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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.
Operator: Good morning, ladies and gentlemen. Welcome to the Ceres 2025 Full Year Results Investor Presentation. [Operator Instructions] I'd now like to hand over to the management team, Stuart, Phil, good morning. Philip Caldwell: Good morning, everybody, and thank you for joining us for the 2025 full year results presentation. I'll talk you through an update on the company and the strategy to begin with, and then Stuart will obviously talk you through the financial numbers, and we'll obviously go into Q&A at the end as usual. So at Ceres, we're operating on 3 strategic imperatives. The first one is signing more licensees. So new manufacturing license partners is a key focus for us as a business. The second is once we have those partners, bringing those partners to market. So that's obviously assisting them as they scale up and put in capacity, but also actually helping to stimulate demand, which actually helps pull through the products that we're developing with partners. And the third is obviously technology leadership. We believe we have the best solid oxide technology in the world. We have a single stack platform, which we're actually going to be launching in April. And we need to maintain that technology leadership advantage because that's what our partners come to rely on from Ceres. So over the last 12 months, we've made significant progress on all these activities. The first thing to say is there is an acute need for power driving the commercial interest in our technology right now and particularly for SOFC technology in the wider landscape. As we go into partner progress, in the past 12 months, we signed a new manufacturing license agreement in China with Weichai, our partner. We'll give you a little bit more on that today, but that's going extremely well, extremely rapidly. In Taiwan, Delta is also scaling and starting to produce first prototype products and is also investing significantly in land and facilities to do that scale up as well. In South Korea, a big milestone for us in the past 12 months with Doosan starting production at the factory there, both for SOFC stacks and power systems, and that also generated first royalties for the company in this period. In Japan, our partnership with DENSO on the electrolysis side began production of first hydrogen with JERA and also led to government funding recently with an estimated value of about JPY 35 billion, approximately GBP 165 million to continue the advancement of SOEC technology. Great progress in India with Shell. The megawatt scale electrolysis demonstrated actually exceeded performance expectations, high efficiency but capacity as well. And we're progressing now towards the pressurized systems as well with Thermax and Shell and Thermax developing a new pilot facility for testing of those systems. We also undertook a business transformation plan around those 3 strategic imperatives that we talked about. And we've restructured the business, very much focused on accelerating the commercial opportunities. So after 25 years of developing this technology, we are now at that point of commercialization and the point of first production and scale up. We'll talk more about this business transformation, but there's a cultural change there, but also it's anticipated it will drive cost savings of around 20% this year compared to the 2025 cost base. And we finished the year with a very strong cash position of over GBP 83 million at the end of the period. So again, we'll talk in more detail about financial management in the second half of the presentation. We had some news this morning as well, which is very pleasing, partnership with Centrica here in the U.K. It's fantastic to be able to actually bring this British technology to the U.K. And this really is part of our second pillar of that strategy, which is how do we stimulate demand and how do we bring this technology forward at scale. Centrica, as you all know, FTSE 100 leading energy integration company. The statement there is about a multi-gigawatt opportunity that we see in the U.K., Centrica sees. And that's on this gap that we're seeing as we have more need for electrification. We have a time to power need that's becoming quite acute. And this modular high-efficiency technology can really service that market, both in terms of the data center needs, commercial and industrialization partners as well. So the purpose of this is we're introducing our licensing partner network to Centrica, the whole ecosystem of manufacturing partners. And we will support Centrica in terms of bringing that forward, if you like, acting as their technical advisory arm, helping them to set up this model of how they go to market with this. So that will include our expertise in things like installation, commissioning, remote monitoring, maintenance, recycling, all of those good things that we at Ceres know how to do. The initial focus will be the data center market, commercial customers and industrial power. So that's a fantastic step forward for us today, and we'll have more details on that. We have an upcoming Capital Markets Day on April 15, and we'll be able to provide you with more detail on that and from Centrica as well. But that's just in very exciting development today. I mentioned also the single stack platform. So we're going to launch that also at our Capital Markets Day. One of the things that's unique about Ceres is the solid oxide platform, the same stack, the same cell technology can run in both directions, both for power generation and for green hydrogen. That's an amazing benefit to our partners because as they develop the supply chain, as they scale up, that investment that they're putting into factories now for power generation also has this dual use aspect in the future for hydrogen as well. And as you can see in the chart here, that same stack technology is now going into products, Doosan, Weichai, Delta, but also we're using that on the hydrogen side with partners like DENSO, Thermax, Shell and Delta as well. Just wanted to spend a little bit of time on what we're seeing as the emerging demand for power. Our estimate is we see an opportunity for power generation using solid oxide of around 22 gigawatts by 2030. And we see that market roughly split about 50% the data center opportunity, but also a very significant part in the industrial and commercial applications as well. So around 50-50 kind of split. Geographically, it's an interesting split as well. About 25% of that is the U.S. market, which gets a lot of attention right now. I'm sure you're all covering data center applications in North America. But just under 20% of that is here in Europe as well. And the U.K. is a great market opportunity when you think about we have some of the highest power prices anywhere in the world. This is a market that really lends itself well to this application. And then about 50% of that market we see is Asia, the wider Asian opportunity as well. And with our partnership network, we're able to access all aspects of this market. So our aim here is to really establish the service technology as the industry standard, and we're doing that by embedding it in these global partners that are accessing and servicing these different parts of the market. Why is that becoming a critical factor? Well, today, if you need power generation, you're waiting about 6 to 7 years for a gas turbine. Small modular reactors are also coming down the pipeline, but they're about 7 to 10 years away. And then high-voltage grid connections, 5 to 15 years away. So right now, with this acute need for power generation, behind the meter or on-site generation is becoming a really viable alternative because there just isn't the conventional power generation equipment available. I think it also opens a window for us in terms of the technology today is good enough. It's viable in terms of its lifetime, its performance and its cost to actually enter the market. And as we scale, we anticipate these costs coming down significantly. Just to show you some of the progress that's being made. These are the first units developed by Delta, took a license just under 2 years ago. So this is a Thai power in Taiwan. So you can see here the first prototype units being made using car stacks, but all the systems done by Delta. Delta are fitting out their production as well, and they're on track. Delta is a very exciting partnership for us because when we talk about that data center market, Delta are already very much in that supply chain. I think by market cap now, they're the second or third biggest company in Taiwan after NVIDIA and Fox. And where we fit in is they make solid-state transformers, they make power conditioning, they make UPSs, et cetera. So by adding in the power generation capability of the solid oxide, they're developing a complete offering from fuel in all the way through to power out. And that power out can either be AC power or in the data center application, 800-volt DC. So don't forget that the fuel cell technology is actually generating DC power and the way that you actually combine stacks, you're very close to being able to match up that 800-volt DC power direct from the power generation unit, which is the SOFC. It's fuel flexible. So we run on natural gas today. We can run on biogas. We can run on hydrogen in the future. It lends itself extremely well to things like carbon capture. And also, if you want to, you can capture the heat or convert that heat into cooling through absorption chilling as well. So you have the option to go from low carbon all the way through to zero carbon and also push very high efficiencies. In Delta's case, the same market applications apply. It's microgrids, AI data centers, even for the semiconductor industry and manufacturing in general. So I think this is a really good illustration of how our partners take this technology and put it into a complete offering for these kind of market opportunities. Weichai is an exciting partner for us. We've been working with them on system level for about 7 or 8 years now. Their systems are very impressive, I have to say. And I'm expecting this year, they'll launch their latest system, which is going to be a very impressive unit. We've taken the step with them. We've done the technology transfer. So we signed last November. already, we're going very quickly, and there will be more to come from Weichai this year, but they're probably going, I would say, faster than any of our partners have ever gone before. Doosan factory, I was privileged to go around the factory. I've been a couple of times, but this was in July with Doo-Soon Lee, the CEO of Doosan. First production was there. And when you actually get in there to see the realization, the single piece flow end-to-end, it's about the size of 3 football pitches, semi-clean room, it's an impressive facility. And they've actually fulfilled their first capacity orders in the past few months, and that factory is now up and running. So that's a big, big milestone for us going full circle. So Doosan is the first. We expect Delta starting to come on stream and then Weichai. So we are building out this ecosystem. On the hydrogen side, I think it's been fair to say that over the past 12 months, there's been more headwinds on the hydrogen side. But at the same time, I think that opens up an opportunity for, again, higher efficiency technology like the Ceres technology. And as I mentioned, all of the investments that are going in now are directly applicable on to the hydrogen side of the business. So extremely pleased with our partnership with Shell. We've exceeded expectations there. We've met all the targets that we set. And that's leading on to the pressurized development, which is now underway. So taking this one, which was the first atmospheric SOEC that we did and now actually putting that into a pressurized system that can be scaled to megawatt scale. And we're doing that engineering ourselves to begin with, but then in partnership with Thermax in India who can really drive down cost. And India is one of the big markets that we see for this green hydrogen in the future. So we see green hydrogen, particularly opportunities in China and India as those areas come on stream. We also did this with DENSO very quickly. So similar to the Shell container, DENSO actually deployed this on site within 18 months of actually taking the license, and that's using Ceres' technology. That's putting in hydrogen into a thermal power station to reduce emissions from conventional power generation. And that's unlocked further funding for DENSO as well. So great progress on all aspects of the hydrogen side as well. In terms of where we are as a business, we're building out this ecosystem of partners. And really, our aim is to be the technology provider of choice. So we now have manufacturing in Korea. We're seeing manufacturing being built now in Taiwan. That will come on stream in China as well and with DENSO in Japan. So really strong ecosystem of partners. Shell is more in the end user category, and we can add Centrica to that list of partners today as well for U.K. and Europe. So our aim is embed this technology to become the industry standard. So with that, I'm going to hand over to Stuart to give you the financial update for the past year. Stuart Paynter: Thanks, Phil. Good morning, everyone. I'm just going to take you through a few slides, just to give you a bit of an update on where we are from a financial position and financial planning position and some of the actions we've taken to put ourselves in a strong position to be able to execute the strategy Phil has laid out. So here's the headline numbers you can see. As you all know, the revenues of Ceres are largely dependent on how successful we can be in terms of signing MLAs. We signed Weichai in 2025, but towards the end of the year, we in sufficient time to recognize any revenue at all from that contract. So we're rolling that into 2026. But you can still see that the margins remain high, right? That's the asset-light model we retain, and we have good financial discipline around that. The other thing to note here is cash. We're still very strong on the cash side. You can see that the cash burn in the year was just under GBP 20 million. And like I said, that was without the benefit of having an MLA. So we're pretty efficient now. I believe we've got the optimized cost base, which I'll take you through. And you can see that the restructuring that we've been going through in the last few years has fed through to the cost saving in 2025 from 2024. There's more to come on that, but we'll take you through that and be very clear, we now believe we have an optimized cost base. So the actions we took towards the end of '25 will flow through to '26, but we really do think now we've got the correct team to prosecute the strategy, which we've chosen. So here's just a graphical representation of the revenue and gross profit. Gross profits remain industry-leading with the asset-light model we have. And of course, the success and the health of those are maintained by signing new MLAs, and we retain the confidence that we have the opportunities to keep on chasing that Pillar 1 on Phil strategy of signing new MLAs and be successful in doing that in 2026. So Phil mentioned business transformation earlier, very important to us. We now have that single stack platform commercially viable to get out into the market, and that started in earnest with Doosan with others to follow. And now we need to make sure that we are still innovating. Pillar 3 was keeping a technology lead, very, very important to a licensor. -- and we'll continue to do that with one of the biggest solid oxide expertise pools in the world. But now we believe we've reached a point where we need to just look at the focus of the company and be very, very commercially disciplined, commercially focused and make sure we have the right people in the background, giving the R&D sufficient attention that we have something to license in the future. And we believe during the end of Q4 2025, we've realigned the business to be able to do that. The flow-through of that will be a 20% cost saving in 2026, but all the actions needed to do that have been taken and are now finished. So now we're into a business transformation for this year, which is all about culture, team and making a cohesive unit so we can make sure that we succeed and our teams succeed at the same time. So we -- this is all crystallizing, as Phil said, in the Capital Markets Day where we're launching this single stack platform. We're very proud of it. And hopefully, that will make sense to everyone when they see it, and it's something we can go out and actively -- more actively sell into the marketplace. In terms of the cost base, so this is the optimized cost base we see for the next commercial phase. All the actions we've had to take have been taken. There will be a natural flow through into 2026 of this cost saving, but we are essentially building from here. We've still got a world-class R&D team. They're very focused on the things we need to do to be successful. That's cost down, that's lifetime. And we've strengthened the commercial teams in order that we can make the biggest impact we can on the top line. So we really do think we've got the right team, the right place, the right assets in place to make real success for the next few years. And why are we doing that? Well, you can see that commercial momentum essentially over the last few years has reduced our cash outflows. And we're very clear, we've now got the model of our business. If we can sign MLA on average every 12 months on that sort of cadence, we will be very close to breakeven and cash flow neutral. And that's important. That gives us control of our own destiny without having to rely on the capital markets. And it's building that MLA base so we can become that industry standard that Phil talks about. And why is that important? Well, the end goal for any company that's ultimately a licensing company is to build your royalty streams. As Phil mentioned, we're just at this orange blob stage here today. Doosan has fulfilled their first order at the very end of last year led to our first royalty revenues, a big milestone after 20, 25 years of development of this project. But we need now to push on if we can become the industry standard, essentially have a portfolio effect of many, many partners building, we're really going to be able to build these royalty streams, power first, hydrogen second. As Phil mentioned, this is the same technology, but you can attack 2 markets, one right and acute now and the other coming several years after. So we're in this in order to keep on signing licensing agreements, which we know we can for the next few years, and then it's all about building the royalty base. So we like the model. Every time we make progress with Centrica and partners, we think it reinforces the success we need to have that model. But importantly, we need to show that we're financially disciplined to keep this asset-light model, which we're doing. So with that, I'll hand back to Phil. Philip Caldwell: Yes. Look, I think we have a very clear strategy. I think the steps we took last year put us in an extremely good position with the asset-light model. The 3 priorities for this year remain unchanged. We're working hard on signing new manufacturing licenses. I think we're at an exciting stage now where you'll probably hear more from our partners this year as they're starting to actually scale and launch things, but also helping to drive that demand as per the announcement with Centrica today, that also helps stimulate that demand for our partners as well. And then the single stack technology platform launch is a key milestone for us. We do believe we have the world's best solid oxide technology. And we're now at a point where we can actually bring that forward rapidly to new partners and existing partners to scale both for power first and then for hydrogen as that follows. And we're starting this year with a strong cash position. We have around GBP 45 million of contracted revenue based on existing contracts from today for 2026. So we're in good shape. And I think the market opportunity has probably never been stronger, particularly on the power side. And I think now we need to get on and actually grab that opportunity, and we're well positioned to do so. So with that, I think we'll probably move on to questions. Operator: That's