the Core product to be commercially available in late Q4 2026. For industrial dehumidification applications, there will be an additional Core product that will be optimized for maintaining low humidity environment in a range of approximately 30% to 40% relative humidity with significant energy savings compared to incumbent desiccant wheel technology. For this product, we are targeting commercialization in 2027. On cost reduction, we have made substantial progress. We have sourced lower cost components across multiple subsystems and are evaluating their reliability in our current builds. We are also simplifying the overall system design which reduces both manufacturing complexity and cost. The sorbent chamber remains the only custom manufactured component. The balance of the bill of materials consists of commercially available parts. Turning to the Prime. This is our larger water generator designed for industrial scale water production using waste heat. Prime is the product that the majority of our data center and industrial water customers are ultimately looking for. The learnings from our Core systems have directly informed the Prime design, and we are building our first Prime system now in Newark, Delaware. Once operational, it will serve as a critical outdoor showcase unit, enabling customers to see the full scale system operating in real-world conditions. We will provide updates on Prime deployment timing as the build progresses and we gain operational experience with the full-scale system. Water productivity per chamber continues to improve through ongoing optimization of our sorbent performance and cycle tuning across a range of temperature and humidity conditions. These improvements directly translate to better economics for our customers, and we expect to continue to make gains as we move into commercial production. We are also initiating a direct -- a dedicated optimization of the Core platform for the stand-alone dehumidifier market, focused on system performance optimization for dry storage and anticorrosion applications. This targets a large installed base of approximately 1.3 million industrial dehumidification systems globally and our longer-term HVAC integration work with Carrier continues to benefit from the engineering and productization work underway on both the Core and Prime systems. On manufacturing, our coating line is operational in Newark, producing the sorbent coated contactors central to AirJoule's operation. We are advancing process development to establish a scalable, repeatable manufacturing process. Our Newark facility has sufficient production capacity to address expected sales volume through 2027. As demand increases beyond that, we expect to transition to contract manufacturing for both contactor production and full system assembly. We're initiating those conversations now and preparing for assembly documentation required to support that transition. On Slide 9, I want to walk us through our process for converting strong customer interest that Matt and Pat described into commercial deployments. We have developed a defined repeatable customer engagement process with four stages. Stage 1 is discovery and evaluation, where we assess product market set for a specific customer, benchmark AirJoule's performance against the customers' alternatives and complete a technoeconomic analysis. This stage typically takes 1 to 3 months, and we are actively engaged with customers across several industry verticals. Stage 2 is a proof of value. In some cases, the technoeconomic analysis from Stage 1 or prior deployments are sufficient for customers to move to commercial structuring. In other cases, we deploy a demonstration unit on site and validate performance in the customers' operating environment. The customer validates water quality, observes waste heat integration, economics, and confirms real-world performance and reliability. Our deployments in Hubbard, at ASU, in Dubai and in Pescadero have all served as proof-of-value demonstrations. Today, the Core system is our primary proof-of-value platform because it operates on the same architecture as the Prime and demonstrates the same sorbent performance, water quality and energy economics. As Prime becomes operational, it will serve as an additional proof-of-value asset at full scale. This stage typically takes 6 to 12 months. Stage 3 is commercial structuring. Once performance is validated, we define the commercial model, which could be a water purchase agreement, direct unit sale or a lease. We also align on product configuration, site engineering, deployment scope and pricing. This stage typically takes 3 to 6 months. Stage 4 is deployment and scale. Multiunit commercial deployment, expansion within the customer's portfolio and across geographies and recurring revenue through service, maintenance and WPA contracts. This is the long-term value creation engine. I should note that these stages are not strictly sequential. For customers with strong strategic urgency or established familiarity with our technology, commercial structuring discussions often begin while proof-of-value work is still underway. This parallel progression can compress the overall timeline from initial engagement to commercial deployment. Putting it all together, here's what to expect from us in 2026. The Core system for both industrial dehumidification and smaller scale water production applications will be our first commercial products to launch late Q4 this year following completion of certifications. Our first Prime system is being built now, and once operational, it will serve as our showcase for industrial scale water generation customers. Through our partnerships with the Net Zero Innovation Hub for Data Centers, we expect to deploy an AirJoule system later this year. This deployment will directly demonstrate AirJoule's performance for Google, Microsoft, Data4, Danfoss and other leading data center customer -- companies. Through TenX, initial commercial deployments in the Middle East are planned for late 2026, subject to regional conditions. And across our defense partnerships, we anticipate deployments in 2026 in both water resiliency and anticorrosion applications. And in the residential market, we're planning for additional partnerships and deployments that can unlock new developments in water-scarce regions. Through these various deployments and partnerships, our focus in 2026 is on building the deployed reference base in contracted customer relationships that support scaled commercial activity in 2027 and beyond. Every deployment we execute this year validates AirJoule for an entire category of customers and advances our pipeline toward commercial conversion. The customer engagement cycle we are outlining is the engine that converts interest into commercial deployments. We're advancing customers through this process with the discipline and the pipeline is growing across multiple verticals and geographies. Now I will turn it over to Stephen for the financial update. Sze-Yin Pang: Thank you, Bryan. I will now walk through our financial results for the fourth quarter and full year 2025 and also provide some color on our 2026 outlook and liquidity position for the year. We can turn to the financial results slide in the presentation. As a reminder, AirJoule Technologies accounts for its 50% ownership in the JV with GE Vernova using the equity method. The numbers I will discuss are for AirJoule Technologies and the results from the joint venture are reflected in the loss from investment in AirJoule JV line. For the fourth quarter, AirJoule Technologies reported net operating expenses of $3.2 million. This is inclusive of approximately $0.7 million in administrative and engineering expenses reimbursed to us by the joint venture under a statement of work. For the full year, net operating expenses at AirJoule Technologies were $13.6 million, which compares to $11.2 million in 2024. The year-over-year increase was driven primarily by a $4.2 million increase in noncash stock-based compensation expense and is offset by lower professional fees and a shift in the R&D line from AirJoule to the joint venture. Our net loss for the full year is $9 million. The primary components below the operating line were a loss in investment AirJoule JV of $39.3 million offset by a noncash gain of approximately $25 million from changes in the fair value of earn-out liabilities and subject vesting shares. The $39.3 million JV loss compares to $5.3 million for the full year 2024. The primary driver of the variance is the noncash impairment of in-process R&D that reduced net income at the joint venture. This is a noncash accounting adjustment related to a change of valuation of intellectual property contributed to JV at formation. It has no impact on our joint venture's operations cash position or our ability to execute on the commercialization plan. Now let's turn to the joint venture. The total JV cash outflows for the year was approximately $18 million, which is consistent with the guidance provided on our third quarter call. The JV received capital contributions totaling $17.8 million from AirJoule Technologies during the year. $5 million of that came from GE Vernova through the April 2025 equity investment in AirJoule Technologies. The joint venture remains in the development of [indiscernible] as there is nominal revenue of approximately $110,000 during the fourth quarter from the sale of AirJoule Core systems to Arizona State University. AirJoule Technologies ended 2025 with approximately $22 million of cash on the balance sheet. Subsequent to year-end, we completed an equity offering in January 2026 that raised approximately $22 million in net proceeds. Following that offer, our combined pro forma cash position across AirJoule Technologies with the JV was approximately $44 million with no debt. With respect to liquidity, we have sufficient cash to fund our operations, the JV and our planned commercial deployments through 2027. We expect our combined cash spend across the corporate entity and the JV in 2026 to be approximately $25 million. The January offering, combined with our existing cash and liquidity, provides a clear runway to execute on the commercialization plan that Matt and Bryan have both outlined. Looking ahead to 2026 at the joint venture level, we are budgeting approximately $17 million to $19 million in operating expenses to support the productization, manufacturing and commercial deployment activities that Bryan described. This is in line with our 2025 spend level. At AirJoule Technologies, our corporate operating expenses are expected to be approximately $15 million for the full year, of which approximately $8 million is noncash stock-based compensation. With the successful execution of our registered offering in January, along with our effective S-3 registration status, we continue to maintain strong flexibility in managing our capital position and balance sheet. Going forward, we will remain opportunistic in evaluating any financing and strategic opportunities that enhance our balance sheet and support long-term value creation. With that, I will pass it back to Tom for the Q&A portion of the call. Operator: [Operator Instructions] And the first question we have comes from the line of Michael Legg with Ladenburg Thalmann. Michael Legg: Congrats on the quarter. Nice progress here. Wanted to ask a little bit about, you talked about the customer engagement. Can you talk about how you're going about engaging the customer from a feet-on-the-street perspective, from a distributor perspective? And what -- how is the outreach going and talk about that a little bit, please? Bryan Barton: Thanks, Mike. This is Bryan. I think if I understand your question correctly, it's really around our process of engaging customers. Is that accurate? Michael Legg: Yes, yes. Bryan Barton: Yes. So it's worth noting that there's really, I think, three ways of one in which these conversations are initiated, right? One is through direct engagement from the customer themselves. That's when they reach out to us. And then, of course, there's warm introductions that happen across our network and to the tops of these organizations. And then there's really kind of meeting folks through direct conferences or trade shows or suppliers and that kind of thing. And so there's really a lot of activity in all three kind of categories of how we reach our customers. There's a lot of them that come to us, frankly, because this is an urgent topic for a lot of data center builds in particular, in that market. One thing to note on the data center market is there's a lot of builds that are happening and a lot of builds that end up getting canceled, canceled projects due to permitting on the water side, where everything seems to be moving ahead, but then you can't secure the water permit. And so that's one thing that's really driven a lot of engagement for us in the data center market. And there's other verticals as well where that outreach has been predominantly customer-driven in the industrial sector as well as in the residential sector, which we believe is a significant value for AirJoule to unlock different kind of frozen residential developments. Does that address the question, Mike? Michael Legg: Yes. Great. And then on the supply chain, you mentioned most of the -- almost everything except one is commercially available. As we scale over the coming years, will -- is there anything that's a scarce supply chain or that you don't have redundancy on that we should be thinking about? Bryan Barton: I don't think so, Mike. Most of these components that are in the box, so to speak, are kind of already at scale, pumps and motors and valves. The custom part of our sorbent chamber is an aluminum vacuum chamber that is produced at scale through cast aluminum manufacturing, and this is a very commodity industrial process. It's just our form factor is a bit unique, but it's totally available at scale. The thing inside the vacuum chamber is our sorbent coated contactor. The contactor is already at scale commodity, many vendors, millions of parts globally already produced. So that's a standard offering that we then coat with the metal organic framework sorbent material. We do that in-house really to define the process of coating, but coating parts is also a commoditized process. There are many vendors that can do this at scale. AirJoule has taken -- like this is kind of a core aspect of our intellectual property and we need to define and own kind of the optimization of that process and lock it down before we engage with the select partner to take that to scale. Michael Legg: Okay. Great. And then just one last question. You mentioned $10 million cap call on the AirJoule joint venture at year-end. Can you explain that and then also talk if there are any other major CapEx needs for '26? Tom Divine: Yes, Stephen, do you want to take that? Sze-Yin Pang: Yes, Mike, you're asking about the 2026 capital call, correct? Michael Legg: Yes. Sze-Yin Pang: Yes. So that capital call -- those two capital calls are kind of the normal course funding plan for this year, as we laid out in our prepared remarks, what our anticipated total spend for the joint venture will be and these two capital calls are part of the funding contribution to fund the JV for those prospective expenses. And I'm sorry, the second part of your question? Michael Legg: Any other major CapEx for '26? Sze-Yin Pang: No, nothing other than, again, the forecast that we provided in our prepared remarks around our cash needs. CapEx for the joint venture has largely been funded through last year to help support the build-out that Bryan described. Michael Legg: Great. We've got some progress. Operator: Our next question is from the line of Alex Fuhrman with Lucid Capital. Alex Fuhrman: Congratulations on all the milestones you've achieved in 2025. Wanted to ask about gross margins. What kind of gross margins are you expecting initially for your first couple units of sales? And then as you think about longer-term contracting -- transitioning to contract manufacturing, what kind of gross margin do you think you'll be able to achieve at scale? Sze-Yin Pang: Yes, maybe I can take that. I think for this year, we're really just focused on the deployments at hand. And so I think the gross margin is less of an emphasis for us in terms of what our long-term objectives are, which are around 30%, 35% at scale as we move into contract manufacturing. So this year, as we're focused on really the customer pipeline build-out and the validation of our technologies, the focus is more on top line and customer engagement execution and as we move into 2027, as I alluded to, as we contract manufacturing that margin is what we're targeting. And so our conversations around both our design and our build materials will ultimately help unlock the gross margin profile that we're pursuing long term. Alex Fuhrman: Okay. That's really helpful. And then nice to see the first obviously, small revenue here for the JV in Q4. Should we expect to see similar small revenue throughout 2026 as we get closer to the full-scale commercial launch at the end of the year? Sze-Yin Pang: Yes, we do. We envision these deployments while some of them will be passed in nature will be paid deployments. So we expect some modest revenue that will continue to [indiscernible] at the joint venture level. And given some of the accounting treatment of the JV that will flow through the equity income or loss from the JV line. Alex Fuhrman: That's really helpful. And then you guys mentioned the water crisis in Corpus Christi and kind of the trade-off between AirJoule and desalination. Just curious how close your economics are getting to competing with large-scale desalination progress -- project? And how much of a selling point is the lack of a massive upfront CapEx for these types of projects as you start engaging with communities like that? Bryan Barton: Yes. Thanks, Alex. I think it's important to think about how a desalination actually gets built. It's a multiyear permitting and planning process. And typically, desal plants are billions of dollars of infrastructure that goes into the ground, then they clean up the salt water, of course, and then they have to dispose brine, and brine disposal back into the source is a point of concern often. Economically, the comparison desal is definitely cheaper than AirJoule Technologies for water creation. It's about 5 to 10x cheaper in terms of operating costs. The difference is like really the value of when you would deploy AirJoule is when the time to those permits and capital are constraining economic development. We're in a period of time right now where there's immense build-out. And we talk about Corpus Christi, who is right on the gaff as you point out, but the timeline to unlocking those development projects is really constrained. And another thing I'd like to point out in terms of the water that's produced from AirJoule is distilled, very plain, 0 TDS. And this is actually difficult for RO water or desal water infrastructure where there's residual TDS or things that come along. And so water quality is a main value driver. So for the kind of like bucket at large, like where is the value for AirJoule Technologies, it's in terms of speed to market, distributed water, resiliency water where that water is yours, right? And it is your asset that you own. And then it's around water quality. Matthew Jore: And Alex, this is Matt. I'll add two things here that Stephen and Bryan said. Regarding your gross margin question, you might recall we've established a water purchase agreement business model, and that has been well received by customers. And to Bryan's point about distributed water. If you envision these AirJoule water plants at the site, wherever there's waste heat and every data center there is waste heat, every industrial operation has waste heat, you can envision an AirJoule water plant. And so the gross margin question, when you take that model is easier to maintain, as long as you're focused on where that water has value, and that distilled water that Bryan brought up has tremendous value. So we're pretty confident because you get this -- we place these AirJoule water plants and sell the water for a 15-, 20-year period. So that gross margin question on sale of equipment also applies to water being sold. So just wanted to add that to your question. Operator: Our next question is from the line of Julian Mitchell with Barclays. Unknown Analyst: This is Drew on for Julian Mitchell. So I just wanted to get a sense of what commercial opportunities you're expecting to turn into firm orders, I guess, more broadly like on a global scale and then more specifically in the Middle East, I know you guys touched on that a bit during the call, but if there's any additional color you could provide there, that would be great? Bryan Barton: Sorry, I'm not exactly -- yes. So the question is around commercial deployments that lead to -- sorry, deployments to lead to commercial activity? Unknown Analyst: Deployments like leading into orders throughout the year, if there's any color on that? Bryan Barton: Yes, sure. So thanks for the question, Drew. As kind of discussed on the call, there's a number of different market verticals that we're engaging into, be it on the residential side of unlocking whole residential build communities that are currently frozen and the development pipeline due to water permitting as well as a number of data center engagements as well as the U.S. military in terms of water resiliency as well as on dehumidification. So there's a number of verticals and customer conversations that are ongoing that are really kind of poised for these deployments and that proof of value conversation with each one of those customers. We will announce these as they happen throughout the year and kind of give updates as to the success of those deployments and proof of values with those customers in different verticals. And then those will cascade into commercial commitments from those customers is our expectation on the overall process. Does that address the question, Drew? Unknown Analyst: Yes, absolutely. Operator: At this time, there are no more questions in the queue, so I'll turn it back to Matt Jore for some closing comments. Matthew Jore: Thanks, everyone, for joining us this morning. 2025 was a year of building for us, building systems, building partnerships and building towards commercial pipeline. In 2026, we expect to see the early results of that work through our first product launches and additional customer deployments. Every deployment we execute this year and every customer relationship we advance is building the foundation for scaled commercial activity in 2027 and beyond. Thank you. Operator: Thank you. This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.
Operator: Good day, everyone, and welcome to Sportsman's Warehouse Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. Now it's my pleasure to turn the call over to the Vice President of Strategic Programs and Investor Relations, Riley Timmer. Please proceed. Riley Timmer: Thank you, operator. Participating on our Q4 and full year 2025 call today is Paul Stone, our Chief Executive Officer; and Jennifer Fall Jung, our Chief Financial Officer. I will now take a moment and remind everyone of the company's safe harbor language. The statements we make today contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which includes statements regarding expectations about our future results of operations, demand for our products and growth of our industry. Actual results may differ materially from those suggested in such statements due to a number of risks and uncertainties, including those described in the company's most recent Form 10-K and the company's other filings made with the SEC. We will also disclose non-GAAP financial measures during today's call. Definitions of such non-GAAP measures as well as reconciliations to the most directly comparable GAAP financial measures are provided as supplemental financial information in our press release included as Exhibit 99.1 to the Form 8-K we furnished to the SEC today, which is also available on the Investor Relations section of our website at sportsmans.com. I will now turn the call over to Paul. Paul Stone: Thank you, Riley, and good afternoon, everyone. Before we begin, I want to recognize our dedicated outfitters across the country. Every day, they deliver on our promise of great gear and great service, strengthening our connection with customers and supporting the progress to transform Sportsman's Warehouse. I'm pleased with our fourth quarter and full year results, which exceeded our revised expectations. While the first half of Q4 reflected a more pressured promotional environment, we turned our sales trends positive in the back half of the quarter, which contributed to our better-than-expected results. We also delivered positive same-store sales growth in each of the first 3 quarters of 2025, resulting in a 1% growth for the year. This is our first year of positive comps since 2020 and a meaningful milestone in our turnaround. This progress reflects disciplined execution of the 3-year strategy we launched in late 2024. While there's more work ahead, we are encouraged by the traction across many areas of the business. For several weeks prior and through the first week of December, sales softened, driven by external factors, including the government shutdown and weaker-than-expected Black Friday and Cyber Week performance. We moved quickly to adjust our holiday strategy with a more promotional cadence to meet a value-driven consumer. These actions helped reverse trends with sales turning positive in December with strength coming into January, February and March. While we are encouraged by these improving trends, we remain measured as the U.S. consumer remains under pressure. Within the quarter, performance across our core pursuits was strong. Hunting and shooting sports grew more than 5% with firearm units again outperforming adjusted NICS checks, indicating continued market share gains. We also believe January demand benefited from external event-driven factors accelerating our personal protection category. Throughout 2025, we strengthened our position in personal protection by building a more focused assortment aligned with growing customer demand for safety solutions. This work is supported by the expertise of our outfitters, many with law enforcement or military backgrounds who provide trusted service and credibility that we believe is difficult for competitors to replicate. By leaning into this category with expertise, service and a more disciplined assortment, we are attracting new customers and gaining share, which is accelerated given current external factors. Fishing delivered quarterly results of 3.2%. Warm weather in the West drove a double-digit decline in ice fishing, masking underlying strength. Excluding ice fishing, the department grew over 11%, highlighting the strength of our business and the share growth opportunities ahead. We are encouraged with our early start to the spring season with sales up double digits so far this quarter. While our key pursuits performed well, camping and softlines remain challenged, reflecting their discretionary nature. We continue to sharpen assortments, eliminate lower productivity SKUs and align these categories more tightly to our core pursuits. Inventory in these categories declined in line with sales, demonstrating improved discipline, efficiency and healthy inventory. Our e-commerce business outperformed again with sales up 8.3% in the quarter and 6.6% for the year. This underscores the strength of our omnichannel model and the growth potential in our core pursuits. We also saw improvements in both units per transaction and average order value, driven by regionally and seasonally relevant merchandise, better in-stocks and stronger attachment across categories. In 2025, we made meaningful progress across 4 strategic priorities. First, through stronger planning and merchandising discipline, along with strategic technology investments, we significantly improved in-stock levels in the core 20% of products that drive 80% of our business. This delivered faster turns, SKU reduction and improved seasonal alignment. Second, we re-anchored the business to our local market advantage by strengthening the roles of our outfitters as trusted local experts and expanding locally relevant brands and products. Our position remains clear, out local the big box players and offer more depth in merchandising authority than smaller competitors. Third, we strengthened our authority in personal protection by optimizing our assortment, increasing depth in key handgun brands and introducing a broader non-lethal offering, including an exclusive collaborative partnership with Byrna that brought in-store theater, innovation and a new customer in the Sportsman's. This reinforced our leadership and drove growth. Finally, we strengthened brand awareness and advanced our digital-first go-to-market strategy. We optimized our performance marketing approach, driving efficient traffic across our channels through targeting and a more powerful customer experience. Leveraging data-driven insights and personalization, we are reaching customers with greater precision to support profitable omnichannel growth. Now I'll walk you through the next phase of our 3-year transformation. In 2026, we are strengthening our leadership position in our core pursuits, Fishing, Hunting and Shooting Sports and Personal Protection. These pursuits define our brand and attract our most engaged, highest value customers. Building on the foundation we set last year, our focus centers on 3 initiatives to support our core pursuits. First, we are upgrading our loyalty rewards program. We are partnering with a leading strategy and platform design firm to build a more powerful program that directly connects loyalty and our credit card ecosystem. Our goals are clear: increase retention, expand lifetime value and drive higher AOV and frequency through compelling rewards and personalized engagement. This work is early, but grounded in new data capabilities and best-in-class design. We expect later this year to begin testing and plan to launch the enhanced program in early Q1 of next year. Second, we are developing firearm solution bundling, building on our strength in Hunting and Shooting Sports and Personal Protection. With over 75% of firearm purchase beginning online and significant firearm traffic already coming to our site, we see meaningful opportunity to convert more of that demand through an improved digital experience. This tool will help customers build a complete firearm solution tailored to the pursuit while improving our overall margins. Given our natural store moat, which requires the customer to pick up their firearms in-store, we are leveraging our e-commerce experience to improve attachment to these items relevant to a single firearms purchase. Third, we are reinventing the omnichannel Fishing experience. Fishing represents meaningful growth upside. We believe we have about 1% share of a large and growing category, and we have an ambitious omnichannel plan to double that share over the next 3 to 4 years. This strategy includes two pathways. First, we are elevating the in-store experience through locally assorted merchandise built around species, seasons and innovation. Second, we are strengthening our digital fishing experience with the new species and region-focused platform that integrates content and commerce. This will help anglers build their total solution more easily and quickly. While this work began in mid-2025, we are accelerating our pace given the category's appeal to new high-value customers and its margin accretive profile. Looking to the year ahead. The U.S. consumer remains under pressure. Rising fuel costs and broader macro dynamics are adding weight to discretionary spending. At the same time, however, we've seen bright spots. Since January, demand in Personal Protection and ammo has strengthened, driven by external factors. We are capturing that demand while remaining realistic about duration. We also see potential tailwinds ahead, such as America's 250th anniversary, which aligns well with our customer and categories. While early, we are seeing a strong start to the fishing season and believe we are well positioned to capture demand due to our strategic initiatives in place for this category. Given all of this, we feel optimistic about our positioning. Our strategy is working, our initiatives are gaining traction and the turnaround is firmly underway. The team is energized and disciplined, and our focus remains on driving profitable growth, disciplined management of inventory while executing against the priorities we've laid out. With that, I'll turn the call over to Jennifer. Jennifer Fall Jung: Thank you, Paul, and good afternoon, everyone. For the full year 2025, we delivered net sales and comparable store sales growth of 1%. We are encouraged by how the year finished with results exceeding our revised guidance following Q3. Importantly, this marks our first year of positive comparable store sales growth since 2020. Adjusted EBITDA for the year was $27.5 million. While modestly below prior year, this result exceeded our revised expectations, driven by stronger-than-expected sales in the fourth quarter. A key focus throughout the year was disciplined inventory management. We ended 2025 with inventory down $29.1 million or 8.5% year-over-year. We are pleased with the quality and composition of our inventory and believe we are well positioned to support growth in our key categories while continuing to improve productivity and turns. We ended the year with net debt of $90 million, a reduction of 6.1% versus the prior year and total liquidity of $107.8 million. We also generated positive free cash flow, reflecting improved operating discipline and improved working capital efficiency. Turning to full year department performance. Fishing remained our strongest growth driver in 2025, increasing 10.3% for the year and nearly 18% on a 2-year stack basis. This performance reflects more precise inventory timing, improved locally relevant assortments and continued strength in participation trends. We see this as a category with ongoing opportunity for both growth and share gains. Hunting and Shooting Sports increased 4.4% for the year, driven by improved in-stock levels in core firearms and ammunition, better alignment of inventory with key hunting seasons and continued traction in personal protection, including less-lethal alternatives. Our other categories declined for the year, reflecting pressure on discretionary spending. Importantly, we maintained inventory discipline in these areas with inventory reductions exceeding sales declines, supporting improved efficiency and margin structure over time. Turning now to fourth quarter results. Net sales were $334.9 million, down 1.6% versus prior year, with comparable store sales declining 1.8% Performance was led by Hunting and Shooting Sports, which increased 6.2%, driven by strength in firearms, ammunition and less-lethal personal protection, partially influenced by event-driven demand. Fishing increased 3.2% in the quarter, though performance was impacted by unseasonably warm weather in the Western U.S., which pressured ice fishing sales. Excluding ice fishing, sales in this category were up over 11%, reflecting its underlying strength. Our other categories declined, reflecting a more promotional environment, the impact of the government shutdown and continued pressure on the U.S. consumer. Gross margin for the fourth quarter was 28.4% compared to 30.4% last year. The decline was primarily driven by category mix with a higher penetration of firearms and ammunition, increased promotional activity and lower sales in higher-margin categories. SG&A expense improved to 28.7% of net sales compared to 29.4% last year, driven by disciplined cost control, particularly in payroll. We remain focused on managing expenses while continuing to support the business. Net loss for the quarter was $21.7 million or $0.56 per diluted share compared to a net loss of $8.7 million or $0.23 per diluted share in the prior year. Adjusted net loss for the quarter was $3.9 million or negative $0.10 per diluted share compared with adjusted net income of $1.6 million or $0.04 per diluted share in Q4 of the prior year. Adjusted EBITDA was $9.6 million compared with adjusted EBITDA of $14.6 million in Q4 of last year. Now I'll provide more details regarding the balance sheet and liquidity. We ended the year with inventory of $312.9 million, down $29.1 million from the prior year and better than our expectations exiting Q3. We exited the year in a healthier inventory position having worked through the majority of our seasonal product. As part of our ongoing inventory efficiency efforts, we are further refining the timing of receipts. As an example, for the upcoming spring season, inventory is planned to arrive later, which we expect will support improved turns and overall productivity. We expect to operate with lower average inventory levels throughout 2026 compared to last year, while still having sufficient levels of inventory to hit the top end of our plan. Capital expenditures for the full year were approximately $19.5 million, primarily focused on general store maintenance and strategic technology investments to support our operational and digital capabilities. We ended the year with net debt of $90 million and total liquidity of $107.8 million. We generated $8.9 million of free cash flow and used that cash to reduce debt. Debt reduction remains our top capital allocation priority as we continue to improve our leverage ratio. As we conducted a thorough review of our fleet of stores, we estimated we will be closing approximately 5 stores in the next 12 months. We expect these closures to happen after the holidays. Therefore, we do not anticipate a material impact to this year's results. Turning now to our guidance for 2026. Starting with our net sales outlook. We estimate same-store sales to be in the range of down 1% to up 2% over last year. This outlook reflects a balanced view of the current environment and the health of the U.S. consumer, which continues to be pressured. We expect adjusted EBITDA to be in the range of $30 million to $36 million. This improvement is expected to be driven by better gross margin performance, continued inventory discipline and ongoing expense management. We expect capital expenditures to be between $20 million and $25 million, primarily related to technology investments as well as normal store maintenance. To reiterate, our priorities for 2026 are driving profitable comp store sales growth through the execution of our strategic initiatives, managing our inventory efficiently and using excess free cash flow to pay down our debt and strengthen the balance sheet. That concludes our prepared remarks today. I will now turn the call back to the operator to facilitate questions. Operator: [Operator Instructions] It comes from Matt Koranda with ROTH Capital. Matt Koranda: I wanted to start out with the near-term demand trends that you highlighted. I know you mentioned sort of a shift that you saw at the end of December that carried through. And I think you said in the prepared remarks, all the way through March. Does that mean we're effectively comping positive in the first quarter to date? And maybe just how you think about the category strength. I would assume it's still kind of the usual suspects in terms of firearms, ammunition, personal protection that's doing well, but maybe just unpack category strength as well for us. Jennifer Fall Jung: Yes. Matt, this is Jennifer. Thanks for the question. Yes, what we made in our prepared remarks is that we were seeing the trends that really started in January continue through February and March, where you just called it as really strong growth coming from firearms and ammunition. And as we know and as you know, our industry tends to be really influenced by external events. And we think there's some tailwinds right now going on because of what is kind of going on externally. So yes, we feel good about the quarter. We gave guidance of a negative 1% to a positive 2% on the year, but we feel like we're coming out strong in Q1. Matt Koranda: Okay. Understood. And then maybe just for the EBITDA improvement that you're embedding in the guidance for the full year. Just wanted to hear how to think about the building blocks there because obviously, the comp guide is, let's call it, flattish at the midpoint. And I would assume that the mix of categories being more skewed toward firearm, ammunition probably puts a little pressure on gross margin. So where are the building blocks to get to the positive EBITDA outlook despite kind of the flattish top line and maybe a little margin pressure from category mix? Jennifer Fall Jung: Yes. So we do feel bullish about our fish category as well. That has been positive comping on a 1-year and a 2-year stack. So we're continuing to put our shoulder against fish, and we have a lot of initiatives that support it. And that with the exception of ice fishing in January, that category has bounced back nicely. So we will have some goodness there with the fish coming into play. That being said, Q1, just based on the penetration of firearms and ammunition, we expect margins to be down year-over-year. And then for the rest of the quarters, margins will be flat to slightly positive, slight improvement. And then with SG&A, a little bit of the same story, do expect slight -- flat to some slight leverage within that range. And that essentially kind of gets you to where our improvement in adjusted EBITDA comes in. Just the one thing to note that Q3 of last year versus Q4 of last year, there was a heavily weight of EBITDA in Q3 versus Q4, but we do think some of the Charlie Kirk effect influenced that. We expect those to be a little more balanced going forward. Matt Koranda: If I could sneak just one more in on the way to think about free cash flow this year, especially on, I guess, the inventory front. It sounds like the signal is we see more efficiency opportunity. Just wanted to hear about how you think about inventory balance throughout the year, especially as we're closing the 5 underperforming stores and how maybe there might be opportunity for inventory per store to improve further this year? Jennifer Fall Jung: Yes. We're definitely -- as part of our go-forward strategy in addition to executing on our -- against our core pillars, we do think there's opportunity to continue to find efficiency in inventory, everything from really about the timing of inventory, making sure that we're getting in similar to what we did in Q3 and Q4 of this year, getting in a little ahead of the season and definitely looking to take the marks before the season is over while the demand is still there. So that's what's really helped our inventory, especially towards Q4 and then how we ended up lean even though we came into the quarter with the first 6 weeks were a little bit tough. So definitely opportunity in inventory. From the stores that we discussed, which is an estimated 5 stores, it might be a few more, it might be a few less. We're still in negotiations on that one. Those we don't expect to close until after the holidays. So you're not going to see a material impact on those. depending on when we actually take action on those, we will transfer inventory and liquidate anything seasonal within the store when those, in fact, do close out. Paul Stone: Matt, I would just add, I think there's been a lot of learning on the inventory front as we went through last year. And I think from a seasonality standpoint, course correcting from '24 to '25, we're probably in seasons a little too early, carried inventory a little too long. So I think as we think of the discipline in the inventory approach this year, really, the rigor is going to be around being able to hit the mark, be able to improve the turns and to look at this improvement in inventory going through the quarters all the way through the year and be much more efficient with how we land the inventory and how we get out of the inventory. Operator: Our next question comes from Anna Glaessgen with B. Riley Securities. Anna Glaessgen: I guess I'd like to follow up on Matt's question about the first quarter here. I guess how should we be thinking about -- it sounds like the tailwinds from the external events are supporting demand offsetting maybe