great, Phil. Thank you very much indeed. Before we go to those online, Phil, if it's okay, I'm going to come to the room. If you do have a question, just raise your hand and I'll give you the microphone. Christopher Leonard: Chris Leonard from UBS. Maybe 2 questions from me. And to start with, can we go into Centrica. And obviously, you spoke to the time to power and the need there. You also spoke in the presentation to the evolution of cost and what you see is feasible here. It will be really helpful to get a gauge on where you think your partners when they first push out these fuel cell products, where you think they'll land at on CapEx price and where you think that evolution can get to? Philip Caldwell: Yes. I have to be very careful here because whenever I start forecasting our licensees prices, I get into trouble. But let's just -- if we talk in general terms, the SOFCs that are out there at the moment are available at around $3,500 a kilowatt. If you take that in the U.K. market context, and you look at the spark spread of gas and power, then you can generate power very efficiently in the U.K. I mean, obviously, gas prices are moving around a bit at the moment. So I don't want to be precise on this. But given we pay in the U.K., the highest energy bills probably anywhere in Europe and even worldwide, when we map the U.K. out, when we look at market attractiveness, spark spreads, cost of power, et cetera, the U.K. is right up there, Northern Europe, et cetera. So it's a very significant opportunity. To go back to your question, Chris, we think that we can significantly generate power at a lower cost, even at a relatively high entry-level CapEx compared to turbines and other generation because we're so efficient, because of the OpEx, et cetera, and because of the lifetimes that we can achieve. So we think that there's a big opportunity there in terms of that deployment. And then the thing I would add is I think that kind of level is a starting point because I think what we see is a window that's opened up. So people need power. I think SOFC can now fulfill that power. And as our partners scale, we expect the cost of those SOFC units to come down quite significantly. Christopher Leonard: Yes, that was the second part. And then following up on Centrica. Obviously, you spoke to the contracted revenue for this year at GBP 45 million in the books, but presumably, I don't know, but I presume that maybe didn't include Centrica's potential contribution. Like what should we think about for engineering revenues and consulting fees, et cetera? Philip Caldwell: Yes. Look, the role that we're playing with Centrica is more in the advisory support side. So at the moment, that's going to be fairly modest revenue. So it's not like -- don't think of this like an MLA, they're not an MLA partner. The big value add of Centrica, obviously, we generate some engineering support fees, et cetera, there. But really, it's the deployment of our technologies through our partner network that drives that demand that ultimately drives royalties. That's -- we see them in that Pillar 2 category, not in the Pillar 1. So that's where we see that. So the thing that would really move the needle for us this year is new MLAs. Alex Smith: Alex here from Berenberg. Just a quick one on the next-gen kind of stack technology. You kind of mentioned it in your kind of closing comments. Kind of what the real benefit you think that could have to offer? And is that like a key milestone for the business going forward? And then second one is just kind of a new licensee pipeline, how the discussions are going to kind of bring new people in and new manufacturing products. Philip Caldwell: Okay. So look, the stack launch is the culmination of several years of effort. Over the years, we've increased the cell footprint. We've increased the stack height. There's a lot of focus on the simplicity to manufacture. We will continue to drive that in terms of getting down the actual installed manufacturing CapEx of what it takes to build those factories. But that stack itself represents what we believe to be the building block that all our partners will now scale on. And our technology teams, our R&D teams are really focused on driving cost and lifetime, cost as in the unit cost of stacks, but also the manufacturing cost and then the lifetime of the product. So that's where we see that technology evolving. And I think it's a significant milestone for the company because we've been in that investment mode for quite a while on the core technology and R&D. I think by launching this product now, you can see from the optimized cost base, we've got the right team to keep on innovating around that particular platform. In terms of the pipeline. I think it's grown considerably in the past 12 months. I think we're getting incoming from most of the kind of players that are in the power system market, in particular, because I think that's the acute need that people see. Obviously, we're very strong in Asia, but we're looking at how we build out that ecosystem as well. So it's grown considerably in the past 12 months. I would say on the hydrogen side, it tailed off a bit towards the end of '24, et cetera. But I think the -- as I look at the pipeline now, I would say it's about 70%, 80% driven by the power demand side of things as well. Alexandro da Silva O'Hanlon: Alex O'Hanlon from Panmure Liberum. A couple of questions for me. Firstly, well done on the Centrica deal. I'm interested if you could give some more color on how that came about? And is there scope for similar type deals in the pipeline? And the second question is just on the cultural change. You mentioned a couple of times in the presentation. Clearly, you're shifting towards being more commercial now. How are you tracking that and making sure that the change that you want to see is actually permeating throughout the business? Philip Caldwell: Okay. So on the Centrica deal, I reached out and I saw what was happening in the U.K. we saw the opportunity in the U.K. market. It's like this market if this technology is so good, why are we not deploying it in probably one of the most attractive markets for this in the world. So Centrica was a logical choice for that. One of the biggest LNG importers, they're looking to diversify. They're making investments in small modular -- advanced modular reactors for nuclear, et cetera. And I think once we started talking with Centrica, they saw the same thing that we did, which was this acute need for power, et cetera. So we were very, very much aligned. And so I think they're an excellent partner for us in the U.K. I think the other thing we didn't talk too much about today is not just on the power generation side, but also there is the potential to combine this with nuclear in the future to do hydrogen generation on the back of modular reactors. So there's a lot of good synergies there between the 2 companies. And we're very excited about that partnership. And as part of that process, what I did is with Centrica I took them and they've actually visited our partner factories. So they've been to Korea, been to Taiwan, been to China. And at that point, I think they realized this is real. And I think this is the key thing is the question we get asked time and again is, well, yes, fuel cells have had about fuel cells. Yes, but is it real? Does it really scale? -- aren't they expensive? How long do they last, et cetera? And then you go and you walk around the Doosan factory and it's like, oh, right, got it. This is real. Even before they went into the factory, it's like, okay, we know what you're talking about now. Is there potential to do that with other partners? I don't think we need to in the U.K., but it's an interesting model. We have so if we can stimulate demand and then we can introduce our ecosystem of partners, I think it's pretty powerful. So as part of that commercial discipline in the future, we will probably look to replicate this in maybe in other parts of the world. But in the U.K., it's Centrica. So in terms of the commercial progress, how we're tracking it, et cetera, our Chief Commercial Officer, Filip Smeets, joined us last year. There's a lot of rigor now in terms of the pipeline progress. We put more people in regions. We're just getting better, better and better at it through some discipline as well. And also demand helps. So we're getting incoming, but also people are starting to realize who we are. And I think in the industry, already, we've got a very good reputation. I think people, competitors, they respect our technology. I think the thing that people have always maybe had the question mark on is, well, how does Ceres scale and go to market. And I think that's what we're going to see coming through this year. Lacie Midgley: Lacie Midgley here, Bloomberg Intelligence. Just a couple from me. Stuart, your comment on securing the one partnership every 12 months and that triggering the breakeven point. I mean, clearly, that's the place we need to be to before the royalty scale. But I mean, I'd be interested in both your comments really, but what in your mind is a realistic number there because no doubt the demand is there to have as many MLAs as you can across geographies. But presumably, your current partners won't want that number going too high given the competition that they'll likely face in certain geographies. I mean what kind of number are you thinking there on kind of a longer-term view? Do you have anything around that? I mean... Stuart Paynter: Well, if you look at recent history, we've signed 3 in the last 2 years from the beginning of '24 to the end of -- we have set ourselves up that on an average cadence every 12 months, we will achieve what you said, Lacie, sort of breakeven and cash flow neutrality, right? But that's not exciting for anyone. That's just a stop gap until the royalties come along and it helps us diversify, build a portfolio of clients. We think there's really plenty of room to play. Phil showed a 22 gigawatt solid oxide market by 2030. Even if Bloom have scaled to 3 to 5 gigawatts by that, that's 15% to 20% of the market. There's plenty of room for plenty of people to play with plenty of applications and with a much bigger market coming along later in hydrogen. So we really don't feel like there's downward pressure on this number. It's a case of execution for us, building a pipeline, instilling commercial discipline and executing. These are big agreements. So they're very -- it's difficult to predict. But we believe we've got the right team in place now, led by Filip, as Phil said, with some really, really strong people sort of backing his team up to give us the best chance of executing. It's still difficult to do, but we -- given our recent history and new commercial discipline, we believe we can as -- the short answer to your question is as many as possible. Lacie Midgley: I mean as the royalties are stacking, that makes the commercial proof point easier to sell, right? So that all becomes a lot easier. Philip Caldwell: Yes. I think also, we've done this now 5 or 6 times. So building factories is something that we're getting we're getting pretty good at, but it's a learning curve. The first time you do it, second time you do it, et cetera. So -- but we also -- what's good to see is when you -- when our first licensees came on, they had to take a fairly immature supply chain and scale that as well and equipment builders. So when somebody takes a license, it's not just to the technology, it's to that whole ecosystem of partners. And so new license discussions now are much faster, much easier because in some ways, you'd say, well, okay, this is where you would get equipment builders from. This is your choices in supply chain, et cetera. So we started off with a very European-centric supply chain. And now we've added to that to our partnerships with Doosan, but now with the Taiwanese and the Chinese, we're building out quite a formidable set of supply chain partners as well. So that -- in terms of that credibility, not only do we know how to build factories and help our partners to do that, but we can also introduce them to a whole ecosystem of very willing suppliers as well. Lacie Midgley: That's helpful. And then just lastly, on Weichai, I mean, you talked about them moving very quickly, quickest out of all your partners so far. Just trying to kind of work this out. So how much of that is because maybe of the historical work that you had with the sort of legacy partnership? And how much of that is kind of versus your own kind of technology developments, maybe reducing time frames there or just Weichai's desire to get to market more quickly? Just trying to understand, firstly, how quickly they can get to royalties, but then I guess, the time frames from MLA signing to actually getting to royalties, future partnerships? Philip Caldwell: Yes. So when we're talking to new partners, we kind of give a guidance of less than 3 years. And we're obviously looking to reduce that all the time. But some of that's incompressible in terms of technology transfer, the time it takes just to actually build either greenfield or brownfield factories and equip them. But we roughly talk about that kind of time frame. Now in parallel with that, you've got not just the stack manufacturer, which for us now is becoming more like a blueprint. We can take people around our own facility in the U.K. And like I mentioned, we can -- we've got blueprints of how you build factories, and we've got an ecosystem of partners there. But then they also have to develop the product, the power system product as well. I think we started the relationship with Weichai with a system license, and we've developed that system with them over a number of years. But now what they're doing is very impressive in terms of their own system development. So I think they can go fast because the system level maturity is very good. And then it's that desire to get to market is how quickly you build out that capacity. And I think that's -- that's what's happening extremely fast. It's a fairly typical approach in Asia, in particular in China, but they set incredibly aggressive time frame. So they're looking to obviously reduce that 3 years quite significantly. Christopher Leonard: Just a follow-up on that actually in terms of the royalty outlook and thinking about Delta scaling up this year, the target to be online end of '26. Has that changed at all? Are you still looking at that time frame? And Doosan as well? I mean, how are you feeling about them looking into '26? Obviously, you recognize right at the end of '25, some royalty perhaps, but is there more to come? And how should we look at this year? Philip Caldwell: Yes. Look, I think on this year, fresh royalties are there, but they're still pretty modest. So I don't think it's that material into '26 is our guidance. Yes, Delta is on track, but really, that's going to be like '27 type time frame and then obviously, new partners coming on. So in the near term, we're really focused on the license fees, the engineering services still through 2026 and probably into '27. And then -- but royalties build from that point. So that's how we see it. We're not changing guidance on that really. Unknown Executive: It looks as though we're doing well for much into the room. So we've got a couple online that we might start to tackle. So the first one is regarding the Centrica deal. And given they're based in the U.K., you mentioned that there's going to be revenue from U.K. and Europe. And what is the likely spread for revenue, be it U.K.-centric or more broad? Philip Caldwell: I think that's really one for Centrica to look at. But their presence predominantly, it's U.K. and Ireland as well is a very attractive market. So U.K. and Ireland, and then they're active across Europe as well. But I think initially, our focus is predominantly U.K. and Ireland. Unknown Executive: Another question coming from the supply chain. So given the fact that the technology transfer includes quite a bit of the supply chain upgrades, do we have any concerns for material, rare earth material accessibility or scaling up to match our partners for the supply chain potential constraints that you see in other industries at the moment? Philip Caldwell: No, we don't because the nature of our technology, we use Ceria where the company gets its name from the major rare earth material, which is the most abundant. We're not using Scandia. We're not using where we use other rare earths, we're using very small amounts. So we're not concerned about constraints in any of those kind of materials. Unknown Executive: We also have a question on the pipeline, which is wondering when and if there's opportunity for U.S. partners? And have there been any constraints of why we haven't signed any EU partners either recently? Philip Caldwell: There's no constraints. And look, as and when I can update you on commercial activities, I will, but I can't give specifics on particular opportunities or geographies at this point. I think there is interest in the U.S. I can say that clearly, given the market opportunity there. And yes, that's an area of focus for us as well. Unknown Executive: Switching topics slightly. We've got a question on hydrogen. So wondering if we can -- you can expand upon what the pressurized modules are, those and the balance of plant and how Thermax is looking to scale and what the time lines would be for that? Philip Caldwell: Okay. So the pressurized modules are basically taking the core cell and stack technology, putting them inside a pressure vessel. And the reason you do that is by working with OEM partners like Shell, you save a very significant compression cost even on first stage compression, just a couple of bar makes a big difference. So as we look at hydrogen at a refinery kind of level or in an industrial application like steel or fertilizers, et cetera, it makes a lot of sense to have modules that are pressurized and can be scaled. The reason for the partnership with Thermax is twofold, really. One is they're an EPC, so a contractor -- engineering contractor based in India, which is one of the key markets that we see for green hydrogen. And secondly, compared to European suppliers, et cetera, there's significantly lower cost in terms of the engineering and actually driving the unit cost of these things down. So again, we're always looking at what's the most economically advantageous way to bring this technology to market. And that's why we have the relationship with Thermax. Unknown Executive: Great. And Stuart, I'm conscious you've already touched on it, but we've got a couple of other questions on when we expect theirs to reach profitability or break point even. I'm just wondering if there's anything else you'd like to add to clarify. Stuart Paynter: Yes. I mean -- so hopefully, we've made it clear that if we can achieve a cadence of 1 MLA every 12 months, that's where we get to. These aren't as predictable as sometimes we'd like. But that would be the goal. So the moment we can continually execute the pipeline to MLA every 12 months, that's when we're going to reach that sort of profitability level. But that's not long-term sustainable profitability. That comes when the royalty streams become the dominant player in our revenues, and that's going to be a few years out. So the idea now is to have a cost base where we can maintain a technology advantage, execute the commercial strategy whilst preserving cash. And in the end, that getting new partners on board and pushing the technology forward will drive the royalties in the long term. So we think it's a really viable business strategy as Phil laid out those 3 pillars, both for the short to medium term, and it also benefits the long term when we get to royalties as well. So it's a really nice business strategy we're pursuing. Unknown Executive: Great. The only final question that's come up is regarding RFC and wondering what has happened to that investment? And are we continuing to pursue that technology? Stuart Paynter: Yes. So RFC was something we supported in the middle of the year and bought it into the Ceres Group. We're still looking to give that really, really viable long-term energy storage technology life. And we're pursuing some opportunities to see whether we can get that business funded. And when we got more news, we'll share. Unknown Executive: Great. I think that wraps up everyone. So Phil, I'll hold -- hand back to you for any final comments. Philip Caldwell: Yes, sure. Well, Yes. Thanks, everybody, for your time today. I think that we've got an exciting 2026 ahead of us. The company is extremely well positioned. We have a Capital Markets Day on 15th of April, where you'll hear more from the industrial applications with a guest speaker, hopefully from Centrica attending from that side of things. We'll have our new product launch. And then I think you'll hear more from our existing partners as well this year as they hit some key milestones. So the market opportunity is definitely very live, and we need to capitalize on that opportunity right now. But I think Ceres is extremely well positioned to do so. Operator: That's great, Phil. Thank you very much indeed. We will now redirect investors.