the con of gas inflation and the government shutdowns. How should we be thinking about the potential risk as the conflict extends? Do you think we should layer on an assumption of more consumer headwind if it extends into April, May? Jennifer Fall Jung: Yes. With the risk, we do think the health of the U.S. consumer is really the risk that we're seeing. Q1, we do have a couple of months behind us, so we're feeling pretty good. But with fuel prices and given where our customer is positioned, that's definitely something we've contemplated in our guide. On the offset of that, the tailwind really is the 250th anniversary of America, which we think resonates well with our customer. And also, if there's anything else from an external event-driven factors, a lot -- we were just looking at all the legislation, both state and federal that's out there, and there's 16 that are on the table right now, some good for our industry, some not so good, but that's just -- that also impacts consumer demand. So there's a lot of variables in there. So we've tried to make sure that as we're thinking about the quarter and the year that we've accounted for that the best we can. Anna Glaessgen: And then a bigger picture question. In the past, we've talked about potentially getting the mix back to pre-COVID, implying a lesser mix from firearms and ammo to help support margin recovery going back to the historical mid- to high single-digit adjusted EBITDA margin. Now we've seen hunt increase in penetration this past year, while, of course, it's great to see the outperformance versus the industry. I guess, how should we be thinking about the hunt penetration over -- in '26 and over the next few years and how that's being contemplated in the margin outlook? Jennifer Fall Jung: Yes. We've contemplated it in our margin. What we're trying to also do kind of going back to the mix question is, as I mentioned on the first question, continuing to put our shoulder against fish. In addition, we have been working on cleaning up the apparel business. There was a pretty big hangover in that category. And we're finally getting to the point where we're able to bring in some new and exciting brands and kind of get that -- the soft goods business back on track as well. Probably have a little bit more work to do with camp. But as we actually start taking these other categories, the soft goods and camp and gift bar and whatnot and make them more attached to our pursuits, we know that's also going to help get them back on track as well because right now, they're a little bit ancillary and doing their own thing, but it's really aligning everything to hunt, shoot, Personal Protection and fish. Paul Stone: Yes. I would just add, Anna, I think the website experience that I mean, we're really leaning into this year and the opportunity around the bundling component of it where we're not putting that complete burden on the outfit or when they come in to attach at that rate, but to be able to allow the consumer to be able to walk through an easy process to be able to have the complete package and solution that they need and then allow them to have that solution when they get to the store versus putting the complete burden on our outfitter in the store. We like what we're seeing and what we're putting into place with that. And then fish as well. We've started the work with fish. We know we're underpenetrated online with fish, even though we've seen growth over the last couple of years, we think we have a large opportunity to improve what our overall experience looks like online and to be able to allow us to be able to grow that penetration of fish as well. So the growth has really happened from fish. We need to accelerate it this year, and we think there's a huge opportunity for us to do that through investments we make on working online to allow the consumer to have an ease of experience. Operator: It comes from the line of Mark Smith with Lake Street. Mark Smith: Can you walk through a little bit more some of the different headwinds on gross profit margin in Q4? Any additional insights you can give us on kind of how much of the pressure came from mix versus promotional intensity maybe late in the quarter and anything like freight that was an additional headwind? Jennifer Fall Jung: Yes. It's a combination of mix as well as promotional cadence. We -- as we came out off of our third quarter call, we were still in the midst of having some pretty pressured sales. So as we discussed on that call, we had the inventory, and it was seasonal inventory that we needed to make sure that we were clean up into January. So we did take the opportunity to be more promotional to drive sales as well as to clean up our inventory. So that's definitely a component of it. But in addition to that, with ice fishing not performing, -- it's probably one of our weaker comps for fish was Q4 simply because of ice fishing, there was no ice to fish. So that put pressure on it as well. But that since has come back. That season is behind us. So fish is back on track now. So a little bit of both. But as we look forward, there's not a ton of tariff impact in here. There's some. We know what that is, but I wouldn't say that's putting the pressure necessarily on our margins going forward. Paul Stone: I think, Mark, I mean the big part of it, we had to play a lot of catch-up in the back half. I think we -- November was an extremely challenging month for us as we started December, we were seeing the same thing. And to Jennifer's point, we were going to clean up and lift our commitment to be able to get out of product in season and not carry it forward. We like the way clearance is year-over-year now and the health of the inventory. So we did have to take some steps being promotional at the same time being cognizant of getting out of the seasonal inventory within the season. So I think the slow start that we saw in November and carrying over into the 1st of December caused us to react. And we did that knowing that we wanted to be in a much cleaner position and not have this continuous carryover of inventory. Mark Smith: Okay. And I think, Jennifer, you may have said that you expect Q1 margin to be down a little bit year-over-year. Is that just some continuation post January of some of those same pressures and lack of snow and that's all mix. Jennifer Fall Jung: Yes, that's a mix. It's heavily penetrated towards firearm and ammunition. Paul Stone: I think that the way you think about it is with the mix, we're seeing a macro effect and February and March being lighter months for fish, not to help you there, then we get into the peak of fish, that helps to outweigh or at least to be able to take a little bit of pressure off of what the mix looks like, but to have February and March in there, especially with some of the temps that we saw on East and in particular, in the Southeast to start the year that we just don't have enough volume in those first couple of months of fish to be able to offset it. Mark Smith: Okay. And then I just wanted to dig in a little bit deeper on some of the store closures. You guys took impairments on 10 stores. It sounds like closing an estimated 5, but it's all going to come after kind of the holiday. Can you just walk us through the thought process, maybe of those 10 stores, how many are losing cash? And if any of these are kind of at the end of lease terms as you close it? Jennifer Fall Jung: Yes. So we -- I think we've always talked about how -- in general, our fleet is very healthy. If you go store by store, it's good. But really, it came time to take a hard look at those 5 underperforming stores that just don't have a long-term place in our fleet and make some calls on those. So the thought process there is these are long-lasting leases that we have because our leases are unfortunately, 10 years long. So these aren't all 10 years, but they're going out quite a bit. But right now, what we're doing -- and these are actually losing adjusted EBITDA stores. So we're working with some brokers to try to either renegotiate, get a subtenant in there, look at all different options, do a buyout, all of which financially makes sense for us just given where they are within the portfolio. I'd say the others, there's a lot of -- not a lot, but there are a few stores that are going to roll off within the next coming, call it, 18 or 20 -- excuse me, 12 to 24 months anyway. So those -- you really can't do much with landlords when you have that short of a time left on your lease. So those are ones we will -- that we may have impaired, but we will just let run off. And then there are some in there where if we're going to close some of these other stores that we know we want to close, there'll be some sales transfers to their neighboring stores, and that will actually help improve the overall productivity of those stores. So those might actually remain in the fleet. Operator: And as I see no further questions in the queue, I will pass it back to Paul Stone for closing comments. Paul Stone: By way of note, we posted an updated presentation on our Investor Relations website. Thank you for all joining the call today, and thank you to all the passionate outfitters around the country for their commitment to Sportsman's Warehouse. Together, we look forward to providing our customers with great year and exceptional service. Thank you. Operator: And this concludes our conference. Thank you for participating. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the nCino Fourth Quarter and Fiscal Year 2026 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Harrison Masters, Vice President, Investor Relations. Harrison Masters: Good afternoon, and welcome to nCino's Fourth Quarter and Fiscal Year 2026 Earnings Call. With me on today's call are Sean Desmond, nCino's Chief Executive Officer and Greg Orenstein, nCino's Chief Financial Officer. During the course of this conference call, we will make forward-looking statements regarding trends, strategies and the anticipated performance of our business. These forward-looking statements are based on management's current views and expectations, entail certain assumptions made as of today's date and are subject to various risks and uncertainties described in our SEC filings and other publicly available documents, the financial services industry and global economic conditions. nCino disclaims any obligation to update or revise any forward-looking statements. Further, on today's call, we will also discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results. A reconciliation to comparable GAAP metrics can be found in today's earnings release, which is available on our website and as an exhibit to the Form 8-K furnished with the SEC just before this call as well as the earnings presentation on our Investor Relations website at investor.ncino.com. With that, I will turn the call over to Sean. Sean Desmond: Thank you, Harrison, and thank you all for joining us today. I want to start by saying how proud I am of the entire nCino team for the results we achieved in fiscal '26 and especially in the fourth quarter. We exceeded our financial guidance across every key metric and delivered an exceptional ACV result, up 17% year-over-year, which we believe was largely driven by customers embracing our AI strategy and product innovation. The team executed incredibly well, and we're seeing the momentum in the market as more prospects are engaging with and choosing nCino and existing customers are expanding and deepening their commitments with us, in large part because of how we are embedding AI throughout the nCino platform. I'll get into the details shortly, but with over 170 customers of all sizes, including global, enterprise, regional and community banks and credit unions having already purchased AI intelligence units as of the end of fiscal '26, we believe nCino is rapidly becoming the de facto AI platform for financial institutions across the globe. For those of you just getting familiar with our story, nCino plays a mission-critical role for our customers and the global financial services market. Financial institutions will continue to struggle with legacy fragmented systems that limit growth, hinder financial performance, restrict their ability to leverage data as a competitive advantage and create poor user experiences. nCino solves these problems with AI-powered intelligent automation on a unified, scalable platform. We are the only platform for managing lending, onboarding, account opening and portfolio management across all major lines of business for financial institutions across the globe. This is why the nCino platform serves as a system of record for the most critical operations of banks, credit unions and IMBs of all sizes in now over 25 countries. Throughout fiscal '26, I talked about the confidence I had in our team, our technology and strategy and our market-leading position. I also said the foundation was in place and that our fiscal '26 performance would come down to execution, including against our AI strategy. This past year's results only strengthen my conviction about what's ahead for nCino as we walk hand-in-hand with our customers into a new era of AI where data, context, guardrails, security, trust and a deep understanding of how financial institutions operate matter more than ever. As banks further embrace automation and think about using AI as an accelerant to do this, they're choosing nCino because nCino is their process. We connect their data, operate as their system of record and enable them to comply with numerous rules and regulations. nCino is an essential Tier 1 mission-critical platform that amplifies their ability to more profitably generate revenues in a regulatory compliant manner. At the start of fiscal '26, I laid out a few strategic initiatives where I believed we had an opportunity to excel with focused execution. I'm very proud of what the team delivered in these areas, and the fourth quarter put an exclamation point on what was a tremendous year for the company. First, in the U.S. enterprise market, we delivered our best sales quarter in over 4 years, which included a mortgage expansion with a top 40 bank and cross-selling commercial to our largest consumer lending customer. Second, in EMEA, we leaned in with new leadership, a new go-to-market strategy and a clear execution plan. We delivered our largest deal of the year with a marquee net new customer win in Austria, and I'm thrilled with the momentum the EMEA team is seeing. I'm also thrilled with the momentum we continue to see in Japan, as highlighted by the fourth quarter signing of one of the largest banks in the world for a commercial lending transformation. I want to congratulate the Japanese team for tripling their total ACV in fiscal '26 from fiscal '25. Third, it's gratifying to see our existing customers continue to validate our AI strategy as they move to our new platform pricing framework to access our growing AI capabilities. We saw expanded commitments from some of our largest accounts, and our ACV net retention rate improved to 112% or 109% organically and in constant currency, up from 106% in fiscal '25. Consistent with what we saw throughout fiscal '26, we closed a number of early renewals in the fourth quarter, including a fresh 5-year commitment from our largest customer by ACV. And those customer commitments go beyond dollars. Critically, they come with trust. More and more customers are choosing to share data with us because they want the insights and benchmarking that only nCino can deliver. Today, almost 500 financial institution customers representing over $11 trillion in assets have granted nCino the right to process their data into a proprietary and anonymized data set, one that powers the development of our products, fuels best-in-class industry insights and sharpens the accuracy of our intelligent services. This proprietary data set that nCino has carefully aggregated and curated for the better part of a decade gives nCino a unique unmatched global perspective on how to more profitably and efficiently operate a financial institution, how work moves seamlessly through the bank, where bottlenecks form, where exceptions happen and what great looks like at scale. We have already put this data set to work through our product called nCino Operations Analytics, which helps customers pinpoint inefficiencies, track cycle times and win rates and benchmark performance against anonymized peers. That benchmarking provides valuable and actionable insights as customers get a true baseline, a clear path to ongoing operational and process improvements and real-time demonstrable ROI as they adopt our AI capabilities. It also informs how we build AI and deploy agents that are practical, relevant, reliable and trustworthy in real bank environments. And it goes a step further. Because of our API foundation and integration gateway, we can seamlessly connect data across a bank's technology stack as well as the key third parties. That broad 360-degree view of a financial institution's customers has been nCino's calling card in the market since we started the company. Before I turn things over to Greg to talk through our financials in more detail, I want to spend a few minutes addressing the elephant in the room as we have all heard the narrative that AI will replace SaaS. For some categories of software, that may very well be true. But the highly regulated business of banking is different and nCino's position and value proposition in banking is different from what you're seeing across the broader SaaS landscape. Bottom line is we believe AI will be a tremendous tailwind for nCino as it becomes central to how financial institutions operate and compete and how we're scaling and operating the company. Here's how we see the world evolving and how nCino fits in. AI is moving quickly from help me write and help me search to help me complete meaningful productive tasks so I can focus on other work to grow my business more efficiently and profitably. And in a financial institution, the work is not generic. It's onboarding, it's underwriting, it's credit reviews. It's monitoring, assessing and managing risk. It's opening accounts. It's work where the data is sensitive, strictly adhering to the rules is essential. Regulatory compliance is nonnegotiable and the cost of being wrong can be extremely high, not only financially but reputationally. To make all this work, AI needs a foundation to run on. In banking, that foundation is the data and regulatory infrastructure nCino provides. That's why we feel extremely confident about our position. We are the system of record and user experience for many of the most important processes in a financial institution. And every capability has been built with regulatory compliance in mind. As AI becomes more capable, that makes our platform even more relevant because AI needs a place where it can safely understand context and then take action in an efficient, controlled, secure, trusted and regulatory compliant way. You'll hear a lot of discussion in the market about AI commoditizing the application layer. We understand why people raise that point because it's undeniable that AI-driven software makes writing code easier and cheaper. But in the highly regulated mission-critical world of banking, deploying that code in a safe and compliant way is harder. Because of this, we believe AI agents actually increase the value of our underlying platform and system of record. An agent can't operate in a vacuum. It needs trusted data, industry context and guardrails, and it needs to be traceable and auditable. And the platform that connects the user to the data and records the actions taken becomes the natural home for these AI-driven experiences. nCino is that platform. All this leads to how we're approaching AI agents. Our role-based agents, what we call digital partners, were designed to work alongside banking professionals inside the nCino platform, guided by what we've learned from almost a 1.5 decades of usage patterns across our lending customer base and what those patterns mean for speed, consistency and results. Now let me connect that strategy to what we're seeing in the business today. First, adoption is real and usage is growing. While much of the SaaS industry continues to debate how best to respond to the agent economy, community, regional enterprise and global banks, credit unions and IMBs are already using nCino's AI capabilities in production today, not just as a pilot or beta, but as part of how they do lending and banking work. Customers are not just buying AI access, they're using it, and we can see that directly in the increasing consumption of intelligence units on our platform, with banking adviser usage up over 25x in March compared to usage in October. For years, we have said that nCino is not only in the software business, we are in the change management business and moving every customer from contract signing to implementation to pilot to using nCino's AI and production as an integral part of the day job is the sole focus of our forward deployed engineering team. We also continue to see the halo effect we talked about before. nCino's AI innovation and product strategy is showing up as a clear differentiator in competitive conversations. I have mentioned over the past couple of quarters that it's helping drive earlier renewals, and it's becoming another reason new customers are engaging with and choosing nCino and current customers are expanding their relationship with nCino. Second, when we talk about AI, we try to keep it simple. We care about outcomes. The question isn't how many features or how many agents exist. The question is, how much time and money did the financial institution save? How much risk was serviced earlier and mitigated and how much did consistency, efficiency and profitability improve, all while helping to ensure the financial institution operates in accordance with various rules and regulations and provides an enjoyable and compelling user experience for its customers. That's why when we look at banking adviser and our digital partners, we focus on practical wins. In the past, a single relationship review meant painstakingly pulling documentation from systems, manually identifying the relevant data points, followed by hours and hours of analysis. With agentic credit reviews, released as part of the analyst digital partner family last quarter, nCino summarizes in seconds what changed, highlights the drivers, cites the underlying data and helps draft the follow-ups. And the work stays inside nCino with the right permissions, the right documentation and the right audit trail. The bank gets faster answers, more consistent reviews and more capacity for higher-value work, like being in front of customers and growing relationships. This focus on outcomes is exactly why we transitioned our pricing model, and I'm pleased to report that as of the end of fiscal '26, we have already moved approximately 38% of our ACV away from seat-based pricing to platform pricing. Third, our data is not just a competitive moat. It is the foundation for a new category of proprietary intelligence capabilities, benchmarking, predictive risk, operations analytics and other capabilities and products you will hear about as the year progresses that we believe will create entirely new value for our customers and new revenue streams for nCino. We strongly believe that proprietary domain-specific real-world data is the most valuable asset in an AI economy and no other company has the data nCino has. And that data moat compounds with every customer we add in every line of business we expand into. Finally, I want to emphasize something that is especially important in banking. Trust. In a regulated environment, close enough isn't good enough. AI has to be deployed in a way that respects policies and data privacy, aligns with the bank's risk tolerance, which varies from institution to institution and produces results both the institution and regulators can confidently rely on. One of our stockholders recently conveyed, they were reminded how embedded nCino is within a bank's internal and external controls, risk management and governance processes when a top 5 U.S. bank explained to them that they have over 500 exemption workflows configured in nCino that guide every deterministic step of the lending process and that they rely on that process to manage risk, regulatory compliance and audit trials. That's why we're building AI into the nCino platform, where our customers already have the industry context, the controls and the ability to measure outcomes over time. As the Agentic operating system for financial institutions, nCino will be the backbone delivering AI with the same compliance guardrails, the same regulatory audit trails, the same institutional policy logic and the same lending decision framework they have grown to trust and rely on. And that's also why we believe our approach will uniquely scale, not by asking banks to bolt generic AI onto complex processes, but by delivering banking-specific AI that reflects how banks actually operate on a platform that has demonstrated time after time the ability to scale to support some of the largest financial institutions in the world. So stepping back, we feel really good about where we are. While still early, we're seeing strong excitement and increasing momentum in AI adoption and growth in usage as measured by intelligence unit consumption. Our sales pipeline looks great, and we believe our AI agents make nCino even more valuable and sticky to our customers because we connect the user, the process and the data in a trusted, controlled, regulatory compliant environment. In summary, we believe the agent economy expands our addressable market. The outperformance against our financial guidance, the acceleration of ACV bookings, the reacceleration of subscription revenue growth and the improvement and strength of our retention KPIs are all reflections of the impact AI is already having on the business, and we're just getting started. As I wrap up my prepared remarks, I want to welcome a new member to the nCino leadership team. I cannot be prouder of how our sales and marketing teams performed in fiscal '26. And to build on that momentum, we are further investing in our go-to-market organization. Today, we are excited to announce that nCino has hired Keith Kettell as our new Chief Revenue Officer. Keith is a seasoned operator who brings deep financial services, enterprise sales, large global company and scaling expertise to the company. We believe Keith's experience and vision are a great addition to the company to help us further accelerate our subscription revenues growth and take nCino to the next level. With that, I'll hand the call over to Greg to walk through our financial results. Gregory D. Orenstein: Thank you, Sean, and thanks, everyone, for joining us this afternoon to review our fourth quarter and fiscal year 2026 financial results. Please note that all numbers referenced in my remarks are on a non-GAAP basis, unless otherwise stated. A reconciliation to comparable GAAP metrics can be found in today's earnings release, which is available on our website and as an exhibit to the Form 8-K furnished with the SEC just before this call. Turning to our fourth quarter results. Total revenues were $149.7 million an increase of 6% year-over-year and $594.8 million for fiscal '26, an increase of 10% over fiscal '25. Subscription revenues were $133.4 million in the fourth quarter, an increase of 7% year-over-year and $523.1 million for the full year an increase of 12% over fiscal '25. Organic subscription revenues were $132.2 million in the fourth quarter, up 6% year-over-year and $505.9 million for fiscal '26, an increase of 8% year-over-year. As a reminder, our fourth quarter organic subscription revenues comparison is negatively impacted by an approximately 3% headwind resulting from onetime subscription revenues that occurred in our international business in the fourth quarter of fiscal '25 as the result of a contract buyout. Please see Slide 14 of our fourth quarter earnings presentation for additional details on the components of our subscription revenues over performance. International total revenues were $32.9 million in the fourth quarter, down 1% year-over-year or down 6% in constant currency. International total revenues were $131.5 million in fiscal '26, up 13% year-over-year or 11% in constant currency. International subscription revenues were $28.4 million in the fourth quarter, up 1% year-over-year or down 4% in constant currency in light of the difficult comparison from the onetime contract buyout last year previously noted. International subscription revenues were $109.5 million in fiscal '26, up 19% year-over-year or 16% in constant currency and 5% organically. We had our largest international gross bookings year in company history and with ACV as a leading indicator of future subscription revenues growth, we look forward to our international subscription revenues growth rate once again being accretive. Professional services revenues were $16.3 million in the fourth quarter, a decrease of 1% year-over-year. Full year professional services revenues were $71.6 million, flat year-over-year. As we have previously highlighted, we are emphasizing professional services gross profit growth over professional services revenues growth and expect to see this reflected within our financial results by the second half of fiscal '27 due in large part to our ongoing initiatives, leveraging AI to accelerate our implementations. Non-GAAP operating income for the fourth quarter of fiscal '26 was $34.7 million or 23% of total revenues compared with $24.4 million or 17% of total revenues in the fourth quarter of fiscal '25. Please see Slide 14 of our fourth quarter earnings presentation for additional details on the components of our non-GAAP operating income over performance. Non-GAAP operating income for the full year was $129.4 million or 22% of total revenues compared with $96.2 million or 18% of total revenues in fiscal '25. Non-GAAP net income attributable to nCino for the fourth quarter of fiscal '26 was $42.8 million or $0.37 per diluted share compared to $22 million or $0.19 per diluted share in the fourth quarter of fiscal '25. Non-GAAP net income attributable to nCino for fiscal '26 was $122.7 million or $1.07 per diluted share compared to $84.5 million or $0.72 per diluted share in fiscal '25. As expected, churn year-over-year continue to trend down towards historic norms and settled to a 3-year low in fiscal '26 of $18.2 million or 4% of prior year subscription revenues. We ended the quarter with cash and cash equivalents of $88.7 million, including restricted cash. Free cash flow was $12.5 million in the fourth quarter of fiscal '26, up from negative $10.4 million in the fourth quarter of fiscal '25. Free cash flow for fiscal '26 was $82.6 million up 55% compared to $53.4 million in fiscal '25. We repurchased approximately 1 million shares of our common stock in the fourth quarter at an average price of $25.84 per share for total consideration of $25 million under the $100 million repurchase authorization announced on December 8, 2025. When added to the stock repurchases made through the third quarter last year, we repurchased a total of approximately 5 million shares of our common stock in fiscal '26 at an average price of $25.18 per share for total consideration of $125 million. In addition to the $75 million that remains available under the December 2025 share repurchase authorization, today we announced a $100 million accelerated share repurchase program. We expect to fund this repurchase program with available free cash flow and with a portion of the $200 million term loan expansion of our existing credit facility, which we also announced today and which was funded by some of our largest customers. A portion of the proceeds from this term loan will also be used to reduce the outstanding balance under our revolving credit facility. We ended the year with 620 customers that contributed greater than $100,000 to fiscal '26 subscription revenues, an increase of 13% from fiscal '25. Of these, 114 contributed more than $1 million to fiscal '26, an increase of 9% from fiscal '25 and 14 contributed more than $5 million to fiscal '26 subscription revenues flat with fiscal '25. ACV as of January 31, 2026, was $602.4 million, an increase of 17% year-over-year. On an organic constant currency basis, ACV grew 13% year-over-year in fiscal '26. ACV net retention rate in fiscal '26 increased to 112% or 109% on an organic constant currency basis, up from an ACV net retention rate of 106% in fiscal '25 and reflecting growing demand for our AI-powered platform and solutions among our customer base and success implementing our new asset-based pricing framework. Subscription revenue retention rate in fiscal '26 was 110% or 106% on an organic constant currency basis compared with a subscription revenue retention rate of 110% in fiscal 2025. Note that the subscription revenue retention rate was negatively impacted by the difficult compares in the third and fourth quarters this past year. Additionally, a significant amount of the existing customer expansion that drove the ACV net retention rate improvement occurred in the fourth quarter, so the subscription revenues from those deals are not yet reflected in the subscription revenue retention rate. Turning to guidance. For the first quarter of fiscal '27, we expect total revenues of $154.5 million to $156.5 million, with subscription revenues of $137 million to $139 million, an increase of 8% and 10%, respectively, at the midpoint of the ranges. Non-GAAP operating income in the first quarter is expected to be approximately $38 million to $40 million. Please note that effective for fiscal '27, we will be providing annual guidance for free cash flow in lieu of quarterly and annual guidance for non-GAAP net income attributable to nCino per share as we believe annual free cash flow is a more meaningful measure of our financial performance. For fiscal year '27, we expect free cash flow of $132 million to $137 million, up 63% year-over-year at the midpoint of the range, which reflects our guidance range for non-GAAP operating income less certain assumptions, including approximately $15 million of interest expense, $6 million in cash taxes and $1.5 million of fixed asset purchases. Please recall that our cash collections from customers is highest in the first quarter, which does introduce seasonality to free cash flow. Turning to ACV. For fiscal year '27, we expect net additions of $60 million to $65 million on a constant currency and organic basis, which would bring our fiscal '27 ending ACV to $662.5 million to $667.5 million, representing 10% ACV growth at the midpoint of the range. After a few difficult years for the banking industry, large deals have again become a healthy part of our business, and our sales performance during the fourth quarter included several multi 7-figure net new and upsell wins. While we are confident in our go-to-market organization and the repeatability of the sales activity that drove these multi 7-figure wins in fiscal '26, these large deals can be inherently difficult to predict in both their timing and eventual sizing. In order to continue to prudently manage expectations on the booking side of the equation, our ACV guidance framework reflects win percentages that are higher than the approach we took for ACV guidance in fiscal '26, but lower than the win percentages we actually achieved last year. Also, recognizing that the fourth quarter has historically been, and we expect it to continue to be the largest gross bookings quarter for us each year, similar to this past year, you should not anticipate quantitative revisions to our ACV guidance throughout the year. For fiscal '27, we expect total revenues of $639 million to $643 million, with subscription revenues of $569 million to $573 million, representing growth of 8% and 9%, respectively, at the midpoint of the ranges. Excluding U.S. mortgage, our guidance assumes 10% to 11% year-over-year subscription revenues growth. Please reference Slide 15 in our earnings presentation for assumptions around our subscription revenues guidance. As you will note, consistent with the guidance philosophy we instituted last year, our guidance assumes approximately 1% growth in U.S. mortgage subscription revenues. While we recognize mortgage industry volume forecasts are currently indexed higher than what this growth rate reflects, for guidance and internal business planning purposes, our intention is to continue to be prudent around expectations for U.S. mortgage. To help you reconcile our subscription revenues guidance with our fiscal '26 ACV result, please consider the following: one, a portion of the ACV booked in fiscal '26 contributed to subscription revenues last year. Two, recall that we define ACV as the highest annualized subscription fee under a customer contract and when subscription fees increase during a contract term, the revenue recognition rules require that they are straight line, which leads to subscription revenues being less than ACV for such contracts. Three, churn experienced in fiscal '26 would have generally been from legacy contracts under our old seat-based activation model, where ACV more closely approximated subscription revenues. And four, subscription revenues from mortgage overages are not included in ACV. We expect non-GAAP operating income for fiscal '27 to be $165 million to $170 million. Finally, I'll leave you with a few additional comments to assist with your modeling that should be construed as supplemental to our formal guidance. First, international subscription revenues are expected to be accretive to overall subscription revenues growth in fiscal '27, beginning with the first quarter. Second, we expect to reduce stock-based compensation expense in fiscal '27 as a percentage of total revenues by approximately 100 basis points year-over-year from the 12% reported in fiscal '26. As a reminder, during our initial Investor Day in September 2023, we referenced a long-term stock-based compensation expense target of 6% to 8% of revenues. Third, effective January 2026, nCino is self-insuring for medical benefits, which may introduce some volatility to health care expenses in fiscal '27 as we make our way through the first year of the program. But ultimately, we expect this approach to be a more cost-effective alternative to traditional third-party insurance. And finally, our subscription revenues outlook includes revenues from both contracted and planned ACV bookings that we attribute to our AI products. Our customers are validating our AI strategy, reinforcing that it is innovative and compelling and the month-over-month increase in the consumption of intelligence units is trending quite well. At the same time, our experience has taught us that overall, financial institutions are going to adopt AI at a very deliberate pace. Accordingly, and consistent with our guidance philosophy, while we expect to sell incremental bundles of intelligence units this year, our fiscal '27 subscription revenues guidance does not yet contemplate this. In closing, I want to thank my nCino colleagues for all of their hard work and efforts successfully executing on our fiscal '26 operating plan. We entered fiscal 2027 with a ton of sales momentum and our sales pipeline, which Sean noted looks great, is up meaningfully from this time last year even after achieving the best gross bookings fourth quarter in company history. The intelligence unit usage trends we are seeing are very exciting and reinforce that our AI capabilities and AI strategy are resonating incredibly well with the market. We have the data, the products, capabilities and global reach, a unique and unmatched AI strategy, a reputation for innovation and for taking care of our customers and a phenomenal customer base that trusts nCino to successfully guide them on this AI journey. It is an incredibly exciting time to be part of nCino, the company leading the financial services industry into the world of AI-powered banking, just as we led the financial services industry into the world of cloud banking. As evidenced by our financial guidance, we feel really good about our headcount and expense plan and our ability to continue generating increasing non-GAAP operating income and free cash flow. Our financial guidance also reflects reaccelerating subscription revenues growth, and we believe the pieces are in place for that upward subscription revenues growth trend to continue. We remain confident that we are on track to achieving Rule of 40 around the fourth quarter of this fiscal year. And while the high end of our financial guidance for fiscal 2027 suggests a Rule of 40 mix of around 10% subscription revenues growth and 30% non-GAAP operating income margin in the fourth quarter, we are keenly focused on driving that mix more towards subscription revenues growth. With that, I will open the line for questions. Operator: [Operator Instructions] Our first question comes from Alex Sklar with Raymond James. Alexander Sklar: Sean or Greg, on the positive sales pipeline commentary and the ACV outlook, can you just frame what you saw in terms of the change in close rates or win rates in the back half of the year versus prior years? You referenced coming in above? And then how you approach the ACV outlook from a pipeline coverage perspective versus last year? Sean Desmond: Yes. Thanks, Alex. First of all, we did highlight early in the year our renewed focus on the execution discipline of pipeline growth and our emphasis and prioritization around demand generation in the marketing machine, right? So I think some of that played out in the back half of the year as our pipeline increased, conversion rates were healthy, but we just had a larger pipeline, and we're seeing that continue into this year over last year as well, and that's why we're so excited about the outlook. Overall, by solution, by geography, it's pretty balanced. And obviously, we're seeing nice momentum in our international business that we highlighted on the call. But I think a lot of it is around the discipline of just pipeline management overall. And when you have a larger pipeline, conversion rates can stay pretty steady and you'll have a larger ACV outcome. Alexander Sklar: Okay. Great. And then, Sean, you gave a lot of great color on the Banking Advisor adoption, 170 customers now on the platform. I think you have over 100 skills now versus 2 a year ago. Can you just frame where you're actually seeing the greatest usage across that portfolio of capabilities and skills? And then in terms of the magnitude of a 25x growth in credit usage versus October, maybe help frame how many of those customers are approaching kind of the upper end of their purchase credit allotment? Sean Desmond: Yes. Listen, first and foremost, our executive leadership team as well as the entire company is maniacally focused on adoption of Banking Advisor and our Agentic solutions. And I think we've been very thoughtful about selling our customers large enough blocks of intelligence units upfront to give them the runway that will enable them to navigate the adoption curve and see the benefits and kind of settle into the new experience, which is really important as you're managing the change. The last thing a customer wants is to feel nickel and dimed when they're adopting something new, right? So we didn't want to put them in a position where we sell blocks in small portions where immediately they have to re-up. And I think we can draw some parallels and analogies to the personal experiences that we have, right, with whatever chat interface you might use. The last thing you want is in the first month to be asked for an increase in your monthly subscription, right? So what we're focused on, first and foremost, is that adoption. And we're pivoting a lot of the energy of the field towards sitting side-by-side with customers and getting them comfortable with that. And then I would expect over time, as this settles in, we'll look into the next block of intelligence units. But in particular, your question around what are we seeing traction in, listen, our agenda credit reviews are really exciting, which falls under our analyst digital partner umbrella. Locate and file has been a mainstay since day 1 that we launched banking advisor, and we're seeing a lot of traction with credit monitoring as well as auto spreading. Operator: Our next question comes from Joe Vruwink with Baird. Joseph Vruwink: Great. Just to