Operator: Ladies and gentlemen, welcome to the SoftwareOne Full Year 2025 Results Conference Call and Live Webcast. I'm Valentina, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Kjell Arne Hansen, Head of Investor Relations at SoftwareOne. Please go ahead. Kjell Hansen: [Audio Gap] presentation. My name is Kjell Arne Hansen, and I'm the Head of Investor Relations at SoftwareOne. Joining me today are our Co-COOs, Raphael Erb and Melissa Mulholland; and our CFO, Hanspeter Schraner. In terms of agenda, Melissa and Raphael will start with a summary of the year and the Q4 performance. Hanspeter will then take us through our detailed financial performance. And finally, Melissa will take us through the final section covering our AI opportunities within the business model as well as our financial outlook for 2026. Before handing over, please let me draw your attention to the disclaimer regarding forward-looking statements and non-IFRS measures on Slide 2 and 3. And with that, I will hand it over to Melissa. Melissa Mulholland: Thank you, Kjell Arne. Welcome to our full year 2025 presentation. 2025 was transformational. With the combination of SoftwareOne and Crayon, we have created a global software and cloud leader with unmatched reach and capabilities. Today, combined gross sales amount to CHF 14 billion. We serve over 70,000 clients across more than 70 countries, supported by 13,000 highly skilled colleagues. Our ecosystem is equally strong with more than 10,000 vendors and a network of 12,000 channel partners, providing reach to the SMB segment. This scale matters. It shows how we are one of a kind and a truly global partner for hyperscalers and ISVs. In addition, both Gartner and IDC have recognized us as a leader in software asset management. We are well positioned to capture the structural growth opportunity and customer demand based on our global scale and market position. Overall, we have delivered. We returned to growth with revenue up 1.4% year-over-year on a like-for-like basis, ahead of our initial expectation of broadly flat development. Profitability remained strong with an adjusted EBITDA margin of 20.9%, in line with our commitment to stay above 20%. At the same time, we maintained discipline on adjustments coming in below our guidance on below CHF 30 million, excluding the Crayon-related costs. Lastly, we made good progress on synergies, delivering CHF 43 million of run rate by the end of 2025. As of today, total run rate cost synergies amount to CHF 64 million. This was a year where we delivered on our promises while building the foundation for further improvement. Growth improved steadily throughout 2025, and by Q3, we were back to positive territory. And in Q4, we reached 11% revenue growth. We will continue to build off the foundation laid in 2025. The actions we are taking are working, putting us in a stronger position to drive momentum in 2026. Let me briefly comment on the full year performance. I'll focus on the combined like-for-like numbers as this best reflects the underlying development of the business. As stated earlier, we delivered 1.4% revenue growth for the full year, with a clear acceleration into Q4 where growth reached 11%. At the same time, profitability improved and we delivered an adjusted EBITDA margin of 20.9% for the year, an improvement of 0.5 percentage points compared to 2024. The key message is clear. We are improving our growth momentum, combined with continued strong margins. Hanspeter will explain the detailed IFRS numbers shortly. But as you can see, our business is on a path of continued growth. Looking at our 3 segments, we see a clear pattern of improving momentum across the business. In direct, the full year performance was impacted by the Microsoft incentive changes. However, we saw a clear rebound in Q4, supported by multi-vendor and continued CSP growth. Going forward, we see significant growth opportunities driven by our broad partner ecosystem across global software vendors, including AWS, Google, VMware and Adobe. Furthermore, the push for EU sovereign cloud increases demand for multi-cloud compliant cloud solutions, playing directly to SoftwareOne's strength in navigating complex vendor ecosystems and regulatory requirements. In channel, growth was strong at 18.7% for the full year, driven in particular by APAC, which represents 60% of the total channel revenue. At the end of February 2026, we became the first global authorized distributor for Google Cloud, enabling channel partners to access and resell Google. This is a strategic milestone allowing us to significantly expand our channel business through authorized distribution of Google Cloud services across 10 markets, covering Australia, India, the Nordics, Germany, France and the U.S., with additional countries to follow throughout the year. In services, we see solid momentum, supported by demand in areas like cloud and cybersecurity. Across all business lines, growth reflects our ability to capture new incentive opportunities introduced by Microsoft across CSP and services. While EA-related incentives were reduced, we have partially offset this by leveraging our combined service portfolio and strong CSP offering. Profitability improved across all business lines, driven by stronger growth, impact from cost savings and synergy realization. We see a strong and encouraging development with solid growth in channel and services and a recovering direct business entering 2026. I will now hand it over to Raphael to walk you through the regional performance. Raphael Erb: Thank you very much, Melissa. Welcome to everyone from my side. I will now take you through the regional performance. First, I want to highlight the change in our segment reporting going forward. Following the acquisition of Crayon, our operating segments have been reassessed. Given our significant presence in the Nordics and the CEE, the rest of Europe region has been restructured into 3 new operating regions: Nordics, Western Europe and CEE. In DACH, revenue grew 2.8% in 2025, driven in particular by a strong Q4 growth of 15.4%. Headwinds from Microsoft incentive changes on enterprise agreements negatively impacted revenue during the year, but this was offset by a successful transition to CSP as well as strong multi-vendor and public sector growth. Revenue in Western Europe increased 3.3%, driven by strong growth in multi-vendor sales and services, while also here partly offset by changes in Microsoft incentives. Similar to the performance in DACH, the year ended strong with 12.2% revenue growth in Q4. APAC grew 11.4%, driven by strong results across the region, with India performing particularly well. The largest contributor to growth came from services business as was driving by strong demand with data and AI and cloud services. I'm also pleased to share that during Q1 2026, payments commenced from a public sector customer in the Philippines on Crayon's previously outstanding receivables with USD 22 million collected as of today. The remaining amount is expected to be collected shortly, bringing this long-standing matter to a close. Nordics revenue grew 0.7% in 2025. During the year, growth in the direct business was positive and accelerated to double digit in the fourth quarter as the impact from Microsoft incentives ease. 2025 was a disappointing year in North America with revenue declining 12.6% year-over-year. The 2025 performance reflects the previous GTM-related sales execution challenges as well as impact from Microsoft incentive changes. The previously initiated turnaround measures are gaining traction, with internal sales metrics improving sequentially, supporting a recovery and return to growth in 2026. LATAM declined 4.4%, driven in particular by weakness in the direct business. We see strong growth opportunity across key markets like Brazil, Mexico and Colombia, and are confident in our capability to achieve profitable growth in the region. As part of the portfolio review and to support improved future performance, the company has decided to exit 4 nonstrategic countries in the region: Argentina, Uruguay, El Salvador and Nicaragua. Finally, CEE grew revenue with 14% in 2025 driven by strong double-digit growth across both the direct business and services business. Now I want to present a good example of our Google Cloud capabilities and how we support customers in a cloud migration and modernization project. Barton Peveril, a U.K.-based college with more than 5,000 students partnered with us to migrate to Google Cloud. They were facing a significant increase in on-premise hosting costs, alongside the need to modernize their IT environment and support new AI-driven learning tools. Together with SoftwareOne, they executed the full cloud migration over a relatively short period, followed by a managed service agreement to support ongoing operations. The outcome was solid, where they achieved meaningful cost savings, reduced operational workload and significantly improved the performance and security of their systems. Importantly, this also led to a 5-year managed service agreement where we support and maintain their cloud infrastructure going forward. This is a great example on how we combine cloud migrations with long-term services, creating both immediate customer value and recurring revenue streams for us. With that, I will now hand over to Hanspeter to walk you through the 2025 IFRS financial update. Hanspeter Schraner: Thank you, Raphael, and a warm welcome to everybody joining us today. In this section, we are presenting the IFRS figures in reported currency. As a reminder, the income statement includes 12 months of SoftwareOne and 6 months of Crayon. Year-over-year revenue growth of 22.5% mainly reflects the acquisition of Crayon closed on 2nd of July 2025. Reported EBITDA margin improved -- improvement is driven by benefits of the previously initiated cost reduction program and continuous cost control. The increase in depreciation, amortization and impairments from CHF 72.7 million to CHF 123.7 million is related to the acquisition and includes depreciation on fixed assets, amortization of intangible assets [Audio Gap] of right of use assets and CHF 17.8 million of impairments. The impairments comprise CHF 3.8 million on intangible assets, CHF 8 million on LATAM goodwill and CHF 6 million on right-of-use assets related to office closures due to integration. Net financial expense increased to CHF 54.4 million, significantly higher than prior year. This was mainly due to lower finance income and higher finance expenses. The decrease of finance income is largely reflecting a CHF 12 million lower fair value gain on Crayon shares in 2025 compared to prior year. Finance expenses increased driven by higher interest costs from acquisition financing and higher factoring costs in line with the increased use of factoring. In addition, other finance expense includes a one-off CHF 5 million make-whole payment related to the early redemption of Crayon bonds following the acquisition. Income tax expense is CHF 28.1 million, implying an effective tax rate of 95% compared with the expected average group tax rate of 23%. The main drivers of this gap are nondeductible expenses for tax purposes as well as unrecognized tax losses. Net profit for the period is CHF 1.4 million. In this slide, I will take you to the adjusted to reported EBITDA. Our reported EBITDA ended at CHF 207.6 million in 2025. 2025 adjustments to reported EBITDA of CHF 69.4 million in total were primarily related to Crayon transaction and integration costs totaling CHF 48.3 million. Excluding these costs, adjustments to reported EBITDA were CHF 21.1 million, well below the CHF 30 million target. Overall, we saw a significant reduction in adjustments with 2025 adjustments constituting around 30% of reported EBITDA in comparison to around 90% in previous year. The adjusted EBITDA margin in Q4 2025 was 23.4%, down 1.5 percentage points year-on-year, mainly due to significantly lower EBITDA adjustments compared with Q4 2024. Let me now walk you through the developments in adjusted OpEx on a like-for-like basis. This bridge shows the development on a combined like-for-like basis which we believe is the most relevant way to assess the cost development. Overall, OpEx remained broadly stable year-on-year, declining slightly to CHF 1.2 billion, reflecting strong cost discipline despite inflationary pressure and continued investments in the business. In '25, realized CHF 74 million of cost savings from the legacy SoftwareOne cost-saving program, which was completed in Q2 2025 as well as 16 million of in-year synergies corresponding to CHF 43 million of run rate synergies. Synergies from the Crayon acquisition are primarily driven by the elimination of publications, simplification of the organizational structure and efficiency gains across corporate functions. These effects helped offset underlying cost increases during the year. Compensation increased by CHF 42 million mainly due to salary inflation across the existing global workforce and the catch-up of social security contribution in India following legislative changes. In addition, we continue to invest selectively in sales and delivery capabilities to support future growth. Importantly, these investments are funded by realized synergies, allowing us to strengthen go-to-market and delivery capacity without diluting margins over time. We also saw higher third-party delivery costs in line with increased activity levels as well as some nonrecurring and other costs, and foreign exchange had a positive impact of approximately CHF 4.6 million. Overall, this reflects a balanced cost development with tangible synergy delivery, disciplined cost management and continued investment to support sustainable growth. Turning to the balance sheet. The most significant year-on-year changes reflect the impact of the Crayon acquisition, which is clearly visible across several line items. Cash and cash equivalents increased to CHF 419.1 million, while financial liabilities rose to CHF 788.4 million, mainly reflecting the CHF 575 million term loan, CHF 100 million utilization of the revolving credit facility at year-end and the CHF 100 million bridge loan, which was repaid in January 2026. As a result, net debt amounted to CHF 369.3 million compared to a net cash position in the prior year. Net working capital on 31st December 2025 was negative at CHF 564.4 million, primarily driven by the inclusion of Crayon and the continued use of factoring. The increase in intangible assets is mainly driven by the recognition of acquired technology and customer relationships from the Crayon acquisition as well as an increase in goodwill which primarily reflects the value of the assembled workforce and the expected synergies from combining the operations of Crayon. Equity increased to CHF 981.4 million driven by the acquisition of Crayon. Overall, this balance sheet reflects the step up in scale following the acquisition. Before I walk through the trade receivables 2025, I would like to briefly comment on a matter we decided to disclose proactively in today's press release. Preliminary legal proceedings have been initiated into potential forgery of documents by individuals relating to SoftwareOne's recording of certain overdue trade receivables in the first half of 2024. The proceedings are not directed against SoftwareOne, and they were triggered by allegations raised by a third party. I want to make it very clear. Internal audits performed an extensive retrospective assessment of trade receivables and related provisions of the first half of 2024 and concluded that they were accurately recorded. The assessment also confirmed that provisions were appropriate and consistent with subsequent write-offs and provisions. The slide presents the aging of trade receivables and the corresponding lifetime expected credit loss for 2025 and 2024. The acquisition of Crayon led to a material increase in trade receivables in '25. In accordance with IFRS, acquired trade receivables are recognized at fair value net of expected credit losses. The implied bad debt amounts to CHF 33 million included in the respective fair value and is largely allocated to receivable past due by more than 181 days. For like-for-like comparability, and on a cross presentation of the acquired trade receivables, the expected credit loss in the bigger than 180 days bucket would be approximately 50%, broadly comparable to the previous year. As of December 2025, Crayon's acquired trade receivables included USD 37 million related to a public customer in the Philippines. As Raphael already mentioned, USD 21.5 million of this amount was collected in March 2026. At year-end 2025 and next to the standard closing procedures, internal audit again performed an additional assessment of the trade receivables and related provision recognized at year-end 2025 and again concluded that they were accurately recorded. Further, the statutory audit of the 2025 full year accounts, which included a focused review of revenue recognition and the provisioning of overdue trade receivables provided further independent assurance regarding the appropriateness of the provisions recognized in the 2025 accounts and their compliance with applicable standards. Turning to the net working capital. Net working capital after factoring decreased by CHF 411.6 million year-on-year, mainly reflecting increased use of short-term factoring of approximately CHF 282 million as well as the positive impact from acquiring the negative working capital from Crayon. Given our business model, characterized by high gross sales volume and seasonal volatility, effective working capital management is key. As part of this, we use nonrecourse factoring as a flexible and economically attractive liquidity management tool applied in a disciplined manner. However, it's important to state that our primary focus remains on structurally improving underlying working capital over time. Net working capital before factoring decreased by CHF 129.5 million year-on-year, driven largely by the acquisition and consolidation of Crayon. Crayon entered the group with a strong negative working capital position which contributed positively to the balance sheet and reduced net working capital at the combined company level. On the right-hand side, we outlined key operational levers we are addressing across the end-to-end order-to-cash cycle, including faster and more accurate invoicing, reduction of overdue receivables, strong credit entry billing processes and better alignment of payment terms with vendors and customers. Together, these measures support our ambition to structurally strengthen working capital and, in turn, improve cash flow over time. Now turning to our cash flow statement. Working capital changes gave a cash inflow of CHF 130.6 million. However, as mentioned on the previous slide, this is significantly impacted by the use of factoring. Noncash items of CHF 169.6 million mainly reflect depreciation, amortization and impairments, together with the add back of the net finance results. CapEx came in at CHF 65.5 million, primarily driven by investments in internal IT, systems and platforms. The cash outflow related to the Crayon acquisition amounted to CHF 290.2 million, as presented in the cash flow statement, and shown net of cash acquired. Gross cash consideration totaled to CHF 504.8 million comprising CHF 419.4 million for the acquisition of Crayon shares and CHF 85.4 million for the subsequent squeeze out. This was partially offset by cash acquired of CHF 270.3 million. The remaining CHF 2.7 million relates to earn-out considerations to be paid in cash for Medalsoft and Predica acquisitions back in 2024 and 2022, respectively. Financing contributed a net inflow of CHF 273.4 million, driving by debt funding, partially offset by 2024 dividends of CHF 45.6 million and interest costs. We ended the period with a cash of CHF 419.1 million, giving us a solid liquidity position. Turning to the net debt development. The increase over the year was primarily driven by the cash outflow related to the acquisition of Crayon. The Crayon acquisition reflects net cash outflow of CHF 405 million as well as the impact of the derecognition of the Crayon shares. Excluding the acquisition effect, the underlying cash generation was driven by a positive contribution of CHF 277 million from adjusted EBITDA and the further CHF 130.6 million inflow from changes in working capital. Other cash outflows mainly relate to cash-effective portion of EBITDA adjustments, capital expenditures, interest and tax payments as well as dividends. As a result, net debt stood at CHF 369.3 million at year-end. Leverage measured on as net debt divided by adjusted EBITDA on an IFRS basis remains at a comfortable level of 1.3x. On a like-for-like basis, leverage would amount to 1.2x. Finally, let me turn to the dividend. Our dividend policy targets a payout ratio of 30% to 50% of adjusted net profit for the year. As a reminder, at our H2 '25 earnings release, we refined our policy by excluding transaction and integration costs related to the Crayon acquisition when calculating adjusted net profit used for dividends. This was made to better reflect the underlying earning power and dividend capacity of the business in a year of integration. For 2025, we proposed a dividend of CHF 0.15 per share, corresponding to a total distribution of CHF 33 million and the payout ratio of 37% of reported adjusted net profit. Excluding Crayon-related transaction and integration costs, the implied payout ratio is 71%. This dividend proposal reflects our continued commitment to delivering attractive shareholder returns while maintaining a balanced capital allocation. It also underlines our confidence that the actions implemented to strengthen net working capital and improve operational execution will translate into improved cash generation in 2026. With that, I will hand it back to Melissa, who will provide further insights in how our business model benefits from AI, followed by her closing remarks. Melissa Mulholland: Thank you, Hanspeter. Before I go into our outlook and closing remarks, I would like to address how we are positioned in a market that is now rapidly and fundamentally being changed by AI. AI is increasing software and cloud consumption, but also complexity, driving a much greater need for governance, optimization and services. At the same time, AI adoption is forcing customers to upgrade their software estates and invest in new tools while accelerating cloud migration and usage. This plays directly into our model. We thrive in helping our customers in maximizing return on investment in IT and simplifying complexity. We support customers across the full life cycle from sourcing and procurement to migration and cloud services to optimization and cost management and increasingly into data and AI solutions. And as customers become more AI ready, we see a clear increase in demand for higher-value services. From a hyperscaler perspective, the vendors see us as a clear driver of AI solutions. Given our customer proximity, AI capabilities that have been established since 2017 and our agility to market, we are uniquely positioned to help customers manage the complexity and spend through our AI solutions. AI is not just a technology shift. It is a structural growth driver for our business. Let me finally turn to our outlook for 2026. We expect revenue growth to accelerate to mid-single digits on constant currency on a like-for-like basis. We see growth driven by CSP, multi-vendor expansion, increasing demand for higher value services and continued channel growth. Expanding our AI capabilities alongside the sales force enables us to build and deliver AI-driven customer solutions, further accelerating consumption growth. At the same time, we expect further margin improvement with adjusted EBITDA margin above 23%, driven by operating leverage, synergies and continued cost discipline. On synergies, we remain on track to reach CHF 100 million run rate synergies, building on the strong progress already delivered in 2025. As already mentioned, by the end of March, the total realized cost synergies amounted to CHF 64 million. We enter 2026 with improving momentum, clear drivers for growth and a strong path towards higher profitability. Let me close with a few key takeaways. 2025 has been a transformational year, while the performance also demonstrates the strength of the combined company. We have executed with discipline, successfully integrated the business and delivered ahead of our synergy targets. At the same time, we have delivered on our financial commitments and strengthened our position and customer offering. Finally, we are uniquely positioned to capture the continued growth in software and cloud, supported by our global scale, strong vendor relationships and clear commercial focus. This is a business with improving momentum, a stronger platform and a clear path forward, and I'm looking forward to sharing more about our strategy and priorities on the Capital Market Day in June. Thank you. I'll hand it now back to the operator. Operator: [Operator Instructions]. The first question comes from Mao Ines from BNP Paribas. Ines Mao: Congrats for the strong result today. I have 2 questions. So the first one is the company is guiding for mid-single-digit revenue growth next year. Does this include a recovery of North America region already? My second question is, can you give us more color on why profitability improved so much year-over-year in Q4 in the Services segment? So we expect this margin level as the new normalized level, so to stabilize from here? Or is there more scope for margin expansion in the Services segment? And my final question is... Raphael Erb: Sorry, somehow your voice is not so clear. We can hardly understand. Ines Mao: Can you hear me better? Raphael Erb: Yes, now it's clear. Ines Mao: Okay. I'll restart. So my first question is about next year revenue growth guidance. Does this include the recovery of the North America region in this guidance? My second question is on the profitability level in the Services segment, which has improved quite significantly year-over-year in Q4. Should we expect this margin level as a new normal level, so to stabilize from here or more margin expansion in the Services segment? And my last question is, can you discuss the growth prospects for the Services segment in 2026? And any new offerings that will drive growth? Typically, in Microsoft E7, I understand it will be a readiness assessment conducting by SoftwareOne team. Would you recognize this as the Services revenue going forward? Raphael Erb: Thank you. Maybe I kick off with the first questions around North America. For sure, as we all know, 2025 has been a disappointing performance for us. However, we are making, as mentioned, also step-by-step progress, especially also around our GTM turnaround. Our internal sales metrics and KPIs clearly show that we are making progress. And with that, to answer your question, we are positive that 2026 is going to be more resilient actually and a more predictable year for us in North America, and we are positive that in that region, we will return into revenue growth for the full year 2026. Around the services margin, maybe also, I think if you look into the numbers and the development from 2024 into 2025, it has been a positive progress. So the margin overall has been increasing, and we are positive that this will continue. It will continue as our service portfolio is shifting more and more towards cloud-native capability, also higher value advisory and managed services and support services, which we are having in our offering. I think this will help to further improve and accelerate our overall margins in the services business. Melissa Mulholland: Thanks for your questions. Regarding E7, you're right to call it out. We see this as a strategic opportunity with our Microsoft portfolio as it combines, let's call it, the SKU capability along with AI through Copilot to simplify this for our customers. And we see this to be particularly attractive in the high end of corporate into the enterprise segment. So we're well positioned to capture additional growth opportunities from this. In terms of additional service areas of growth that are implied, certainly, we're going to continue our focus around AI as well as agents and continue to improve the, let's say, the efficiency of the overall services line, which is implied in terms of the overall margin improvement in Q4. Operator: The next question comes from Christian Bader from Zurcher Kantonalbank. Christian Bader: I have 3 questions, please, and I'd like to do them one after the other. First of all, you mentioned several times new business with Google Cloud. And I was wondering what is the revenue potential here? And is this business going to be margin accretive? Melissa Mulholland: Thanks for the question. So with Google and with our channel business in general, this is a new opportunity for us. As we've seen with our AWS channel expansion, it will take time for this to be able to really take effect in terms of the P&L. So we expect this to deliver additional upside in the back half of H2, but more likely in 2027 from a materiality perspective. From a margin standpoint, this is very accretive to our overall channel margins as the channel business is very highly dependent on our platform, Cloud IQ, which gives us more efficiency and scale. So we see this to be particularly attractive across the markets that we are ready to launch with more countries to come. From a margin standpoint, this is very accretive to our overall channel margins as the channel business is very highly dependent on our platform, Cloud-iQ, which gives us more efficiency and scale. So we see this to be particularly attractive across the markets that we are ready to launch with more countries to come. Christian Bader: Okay. My second question has to do with LATAM because you said that you exited 4 countries, Argentina and 3 others. So I was wondering how much of revenue is lost due to the exit of these 4 countries. Raphael Erb: The revenue impact is not significant because those markets are very, very small markets already. There actually the revenue impact from the revenue of 2025 has been very insignificant. Christian Bader: I see. All right. Okay. And then my last question is, is it possible to get some guidance for your investments, both in tangibles and intangibles for 2026? CapEx guidance, any CapEx guidance, please. Hanspeter Schraner: So as we are continuing to invest in our technology, especially in the platforms, the investments will maybe slightly increase, but for sure, have a similar level as in 2025. Operator: The next question comes from Florian Treisch from Kepler Cheuvreux. Florian Treisch: My question is around the Microsoft incentive changes, EA changes. I mean we discussed at length last year being a headwind for SoftwareOne. So the first question would be, have you actually, let's say, delivered better than expected on these kind of headwinds as you have mentioned or flagged that Q4 has clearly been driven by the CSP transition? And then looking into '26, how much of a tailwind can it become? Or would you still assume it's a slight negative impact on the overall business? Melissa Mulholland: Thank you so much for asking. So great question. In terms of Q4 and what we saw for the full year for 2025, yes, we delivered better than expected given the, let's say, negative effect of the EA changes. This was driven by the focus to CSP realization, which I'm pleased to say we delivered. In addition, we also saw the shift to services-based incentives as particularly accretive, and that's also demonstrated in the Q4 profitability improvement overall for services. As we go into 2026, we do not see any headwinds effect with related to the EA incentives. If anything, there will be stabilization of incentives as indicated also by Microsoft. So with that, we will further, let's say, accelerate the growth that we've had around CSP and services as we see that to drive more potential. Operator: The next question comes from Christopher Tong from UBS. Christopher Tong: Maybe 2 from my side. I was just wondering on exceptionals in 2026. What should we expect over here? Obviously, you'll have to take some further cost synergies, but is there anything else we should be mindful of? Hanspeter Schraner: I mean, look, as we already stated, our goal is to narrow the gap between the reported and adjusted EBITDA. So we said it's below CHF 30 million. And of course, you always have certain items to adjust which are non-recurring, but we stick to the below CHF 30 million and with a clear ambition to further decrease. This does not include the Crayon acquisition cost or cost related to the integration, to be clear. Raphael Erb: And maybe to add on, on the cost synergies, as we already mentioned, to date, we are at the CHF 64 million, and we are making further progress on that. We are very committed on our CHF 80 million to CHF 100 million target, which we mentioned. And through that, we should also -- this should also help to make a positive impact also going into H2 on our overall OpEx situation. Christopher Tong: Got it. And I guess maybe on just the outlook and the cadence of revenue growth for the year. You mentioned that profitability would probably be more weighted towards second half. I was just wondering if you think revenue growth would also be sort of second half weighted as well. Melissa Mulholland: Yes. I mean with the seasonality of our business, Q4 is the largest quarter. So you could certainly see that implied growth pick up on towards the back half of the year. Operator: Next question comes from Marc Burgi from Finanz und Wirtschaft. Marc Burgi: I only have one question concerning North America. You already talked about it in length, which is about the growth. Can we expect that in the second half? Or could you maybe be more precise about when that should occur? And just about the general market situation, how is the market -- how is your market position? Hanspeter Schraner: In general, as mentioned, I'm very confident that in North America 2026, we will return into growth overall as a company again, which is very good, given where we are coming from. I also expect in Q1 a better performance than in Q4. So from this perspective, I'm positive that the trajectory is going to improve, and we should see an improvement already in Q1 compared to Q4. Overall, I think the market for us is -- remains to be an attractive market. And again, with the combination of Crayon, I think we have a good chance now with a better overall setup also with the channel business as an additional business line for us. So we continue to be very focused on North America. Operator: The next question comes from Andreas Wolf from Berenberg. Andreas Wolf: Congratulations on the strong Q4. I have several questions. The first one is related to the assessment of the individual regions. Have you already fully assessed the region's performance? Or is there a possibility of impairments also in 2026? The second is related to AI and the adoption of use cases? Do you see opportunities associated with the deployment of on-site engineers to drive use case adoption and ultimately, your business? Question number three. How are AI providers such as OpenAI or Anthropic dealing with resellers? Does this -- does their growth offer business opportunities for you as well? And the last one is related to Microsoft price increases. What do you believe will be the tailwind from those in 2026? Hanspeter Schraner: Let me take the first question regarding the impairments. So what we did in 2025, we do the impairment test on CGU levels, which are the 7 regions. And obviously, there were no impairments based on the current business plans for all regions with the exception of LATAM. LATAM we impaired CHF 8 million. And we believe this is the right number based on what we know today. So based on what we know today, there are no further impairments expected in 2026. Otherwise, you would have impaired already at the end of 2025. Melissa Mulholland: Thanks for your question regarding AI. So I'll start with the first regarding the adoption of use cases. So this is something that we are very much focused on. We always believe that it's important to test internal use cases before we take them to market. And we're also finding ways to drive AI through internal adoption to increase more efficiency and scale also to reduce cost to make us quicker to market to customers. So this is something that, yes, we are focused on, and yes, we are also looking at ways to deploy our internal AI capability to both support customers, but also ourselves. In terms of your question regarding Anthropic, OpenAI, certainly, this is something that is quite exciting to see in the market. Anthropic is certainly an area where we see additional partner opportunity as they need partners like us to be able to deploy and also to help customers manage which AI models should they actually consider. This is where our business model really thrives around complexity. So we help guide our customers around which model makes sense for their data environment, but also how to implement and build those solutions. So we see business opportunity to come out of that. In terms of the Microsoft price increases, I always say Microsoft price increases help our business. So there's certainly a carryforward from that. It also positions us well to be able to support our customers in navigating that price increase as our business has always been focused around cost management overall. Hard to say what the actual implied impact will be, but certainly, we see this to be positive for 2026. Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Kjell Arne Hansen for any closing remarks. Kjell Hansen: Thank you, and thank you, everyone, for joining the call. And as always, please don't hesitate to reach out to the IR team if you have any further questions. Thank you. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