stay on some of the AI debates. Lending is a very complicated process. And part of that complexity, I'm sure we can appreciate ties to all the different systems and data and decisions that go into it. I guess the risk is that AI models can be good at orchestration. Are you seeing that type of capability and it starts to eat into nCino's differentiation? Or does it cause you to think about how the platform is currently architected and maybe doing some things differently to match up against what AI makes possible? Sean Desmond: Yes. Thanks, Joe. I appreciate the question and certainly understand a lot of the narrative that's going on in the market today. And some of the realities have changed with the AI capabilities, no doubt. For instance, we all know the coding has never been easier, right? And what we need to focus on is the reality that there's a difference between standing up an overnight user experience and deploying that code and maintaining that code in a highly regulated industry. That's still hard if you weren't built from day 1 in a compliant way for the regulators, if you don't own the workflow, if you don't own the data and you don't have the trust relationship, then these AI tools aren't going to stand you up overnight. All that being said, we've acknowledged that workflow is relative old news. And what we're focused on is an Agentic operating system future where we can instrument the platform with agents that tap into our own embedded intelligent workflows and mine that data and provide a differentiated experience. And we believe that is very unique. And the right question right now is not necessarily who's best positioned to deliver overnight because I've yet to see somebody to take a customer live even in the past year that was threatening that posture this time last year. What I think the right question is who's best and most uniquely positioned to capitalize on AI and banking, and we think that's nCino. Joseph Vruwink: That's helpful. On the Intelligent credits, do you have any metrics you can share maybe around efficiency gains or P&L impact that customers using the credits have seen so far? Or maybe is there a spectrum of outcomes you're seeing between heavy and light users? Can you kind of present to your customer base that here are examples where greater consumption is actually translating into greater benefits and you start to build referenceability in kind of that way. Sean Desmond: Yes. And thanks for highlighting the focus on outcomes that we have here at nCino. Listen, I don't really wake up in the morning excited about people adopting AI. I get excited about them getting real outcomes. And when I talk to bank CEOs, around the world, they care about what impact we can have on their top line and what impact we can have on their bottom line, right? It's all about revenue efficiency and cost savings. And so I think we're seeing really good gains and traction, specifically around credit monitoring, which is why I highlighted that credit analyst. And in some cases, we're seeing months to days and days to minutes in terms of getting [indiscernible]. We plan on highlighting at site some direct outcomes sharing their experiences on leveraging those units. But safe to say that as I wake up every morning with the CEO agent stack of my own that highlights intelligent units consumption, there's a direct correlation between the outcomes our customers are getting and the intelligence units they're drawing down on across the spectrum of banking advisers. Operator: Our next question comes from Michael Infante with Morgan Stanley. Michael Infante: On pricing, obviously, it sounded like a really strong result with 38% of revenue now on the new pricing model. Any incremental commentary you can share just in terms of price realization for the fiscal 4Q renewal cohort versus your plan? And in the instances where customers did push back. Can you sort of speak to some of the instances or initiatives you have in place to retain those customers, either in terms of ancillary product of attach of things like banking adviser and/or lower price realization? Sean Desmond: Yes. On the pricing front, first and foremost, I want to highlight that we started on the pricing journey nearly 3 years ago. And I really point that out because we're not reacting to anything here. We had a vision for how outcomes would be the end game for software companies like nCino. And so we prepared for this. The pricing has now been out there for a little over a year. And what I would tell you is that we are exceeding our internal plans and targets, and that momentum even picked up in Q4 versus the prior quarters. And while nobody likes a price increase and nobody likes change, I think that we're very prepared for that. And by and large, those customers are going very well. I'm proud of our account teams in the field. Those aren't necessarily easy conversations. But what I would say is they're more focused on education and enablement and drawing direct lines to the outcomes that our customers are going to get over time versus the old per user per seat model. So the value exchange is becoming apparent to our customers. And because of that, we're seeing early renewals. We're exceeding our targets, and we're leaning in heavily. It's been really accretive to our business. Michael Infante: Helpful, Sean. And then maybe just a quick follow-up on gross margins. I know it's fairly early in terms of thinking about banking advisory monetization. But do you expect the consumption of those incremental credits to be gross margin accretive? Should we be focusing on incremental gross profit dollars? How are you sort of thinking about the inference cost and customer usage intensity when usage exceeds expectations? Sean Desmond: Yes. Listen, I would absolutely expect these to contribute toward gross margins and really both, right? I mean what we're doing in terms of instrumenting our customers with the ability to come to decisions faster over time. we expect the value exchange to play out, right? And I think they're going to be in a position where they can exchange some of the labor cost and add their labor force to more high-value activities and put their employees in front of the customer, right? And that's where they want to be. And we're going to automate the things that happen in the middle and back office, and that's going to drive margin efficiency for our customers. Ultimately, that will flow through to nCino as well. Gregory D. Orenstein: And Michael, just to add, I mean, one of the benefits of seeing the usage tick up quite well is that it gives us the opportunity to stress test our gross margin model as we ramp up, and so we've been able to see that over the last few months is again 25x from October to March. And again, so far, we feel good about it. Operator: Our next question comes from Chris Kennedy with William Blair. Cristopher Kennedy: Can you provide an update on the credit union initiative? Sean Desmond: Yes, something we're very excited about. We mobilized the team, as you know, early last year that wakes up and sleeps, eats and breathes as well, just that credit union market. I'm proud of the way they've run toward the opportunity, have established relationships and credibility in that space and understands the problems we're solving for those customers. I think that's a matter of really being able to tell the same nCino value proposition story in a way that resonates more deeply with the credit union space, and that's given us the opportunity to even envision how we can think about road map in a different way and how we kind of augment the platform and the experiences that we deliver and think beyond some of the traditional experiences we serve up. So we've got good momentum there. The team is fully activated. The pipeline is growing as we head into this year, and we plan on selling the entire platform to our Credit Union customer base. Cristopher Kennedy: Great. And then just as a follow-up, historically, you've given ACV by category. Can get an update between mortgage, commercial and consumer? Gregory D. Orenstein: Yes, Chris, we don't have that for this call, maybe at another public forum, we'll be able to provide that breakdown for you. Operator: Next question comes from Ryan Tomasello with KBW. Ryan Tomasello: I guess starting with the organic subs guide. You're talking about 10% to 11% growth ex mortgage for the year. I appreciate the commentary on international being accretive this year, but I was hoping you can just put a finer point on the drivers there. Ex mortgage, particularly with respect to the U.S. business ex mortgage in terms of subs growth outlook. Gregory D. Orenstein: Yes. Thanks, Ryan. I mean, overall, I think business perspective, whether it's by product or geo, I think we feel really good about the sales momentum that we're seeing in the market. Our customer base generally is quite healthy. Balance sheets are healthy, lending activity has been up. And I think that is driving, again, demand for nCino -- for our products. And I would also go back to AI is a big driver for that as well. You can't leverage AI. You can't leverage this revolutionary technology unless your house is in order. And that's the business that we're in. We're in coming in and transforming your bank so that you can operate on a platform and to be able to leverage not just your data, but the data that nCino has across our whole customer base that's given us the rights to leverage that data as part of our product offering. I would point you to the appendix in the back of the earnings call presentation that we put up, you'll see a nice walk in terms of our year. And the other thing I'd highlight again is the continued downward trend in churn, which, as we know over the last couple of years, has been unusual for us, right, heightened churn, but that coming back more towards historic norms has been a big positive to getting our growth trajectory back towards an upward motion and one that we can build on. Ryan Tomasello: I appreciate that, Greg. And then just following up, just kind of on the subs cadence for the year. The 1Q guide round numbers looks like 9% to 11% organic subs growth versus 9% to 10% for the full year. Just trying to reconcile that with your comments earlier, Greg, about being confident in being able to continue to drive this acceleration in subs growth and just how we should think about this cadence throughout the year with respect to that Rule of 40 target. Gregory D. Orenstein: Yes. Thanks, Ryan. I think you should assume that mortgage comps in the second and third quarter are a little bit tougher. And so that from a trajectory standpoint is something that you should take into account in your modeling. Operator: Our next question comes from Aaron Kimson with Citizens. Aaron Kimson: Sean, can you talk about why now is the right time to bring Keith in to run sales? And what is type 2 priorities will be in fiscal '27? It seems like the sales team is executing well. Sean Desmond: Sales team is executing phenomenally well. And we are -- we have been marching towards a point in time where we were going to appoint a Global Chief Revenue Officer. That's going to help us scale to $1 billion and beyond in terms of where we're going on the revenue growth side. And that has been in the works for some time. What I would share with you is that we had a model in place where Paul Clarkson, who ran our North America sales operation is stepping aside for personal reasons, and Keith is coming in to consolidate the global org and we'll have a tight partnership not only in North America, but in EMEA and Asia PAC and with our partner organization, and Keith has a lot of experience in these areas. He's been somebody we've known for a long time in our network, not only his days at Salesforce, but also at Alloy. And we're super excited about his leadership. He's not only a great experienced leader who's operated in this vertical and has deep relationships with our customer base, but also is a great culture fit for nCino. So yes, the sales organization is operating fantastically well in large part due to Paul Clarkson's leadership. And Paul is stepping aside for personal reasons and Keith is the perfect guy to step in at this point in time and take us to the next level. Aaron Kimson: Understood. And then as a follow-up, it's good to see the mortgage win with a top 40 bank where they also use your commercial lending, small business lending and treasury products. Are you getting to a point in mortgage sales cycles now where you have a better idea of how the move up market with nCino mortgage is going now that you're 3 quarters in there from when you really rolled it out after the Investor Day last year at nSight and at the larger FIs, you finding that existing relationships and other parts of the bank are helping you get a foot in the door on the mortgage side of the house or that the buyers are just generally separate in those big organizations? Sean Desmond: The answer is yes. We are learning from experiences there. As you know, we made the jump from our mortgage solution in the IMB space full on towards some of the largest banks in the world. And we're excited that we have a top 30 bank in the U.S. on the platform, and that naturally gets the attention of the peer group and the cohorts to the point where we start getting some inbound calls for nCino to participate in forums at that level. We're also getting traction in the community and regional bank space as well as the credit union space with the mortgage solution. And I think our teams now have some of the experience and quite frankly, some of the attitude and confidence that it takes to go aggressively sell that across lines of business. It's not uncommon that I would be meeting with our customer base, whether it's a CEO or Chief Lending Officer, or somebody in the C-suite that would proactively bring up on their side and recommend that we talk to the mortgage leader in their business. So that is happening and it's happening pretty organically. Operator: Our next question comes from Saket Kalia with Barclays. Saket Kalia: A nice finish to the year. Greg, maybe for you. I think we said we've got about 38% of ACV on platform pricing now, which is great to hear. I'm curious, have any of your top 20 banks made that transition yet. And were there any learnings from those customers in particular that you feel you could build upon? Gregory D. Orenstein: Yes. Thanks, Saket. The answer is yes. I mean, I think with every deal, you learn something new. We certainly try to. But to Sean's point, this is something that we started in terms of this pricing transition going back about 3 years. First off, internally and testing with our customers. Again, one of the great things about the wonderful customer base we have as we work very closely with them to get their thoughts and input. And so the rollout has frankly exceeded my expectations, not just from the uplift that we've talked about, but as well just in terms of the execution and you would have heard Sean's prepared remarks, our largest customer by ACV renewed for a 5-year deal, and that would have been on the new platform pricing model. So we do have some of our larger customers already on it. And again, I think it's gone quite well, quite pleased -- we're quite pleased with the execution there. Saket Kalia: That's great to hear. Maybe for my follow-up. It was great to hear you reconfirm the Rule of 40 expectation. Is it may be fair to say that, that rule of 40 is achievable based on the ACV that you've already booked here in fiscal '26? Or is it dependent on some of the new bookings that you anticipate this year as well? Gregory D. Orenstein: It would include some new bookings. Again, the slide I referenced earlier, Saket, in the appendix, I think it's Slide 15, you'll see a nice walk that we tried to lay out, so you could see the contribution from bookings last year and what we came into the year with, which is quite a bit of visibility. But we do have -- we do have some work to do this year. And again, I think as we look at our pipelines, as we look at the activity in the market, and frankly, as we look at the excitement that we see in here and feel around AI, we come into this year feeling good about the plan that we have. And it's actually Slide 16, if you look in that deck. Operator: Our next question comes from Charles Nabhan with Stephens. Charles Nabhan: Just 1 quick one for me. Looking back over the past couple of years, you've done several acquisitions. Wondering if you could provide us an update on the progress you've made on Sandbox and DocFox, any positives or negatives? And just an update on the traction you're getting on those solutions in the market. Sean Desmond: Of course, taking those each on its own from a Sandbox standpoint, that has actually become the foundation and the backbone of our integration gateway and the MCP layer that we expect to control how agents access data in the nCino moat, right? So that's very strategic. We're not necessarily selling -- looking to that as a stand-alone revenue engine, but as a strategic foundational platform that sets us up to be the agentic operating system of the future for banks. So we're really excited about that. And from a DocFox standpoint, we remain very compelled by the opportunity with complex commercial onboarding that continues to come up in nearly every conversation as an adjacent problem our customers are solving to the one that we solve so well around commercial loan origination. And so those opportunities in the pipeline are growing. We have acknowledged in past calls that it was going to take us the better part of the prior fiscal year to complete the technology integration work. And now we're looking to convert some of that pipeline here in the first half of this fiscal year. So we're really excited about onboarding coming into full focus as it's kind of been mainly in the background and the R&D room. Now it's coming into the sales machine. Operator: Our next question comes from Adam Hotchkiss with Goldman Sachs. Adam Hotchkiss: Sean, where are bank CIOs leaning in most to AI from your perspective, whether that's nCino or otherwise? And how does that differ across financial institution side? I'm just curious if smaller to midsized banks or maybe more likely to lean into packaged AI use cases. And are you seeing any appetite for some of the larger banks, in particular, to try to do anything? And how is the -- I'm just trying to understand ultimately what banks are out there trying versus not trying from an experimentation perspective and then how nCino fits into that? Sean Desmond: Sure. And in our landscape and as you've acknowledged, I appreciate the tee up there and market segmentation. Undoubtedly, the further down market you go, the bigger the appetite those customers have for prepackaged solutions that we would serve up the agents, right? And we would actually build and deploy the agents. And what's so powerful about our platform as we render those in the existing workflow, right? At nCino, AI lives in the workflow, so the context is already there. The user doesn't have to change their behavior and the trust and compliance are inherited and the data moat is leveraged. So those banks absolutely get that. As you go upmarket, the same value proposition applies but you absolutely have, what I would say, more curious in experimental groups within the organization who are being chartered with, hey, if we build our own agents, what would that experience look like, right? And those customers, just the same need context, they want trust and compliance and they want to tap into nCino data. So we have thoughtfully architected a platform as we evolve in our journey that would enable customers to do both. And we're seeing enterprise banks that are asking us to actually sit side-by-side and co-develop some of these agents and look at those experiences. So it's all exciting. I do think that what comes up most for me when I'm talking to customers about the outcomes they want to go back to that credit monitoring experience is very powerful. The ability to reduce the time spent analyzing the scores and reams of documentation and data to get to a proactive monitoring position over time, and that's not only upfront to do a deal, but that's maintenance. That's pretty common. And then, of course, you know that we have banking adviser skills embedded across the experiences. So that's one that stands out. They are looking for low-hanging fruit. They are looking for quick wins, and we can serve those up, and that's exactly how we've architected our digital partners. Adam Hotchkiss: Okay. That's really helpful, Sean. And then Greg, just on the Slide 16 that fiscal '27 growth algorithm, I really appreciate the detail there. Any way to think about how that contribution mix between contracted in the prior year and forward bookings compares to ultimately what you did in fiscal '26 just from a mix perspective would be helpful to understand. Gregory D. Orenstein: Yes, Adam, I think you can assume it's comparable. Operator: Next question comes from Terry Tillman with Truist Securities. Terrell Tillman: I'll keep it to 1 question, but as typical, there's probably multi parts to it. On the early renewals, it seems like that's a good sign of the interest in the new innovation. But could you all quantify how much early renewals impacted or benefited the strong 4Q ACV? Or the in-year ACV target? And the kind of the second part of this is with the early renewals, I think you did say that one did a contractual renewal at 5 years. But what is the duration looking like on early renewals versus the original contract? And then just do they tend to consume or sign up for more banking adviser or skills versus the non early renewals? Just double-clicking more on early renewal activity would be great. Gregory D. Orenstein: Yes. So in terms of the renewal trajectory and momentum, I'd point you to the ACV you mentioned that we disclosed going from -- it was 102%, I think back in fiscal '24 up to 106% and then up to 112% or 119% at constant currency organic basis, Terry. So again, really like that trend. And I think that's reflective of, again, the customer relationships that we have and also, again, just the breadth of our product that we can go back to our customers and sell them more. And again, a lot of those discussions actually AI, whether it ends up being an AI discussion or not, being able to go talk about AI provides an opportunity for us to explore where else we may be able to add value to our customer base. And so all that's exciting, and I think all that's helping to drive the momentum that we saw last year and that we came into this year with. Operator: Our next question comes from Koji Ikeda with Bank of America. Unknown Analyst: This is [ George McGrehan ] on for Koji Ikeda. And I know that you guys already talked about the relationship between sub revs and ACV. But I kind of wanted to ask this simplistic question, and apologies if it's a bit redundant, but if you could humor me. So fiscal year '26 sub revenue came in higher than ending fiscal year '25 ACV. But the initial guidance for fiscal year '27 sub revenue doesn't quite get us to ending fiscal year '26 ACV. What's kind of the relationship there? And how would you kind of describe the level of conservatism in this fiscal year '27 sub revenue guide? Gregory D. Orenstein: Yes. Thanks for the question. Just going back to some of the earlier comments, there's a few things to keep in mind when you're trying to reconcile the ACV performance in our sub-rev guide. One is, again, a portion of the ACV that we got actually contributed to subs revs last year. So you need to take that into account. Again, the way that we've always defined ACV is the high point of a contract. And when there's increased pricing during a contract, right, the rev rec rules require you to straight line that. And so your actual revenue is going to be short or fall short of what your ACV is and what that exit contracted amount is would be another thing to take into account. The third thing is churn that we experienced last year would generally have been from our older seat-based pricing model. And the ACV and subscription revenue would have been more aligned under that historic model that we had. And then finally, again, as you think about subs revs, keep in mind that our mortgage overages don't fall into ACV. And so those are some of the deltas to take into account when you're trying to reconcile the ACV performance we had in fiscal '26 and the initial guide that we've given for sub revs for fiscal '27. Operator: Our next question comes from Eleanor Smith with JPMorgan. Eleanor Smith: I think I'll keep it to 1 as well. I know many products can be implemented in a matter of weeks or months. But when you land a large new customer as you did in Japan this quarter, how long does it take to implement a large customer like that? And when do you begin recognizing revenue? Sean Desmond: Sure. And listen, I think on average, it's a reality with the efforts we've put into rotating a lot of our energy in our field, PSO organizations toward our forward deploy engineer as well as applied intelligence groups to reducing overall implementation times. And that's showing up and they're compressing nicely, and we're getting customers live in time frames that are actually exceeding my expectations. Specific to the large Japanese deal, that's a multinational deployment that is probably unique in its own regard with respect to some of the coordination that needs to happen upfront before we even start thinking about deploying nCino. So there's some of that that's happening right now. once we get hands on keyboards with nCino, I expect that we'll hammer through that project in months. But there's a lot of upfront prep work when you're bringing a global organization together across 26 countries that needs to happen, that will probably elongate the time that we can announce something very exciting with respect to a go-live on that particular bank. Gregory D. Orenstein: Yes. Ella, with respect to the rev rec, just recall with platform pricing, it's going to be straight lined over the term. And it would generally start a month or two after contract signing, when we would start billing just based on the terms of the contract. Operator: Our next question comes from Nick Altmann with BTIG. Nicholas Altmann: Just on the renewal base. I know you guys mentioned 38% of the ACV base is renewed to the new pricing. But can you just talk about where you expect that mix to trend as it relates to the 2027 ACV guide and whether that contemplates some continuation in the early renewal activity that you guys have been seeing? Gregory D. Orenstein: Yes. Thanks, Nick. Yes. As it relates to fiscal '27. I mean, we would expect a similar performance as we had in fiscal '26 in terms of the renewal cohort that comes up. Recall historically, the average contract length of our bank operating customers is upwards of 4 years. And so break that down generally a quarter over that 4-year period. We are seeing accelerated renewals. And so I think we're ahead of plan for that. So again, we would expect a similar performance. Keep in mind in terms of the comp because it's a similar performance, you won't see that onetime kind of step-up that we had this past year, which was the first year really of the step-up. And so just keep that in mind from a compare standpoint as move into fiscal '27. Operator: Our next question comes from Ken Suchoski with Autonomous Research. Kenneth Suchoski: I'll keep it to 1 as well. I wanted to dig into the long-term moat of the business a little bit because it seems like people are -- investors are questioning the terminal value of these -- of software companies more broadly. You mentioned how banking is a highly regulated business and how that's different. Could you just talk a little bit about how nCino works -- if and how nCino works with regulators and how that might impact the ability to remain entrenched and prevent new companies from coming into the space? And then secondly, it sounds like data is going to be one of the key sort of aspects to the moat longer term. So are we at the point where the network effects of the data are strong enough to keep nCino in the lead? Or is there this sense of urgency across the business to try to build up that aspect of the moat? Sean Desmond: Thank you. And yes, we do believe that the future long-lasting durable software companies that are going to be the generational companies that can survive inflection points like these are going to be able to deliver AI embedded within existing business processes and in particular, in this banking vertical to lend context and within the guardrails of regulation. And beyond regulation, you have to consider things like security, there's trust and there's that data moat that you talked about. And we believe that what's unique about nCino is we started accumulating this data 14 years ago, right? So we are absolutely not sitting here reacting and aggressively trying to build up our data moat overnight because that was the original vision of nCino. When I joined this company in 2013, I had a conversation with our founding CEO on the power of sitting at the intersection of the things that we do and where we do them. And if we could serve that data up with meaningful insights that would be very compelling. And we just happen to now be in the era of AI. So while other companies are scrambling to deliver user experiences overnight with no foundation of data, we're actually continue to build on 14 years of buildup. And we just -- we're not arrogant about it, but we believe our data moat is unparalleled and unique, and nobody else has the type of contextual view on how capital flows through workflows in financial institutions. So we're excited about that, and we believe that's going to propel us we'd lean into it. As far as the regulation, I would first point you to the fact that we have hundreds of bankers that work at nCino, they come from that world, right? In many cases, sitting in those chairs side-by-side with the chairs of the regulators for careers before software. And that's very unique in terms of how you think about product management. And now in the world of prompt engineering and imagining experiences very quickly, doing that without that human riding shotgun with you is where I'd be nervous, right? That's where you start getting into hallucinating on public cloud data that you think regulation lives in the public cloud. It does not and the bankers understand that. And that's why we're excited about that, and we maintain the relationships with these types of people in the space. Operator: Thank you. I would now like to turn the call back over to Sean Desmond for any closing remarks. Sean Desmond: Thank you all for joining us today. We do look forward to seeing many of you at nSight, which is our annual user conference in May, where we will be showcasing many of these agentic experiences we're talking about with customers on stage delivering outcomes. Hope to see you there. Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.
Operator: Good day, and welcome to the Bitfarms Fiscal 2025 Conference Call. [Operator Instructions] Please note, this call is being recorded. I would like to turn the call over to Jennifer Drew-Bear from Bitfarms Investor Relations. Please go ahead. Jennifer Drew-Bear: Thank you, and welcome to Bitfarms Fiscal Year 2025 Conference Call. With me on the call today are Ben Gagnon, Chief Executive Officer and Director; and Jonathan Mir, Chief Financial Officer. Before we begin, please note this call is being webcast with an accompanying slide presentation. Today's press release and our presentation can be accessed on our website under the Investors section. Turning to Slide 2. I'd like to remind everyone that certain forward-looking statements will be made during the call, and that future results could differ from those implied in this statement. The forward-looking information is based on certain assumptions and is subject to risks and uncertainties. And I invite you to consult Bitfarms 10-K for a complete list. Also, please note that references will be made to certain non-GAAP financial measures, and therefore, may not be comparable to similar measures presented by other companies. We invite listeners to refer to today's press release and our 10-K for definitions of the aforementioned non-GAAP measures and their reconciliations to GAAP measures. Please note that all financial references are denominated in U.S. dollars, unless always noted. And now turning to Slide 3. It is my pleasure to turn over the call to Ben Gagnon, Director and Chief Executive Officer. Ben, the floor is yours. Ben Gagnon: Good morning, everyone, and welcome to our fiscal year 2025 earnings call. In 2025, we made a bold decision to walk away from our legacy business, Bitcoin, and build the infrastructure in North America for what comes next, HPC and AI. It was a year of deliberate and consequential transformation with a clear mandate. Secure North American pipeline, strengthen our balance sheet, accelerate site development, and position ourselves to engage customers from a place of operational momentum at the peak of the energy bottleneck constraining the growth of AI. I can say with confidence and pride that we accomplished exactly what we set out to do. The foundation you see today, the capital structure, the sites, the team, the strategy was engineered through deliberate choices, developed with discipline and built to propel us forward. We made foundational changes to reposition the business and made 100% of our focus on North American HPC infrastructure development. No half measures, no compromises and in time, no Bitcoin. We built a new company. And while we are presenting as Bitfarms today, tomorrow marks our beginning as Keel infrastructure. The name says it all. A Keel is the bottom of structural component of a vessel. It's what keeps it stable and moving forward in the right direction regardless of the condition above the water line. It is structural, it is essential, and it is exactly how we see our role in the HPC and infrastructure landscape. We are not here to compete with hyperscalers or neoclouds. We are here to enable them. Our focus is providing the critical and largely invisible foundation that will allow the world's most advanced AI platform to deploy on time and scale without interruption. We expect to close the re-domiciliation and finalize our rebranding efforts tomorrow, April 1, and we'll begin trading under the ticker KEEL, 2 business days after completion of the transaction on the Nasdaq and the TSX. We are entering this new phase from a position of strength. With over 2 gigawatts in our pipeline, Keel is a regional leader with some of the largest power land portfolios in some of the highest demand markets in North America and with robust financial strength to execute against our plan. Our current liquidity is far in excess of the CapEx budgeted to get us through permitting and ultimately to start signing leases, giving the company significant financial flexibility to execute on our strategy. And our strategy is equally as clear. We are designing all of our site and campus developments as either powered shell or co-location facilities. We believe this is where we can deliver the most value to shareholders and serve our potential customers at the speed and to the specifications they need. We were originally exploring in parallel to co-location the potential benefits of pursuing a small amount of GPU as a service at our Washington site, Moses Lake, where due to the lowest cost power for data centers in the country and a relatively smaller footprint, we believe it could be an avenue to drive additional shareholder value. Since our last quarterly call, we have spoken with an increased volume of potential customers. And it's clear from those conversations, the most accretive business model for the site is one of co-location. This is not specific to Moses Lake and applies to all of our other sites as well, where demand is even higher. So we will focus on what we do best, being an infrastructure developer and owner. This plays directly to our core competencies. We are a team of developers united by disciplined action, building cost-effective institutional-grade infrastructure at the pace our customers require. The same capabilities have built our energy platform, speed to market, capital discipline, operational rigor precisely what HPC and AI deployments demand today. This is just the natural extension of what we do best. So with all the pieces in place and with the overwhelming support of our shareholders who voted over 99% in favor of the HPC and AI pivot, the U.S. redomicile and the rebrand. Starting tomorrow, we are Keel infrastructure. Turning to Slide 4. When we sat on our pivot, we developed a 3-year transformation plan, one that as of today, we are nearly halfway through completing. In 2025, we did the intensive foundational work for our transformation, including the Stronghold acquisition, securing more power in Pennsylvania, rebalancing the portfolio to North America, a $588 million raise fully institutional and oversubscribed, our U.S. GAAP transition, New York headquarters and establishing a new executive team. This work is done. With power and land secured in some of the power markets that matter most, a team of internal experts and strategic partners that have built data centers for the largest companies in the world and a balance sheet engineered to see us through 2026, we are well positioned to continue our site development and deliver against the time lines, our prospective hyperscalers and neocloud customers need. 2026 is all about execution. Effective tomorrow, we will have completed our redomiciliation to the United States and officially rebranded as Keel infrastructure. Two major milestones that position the company for the next phase of growth. With that complete, we expect the next significant milestones to come from executing against our development at Panther Creek, Sharon and Moses Lake, where we are moving full steam ahead and working diligently across three simultaneous and active work streams. One, finalizing permits, which we expect to be done in the coming months. Two, continued work on architecture and engineering in line with ongoing customer conversations and requirements. And of course, three, our go-to-market to secure highly financeable leases with investment-grade tenants. Commercialization is well underway. The upcoming milestones investors can expect are completion of preconstruction activities like permitting, progress in customer engagement and ultimately lease execution, which we are confident we can achieve this year and will be major catalysts. 2026 is also the year where we expect to leave Bitcoin and Bitcoin mining behind. While we were probably one of the first miners to commence wind down of our Bitcoin mining exposure to reinvest that capital into infrastructure for HPC and AI, we will be accelerating those efforts in 2026 as site developments progress. 2027 is all about delivery. This is the year when we anticipate that sites would come online, we'd begin delivering megawatts to customers, HPC and AI revenue really begins and we complete our transition to a premier North American HPC and AI infrastructure company. By the end of 2027, we expect Keel will be a proven infrastructure developer and a regional leader across Pennsylvania, Washington and Quebec, and we will just continue to grow and scale from there in 2028 and beyond to over 2 gigawatts as we execute against our expansion capacity. Turning to Slide 5. In HPC infrastructure, power, location and time lines are everything. We hold something scarce and valuable secured power, land and expansion capacity in Pennsylvania, Washington State and Quebec. Some of the most in-demand markets with some of the biggest barriers to entry. We know it and so do our potential tenants. Our campuses offer solutions to hyperscalers and neocloud's greatest scaling problems, location, proximity and fiber connectivity to major metro areas and data center clusters solving for latency issues and giving our tenants proximity to their own customers and other data centers. Time lines. Our robust secured power for '26, '27 and with expansion capacity in 2028 is highly coveted in an environment where energy capacity is hard to find and multiyear waitlists are the norms. We create value for tenants by enabling them to deploy years earlier by leasing from us rather than to invest in growing organically. An energy-efficient cool climate, the lower the PUE, the more critical megawatts. Panther Creek is a great example of seeing the hyperscaler and neocloud's appetite at play. While there is a lot of interest in the site last year, inbound customer activity surged after we secured zoning in February. This is not a coincidence. It is the proof point and one that we've been making for the last year, but may still be confusing to some investors. So we'd like to be clear that investment-grade tenants value derisk sites where they can move from lease to revenue fast. The more we advance, the better our leverage. The better our leverage, the better the leases, and the more long-term value we create for shareholders. Turning to Slide 6. It is indisputable that power is the binding constraint for AI infrastructure deployment and will remain so for the coming years. Leading investment banks, Goldman Sachs, JPMorgan, Wells Fargo, Guggenheim, Moelis, they've all published extensively on this. And the consensus is clear. New power generation cannot come online fast enough to meet AI demand today, tomorrow or in the next 5 years. This bottleneck is structural, not cyclical. Hyperscalers and neoclouds that used to plan on 12-month horizons are now locking in 24- to 36-month supply chain commitments. Not tied to specific projects, but as platform level agreements and are now actively competing for the power and land to deploy it. While you are probably familiar with this information, here you can see a summary of the five development sites. The power we have secured and in some cases, the incremental power opportunities that make up our 2.2 gigawatt pipeline. Turning to Slide 7. I want to take a moment to put our current valuation context because there is a meaningful disconnect between where we trade today and the value we are positioned to capture as a company. When we analyze our current valuation against our peers, the picture becomes clear, at approximately $1.9 million per available megawatt of secure 2027 capacity, we're trading in the middle of a Bitcoin miner Group, valued at roughly $1.7 million to $2.1 million for 2027 megawatt meaning we are being valued based on having power but not what we are doing with it. For shareholders and bondholders, we see three distinct catalysts, each capable of driving meaningful reratings. The first is obviously lease execution. Across our sector, companies that have signed leases trade at $4 million to $6 million per 27 megawatts, a 2 to 3x premium to where we are today. This is the market's consistent signal driven entirely by lease execution, not facility delivery, not revenue generation, just signed leases. A signed lease secures revenue and financing derisking the developments. The market pays for that with nearly 500 megawatts actively being commercialized today and visibility on permitting across Panther Creek, Sharon and Moses lake, this catalyst is well within reach. The second catalyst and arguably the most powerful for long-term holders is securing our expansion capacity. 