Operator: Ladies and gentlemen, welcome to the SoftwareOne Full Year 2025 Results Conference Call and Live Webcast. I'm Valentina, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Kjell Arne Hansen, Head of Investor Relations at SoftwareOne. Please go ahead. Kjell Hansen: [Audio Gap] presentation. My name is Kjell Arne Hansen, and I'm the Head of Investor Relations at SoftwareOne. Joining me today are our Co-COOs, Raphael Erb and Melissa Mulholland; and our CFO, Hanspeter Schraner. In terms of agenda, Melissa and Raphael will start with a summary of the year and the Q4 performance. Hanspeter will then take us through our detailed financial performance. And finally, Melissa will take us through the final section covering our AI opportunities within the business model as well as our financial outlook for 2026. Before handing over, please let me draw your attention to the disclaimer regarding forward-looking statements and non-IFRS measures on Slide 2 and 3. And with that, I will hand it over to Melissa. Melissa Mulholland: Thank you, Kjell Arne. Welcome to our full year 2025 presentation. 2025 was transformational. With the combination of SoftwareOne and Crayon, we have created a global software and cloud leader with unmatched reach and capabilities. Today, combined gross sales amount to CHF 14 billion. We serve over 70,000 clients across more than 70 countries, supported by 13,000 highly skilled colleagues. Our ecosystem is equally strong with more than 10,000 vendors and a network of 12,000 channel partners, providing reach to the SMB segment. This scale matters. It shows how we are one of a kind and a truly global partner for hyperscalers and ISVs. In addition, both Gartner and IDC have recognized us as a leader in software asset management. We are well positioned to capture the structural growth opportunity and customer demand based on our global scale and market position. Overall, we have delivered. We returned to growth with revenue up 1.4% year-over-year on a like-for-like basis, ahead of our initial expectation of broadly flat development. Profitability remained strong with an adjusted EBITDA margin of 20.9%, in line with our commitment to stay above 20%. At the same time, we maintained discipline on adjustments coming in below our guidance on below CHF 30 million, excluding the Crayon-related costs. Lastly, we made good progress on synergies, delivering CHF 43 million of run rate by the end of 2025. As of today, total run rate cost synergies amount to CHF 64 million. This was a year where we delivered on our promises while building the foundation for further improvement. Growth improved steadily throughout 2025, and by Q3, we were back to positive territory. And in Q4, we reached 11% revenue growth. We will continue to build off the foundation laid in 2025. The actions we are taking are working, putting us in a stronger position to drive momentum in 2026. Let me briefly comment on the full year performance. I'll focus on the combined like-for-like numbers as this best reflects the underlying development of the business. As stated earlier, we delivered 1.4% revenue growth for the full year, with a clear acceleration into Q4 where growth reached 11%. At the same time, profitability improved and we delivered an adjusted EBITDA margin of 20.9% for the year, an improvement of 0.5 percentage points compared to 2024. The key message is clear. We are improving our growth momentum, combined with continued strong margins. Hanspeter will explain the detailed IFRS numbers shortly. But as you can see, our business is on a path of continued growth. Looking at our 3 segments, we see a clear pattern of improving momentum across the business. In direct, the full year performance was impacted by the Microsoft incentive changes. However, we saw a clear rebound in Q4, supported by multi-vendor and continued CSP growth. Going forward, we see significant growth opportunities driven by our broad partner ecosystem across global software vendors, including AWS, Google, VMware and Adobe. Furthermore, the push for EU sovereign cloud increases demand for multi-cloud compliant cloud solutions, playing directly to SoftwareOne's strength in navigating complex vendor ecosystems and regulatory requirements. In channel, growth was strong at 18.7% for the full year, driven in particular by APAC, which represents 60% of the total channel revenue. At the end of February 2026, we became the first global authorized distributor for Google Cloud, enabling channel partners to access and resell Google. This is a strategic milestone allowing us to significantly expand our channel business through authorized distribution of Google Cloud services across 10 markets, covering Australia, India, the Nordics, Germany, France and the U.S., with additional countries to follow throughout the year. In services, we see solid momentum, supported by demand in areas like cloud and cybersecurity. Across all business lines, growth reflects our ability to capture new incentive opportunities introduced by Microsoft across CSP and services. While EA-related incentives were reduced, we have partially offset this by leveraging our combined service portfolio and strong CSP offering. Profitability improved across all business lines, driven by stronger growth, impact from cost savings and synergy realization. We see a strong and encouraging development with solid growth in channel and services and a recovering direct business entering 2026. I will now hand it over to Raphael to walk you through the regional performance. Raphael Erb: Thank you very much, Melissa. Welcome to everyone from my side. I will now take you through the regional performance. First, I want to highlight the change in our segment reporting going forward. Following the acquisition of Crayon, our operating segments have been reassessed. Given our significant presence in the Nordics and the CEE, the rest of Europe region has been restructured into 3 new operating regions: Nordics, Western Europe and CEE. In DACH, revenue grew 2.8% in 2025, driven in particular by a strong Q4 growth of 15.4%. Headwinds from Microsoft incentive changes on enterprise agreements negatively impacted revenue during the year, but this was offset by a successful transition to CSP as well as strong multi-vendor and public sector growth. Revenue in Western Europe increased 3.3%, driven by strong growth in multi-vendor sales and services, while also here partly offset by changes in Microsoft incentives. Similar to the performance in DACH, the year ended strong with 12.2% revenue growth in Q4. APAC grew 11.4%, driven by strong results across the region, with India performing particularly well. The largest contributor to growth came from services business as was driving by strong demand with data and AI and cloud services. I'm also pleased to share that during Q1 2026, payments commenced from a public sector customer in the Philippines on Crayon's previously outstanding receivables with USD 22 million collected as of today. The remaining amount is expected to be collected shortly, bringing this long-standing matter to a close. Nordics revenue grew 0.7% in 2025. During the year, growth in the direct business was positive and accelerated to double digit in the fourth quarter as the impact from Microsoft incentives ease. 2025 was a disappointing year in North America with revenue declining 12.6% year-over-year. The 2025 performance reflects the previous GTM-related sales execution challenges as well as impact from Microsoft incentive changes. The previously initiated turnaround measures are gaining traction, with internal sales metrics improving sequentially, supporting a recovery and return to growth in 2026. LATAM declined 4.4%, driven in particular by weakness in the direct business. We see strong growth opportunity across key markets like Brazil, Mexico and Colombia, and are confident in our capability to achieve profitable growth in the region. As part of the portfolio review and to support improved future performance, the company has decided to exit 4 nonstrategic countries in the region: Argentina, Uruguay, El Salvador and Nicaragua. Finally, CEE grew revenue with 14% in 2025 driven by strong double-digit growth across both the direct business and services business. Now I want to present a good example of our Google Cloud capabilities and how we support customers in a cloud migration and modernization project. Barton Peveril, a U.K.-based college with more than 5,000 students partnered with us to migrate to Google Cloud. They were facing a significant increase in on-premise hosting costs, alongside the need to modernize their IT environment and support new AI-driven learning tools. Together with SoftwareOne, they executed the full cloud migration over a relatively short period, followed by a managed service agreement to support ongoing operations. The outcome was solid, where they achieved meaningful cost savings, reduced operational workload and significantly improved the performance and security of their systems. Importantly, this also led to a 5-year managed service agreement where we support and maintain their cloud infrastructure going forward. This is a great example on how we combine cloud migrations with long-term services, creating both immediate customer value and recurring revenue streams for us. With that, I will now hand over to Hanspeter to walk you through the 2025 IFRS financial update. Hanspeter Schraner: Thank you, Raphael, and a warm welcome to everybody joining us today. In this section, we are presenting the IFRS figures in reported currency. As a reminder, the income statement includes 12 months of SoftwareOne and 6 months of Crayon. Year-over-year revenue growth of 22.5% mainly reflects the acquisition of Crayon closed on 2nd of July 2025. Reported EBITDA margin improved -- improvement is driven by benefits of the previously initiated cost reduction program and continuous cost control. The increase in depreciation, amortization and impairments from CHF 72.7 million to CHF 123.7 million is related to the acquisition and includes depreciation on fixed assets, amortization of intangible assets [Audio Gap] of right of use assets and CHF 17.8 million of impairments. The impairments comprise CHF 3.8 million on intangible assets, CHF 8 million on LATAM goodwill and CHF 6 million on right-of-use assets related to office closures due to integration. Net financial expense increased to CHF 54.4 million, significantly higher than prior year. This was mainly due to lower finance income and higher finance expenses. The decrease of finance income is largely reflecting a CHF 12 million lower fair value gain on Crayon shares in 2025 compared to prior year. Finance expenses increased driven by higher interest costs from acquisition financing and higher factoring costs in line with the increased use of factoring. In addition, other finance expense includes a one-off CHF 5 million make-whole payment related to the early redemption of Crayon bonds following the acquisition. Income tax expense is CHF 28.1 million, implying an effective tax rate of 95% compared with the expected average group tax rate of 23%. The main drivers of this gap are nondeductible expenses for tax purposes as well as unrecognized tax losses. Net profit for the period is CHF 1.4 million. In this slide, I will take you to the adjusted to reported EBITDA. Our reported EBITDA ended at CHF 207.6 million in 2025. 2025 adjustments to reported EBITDA of CHF 69.4 million in total were primarily related to Crayon transaction and integration costs totaling CHF 48.3 million. Excluding these costs, adjustments to reported EBITDA were CHF 21.1 million, well below the CHF 30 million target. Overall, we saw a significant reduction in adjustments with 2025 adjustments constituting around 30% of reported EBITDA in comparison to around 90% in previous year. The adjusted EBITDA margin in Q4 2025 was 23.4%, down 1.5 percentage points year-on-year, mainly due to significantly lower EBITDA adjustments compared with Q4 2024. Let me now walk you through the developments in adjusted OpEx on a like-for-like basis. This bridge shows the development on a combined like-for-like basis which we believe is the most relevant way to assess the cost development. Overall, OpEx remained broadly stable year-on-year, declining slightly to CHF 1.2 billion, reflecting strong cost discipline despite inflationary pressure and continued investments in the business. In '25, realized CHF 74 million of cost savings from the legacy SoftwareOne cost-saving program, which was completed in Q2 2025 as well as 16 million of in-year synergies corresponding to CHF 43 million of run rate synergies. Synergies from the Crayon acquisition are primarily driven by the elimination of publications, simplification of the organizational structure and efficiency gains across corporate functions. These effects helped offset underlying cost increases during the year. Compensation increased by CHF 42 million mainly due to salary inflation across the existing global workforce and the catch-up of social security contribution in India following legislative changes. In addition, we continue to invest selectively in sales and delivery capabilities to support future growth. Importantly, these investments are funded by realized synergies, allowing us to strengthen go-to-market and delivery capacity without diluting margins over time. We also saw higher third-party delivery costs in line with increased activity levels as well as some nonrecurring and other costs, and foreign exchange had a positive impact of approximately CHF 4.6 million. Overall, this reflects a balanced cost development with tangible synergy delivery, disciplined cost management and continued investment to support sustainable growth. Turning to the balance sheet. The most significant year-on-year changes reflect the impact of the Crayon acquisition, which is clearly visible across several line items. Cash and cash equivalents increased to CHF 419.1 million, while financial liabilities rose to CHF 788.4 million, mainly reflecting the CHF 575 million term loan, CHF 100 million utilization of the revolving credit facility at year-end and the CHF 100 million bridge loan, which was repaid in January 2026. As a result, net debt amounted to CHF 369.3 million compared to a net cash position in the prior year. Net working capital on 31st December 2025 was negative at CHF 564.4 million, primarily driven by the inclusion of Crayon and the continued use of factoring. The increase in intangible assets is mainly driven by the recognition of acquired technology and customer relationships from the Crayon acquisition as well as an increase in goodwill which primarily reflects the value of the assembled workforce and the expected synergies from combining the operations of Crayon. Equity increased to CHF 981.4 million driven by the acquisition of Crayon. Overall, this balance sheet reflects the step up in scale following the acquisition. Before I walk through the trade receivables 2025, I would like to briefly comment on a matter we decided to disclose proactively in today's press release. Preliminary legal proceedings have been initiated into potential forgery of documents by individuals relating to SoftwareOne's recording of certain overdue trade receivables in the first half of 2024. The proceedings are not directed against SoftwareOne, and they were triggered by allegations raised by a third party. I want to make it very clear. Internal audits performed an extensive retrospective assessment of trade receivables and related provisions of the first half of 2024 and concluded that they were accurately recorded. The assessment also confirmed that provisions were appropriate and consistent with subsequent write-offs and provisions. The slide presents the aging of trade receivables and the corresponding lifetime expected credit loss for 2025 and 2024. The acquisition of Crayon led to a material increase in trade receivables in '25. In accordance with IFRS, acquired trade receivables are recognized at fair value net of expected credit losses. The implied bad debt amounts to CHF 33 million included in the respective fair value and is largely allocated to receivable past due by more than 181 days. For like-for-like comparability, and on a cross presentation of the acquired trade receivables, the expected credit loss in the bigger than 180 days bucket would be approximately 50%, broadly comparable to the previous year. As of December 2025, Crayon's acquired trade receivables included USD 37 million related to a public customer in the Philippines. As Raphael already mentioned, USD 21.5 million of this amount was collected in March 2026. At year-end 2025 and next to the standard closing procedures, internal audit again performed an additional assessment of the trade receivables and related provision recognized at year-end 2025 and again concluded that they were accurately recorded. Further, the statutory audit of the 2025 full year accounts, which included a focused review of revenue recognition and the provisioning of overdue trade receivables provided further independent assurance regarding the appropriateness of the provisions recognized in the 2025 accounts and their compliance with applicable standards. Turning to the net working capital. Net working capital after factoring decreased by CHF 411.6 million year-on-year, mainly reflecting increased use of short-term factoring of approximately CHF 282 million as well as the positive impact from acquiring the negative working capital from Crayon. Given our business model, characterized by high gross sales volume and seasonal volatility, effective working capital management is key. As part of this, we use nonrecourse factoring as a flexible and economically attractive liquidity management tool applied in a disciplined manner. However, it's important to state that our primary focus remains on structurally improving underlying working capital over time. Net working capital before factoring decreased by CHF 129.5 million year-on-year, driven largely by the acquisition and consolidation of Crayon. Crayon entered the group with a strong negative working capital position which contributed positively to the balance sheet and reduced net working capital at the combined company level. On the right-hand side, we outlined key operational levers we are addressing across the end-to-end order-to-cash cycle, including faster and more accurate invoicing, reduction of overdue receivables, strong credit entry billing processes and better alignment of payment terms with vendors and customers. Together, these measures support our ambition to structurally strengthen working capital and, in turn, improve cash flow over time. Now turning to our cash flow statement. Working capital changes gave a cash inflow of CHF 130.6 million. However, as mentioned on the previous slide, this is significantly impacted by the use of factoring. Noncash items of CHF 169.6 million mainly reflect depreciation, amortization and impairments, together with the add back of the net finance results. CapEx came in at CHF 65.5 million, primarily driven by investments in internal IT, systems and platforms. The cash outflow related to the Crayon acquisition amounted to CHF 290.2 million, as presented in the cash flow statement, and shown net of cash acquired. Gross cash consideration totaled to CHF 504.8 million comprising CHF 419.4 million for the acquisition of Crayon shares and CHF 85.4 million for the subsequent squeeze out. This was partially offset by cash acquired of CHF 270.3 million. The remaining CHF 2.7 million relates to earn-out considerations to be paid in cash for Medalsoft and Predica acquisitions back in 2024 and 2022, respectively. Financing contributed a net inflow of CHF 273.4 million, driving by debt funding, partially offset by 2024 dividends of CHF 45.6 million and interest costs. We ended the period with a cash of CHF 419.1 million, giving us a solid liquidity position. Turning to the net debt development. The increase over the year was primarily driven by the cash outflow related to the acquisition of Crayon. The Crayon acquisition reflects net cash outflow of CHF 405 million as well as the impact of the derecognition of the Crayon shares. Excluding the acquisition effect, the underlying cash generation was driven by a positive contribution of CHF 277 million from adjusted EBITDA and the further CHF 130.6 million inflow from changes in working capital. Other cash outflows mainly relate to cash-effective portion of EBITDA adjustments, capital expenditures, interest and tax payments as well as dividends. As a result, net debt stood at CHF 369.3 million at year-end. Leverage measured on as net debt divided by adjusted EBITDA on an IFRS basis remains at a comfortable level of 1.3x. On a like-for-like basis, leverage would amount to 1.2x. Finally, let me turn to the dividend. Our dividend policy targets a payout ratio of 30% to 50% of adjusted net profit for the year. As a reminder, at our H2 '25 earnings release, we refined our policy by excluding transaction and integration costs related to the Crayon acquisition when calculating adjusted net profit used for dividends. This was made to better reflect the underlying earning power and dividend capacity of the business in a year of integration. For 2025, we proposed a dividend of CHF 0.15 per share, corresponding to a total distribution of CHF 33 million and the payout ratio of 37% of reported adjusted net profit. Excluding Crayon-related transaction and integration costs, the implied payout ratio is 71%. This dividend proposal reflects our continued commitment to delivering attractive shareholder returns while maintaining a balanced capital allocation. It also underlines our confidence that the actions implemented to strengthen net working capital and improve operational execution will translate into improved cash generation in 2026. With that, I will hand it back to Melissa, who will provide further insights in how our business model benefits from AI, followed by her closing remarks. Melissa Mulholland: Thank you, Hanspeter. Before I go into our outlook and closing remarks, I would like to address how we are positioned in a market that is now rapidly and fundamentally being changed by AI. AI is increasing software and cloud consumption, but also complexity, driving a much greater need for governance, optimization and services. At the same time, AI adoption is forcing customers to upgrade their software estates and invest in new tools while accelerating cloud migration and usage. This plays directly into our model. We thrive in helping our customers in maximizing return on investment in IT and simplifying complexity. We support customers across the full life cycle from sourcing and procurement to migration and cloud services to optimization and cost management and increasingly into data and AI solutions. And as customers become more AI ready, we see a clear increase in demand for higher-value services. From a hyperscaler perspective, the vendors see us as a clear driver of AI solutions. Given our customer proximity, AI capabilities that have been established since 2017 and our agility to market, we are uniquely positioned to help customers manage the complexity and spend through our AI solutions. AI is not just a technology shift. It is a structural growth driver for our business. Let me finally turn to our outlook for 2026. We expect revenue growth to accelerate to mid-single digits on constant currency on a like-for-like basis. We see growth driven by CSP, multi-vendor expansion, increasing demand for higher value services and continued channel growth. Expanding our AI capabilities alongside the sales force enables us to build and deliver AI-driven customer solutions, further accelerating consumption growth. At the same time, we expect further margin improvement with adjusted EBITDA margin above 23%, driven by operating leverage, synergies and continued cost discipline. On synergies, we remain on track to reach CHF 100 million run rate synergies, building on the strong progress already delivered in 2025. As already mentioned, by the end of March, the total realized cost synergies amounted to CHF 64 million. We enter 2026 with improving momentum, clear drivers for growth and a strong path towards higher profitability. Let me close with a few key takeaways. 