2/3 of our 2.2 gigawatt portfolio or approximately 1.5 gigawatts is expansion capacity, which we believe the market is assigning little to no value. While securing these megawatts is a process that will take more time, we believe additional megawatts can be secured in the second half of 2026 requiring very little CapEx while representing significant embedded value as powered land even before a lease is signed or there is a shovel in the ground. The third catalyst is delivering in 2027. Once facilities are derisked through commissioning and begin generating revenue under long-term contracts, the development risk should drop dramatically and the operator valuation numbers become transformational yet again. We are not taking a leap of faith on technology, our ability to see our power or market demand. The tech is here. The power is secured, the sites are advancing, the inbound demand is real, but the market has not yet priced in is the transformation that happens when a developer becomes a counterparty when we move from site advancing to lease executing. This is the main opportunity ahead of us to accelerate permitting, execute leases, secure our expansion capacity and ultimately deliver to our customers. This is how we will create value for our shareholders and bondholders. Turning to Slide 8. Our execution plan is defined by six areas, each supporting our ability to deliver at the pace and scale our future customers require. First, we've secured our deep bench of talent by adding over 60 years of infrastructure and development in over 50 years of data center construction experience combined in just the past few months. People have delivered at scale for the most demanding customers in the world. Jonathan Mir joined as CFO, bringing 25 years of energy infrastructure strategy and project finance expertise. We have also added an SVP of construction and of power, a VP of HPC Operations and Head of permitting to oversee the execution of these critical functions. We've assembled the right team to execute on our vision. Second, we are engaging the right industry leaders as partners, T5, Turner Construction, Corgan, [ WWT ], Vertiv. These firms have built data centers for the world's largest hyperscalers not once but hundreds of times. When customers look at our project partners, which will be available on the new website when it launches tomorrow, they will see that we have also assembled the right partners to ensure better outcomes. Third, we have the capital required to bring our sites to market. As of March 27, 2026, our liquidity stands at $520 million in cash and Bitcoin, which we expect is much more than the CapEx budgeted to get us to a lease at Panther Creek, Sharon and Washington. Jonathan will go into more detail on our capital position and financing strategy shortly, but the headline is simple. We're well funded and can move fast. Fourth, a disciplined Bitcoin exit. It is clear we are no longer a Bitcoin miner. However, with strong, robust liquidity, we can have a disciplined approach to our exit strategy. We will continue to operate up until the time sites need to be prepared for construction maximizing free cash flow before selling the miners. We will also opportunistically sell Bitcoin into strength to capture and reinvest every dollar we can into HPC and AI infrastructure. Fifth, power assets that cannot be replicated. Our megawatts sit in regions with large barriers to entry, Pennsylvania, Washington State and Quebec, all have multiple year waitlists. No one is cutting the line. Our 350 megawatts at Panther Creek, 110 megawatts at Sharon and 18 megawatts in Washington were secured before the AI demand wave made these markets highly coveted. This isn't power others can easily replicate giving us competitive edge with high-quality tenants to understand these markets and are hungry for assets like ours, which leads us to our sixth point. In this market, speed to power is what drives value. For our customers, the opportunity cost of delayed deployment is huge. So the priority is getting capacity online as quickly as possible. Every day of delay is lost revenue. As a result, power availability and certainty of delivery are the primary drivers of lease economics. This dynamic has pushed lease rates higher since our Q3 call, exactly as we said it would. The opportunity in front of Keel infrastructure is real. We now have the assets and the team is ready. I'm so proud of what we built in 2025, and I'm confident in what we'll deliver in 2026 and 2027. With that, I'll turn the call over to Jonathan. Jonathan Mir: Thanks, Ben. Turning to Slide 9. I joined the team 5 months ago. My focus has been on sharpening our approach to capital allocation, strengthening our balance sheet and capital structure and ensuring the financing actions support long-term shareholder value creation. I've had a front row of the depth of talent, the operational discipline and the strategic momentum across Bitfarms. I work closely with our operations and development teams both to understand the current trajectory of our assets and to ensure our capital plans are aligned with the opportunities ahead. What stood out to me is the extraordinary potential we have driven by the quality and potential of our sites, a strong balance sheet, the best liquidity position in the company's history and a broad team that's both deeply engaged and committed to excellence. We're moving quickly and with purpose. I'm pleased to be here with you today and discuss the progress we're making. I'll use this time to walk through our performance for fiscal year 2025 and outline our current capital strategy that we believe supports the accretive growth we're targeting for 2026 and beyond. Turning to Slide 10. Before discussing our financials for the quarter, I want to briefly frame the results are presented this quarter. As of Q3 2025, the Paso Pe facility in Paraguay has been classified as held for sale. As a result, all revenues, operating costs and asset balances associated with Paso Pe are treated as discontinued operations in our fiscal year 2025 financials. So when I refer to continuing operations, I am speaking exclusively about our North American platform, the foundation of our transition into HPC and AI infrastructure. With that, revenue for fiscal year 2025 was $229 million, up 72% year-over-year. Operating loss for fiscal year 2025 was $150 million including noncash depreciation of $98 million and $28 million of impairment charges. This compares to an operating loss of $28 million in 2024, which included $102 million of noncash depreciation and $4 million of impairment charges. Net loss for 2025 was $209 million or a $0.38 loss per basic and diluted share compared to a 2024 net loss of $7 million or $0.02 loss per basic and diluted share. The differences between 2024 and 2025 were driven by a number of factors, including change in fair market value of digital assets, primarily due to the decline of Bitcoin prices and realization of gains on disposal of Bitcoin during the year. Two additional items also impacted year-over-year comparability. First, we saw a loss of $68 million, reflecting changes in our derivative assets and liabilities. Second, 2025 impairment charges were $25 million higher than in 2024. For the year, our adjusted EBITDA was $29 million compared to $31 million in 2024. Turning to Slide 11. 2025 was a deliberate year of balance sheet optimization and improvement, providing the foundation for our next phase of growth. We successfully issued an oversubscribed $588 million convertible offering, significantly expanding our liquidity. And in February, we repaid the Macquarie debt facility eliminating legacy debt, simplifying our capital structure and freeing the company from covenants. Each of these supports the pursuit of our HPC infrastructure strategy. The Macquarie facility had been originally used to accelerate development at Panther Creek, funding critical project activities, including long lead time item procurement and substation work. Retiring the facility was a strategic decision, strengthens the balance sheet and gives us the flexibility to secure a more cost-effective financing at either the parent or project level. Our current cash position of $520 million provides the runway to advance Panther Creek, Sharon and Moses Lake through lease execution without accessing capital markets. Though we may do so if attractive opportunities arise that improve our ability to deliver the best possible long-term risk-adjusted shareholder returns. Macquarie was an excellent partner, and we appreciate their support so early in our pivot to HPC AI infrastructure. Turning to Slide 12. As we pivot to commercialization of our development sites, we have a clear financial strategy based on three principles. Capital allocation, capital formation and capital structure. Taken together, they are designed to deliver the best possible long-term risk-adjusted shareholder returns. First, capital allocation. We deploy capital into projects where the earnings potential exceeds their weighted average cost of capital. We rotate capital from businesses that are noncore or earning less than optimal returns and deploy the capital into higher return investments. Second, capital formation. Our financing strategy is designed to fund our very large growth opportunities while maintaining the liquidity needed for a stable base of operations. We will be opportunistic in our financing execution. We will fund construction of our data center projects using project or parent level bet and project or parent level equity or equity-linked offerings. We're taking a disciplined approach and at this time, are well capitalized to actively commercialize and execute leases across Panther Creek, Sharon and Washington. Third, capital structure. Our capital structure is designed to capture the best possible long-term risk-adjusted shareholder returns while also retaining overall corporate flexibility and support growth. Our objective is to operate with a deliberate liquidity strategy in order to enable clear-headed commercial decisions and capital allocation decisions rather than having liquidity drive time lines. Stepping back, our road map is clear. We are building a regionally focused high-growth HPC AI infrastructure platform, grounded in disciplined capital allocation, a strengthened balance sheet and a development cadence that maximizes returns and minimizes risk. We're funded through the key derisking stages, permitting and leasing across Moses Lake, Sharon and Panther Creek and we're entering 2026 with momentum, optionality and a balance sheet engineered for growth. We have the right people, assets, liquidity and strategy and we're well positioned to capture for our shareholders the long-term value potential we have today. With that, I'd like to return the call to Ben for closing remarks. Ben Gagnon: Thanks, Jonathan. A little over a year ago, as our team began actively integrating AI into both our business and our daily lives, we came to a realization. This isn't just another technology cycle. It's a paradigm shift. More comparable to the industrial revolution than the Internet revolution. The fundamental measure, productivity capacity is no longer calories or joules, but tokens. This became strikingly clear 2 weeks ago at NVIDIA GTC, where I witnessed hundreds of companies applying AI to everything from straightforward tasks by cleaning and image generation to extraordinary complex applications, including protein folding, cystic simulations and even brain surgery. Walking the conference floor, speaking to the attendees, one thing was unmistakable. We've only begun to scratch the surface of AI's potential. Yet even in these early days, AI is already empowering individuals, communities and companies to accomplish exponentially more. We're witnessing Jevons Paradox unfold simultaneously across every industry, thanks to AI, where improved efficiency can paradoxically drive higher, not lower demand. It is literally never cost less to transform an idea into an action, a product, an image, a refined concept, a service or countless other outlets. The possibilities are truly limitless, and while no one can predict exactly how AI will reshape our future, uncertainty remains. It will require enormous amounts of power. Our 2.2 gigawatts of capacity and strategically position land across Pennsylvania, Washington and Quebec sit directly in the path of this transformation, and we intend to capitalize on that opportunity for our shareholders. We look forward to the opportunities ahead. With that, I would like to open the call to Q&A. Operator, please go ahead. Operator: [Operator Instructions] And our first question comes from Mike Grondahl with Northland. Mike Grondahl: First question, Ben, you talked about your decision not to go the GPU rental route at Moses Creek. And just the colocation route, could you talk a little about what a couple of the major drivers were that got you to that decision? Ben Gagnon: Yes, it's a great question, Mike. When we first started talking about in Q3, we were always evaluating this alongside with the colocation. We're trying to maximize the value for shareholders. So we're always going to evaluate multiple different business models at our sites. And because they have the lowest cost energy and all these other benefits, we thought it would make a lot of sense. But as we've continued to have increasing amounts of customer conversations for Washington and other sites. It was just really clear to us that the best opportunity for us is to just remain a pure-play infrastructure developer and owner and let these customers who really want these megawatts lease these megawatts. Mike Grondahl: Got it. Got it. And then maybe secondly, you articulated, I'll say, a philosophy a quarter or 2 ago about waiting and waiting on signing a lease as terms were continuing to improve kind of implying you're going to be really patient and wait on a lease. Could you kind of update how you're thinking about that lease execution strategy and the potential timing around it? Ben Gagnon: Yes. Our strategy on lease execution has been consistent. It remains consistent today. Our view is that the best way to maximize value for shareholders is to get the best terms in a lease because that's going to be what is going to be driving our NOI and our multiple. And so when we're looking to sign 10- to 15-year agreements, it's really important for us to take the -- maybe a little bit more time than investors may want us to in order to get better terms for longer. When it looks at what is really driving the value in these lease economics, one of the biggest elements is risk, and we've spoken to this multiple times over the last couple of months. And the biggest risk for most of the people -- to go out there and have conversations and get a lot of interest. And in some cases, you could even sign a lease prior to getting permits. But all of that risk is going to be priced into the agreement, you're going to be locked into it for 10 to 15 years, and that's going to negatively impact the long-term value that we're creating for shareholders. So our strategy has been incredibly consistent. And the benefit for us is that we are operating in high demand markets with high barrier to entry. So it takes a little bit longer to get permits going in Pennsylvania or in Washington than it does in Texas, which is the easiest market in the United States for that. But we believe that drives a lot of extra value because it's way more scarce, it's way harder to acquire and there's just not as much optionality. Operator: Our next question comes from Brett Knoblauch with Cantor Fitzgerald. Brett Knoblauch: Maybe to start, could you maybe just go into detail on what permits at what sites you guys are waiting to receive? Ben Gagnon: So permits is a complicated process, and we are develop -- we're getting permits across multiple sites in multiple jurisdictions. So they all have different rules, different regulations, different time lines, different reviews, different authorities. So it's far too much detail to get into exactly what permits are remaining on all the different sites. But we are continuing to make good progress and kind of -- we're looking at the visibility over the next couple of months. And with what we've had so far with the community engagement success that we've had so far, we think that in the coming months, sometime around the mid- to late summer time. we should be achieving the full permitted status across at least one, if not all of the sites. Brett Knoblauch: And then maybe just on the leasing environment across the different sites that you guys have. I guess we were under the impression that maybe Sharon would be first to go given it's relatively further along. Is that still how you guys are thinking about it? And then in the presentation when you guys kind of list the power pipeline and road map. How much of that is from generation on site that you guys are looking into? And do you have any update on where you guys are with respect to sourcing that generation? Ben Gagnon: Yes, sure. So the -- to answer the second part of your question first, all the power that we're talking about developing for our HPC and AI data centers right now is grid connected. So the two operating power plants that we have at Scrubgrass and Panther Creek. Currently, that math is not in those charts for the secured capacity or the site development plans. But in Scrubgrass particular, we are working to expand the generation capacity there with natural gas. So we've been working to tap into the Tennessee Natural Gas Pipeline. We're achieving pretty good results there with the engineering firms. There's still probably another month or two to go before we're getting a clear path forward on the engineering plans. But Scrubgrass is our more of our pipeline site. And so those -- that power generation opportunity is more of a 2028 and 2029 time line. Everything else is grid connected, it's secure today or it's currently active. And sorry, Brett, I'm blanking on the first part of your question, would you mind repeating it? Brett Knoblauch: Yes. Just on maybe the cadence of which sites are -- quicker to go? Ben Gagnon: Yes. So really, that's going to be driven by success on permitting time lines in the customers. So all three of the sites, Moses Lake, Sharon and Panther Creek are all actively in our go-to market right now. Every single one of those has customers engaged under NDA, and they have for quite some time. And so we're continuing to push forward on those conversations and those negotiations. Really, I think what investors should think about with regards to permits, permits are more of a closing condition to a lease, right? They're really not a starting condition to a negotiation. So we have these conversations and these negotiations simultaneously while we're working towards permitting. As permitting gets closer and closer, the negotiations will also get closer and closer in tandem and the first site to get leased is likely to be the first site to be permitted. Operator: Our next question comes from Stephen Glagola with KBW. Stephen Glagola: Just on that last point, if you could clarify the sequencing here between like notice to proceed and lease execution. So in other words, like can you pre-sign leases contingent on notice to proceed? Or is like notice to proceed required before any major customer would commit to a lease? Ben Gagnon: For a customer commit to binding in our view, they're going to want NTP, and that's based on the number of conversations that we are continuing to have and there probably are some customers who would be interested to sign prior to NTP, but those aren't the investment-grade counterparties that we're really seeking to engage with. Stephen Glagola: Okay. And then just one more. How are you thinking about like Vera Rubin hardware availability in '26 and like early '27? And to what extent could that variability in supply influence the timing of lease discussions at your sites? Ben Gagnon: Yes. That's a good question, Stephen. We've been talking about Vera Rubin, I think, since Q3 call because all of our sites are basically coming online in 2027. So we're trying to make sure that they are designed for the highest level of equipment that's coming out in '27 and '28, which is the Vera Rubin. In terms of supply, we haven't seen any impact so far. I understand there's always geopolitical uncertainty in the world that may impact those supply chains. But given that energy is such a huge bottleneck, and it's always been a huge bottleneck on the growth. I don't think that there is going to be a geopolitical situation that's going to make the bottleneck change from energy over to GPUs. So we don't have any expectation right now that, that's going to have any impact on leasing or demand for sites because power is still such an extreme bottleneck. It's hard to imagine what's going to overshadow that geopolitically. Operator: Our next question comes from Michael Donovan with Compass Point. Michael Donovan: Congrats on the progress. Can you provide an update on ESA progress, specifically Panther Creek's ISA to ESA conversion? Ben Gagnon: Yes. So that's a great question, Mike. As investors probably know, we have 350 megawatts secured ESA with PPL. But in addition to that, we also have an ISA that enables us to draw down approximately 60 megawatts from the grid, and that's associated with the existing transmission line and substation for the power plant that we currently have operating. In order to get that converted over, it's really more of a regulatory matter. And so it's hard to put an exact time line as to when those stamps are going to be received, but there's no infrastructure that needs to be built. There's no CapEx that needs to be spent. Really, it's just a matter of getting the regulatory approval to convert a nonfirm service into a firm service, and that would enable us to increase our capacity beyond 350 megawatts to what we probably expect is going to be maybe 400 megawatts or possibly slightly more. We expect this is going to happen this year, but it's hard to put an exact time line on it, given it's a regulatory matter. Operator: Our next question comes from Brian Kinstlinger with AGP. Brian Kinstlinger: Last quarter, Ben, you communicated, you expected the GPU as a service and Moses Lake site would be targeted for, I believe, the first quarter for go-live. How are you shifting to co-location change the timing if at all? And my second question is, can you talk about also how the global memory shortage is impacting your site development or changing your near-term needs or planning for lead times? Ben Gagnon: Yes. So two parts to that question. In terms of switching from a GPU as a service to co-location just changing the business model doesn't really impact the development time line. So we don't really see any delay there associated with changing from GPU as a service, just to co-location. Really, it's just a matter of how we want to allocate our capital and how we want to focus the business. When it comes to the memory shortage. As a pure-play infrastructure developer and owner that really is not coming into our calculus very much, mostly that's a customer situation for them to resolve with their own