2025 has been a transformational year, while the performance also demonstrates the strength of the combined company. We have executed with discipline, successfully integrated the business and delivered ahead of our synergy targets. At the same time, we have delivered on our financial commitments and strengthened our position and customer offering. Finally, we are uniquely positioned to capture the continued growth in software and cloud, supported by our global scale, strong vendor relationships and clear commercial focus. This is a business with improving momentum, a stronger platform and a clear path forward, and I'm looking forward to sharing more about our strategy and priorities on the Capital Market Day in June. Thank you. I'll hand it now back to the operator. Operator: [Operator Instructions]. The first question comes from Mao Ines from BNP Paribas. Ines Mao: Congrats for the strong result today. I have 2 questions. So the first one is the company is guiding for mid-single-digit revenue growth next year. Does this include a recovery of North America region already? My second question is, can you give us more color on why profitability improved so much year-over-year in Q4 in the Services segment? So we expect this margin level as the new normalized level, so to stabilize from here? Or is there more scope for margin expansion in the Services segment? And my final question is... Raphael Erb: Sorry, somehow your voice is not so clear. We can hardly understand. Ines Mao: Can you hear me better? Raphael Erb: Yes, now it's clear. Ines Mao: Okay. I'll restart. So my first question is about next year revenue growth guidance. Does this include the recovery of the North America region in this guidance? My second question is on the profitability level in the Services segment, which has improved quite significantly year-over-year in Q4. Should we expect this margin level as a new normal level, so to stabilize from here or more margin expansion in the Services segment? And my last question is, can you discuss the growth prospects for the Services segment in 2026? And any new offerings that will drive growth? Typically, in Microsoft E7, I understand it will be a readiness assessment conducting by SoftwareOne team. Would you recognize this as the Services revenue going forward? Raphael Erb: Thank you. Maybe I kick off with the first questions around North America. For sure, as we all know, 2025 has been a disappointing performance for us. However, we are making, as mentioned, also step-by-step progress, especially also around our GTM turnaround. Our internal sales metrics and KPIs clearly show that we are making progress. And with that, to answer your question, we are positive that 2026 is going to be more resilient actually and a more predictable year for us in North America, and we are positive that in that region, we will return into revenue growth for the full year 2026. Around the services margin, maybe also, I think if you look into the numbers and the development from 2024 into 2025, it has been a positive progress. So the margin overall has been increasing, and we are positive that this will continue. It will continue as our service portfolio is shifting more and more towards cloud-native capability, also higher value advisory and managed services and support services, which we are having in our offering. I think this will help to further improve and accelerate our overall margins in the services business. Melissa Mulholland: Thanks for your questions. Regarding E7, you're right to call it out. We see this as a strategic opportunity with our Microsoft portfolio as it combines, let's call it, the SKU capability along with AI through Copilot to simplify this for our customers. And we see this to be particularly attractive in the high end of corporate into the enterprise segment. So we're well positioned to capture additional growth opportunities from this. In terms of additional service areas of growth that are implied, certainly, we're going to continue our focus around AI as well as agents and continue to improve the, let's say, the efficiency of the overall services line, which is implied in terms of the overall margin improvement in Q4. Operator: The next question comes from Christian Bader from Zurcher Kantonalbank. Christian Bader: I have 3 questions, please, and I'd like to do them one after the other. First of all, you mentioned several times new business with Google Cloud. And I was wondering what is the revenue potential here? And is this business going to be margin accretive? Melissa Mulholland: Thanks for the question. So with Google and with our channel business in general, this is a new opportunity for us. As we've seen with our AWS channel expansion, it will take time for this to be able to really take effect in terms of the P&L. So we expect this to deliver additional upside in the back half of H2, but more likely in 2027 from a materiality perspective. From a margin standpoint, this is very accretive to our overall channel margins as the channel business is very highly dependent on our platform, Cloud IQ, which gives us more efficiency and scale. So we see this to be particularly attractive across the markets that we are ready to launch with more countries to come. From a margin standpoint, this is very accretive to our overall channel margins as the channel business is very highly dependent on our platform, Cloud-iQ, which gives us more efficiency and scale. So we see this to be particularly attractive across the markets that we are ready to launch with more countries to come. Christian Bader: Okay. My second question has to do with LATAM because you said that you exited 4 countries, Argentina and 3 others. So I was wondering how much of revenue is lost due to the exit of these 4 countries. Raphael Erb: The revenue impact is not significant because those markets are very, very small markets already. There actually the revenue impact from the revenue of 2025 has been very insignificant. Christian Bader: I see. All right. Okay. And then my last question is, is it possible to get some guidance for your investments, both in tangibles and intangibles for 2026? CapEx guidance, any CapEx guidance, please. Hanspeter Schraner: So as we are continuing to invest in our technology, especially in the platforms, the investments will maybe slightly increase, but for sure, have a similar level as in 2025. Operator: The next question comes from Florian Treisch from Kepler Cheuvreux. Florian Treisch: My question is around the Microsoft incentive changes, EA changes. I mean we discussed at length last year being a headwind for SoftwareOne. So the first question would be, have you actually, let's say, delivered better than expected on these kind of headwinds as you have mentioned or flagged that Q4 has clearly been driven by the CSP transition? And then looking into '26, how much of a tailwind can it become? Or would you still assume it's a slight negative impact on the overall business? Melissa Mulholland: Thank you so much for asking. So great question. In terms of Q4 and what we saw for the full year for 2025, yes, we delivered better than expected given the, let's say, negative effect of the EA changes. This was driven by the focus to CSP realization, which I'm pleased to say we delivered. In addition, we also saw the shift to services-based incentives as particularly accretive, and that's also demonstrated in the Q4 profitability improvement overall for services. As we go into 2026, we do not see any headwinds effect with related to the EA incentives. If anything, there will be stabilization of incentives as indicated also by Microsoft. So with that, we will further, let's say, accelerate the growth that we've had around CSP and services as we see that to drive more potential. Operator: The next question comes from Christopher Tong from UBS. Christopher Tong: Maybe 2 from my side. I was just wondering on exceptionals in 2026. What should we expect over here? Obviously, you'll have to take some further cost synergies, but is there anything else we should be mindful of? Hanspeter Schraner: I mean, look, as we already stated, our goal is to narrow the gap between the reported and adjusted EBITDA. So we said it's below CHF 30 million. And of course, you always have certain items to adjust which are non-recurring, but we stick to the below CHF 30 million and with a clear ambition to further decrease. This does not include the Crayon acquisition cost or cost related to the integration, to be clear. Raphael Erb: And maybe to add on, on the cost synergies, as we already mentioned, to date, we are at the CHF 64 million, and we are making further progress on that. We are very committed on our CHF 80 million to CHF 100 million target, which we mentioned. And through that, we should also -- this should also help to make a positive impact also going into H2 on our overall OpEx situation. Christopher Tong: Got it. And I guess maybe on just the outlook and the cadence of revenue growth for the year. You mentioned that profitability would probably be more weighted towards second half. I was just wondering if you think revenue growth would also be sort of second half weighted as well. Melissa Mulholland: Yes. I mean with the seasonality of our business, Q4 is the largest quarter. So you could certainly see that implied growth pick up on towards the back half of the year. Operator: Next question comes from Marc Burgi from Finanz und Wirtschaft. Marc Burgi: I only have one question concerning North America. You already talked about it in length, which is about the growth. Can we expect that in the second half? Or could you maybe be more precise about when that should occur? And just about the general market situation, how is the market -- how is your market position? Hanspeter Schraner: In general, as mentioned, I'm very confident that in North America 2026, we will return into growth overall as a company again, which is very good, given where we are coming from. I also expect in Q1 a better performance than in Q4. So from this perspective, I'm positive that the trajectory is going to improve, and we should see an improvement already in Q1 compared to Q4. Overall, I think the market for us is -- remains to be an attractive market. And again, with the combination of Crayon, I think we have a good chance now with a better overall setup also with the channel business as an additional business line for us. So we continue to be very focused on North America. Operator: The next question comes from Andreas Wolf from Berenberg. Andreas Wolf: Congratulations on the strong Q4. I have several questions. The first one is related to the assessment of the individual regions. Have you already fully assessed the region's performance? Or is there a possibility of impairments also in 2026? The second is related to AI and the adoption of use cases? Do you see opportunities associated with the deployment of on-site engineers to drive use case adoption and ultimately, your business? Question number three. How are AI providers such as OpenAI or Anthropic dealing with resellers? Does this -- does their growth offer business opportunities for you as well? And the last one is related to Microsoft price increases. What do you believe will be the tailwind from those in 2026? Hanspeter Schraner: Let me take the first question regarding the impairments. So what we did in 2025, we do the impairment test on CGU levels, which are the 7 regions. And obviously, there were no impairments based on the current business plans for all regions with the exception of LATAM. LATAM we impaired CHF 8 million. And we believe this is the right number based on what we know today. So based on what we know today, there are no further impairments expected in 2026. Otherwise, you would have impaired already at the end of 2025. Melissa Mulholland: Thanks for your question regarding AI. So I'll start with the first regarding the adoption of use cases. So this is something that we are very much focused on. We always believe that it's important to test internal use cases before we take them to market. And we're also finding ways to drive AI through internal adoption to increase more efficiency and scale also to reduce cost to make us quicker to market to customers. So this is something that, yes, we are focused on, and yes, we are also looking at ways to deploy our internal AI capability to both support customers, but also ourselves. In terms of your question regarding Anthropic, OpenAI, certainly, this is something that is quite exciting to see in the market. Anthropic is certainly an area where we see additional partner opportunity as they need partners like us to be able to deploy and also to help customers manage which AI models should they actually consider. This is where our business model really thrives around complexity. So we help guide our customers around which model makes sense for their data environment, but also how to implement and build those solutions. So we see business opportunity to come out of that. In terms of the Microsoft price increases, I always say Microsoft price increases help our business. So there's certainly a carryforward from that. It also positions us well to be able to support our customers in navigating that price increase as our business has always been focused around cost management overall. Hard to say what the actual implied impact will be, but certainly, we see this to be positive for 2026. Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Kjell Arne Hansen for any closing remarks. Kjell Hansen: Thank you, and thank you, everyone, for joining the call. And as always, please don't hesitate to reach out to the IR team if you have any further questions. Thank you. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
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.
Operator: Good morning, and good evening, ladies and gentlemen. Thank you for standing by, and welcome to Chagee's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note that today's event is being recorded. With that, I will now turn the call over to the first speaker today, Ms. Alicia Guo, Investor Relations Director of the company. Please go ahead, madam. Alicia Guo: [Interpreted] Thank you. Hello, everyone, and welcome to Chagee's Fourth Quarter 2025 Earnings Call. With us today are Mr. Junjie Zhang, our CEO; Mr. Dengfeng Yin, our COO, Global Executive President and CEO of Greater China region; and Mr. Aaron Huang, our CFO. The company's financial and operating results were released by the Newswire earlier today and are currently available online. Before we continue, I refer you to our safe harbor statements in the earnings press release. which applies to this call. Any forward-looking statements that we make on this call are based on assumptions as of today, and Chagee does not undertake any obligation to update these statements. Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP measure to GAAP measure. With that, I will turn the call to our CEO, Mr. Junjie Zhang. Please go ahead, sir. Junjie Zhang: [Interpreted] Hello, everyone. Thank you all for joining Chagee's Fourth Quarter 2025 Earnings Conference Call. Over the past year, the market has experienced significant volatility and the competitive landscape has grown even more complex. As a new listed young company, we indeed encountered some ups and downs on our 2025 journey, took a few detours and a time faced moments of uncertainty in our decision-making. The management team has conducted a deep review and a reflection on these reviewing them as vital nourishment to drive the company's evolution and build long-term competitiveness. Looking back at our journey, 2023 to 2024 was a period of rapid expansion in Greater China market. Our primary strategy was quality tea house expansion with the core objective of securing prime location across major commercial districts nationwide, leveraging a standardized business model to achieve rapid scale. This strategy delivered significant results. We now have over 7,000 core tea house locations across Mainland China. And through Boya Tea Latte, our blockbuster product, we successfully pioneered the fresh tea leaf category and accumulated a total of nearly 240 million members registered with our membership program. These achievements have formed the foundation of our durable competitive moat. Over the past year, the market entered a new shape and consumers have shown a K-shaped divergence in spending habits. On side chasing extreme value, the other seeking premium experiences through superior products and service. The ongoing price war among the third-party delivery platforms has further intensified this divergence. For Chagee, we have a strong foundation in premium experiences with over 7,000 prime offline locations, a core fresh tea leaf latte driving over 90% of revenue and a loyal membership base. We underinvested here before. Now we are ready to expand categories and fully unlock our offline potential. Last year, Chagee foundation solidified and we entered high-quality development. We recognize that expansion phase inertia no longer met the demands of refined management and operational excellence. Starting the second half of 2025, we advanced a series of internal adjustments, including organizational restructuring and business model transition while strategically slowing down the pace of new product launches. This had a measurable impact on our revenue. We also underestimated delivery platform price on off-line sales. We stay true to our long-term strategy, avoiding short-term trends. Today, I would like to share the clear insights from these experiences and our definitive 2026 direction. We believe a team that faces problems head on, learns from them and sharpen its thinking deserves long-term trust. In this way, we aim to deliver enduring value to our shareholders, our consumers and society at large. I can now share with confidence that our internal realignment is largely complete, and we have returned to steady operations in order. Looking ahead to 2026, our core strategy will remain centered on high-value brand positioning and consumer value with focus on refining every day, every detail that shapes the consumer experience. Specifically, we will focus on 5 key areas: brand upgrade, product innovation, scenario expansion, experience enhancement and organizational improvements. These initiatives will bring us closer to our customers and support sustainable high-quality growth. At the brand level, we will launch new formats for regular and personalized tea houses, complemented by varied product lines to fill diverse occasions and emotions. We will elevate the offline experience, creating a true first space that connects emotionally with customers and showcases Chagee's unique term. We will stay true to the logic of product people. We will innovate across categories by anchoring our 18 to 30 demographic core demand and develop new offerings in special deals, tea latte and more, aligning our portfolio with consumers' multi-scenario lifestyle. We will penetrate new scenarios with morning and evening specific products such as energizing morning and evening low caffeine drinks. To complete our all-day lineup, we will also grow into workplaces, celebrations, birthdays, schools and wedding, leveraging scenario marketing to win lasting mind share and wave strategy into everyday and special occasions. Consumer experience and organizational strength underpin our strategy. We will enhance tea health environment through improved ambience and differentiated designs for flagship, Landmark and boutique tea houses. On service, we will overhaul after sales system, rolling out company-wide training, launch a SVIP hub line and create feedback channels that directly shape improvements based on real consumer input. Strong organizational capability is essential to delivering our core strategic goals. In 2026, we will advance digital tools, optimize processes and standardize best practices in operation, R&D, supply chain and beyond. This will create a leaner, more agile structure perfectly linked with our brand expansion and consumer needs. We understand that high-quality growth is a long-term process requiring patience and results, and we must consistently do what is right for the long term. In 2026, all of our strategic execution and resource allocation were centered on consumer value. We believe that only by truly understanding consumers, meeting their needs and creating value that exceeds their expectations can a brand achieve long-term steady development. We also look forward to working with all partners to advance these strategies and build on an even more vibrant strategy. Over 8 years, Chagee expanded from one tea house to 7,453 tea houses. This growth reflects the strength of our sustainable business model, adaptive organization and commanding brand equity. In 2025, due to the comprehensive organizational adjustments in the second half of the year and a deliberate pause in new product launches, we experienced a slower growth in top line. Our same-store sales in the fourth quarter declined by 25.5% year-over-year. This was indeed our biggest challenge in 2025. But what I want to emphasize is not just this number, but also the fact that despite short-term pressure, we did not resort to short-term tactics. Instead, we held firmly to our long-term plan. In 2023, recent domestic same-store sales showed sequential improvement, reinforcing our confidence in a full year trajectory of stabilizing in the first half and improving in the second. From a long-term perspective, we will continue to make overseas operations a powerhouse growth driver, and we are unwavering in our goal to evolve Chagee into a global key leader originating from China but resonating universally. With that, I will now turn the call over to our CFO, Aaron, who will provide detailed insights into the financials. Thank you. Hongfei Huang: Thank you, Junjie, and hello, everyone. Thank you for joining our earnings call today. And as Junjie outlined, we have gained valuable clarity from 2025 that position us well for 2026 execution. I will focus on remarks on the metrics that support this outlook. Before we begin, please note that all amounts are in RMB and all comparisons are on year-over-year basis, unless otherwise stated. For the full year 2025, total GMV reached RMB 31.6 billion, representing a 7.2% increase from RMB 29.5 billion in 2024. In the fourth quarter, total GMV was RMB 7,322.9 million, reflecting the challenging environment in our home market, but also strong growth momentum overseas. As of December 1, 2025, our tea house network totaled 7,453 locations across Greater China and overseas, a 15.7% increase from 6,440 a year ago. Specifically, our franchisee tea house accounts for 6,838 compared to 6,971 in the third quarter, while company-owned tea house reached 615, representing a net increase of 248 sequentially. This change was primarily because we converted some of our franchisee tea house into company-owned ones in China. In Greater China, average monthly GMV per tea house was RMB 337,000 in fourth quarter of 2025 and RMB 387,000 for the full year, consistent with same-store and the mix dynamic that Junjie discussed. At the same time, overseas GMV for the fourth quarter grew 84.6% year-over-year to RMB 371.9 million. And for the full year, our international market made an increasing meaningful contribution to overall growth. On the revenue line, fourth quarter 2025 net revenue were RMB 2,974.5 million compared to RMB 3,334.4 million in the same quarter of 2024. For the full year 2025, net revenue increased by 4% to RMB 12.9 billion. In the fourth quarter, net revenues from franchisee to tea houses were RMB 2,434.9 million, representing 81.9% of total net revenues compared to RMB 3,095.9 million a year ago. This reflects the cadence of the new product launch and the impact of subsidy competition on the delivery platform. Net revenue from the company-owned tea house were RMB 539.6 million, up 126.2% from RMB 238.6 million in the fourth quarter of 2024, mainly as a result of our deliberate development of the company-owned tea house network in both Greater China and overseas markets. Turning to margin. Our gross profit calculated by excluding cost of material, storage and logistics from net revenue reached RMB 1,581.9 million this quarter, resulting in a gross margin of 53.2%. This marks an improvement from 51.6% last year. The margin improvement results primarily from lower packaging material costs, equipment and supply chain costs. On operating expenses, share-based compensation expenses this quarter were RMB 66.1 million. This reflects our commitment to long-term employee engagement and aligning their goal with stakeholders. To provide greater clarity on underlying operational performance, we will reference non-GAAP operating results with full reconciliation available in our earnings release and the Form 6-K. We recorded an operating loss of RMB 35.5 million compared to operating income of RMB 642.5 million last year. Based on management accounts, the operating loss was mainly attributable to the operational change in the fourth quarter with an impact of approximately RMB 320 million, which includes organizational structure optimization and business model transition costs. Excluding share-based compensation expenses, non-GAAP operating income was RMB 30.5 million, representing a 1% margin. The above-mentioned margin differences reflects our step-up investment in talent recruitment for global expansion, including brand building to support new product launches, R&D to enhance our offering and digital infrastructure to elevate customer experience. Operating costs for company-owned tea houses were RMB 376.8 million, up 130.8% from RMB 163.2 million a year ago. As of December 31, 2025, we operated 615 company-owned tea houses, up from 169 at year-end 2024. Other operating costs increased by 26.9% to RMB 231.4 million, largely due to higher payroll supporting the expansion of our global tea house network. On a non-GAAP basis, other operating costs accounts for 7.6% of revenue compared to 5.5% a year ago. Sales and marketing expenses for the quarter were RMB 373.6 million, down 5.6% from RMB 395.7 million a year ago. On a non-GAAP basis, sales and marketing expenses representing 12.2% of revenue compared to 11.9% a year ago. General and administrative expenses reached RMB 635.6 million, up 89% year-over-year from RMB 336.3 million. This includes costs associated with a targeted organizational restructuring to position the company for more efficient, leaner operation going forward. The higher G&A reflects our continued investment in global corporate infrastructure and to support international expansion, alongside costs associated with ongoing initiatives to optimize internal process and resources allocation. On a non-GAAP basis, G&A expenses represented 19.7% of revenue compared to 10.1% a year ago. Beyond operating income, we generated positive financial income, reflecting interest earned on our current cash and investment balance as well as a position -- a positive other income, which was mainly comprised of government grants largely in line with prior year period. On a non-GAAP basis, excluding share-based compensation, our full year 2025 tax rate was 18.4%. Importantly, we delivered another profitable quarter on both GAAP and non-GAAP basis, making -- marking our 12th consecutive quarter of profitability at the net income level, even though this transitional period. GAAP net income was RMB 33.9 million. Non-GAAP net income, excluding RMB 66.1 million of share-based compensation expenses was RMB 100 million, with a non-GAAP net margin of 3.4% compared to 9.3% last year. For the full year 2025, GAAP net income was RMB 1,186.3 million and non-GAAP net income was RMB 1,909.9 million. For the fourth quarter, basic and diluted net income per ordinary share were both RMB 0.15. On a non-GAAP basis, basic net income per ordinary share was RMB 0.50 and diluted net income per ordinary share was RMB 0.49. For the full year 2025, basic net income per ordinary share was RMB 6.27 and diluted was RMB 6.18. On a non-GAAP basis, basic was RMB 10.21 and diluted was RMB 10.7. Turning to liquidity. We ended the quarter with RMB 7,892.4 million in cash and cash equivalents, restricted cash and time deposits, up from RMB 4,868.7 million at year-end 2024. This robust balance sheet provides ample flexibility to execute our growth investment while delivering shareholder return. In closing, our fourth quarter and the full year 2025 results demonstrate our durable profitability and our commitment to returning value to shareholders through disciplined capital allocation. This positions us strongly as we execute our 2026 priorities. With that, I will turn the call back to the operator to begin the Q&A. Operator, please go ahead. Operator: [Operator Instructions] Our first question comes from the line of Lillian Lou of Morgan Stanley. Lillian Lou: [Foreign Language] Junjie Zhang: [Interpreted] Thank you for your question. We conducted a deep review of our same-store performance, and we think it reflects both external challenges and our internal strategy adjustment pace. As you mentioned, we underestimate the complexity of a company who has over 3,000 employees, which has delayed our strategy rolling out for the year of 2025. For that, I apologize or I feel sorry for the market. Market competition in 2025 exceeded our expectation. The intense third-party platform competition impacted off-line operations and our short-term market tactics were not as strong as they needed to be. In this environment, we chose not to chase low-price traffic blindly. Instead, we stuck to our premium brand positioning. At the same time, we were very focused on internal adjustments and slowed our new product cadence, which did create short-term pressure on cup volume. Even so, we believe growth based on healthy business model is sustainable. Meanwhile, we are reflecting on how to actively adapt to market changes with flexible short-term tactics, while maintaining our high-value brand positioning. Honestly, we took some detours in new product launch rhythm and marketing execution, and we did not fully keep pace with how fast the market was moving. The positive side is that these lessons have made us more alert and agile. You can already see this in our Tianwen campaign in February, where we reached quickly and captured the opportunity, which shows the team's agility has getting back to the normal level. For 2026, we're not going to pursue growth for its own sake. We want to get back to a cycle of higher quality operations with same-store recovery as our top KPI. We will focus on 4 things: store operation, consumer experiences, product innovation and organizational efficiency. First, on operations, we will focus on existing tea houses. Slow new openings, we will moderate this year's expansion pace and prioritize healthy operations at current tea houses. For underperforming ones, we will keep optimizing and upgrading. And in parallel, we are building a full chain quality management system from sourcing all the way to after sales to lay a solid foundation for long-term operations. Second, on consumer experience, we are focused on enhancing brand value. We won't trade price cuts for traffic. Instead, we attract consumers through high-quality product innovation and superior in-store service experiences. Third, on innovation. On the one hand, we will keep innovating across multiple categories while reinforce our core fresh leaf milk tea franchise. Our new product, Signature Four Tea launched in December provides a strong example with a dormant membership reactivating rate as high as 51%, meaning in every 2 members buying this product than old members who had been consumer consumed by previous month. It drove 15.2 week-over-week GMV up in the launch week, significantly exceeding the historical average for all new products. This example proves that our product innovation capability is our driver for navigating cycles and we're broken for sale. On one hand -- on the other hand, we are exploring more consumer scenarios such as gatherings, wedding, birthday and other moments and extending to all the occasions to deepen the brand wars and temperature in consumers' life. Last on efficiency, we have now completed the major organizational adjustments, and we will continue to refine the structure so that we can maximize efficiency. Overall, we expect 2026 to be a year where we are very focused on high-quality growth rather than rapid expansion for scale. And our goal is to keep revenue and profit broadly flat year-on-year, while seeing same-store growth trend stabilize at the operating level. And we believe in the second half, the overall same-store sales and operation will be healthier. And also, we want to focus that our priority for this year is to secure the market share rather than for the net profit. So if we have a conflict -- we see the conflict between market share versus profitability, we will choose the former one. So to sum up, the priority for this year 2026 is to both elevate the user experiences and keep the same-store sales getting back to the healthy level. Operator: [Operator Instructions] Our next question comes from the line of Xiaopo Wei of Citi. Xiaopo Wei: [Interpreted] In your prepared remarks, you briefly touched base on the business model transition. And could you share with us what have been motivating you to execute such a business model transition? And could you give us more update on the status of transition? Hongfei Huang: Our model transition has one core motivation that is to build true shared risk, shared reward strategic partnership with franchisees. Last year, industry price was intensified. Franchisees faced the dual pressure of sales decline and rising costs. The old model offered insufficient buffer in downturns. So we restructured incentives, shifting from traditional supply relations to a GMV-based revenue sharing model. In the new model, brand fees do go up slightly, but those fees come with 2 strong offsets. First, we offer enhanced discount management through marketing intelligence and targeted campaigns. Second, we cut raw material cost ratio at franchisees and sharply. Now our revenue moves up and down with their GMV sales. When they succeed, we succeed. From 2026, we fully rolled out the new model. This unites our interest and goals. We look forward to even tighter collaboration to drive sustained GMV growth. Operator: Our next question comes from the line of Sijie Lin of CICC. Sijie Lin: [Interpreted] My question is that can you provide an update on the performance of our overseas markets? And what are your expansion plans in 2026 domestic and overseas markets? Junjie Zhang: [Interpreted] Thank you for your question. Let me start with our overseas performance in 2025. In the fourth quarter, our international markets showed strong and healthy growth. We added a net 83 houses, bringing the total to 345 in the overseas market. GMV grew 23.9% quarter-over-quarter and 84.6% year-over-year. More importantly, the average monthly GMV of tea house for overseas tea houses outperformed the domestic ones, preliminarily replicability and strong vitality of our business model overseas. In 2025, we entered 4 new markets: Indonesia, the United States, Vietnam and Philippines. Currently, our overseas footprint covers 7 countries: Singapore, Malaysia, Thailand, Indonesia, Vietnam, Philippines and the United States. In Vietnam, our first tea house opening generated over 20,000 cups across 3 tea houses in the first 3 days with brand voice rapidly climbing to second in the local tea category. At year-end 2025, our Hello Kitty IP co-branded Coco Oolong launched across 5 Southeast Asian countries, achieving a 75% new product sales share on launch date in Thailand and 38.3% in the Asia Pacific region over the first 3 days, helping regional tea brand voice. This achievement has demonstrated that Chagee's brand power can transcend broader. Our break 2026 strategy into domestic and international markets. For domestic market, we focus on existing prioritizing quality. This year, we will moderate domestic expansion pace and shift our focus to same-store sales growth and ensuring store level health and profitability. We plan about 300 net new tea house openings in strategic locations in Mainland China. The number is not the goal. We prioritize healthy profitability for each new tea house while supporting existing same-store growth through optimizing and reinforcing key location resources. Additionally, we may make strategic adjustments to our expansion pace based on our performance this year. Overseas expansion will continue at a steady pace. In the fourth quarter, we added 21 tea houses in Malaysia, 19 in Indonesia, 13 in Thailand, 12 in Vietnam and 11 in Singapore. This momentum carries into 2026. Thailand is now expanding from Bangkok to in Chiang Mai, and our Korea debut is planned for the second quarter, making it our eighth overseas market. 2026 is our foundation building year. We target about 200 net new tea houses overseas. More importantly, in every market we enter, we will continue to refine business model and build replicable template for future scale. Lastly, in terms of globalization, I have to add on a little bit of touch. We are doing something that is a must. This is something we have to do, but it's difficult. So we're not only investing the overseas market in the next several years, we're actually investing in the next decade, especially the market. And so we're not talking about a short-term sprint, but a long-lasting marathon for our global expansion. And we believe the thing -- the priority for our overseas market is to refine the business model as we go. And also the priority is to keep a healthy unit economics, especially for the U.S. market, which is the second largest market, except for China. So we believe there are a lot of business models that we can adopt like license or franchisee, but we choose the hard way to bring it out because we not only want to open dozens or hundreds stores in the U.S., but we want to bring the drinking habits of tea into the U.S. market like Starbucks has been doing for the past several years when they entered into the Chinese market. So we chose -- we chose a route that is more difficult and requires higher CapEx, and we might make mistakes. But I'm here to ask for the capital markets to give us more confidence and understanding about our overseas market expansion. Lastly, to add on a little bit, Chagee is not adopting the normal way to grow, especially as a listing company, but we believe we want to bring the higher value and make Chagee a high-value branding-oriented company in the future. In the short term, we believe most of the capital markets or investors is focused on P&L. In the long term, Chagee wants to grow the company as a new category pioneer, which not only provides freshly brewed drinks to our customers, but also to bring a new lifestyle to our customers such as RTD and also different scenarios of consumption. So in the short term, we might see volatility from our financial performance. But in the long term, we believe Chagee has the possibility to evolve from a freshly brewed maker to a lifestyle changer worldwide to the global consumers. So hopefully, we have your -- all the investors' long-term support, and we welcome your comments and your advices as well. Thank you. Operator: Our next question comes from the line of Jessie Xu of JPMorgan. Jessie Xu: [Interpreted] Jessie Xu from JPMorgan. 2025 was a tough year, but I think it's fair to say that the most difficult time seems already behind us. Investors have been looking forward to a marginal improvement in same-store sales trend. And I think 4Q trend already provides some reasons for investors to turn more positive from here. Management mentioned cost reduction initiatives on the earnings call last quarter. So could the management introduce the concrete measures? What did we do? How it's progressing? And any initial feedback or efficiency gains from these initiatives? And lastly, how should we think about the OpEx ratio for this year? Hongfei Huang: [Interpreted] Thank you for your question. Our cost reduction and efficiency efforts are not short-term fixes for a single quarter performance. They're part of a bigger long-term push to make the organization healthy overall. Things are moving forward well, and we are already seeing some early results. On the organization side, we've wrapped up Phase 1. That means combining mid- and back-office functions and cutting out duplicate work. As Junjie just mentioned, we opened a lot of new stores during the year of 2023 and 2024. And in 2025 alone, we opened more than 800 stores as well. So now we are focusing on the same-store sales and shifting more resources to the front lines for better execution and faster response. This is not about a smarter structure, not just training headcount. For expenses, we've put in stricter controls and better budgeting. It covers everything from targeted marketing spending down to daily operation. Looking at 2026, we expect our overall fee rate to stay stable, especially for sales and marketing, we'll keep investing in this area. And also, we'll keep investing in efficiency and controls without hurting core growth areas. The game is better quality inputs, leading to stronger output no matter the environment. For the G&A expenses, our goal is to keep optimizing the overall efficiency with the precondition that without impact our overseas market expansion. Operator, next question, please. Operator: As there are no further questions, I'd like to hand the conference back to management for closing remarks. Junjie Zhang: Thank you again for joining our call today. If you have any further questions, please feel free to contact us or request through our IR website. We look forward to our next call with everyone. Have a great day ahead. Thank you. Operator: This concludes today's event. Thank you for participating. You may now disconnect. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]