supply chain because we're not the ones investing in the GPUs and the compute and the servers. Operator: Our next question comes from Martin Toner with ATB Cormark Capital Markets. Martin Toner: Good morning. Can you guys elaborate or [indiscernible] can you kind of give us some time line thoughts there? Ben Gagnon: So I'm going to repeat the question because it was a little quiet, just in case nobody else or other people had difficulty hearing. I believe the question was, can you give some time lines as to how we might be able to expand Panther Creek to 500 megawatts and beyond? So in order for us to move beyond the 350-megawatt ESA that we have secured, there's really two sources for expansion. The first is converting over that ISA from non-firm service to firm service that I just spoke to a minute ago. And that's really a regulatory matter that we expect to be resolved sometime this year. It could be tomorrow, it could be a few months from now. And then when it comes to expanding beyond that, what we have to do with that is we have to actually have new power applications. The good thing here is that the utilities are actually looking to invest in new generation in the area. So in this particular instance, and we weren't actually applying for new power. We actually have the utility call us and ask us how much more power we could take on site. Given the bottleneck constraint on power, that was obviously a very welcome call over here at Bitfarms to receive. And it's a pretty unusual one in the industry, but they're looking to scale up generation capacity in the area, specifically to service our site at greater capacity. So this is probably going to be 2 to 3 years time line because there's a lot of process involved with spinning up new generation and building those new transmission lines. But for a lot of our customers, what they really want is the fastest pathway to energization and a clear path to scale over multiple years. And so this really lines up with what the hyperscalers and what the neoclouds are searching for. Martin Toner: That's great. Hopefully, you can hear me better. Can you clarify when you expect to sign your first lease? Ben Gagnon: So I can't get into a specific time line. But in terms of milestones, as I spoke to earlier, it's really about clearing NTP as kind of the last closing condition or last milestone for us to sign a lease. So I think for the investors and the analysts on the call, the important thing to keep track of, especially over the next coming months is the continued progress that we have towards NTP because once NTP is clear, that's basically the last thing standing between us and a signed agreement. Martin Toner: Got it. Great. And last one from me. Can you talk a little bit about why mining exahash in Q4 was at the level that it was at? Ben Gagnon: So we continue to scale back our mining exposure as we continue to focus on our U.S. HPC infrastructure investments. So we haven't made any investments into Bitcoin mining. We're not spending any money on upgrades or new miners, and we're actively working to scale down the fleet and actively working to spin off assets like we have in Paraguay that are not suitable for conversion. So investors should continue to expect our hash rate to continue to trickle down over 2026 as we continue to execute on this transition to HPC and AI. Operator: Our next question comes from Mike Colonnese with H.C. Wainwright & Company. Michael Colonnese: So, Ben, I'm just curious, after securing the remaining permits across the three sites, which sounds like likely to take place in the coming months here, what does the time line look like from a data center construction and delivery standpoint? It sounds like you're pretty optimistic that revenue generation could commence as soon as next year, but any additional color there would be helpful. Ben Gagnon: Yes. I mean, really, this is the year of execution in 2027 is the year of delivery. And so at all three of our projects that we talked about today, Panther Creek, Sharon and Washington, we all expect them to come online and start delivering megawatts and start generating revenue to customers in 2027. We'll continue to provide updates as we go along. And I think once we have cleared NTP and we have signed leases, there's going to be a lot clear visibility that we can provide to investors for each specific project and their specific time lines. Michael Colonnese: Got it. And then back to Bitcoin mining operations, it sounds like you're progressively going to be scaling back hash rate as you bring some of the HPC AI data centers online. I guess what's the best way to think about hash coming offline and kind of flowing through your operating results over the near term here? Ben Gagnon: I'll speak to it at a high level and then maybe I'll pass it off to Jonathan for some further clarity. But right now, the Bitcoin mining remains profitable, but it's not it's not very -- it's marginal. So it's still contributing to the business. But really, it's not the focus of the business. It's not where we're investing our time, it's not where we're investing our efforts. And given that we have been so successful last year in raising capital and strengthening our balance sheet. It's really not super impactful for the developments that we have this year, the operations or the CapEx. So we'll just continue to scale that down, trying to maximize value in the disciplined exit. If it makes more sense to maybe sell some miners a little bit earlier then we might need to in order to begin instruction, we'll evaluate that as we will always do to maximize value for our shareholders. But really, we kind of see this as a pretty minor element of our balance sheet and a minor element of the financial plan for this year. Jonathan, do you want to add anything further? Jonathan Mir: Only that when we think about our liquidity going forward, the strategic objective is to ensure we are well capitalized through the lease process and beyond without the need to raise any new capital in the markets and that takes into account the current state of Bitcoin mining operations. It's not assuming any improvement in the economics there. So our plan is built on conservative assumptions around the status of the Bitcoin market. Operator: Our next question comes from Nick Giles with B. Riley Securities. Nick Giles: Good morning, Keel team. In the interim period where Bitcoin mining operations are wound down, but kind of pre-revenue generation on the HPC side, could the generating assets at Panther Creek and Scrubgrass be utilized in any way such as the PJM capacity auction? Ben Gagnon: So those power plants do actually participate in PJM capacity auctions. We've done that for quite some time. And so we do benefit from the capacity payments that we received there. Nick Giles: Got it. Okay. And any order of magnitude of what those could be kind of in the 2026 planning year? Ben Gagnon: So I mean, really, it's -- we've kind of maxed out on the capacity auction payments. They set a ceiling, and that's where the capacity auction payments closed. Nick Giles: Got it. Understood. Maybe one for Jonathan. You've made some progress on the capital structure, but just was hoping for any additional comments you might have on what you're looking for in an initial debt package, how you're seeing term shift and kind of what tools you have at your disposal during construction and kind of post energization. Jonathan Mir: Good question. Thanks, Nick. So our basic approach is to compare and contrast our financing options down at the asset level and upstairs at the parent level. And certainly, one of the things that we've seen in the market that has caught our attention like everyone else, is the tightening of spreads between folks issuing high-yield debt in the market that would seem like quite attractive levels for strong investment-grade counterparties or credit wraps. And those converging towards the levels seen in bank-originated classic construction of project financing. So we'll be -- each of those has its own advantages in terms of simplicity of managing the actual capital once it's raised versus negative carry costs. And as we get closer to a funding point, we'll make the decision as to what seems best for our shareholders in terms of how we decide to finance. I'm sorry, Nick, I was just going to say that the markets for our space and for infrastructure generally seem calm right now. Operator: Our next question comes from Brian Dobson with Clear Street. Gregory Pendy: It's Greg Pendy in for Brian Dobson. Just I guess one final one. Just I guess, one final one. Just on the redomiciling to the U.S., are there any implications to costs or structural implications in terms of ownership that we should be aware of as you enter this over the next couple of days? Ben Gagnon: One of the benefits and reasons for the redom is that we will now be eligible for inclusion in indices that require -- want to be a U.S. domiciled company. So for example, we'll be eligible for inclusion in the Russell 1000 and the Russell 3000 as well as for ownership in any other fund who was otherwise limited to the purchase of U.S. securities. We view that as being quite helpful in terms of moving our shareholder base to one that is institutional and long term. There are no other -- there are no cost or flexibility implications in our end. We simply see this as a nice path forward with a lot of benefits for our shareholders. Operator: Our next question comes from Bill Papanastasiou with Chardan Capital Markets. Bill Papanastasiou: Just wanted to touch on the Washington side and decision to shift towards colo. Can you confirm that this won't have any material impact on the purchase commitment that was entered into November? Or is the team considering the shift in development allocation to other sites? Ben Gagnon: Thanks, Bill. No impact on the capital commitments and the equipment we've already purchased for the Washington site by changing business models. In fact, actually, it just helps to reduce the CapEx because we're no longer paying for the compute. Bill Papanastasiou: Understood. And then how should we generally be thinking about maintenance CapEx on existing Bitcoin mining sites as you gradually shift over to AI HPC here? Ben Gagnon: We're not making any investments into the Bitcoin mining sites. Basically, we're just continuing to keep them up and running. And so no further investments are being made in the sites into new sites or into new miners. Operator: Thank you. This concludes the question-and-answer session. I'd like to turn the call back over to Ben Gagnon for closing remarks. Ben Gagnon: Thank you very much, everyone, for joining our call today and really look forward to speaking to you next time as Keel Infrastructure. Have a great day. Operator: Thank you for your participation. This does conclude the program. You may now disconnect.
Operator: Welcome to the 2025 Annual Results Presentation of Singamas Container Holdings Limited. First of all, I'd like to introduce you to our management of the company, Mr. S. S. Teo, Chairman and Chief Executive Officer; Ms. Winnie Siu, Executive Director and Chief Operating Officer; and Ms. Rebecca Chung, Executive Director, Chief Financial Officer and Company Secretary. Mr. Teo will now present the company's annual results. All the financial figures in the presentation are in U.S. dollars, unless otherwise stated. Mr. Teo, please. Siong Seng Teo: Thank you. Good afternoon, friends, ladies and gentlemen. Thank you for joining us this afternoon. We will go through the presentation by looking into Singamas' corporate profile, industry dynamics, financial and business review. As an established container manufacturer, leasing, logistics and depot service provider, we currently operate 5 factories in China. Our total annual capacity is now at about 270,000 TEU of dry freight and ISO specialized container and about combined capacity of 21,000 units of tanks and customized containers. For leasing business, we currently own a fleet of about 180,000 TEU containers. Singamas is also operating 8 container depots across 7 major cities in China and 1 logistic company in Xiamen. This slide shows the ongoing upgrade of our Huizhou and Shanghai manufacturing plant designed to enhance capacity and capability of energy storage system ESS container orders. At Huizhou plant, the upgrade is aimed at boosting overall production capacity. The facility has been equipped with advanced robotic and automation application to meet the rising demand for ESS containers. At our Shanghai plant, we have expanded dedicated production line for high-value customized containers, including Battery Energy Storage System, BESS containers and AI Data Center containers. This has enabled elevated development of our integrated business. In year 2025, annual capacity for customized container at Shanghai plant has increased to 7,200 units. The next 3 slides, Slide 7 to 10, cover our product ranging from traditional dry freight and ISO specialized container to innovate customized container include customer containers for ESS, data center, car racks, housing and more. And we also provide a full range of container solution services. The core product of Singamas' customized container is ESS, energy saving system. This container facilitate efficient electricity storage and release, benefiting users by allowing electricity consumption at lower period. ESS container ensures stability in new energy power generation and are designed to withstand extreme condition for normal operation in challenging environment. Green Tenaga is our wholly owned subsidiary in Singapore, dedicated to accelerating the journey towards net zero emission and carbon neutrality. Through its BESS solution, it form a pivotal element in our commitment to delivering comprehensive green energy solution worldwide. In 2025, Green Tenaga partnered with Singapore A*STAR ARTC to co-develop an analytic power energy management system that enhanced battery health, energy efficiency and intelligent sustainability energy solution for BESS. In our collaborated in a collaboration with the Institute of Technical Education to co-develop an ESS training program for the youth in Singapore. With this program, Singapore Singamas contribute to its ESG goal through fostering new energy talent development, enhancing ESS safety standard and supporting low-carbon economy transition. Next, for our leasing business. Significant growth was recorded for the business this year. By the end of 2025, we own a fleet of about 18,000 TEU leasing containers, 18,000. Singamas is a major operator of 8 container depot in China. We maintain strong tie with key port operators in the countries and foster relationship with major global shipping and leasing company. Our logistics service business focused on enhancing warehousing capability, integrating multimodal transport resources, improving digital operational capabilities for efficiency and collaborating with service provider to expand network coverage. This slide shows Drewry's analysis of global dry freight container production and pricing trend of January 2026. For the year 2025, worldwide dry freight container production was 6.5 million TEU, far exceeding the initial market expectation. However, it has led to significant surplus worldwide. As the market is expected to regulate the surpluses in years to come, Drewry forecast the industry production for the year 2026 will decline sharply to 3.6 million TEU. On pricing, the average price of a 20-foot standard dry freight is expected to reach USD 1,710 for the year 2026, a year-on-year increase of 2.6%. This trend highlights a market transitioning from over production to caution rebalancing. According to Drewry, long-term lease rate for all standard dry freight containers dropped sharply during 4Q 2025, and leasing rates are projected to remain subdued in the next few years. This forecast from Drewry Q1 2026 provide a solid baseline for market stabilization. However, they were made before the major disruption from the Middle East war, including rerouting around the Cape of Good Hope, elevated fuel and insurance costs. These emerging factors or rather disturbing factors may affect short-term leasing rates and recovery trajectory in ways not reflected in the current forecast. That means the war in Middle East have created many issues, and this may affect what we forecasted. This chart shows Singamas' average selling price trend of 20-foot dry freight container and related steel costs over the years. Despite better-than-expected global trade volume and ongoing new container vessel order, U.S. tariff and trade policy continue to create market uncertainty, leading to softer container demand in the second half of 2025. Consequently, the average selling price of 20-foot dry freight container dropped 12% to USD 1,752 in 2025, meanwhile, container steel average cost dropped about 11%. Now let's move on to the financial review section. Revenue decreased by 17% to USD 481.5 million due primarily to soft market demand and overproduction in previous year. Consolidated net profit attributable to owners of the company decreased by 48% to USD 17.4 million. Basic earnings per share was USD 0.0073 for the year compared with USD 0.0143 in 2024. Net asset per share was USD 23.30 as a year of 2025, almost the same as previous year. We have decided a final dividend of HKD 0.02 per share proposed for the year 2025. Together with the interim dividend of HKD 0.03, total dividend for this year was HKD 0.05 per share, representing a payout of about 88%. Let's move on to business review section. First, manufacturing. It shows the performance of our manufacturing and leasing business. This segment achieved revenue of USD 447.8 million, which accounted for about 93% of our total revenue. Segment profit before tax and noncontrolling interest was about USD 18.1 million. This slide shows the breakdown of container units sold under different product categories and accordingly, the respective revenue generated. The table on the left shows that Singamas sold over 147,000 TEU of dry freight container during the year. The pie chart on the right shows that the sales of this dry freight container made up of 57% of the segment revenue compared to 72% in the previous year. For customized container, more than 13,000 units were sold during this year. As global interest in solar energy grows, revenue contributed by our ESS continued to increased drastically from 16% of 2024 to 33% in 2025. Leasing revenue accounted to 8% of the group total revenue during the year. Finance lease Finance lease interest income was USD 4.1 million, up 47% year-on-year, while operating lease income was about USD 15.6 million, up 176% year-on-year. This slide shows the performance of our logistics service business. Its revenue was USD 33.8 million and segment profit before tax and noncontrolling interest was USD 8.7 million. This slide represents our marketing and operating synergy strategy in the years to come. The political and tariff issue between U.S. and other countries, especially following the outbreak of the Middle East war will impact our operating environment. We believe many carriers will once again choose to avoid the Strait of Hormuz and the Suez Canal. While this rerouting could initially stimulate demand in dry freight container market, the current sizable dry freight pool of 55 million TEU is likely to temper the overall impact, leaving demand for dry freight container unpredictable in the first half of 2026. At the same time, the ongoing crude oil crisis is expected to accelerate global transition to new energy infrastructure, which could translate into further growth in market demand for our ESS containers. Faced with unpredictable demand in dry freight container, we maintain strict cost control and cautious capital expenditure. On the maintenance side, our focus remains on enhancing safety and environmental protection of our plants. On the growth side, we invest on high-growth customized container project and automation -- short payback automation initiative. This balanced strategy keep us agile, cost disciplined and well positioned to capture any new opportunities in this challenging market. The following appendices that show our income statement and the data of our factory and depot for your further reference. That concludes my presentation. If you have any questions, Winnie, Rebecca and myself will be happy to answer. Thank you very much. Operator: [Operator Instructions] Unknown Analyst: [Foreign Language] Siong Seng Teo: [Foreign Language] New energy container [Foreign Language] Unknown Analyst: [Foreign Language] Siong Seng Teo: [Foreign Language] tank container [indiscernible] ESS. [Foreign Language] Unknown Analyst: [Foreign Language] Siong Seng Teo: [Foreign Language] barrier of entry is higher [Foreign Language] Unknown Analyst: [Foreign Language] Wai Yee Siu: [Foreign Language] renewable energy [Foreign Language] Siong Seng Teo: [Foreign Language] sustainable energy [Foreign Language] Unknown Analyst: [Foreign Language] Wai Yee Siu: [Foreign Language] 170 out of 481.. Pui King Chung: [Foreign Language] specialized container [Foreign Language] Unknown Analyst: [Foreign Language] Siong Seng Teo: [Foreign Language] weekly service [Foreign Language] Unknown Analyst: [Foreign Language] Siong Seng Teo: [Foreign Language] solar farm -- solar energy farm [Foreign Language] Unknown Analyst: [Foreign Language] Wai Yee Siu: [Foreign Language] Unknown Analyst: [Foreign Language] Siong Seng Teo: [Foreign Language] Unknown Analyst: [Foreign Language] Wai Yee Siu: [Foreign Language] Siong Seng Teo: [Foreign Language] finished product like quality [Foreign Language] Unknown Analyst: [Foreign Language] Wai Yee Siu: [Foreign Language] economies of scale, productivity [Foreign Language] Siong Seng Teo: [Foreign Language] Singapore, Green Tenaga [Foreign Language] Unknown Analyst: [Foreign Language] Siong Seng Teo: [Foreign Language] Unknown Analyst: [Foreign Language] Wai Yee Siu: [Foreign Language] million dollar question [Foreign Language] Siong Seng Teo: [Foreign Language] Bangladesh, Sri Lanka [Foreign Language] it's not free, there's a cost involved. [Foreign Language] Operator: [Foreign Language] Thank you, everyone, for joining. Thank you Mr. Teo, Winnie and Rebecca.