Operator: Good morning, ladies and gentlemen. Welcome to the Ceres 2025 Full Year Results Investor Presentation. [Operator Instructions] I'd now like to hand over to the management team, Stuart, Phil, good morning. Philip Caldwell: Good morning, everybody, and thank you for joining us for the 2025 full year results presentation. I'll talk you through an update on the company and the strategy to begin with, and then Stuart will obviously talk you through the financial numbers, and we'll obviously go into Q&A at the end as usual. So at Ceres, we're operating on 3 strategic imperatives. The first one is signing more licensees. So new manufacturing license partners is a key focus for us as a business. The second is once we have those partners, bringing those partners to market. So that's obviously assisting them as they scale up and put in capacity, but also actually helping to stimulate demand, which actually helps pull through the products that we're developing with partners. And the third is obviously technology leadership. We believe we have the best solid oxide technology in the world. We have a single stack platform, which we're actually going to be launching in April. And we need to maintain that technology leadership advantage because that's what our partners come to rely on from Ceres. So over the last 12 months, we've made significant progress on all these activities. The first thing to say is there is an acute need for power driving the commercial interest in our technology right now and particularly for SOFC technology in the wider landscape. As we go into partner progress, in the past 12 months, we signed a new manufacturing license agreement in China with Weichai, our partner. We'll give you a little bit more on that today, but that's going extremely well, extremely rapidly. In Taiwan, Delta is also scaling and starting to produce first prototype products and is also investing significantly in land and facilities to do that scale up as well. In South Korea, a big milestone for us in the past 12 months with Doosan starting production at the factory there, both for SOFC stacks and power systems, and that also generated first royalties for the company in this period. In Japan, our partnership with DENSO on the electrolysis side began production of first hydrogen with JERA and also led to government funding recently with an estimated value of about JPY 35 billion, approximately GBP 165 million to continue the advancement of SOEC technology. Great progress in India with Shell. The megawatt scale electrolysis demonstrated actually exceeded performance expectations, high efficiency but capacity as well. And we're progressing now towards the pressurized systems as well with Thermax and Shell and Thermax developing a new pilot facility for testing of those systems. We also undertook a business transformation plan around those 3 strategic imperatives that we talked about. And we've restructured the business, very much focused on accelerating the commercial opportunities. So after 25 years of developing this technology, we are now at that point of commercialization and the point of first production and scale up. We'll talk more about this business transformation, but there's a cultural change there, but also it's anticipated it will drive cost savings of around 20% this year compared to the 2025 cost base. And we finished the year with a very strong cash position of over GBP 83 million at the end of the period. So again, we'll talk in more detail about financial management in the second half of the presentation. We had some news this morning as well, which is very pleasing, partnership with Centrica here in the U.K. It's fantastic to be able to actually bring this British technology to the U.K. And this really is part of our second pillar of that strategy, which is how do we stimulate demand and how do we bring this technology forward at scale. Centrica, as you all know, FTSE 100 leading energy integration company. The statement there is about a multi-gigawatt opportunity that we see in the U.K., Centrica sees. And that's on this gap that we're seeing as we have more need for electrification. We have a time to power need that's becoming quite acute. And this modular high-efficiency technology can really service that market, both in terms of the data center needs, commercial and industrialization partners as well. So the purpose of this is we're introducing our licensing partner network to Centrica, the whole ecosystem of manufacturing partners. And we will support Centrica in terms of bringing that forward, if you like, acting as their technical advisory arm, helping them to set up this model of how they go to market with this. So that will include our expertise in things like installation, commissioning, remote monitoring, maintenance, recycling, all of those good things that we at Ceres know how to do. The initial focus will be the data center market, commercial customers and industrial power. So that's a fantastic step forward for us today, and we'll have more details on that. We have an upcoming Capital Markets Day on April 15, and we'll be able to provide you with more detail on that and from Centrica as well. But that's just in very exciting development today. I mentioned also the single stack platform. So we're going to launch that also at our Capital Markets Day. One of the things that's unique about Ceres is the solid oxide platform, the same stack, the same cell technology can run in both directions, both for power generation and for green hydrogen. That's an amazing benefit to our partners because as they develop the supply chain, as they scale up, that investment that they're putting into factories now for power generation also has this dual use aspect in the future for hydrogen as well. And as you can see in the chart here, that same stack technology is now going into products, Doosan, Weichai, Delta, but also we're using that on the hydrogen side with partners like DENSO, Thermax, Shell and Delta as well. Just wanted to spend a little bit of time on what we're seeing as the emerging demand for power. Our estimate is we see an opportunity for power generation using solid oxide of around 22 gigawatts by 2030. And we see that market roughly split about 50% the data center opportunity, but also a very significant part in the industrial and commercial applications as well. So around 50-50 kind of split. Geographically, it's an interesting split as well. About 25% of that is the U.S. market, which gets a lot of attention right now. I'm sure you're all covering data center applications in North America. But just under 20% of that is here in Europe as well. And the U.K. is a great market opportunity when you think about we have some of the highest power prices anywhere in the world. This is a market that really lends itself well to this application. And then about 50% of that market we see is Asia, the wider Asian opportunity as well. And with our partnership network, we're able to access all aspects of this market. So our aim here is to really establish the service technology as the industry standard, and we're doing that by embedding it in these global partners that are accessing and servicing these different parts of the market. Why is that becoming a critical factor? Well, today, if you need power generation, you're waiting about 6 to 7 years for a gas turbine. Small modular reactors are also coming down the pipeline, but they're about 7 to 10 years away. And then high-voltage grid connections, 5 to 15 years away. So right now, with this acute need for power generation, behind the meter or on-site generation is becoming a really viable alternative because there just isn't the conventional power generation equipment available. I think it also opens a window for us in terms of the technology today is good enough. It's viable in terms of its lifetime, its performance and its cost to actually enter the market. And as we scale, we anticipate these costs coming down significantly. Just to show you some of the progress that's being made. These are the first units developed by Delta, took a license just under 2 years ago. So this is a Thai power in Taiwan. So you can see here the first prototype units being made using car stacks, but all the systems done by Delta. Delta are fitting out their production as well, and they're on track. Delta is a very exciting partnership for us because when we talk about that data center market, Delta are already very much in that supply chain. I think by market cap now, they're the second or third biggest company in Taiwan after NVIDIA and Fox. And where we fit in is they make solid-state transformers, they make power conditioning, they make UPSs, et cetera. So by adding in the power generation capability of the solid oxide, they're developing a complete offering from fuel in all the way through to power out. And that power out can either be AC power or in the data center application, 800-volt DC. So don't forget that the fuel cell technology is actually generating DC power and the way that you actually combine stacks, you're very close to being able to match up that 800-volt DC power direct from the power generation unit, which is the SOFC. It's fuel flexible. So we run on natural gas today. We can run on biogas. We can run on hydrogen in the future. It lends itself extremely well to things like carbon capture. And also, if you want to, you can capture the heat or convert that heat into cooling through absorption chilling as well. So you have the option to go from low carbon all the way through to zero carbon and also push very high efficiencies. In Delta's case, the same market applications apply. It's microgrids, AI data centers, even for the semiconductor industry and manufacturing in general. So I think this is a really good illustration of how our partners take this technology and put it into a complete offering for these kind of market opportunities. Weichai is an exciting partner for us. We've been working with them on system level for about 7 or 8 years now. Their systems are very impressive, I have to say. And I'm expecting this year, they'll launch their latest system, which is going to be a very impressive unit. We've taken the step with them. We've done the technology transfer. So we signed last November. already, we're going very quickly, and there will be more to come from Weichai this year, but they're probably going, I would say, faster than any of our partners have ever gone before. Doosan factory, I was privileged to go around the factory. I've been a couple of times, but this was in July with Doo-Soon Lee, the CEO of Doosan. First production was there. And when you actually get in there to see the realization, the single piece flow end-to-end, it's about the size of 3 football pitches, semi-clean room, it's an impressive facility. And they've actually fulfilled their first capacity orders in the past few months, and that factory is now up and running. So that's a big, big milestone for us going full circle. So Doosan is the first. We expect Delta starting to come on stream and then Weichai. So we are building out this ecosystem. On the hydrogen side, I think it's been fair to say that over the past 12 months, there's been more headwinds on the hydrogen side. But at the same time, I think that opens up an opportunity for, again, higher efficiency technology like the Ceres technology. And as I mentioned, all of the investments that are going in now are directly applicable on to the hydrogen side of the business. So extremely pleased with our partnership with Shell. We've exceeded expectations there. We've met all the targets that we set. And that's leading on to the pressurized development, which is now underway. So taking this one, which was the first atmospheric SOEC that we did and now actually putting that into a pressurized system that can be scaled to megawatt scale. And we're doing that engineering ourselves to begin with, but then in partnership with Thermax in India who can really drive down cost. And India is one of the big markets that we see for this green hydrogen in the future. So we see green hydrogen, particularly opportunities in China and India as those areas come on stream. We also did this with DENSO very quickly. So similar to the Shell container, DENSO actually deployed this on site within 18 months of actually taking the license, and that's using Ceres' technology. That's putting in hydrogen into a thermal power station to reduce emissions from conventional power generation. And that's unlocked further funding for DENSO as well. So great progress on all aspects of the hydrogen side as well. In terms of where we are as a business, we're building out this ecosystem of partners. And really, our aim is to be the technology provider of choice. So we now have manufacturing in Korea. We're seeing manufacturing being built now in Taiwan. That will come on stream in China as well and with DENSO in Japan. So really strong ecosystem of partners. Shell is more in the end user category, and we can add Centrica to that list of partners today as well for U.K. and Europe. So our aim is embed this technology to become the industry standard. So with that, I'm going to hand over to Stuart to give you the financial update for the past year. Stuart Paynter: Thanks, Phil. Good morning, everyone. I'm just going to take you through a few slides, just to give you a bit of an update on where we are from a financial position and financial planning position and some of the actions we've taken to put ourselves in a strong position to be able to execute the strategy Phil has laid out. So here's the headline numbers you can see. As you all know, the revenues of Ceres are largely dependent on how successful we can be in terms of signing MLAs. We signed Weichai in 2025, but towards the end of the year, we in sufficient time to recognize any revenue at all from that contract. So we're rolling that into 2026. But you can still see that the margins remain high, right? That's the asset-light model we retain, and we have good financial discipline around that. The other thing to note here is cash. We're still very strong on the cash side. You can see that the cash burn in the year was just under GBP 20 million. And like I said, that was without the benefit of having an MLA. So we're pretty efficient now. I believe we've got the optimized cost base, which I'll take you through. And you can see that the restructuring that we've been going through in the last few years has fed through to the cost saving in 2025 from 2024. There's more to come on that, but we'll take you through that and be very clear, we now believe we have an optimized cost base. So the actions we took towards the end of '25 will flow through to '26, but we really do think now we've got the correct team to prosecute the strategy, which we've chosen. So here's just a graphical representation of the revenue and gross profit. Gross profits remain industry-leading with the asset-light model we have. And of course, the success and the health of those are maintained by signing new MLAs, and we retain the confidence that we have the opportunities to keep on chasing that Pillar 1 on Phil strategy of signing new MLAs and be successful in doing that in 2026. So Phil mentioned business transformation earlier, very important to us. We now have that single stack platform commercially viable to get out into the market, and that started in earnest with Doosan with others to follow. And now we need to make sure that we are still innovating. Pillar 3 was keeping a technology lead, very, very important to a licensor. -- and we'll continue to do that with one of the biggest solid oxide expertise pools in the world. But now we believe we've reached a point where we need to just look at the focus of the company and be very, very commercially disciplined, commercially focused and make sure we have the right people in the background, giving the R&D sufficient attention that we have something to license in the future. And we believe during the end of Q4 2025, we've realigned the business to be able to do that. The flow-through of that will be a 20% cost saving in 2026, but all the actions needed to do that have been taken and are now finished. So now we're into a business transformation for this year, which is all about culture, team and making a cohesive unit so we can make sure that we succeed and our teams succeed at the same time. So we -- this is all crystallizing, as Phil said, in the Capital Markets Day where we're launching this single stack platform. We're very proud of it. And hopefully, that will make sense to everyone when they see it, and it's something we can go out and actively -- more actively sell into the marketplace. In terms of the cost base, so this is the optimized cost base we see for the next commercial phase. All the actions we've had to take have been taken. There will be a natural flow through into 2026 of this cost saving, but we are essentially building from here. We've still got a world-class R&D team. They're very focused on the things we need to do to be successful. That's cost down, that's lifetime. And we've strengthened the commercial teams in order that we can make the biggest impact we can on the top line. So we really do think we've got the right team, the right place, the right assets in place to make real success for the next few years. And why are we doing that? Well, you can see that commercial momentum essentially over the last few years has reduced our cash outflows. And we're very clear, we've now got the model of our business. If we can sign MLA on average every 12 months on that sort of cadence, we will be very close to breakeven and cash flow neutral. And that's important. That gives us control of our own destiny without having to rely on the capital markets. And it's building that MLA base so we can become that industry standard that Phil talks about. And why is that important? Well, the end goal for any company that's ultimately a licensing company is to build your royalty streams. As Phil mentioned, we're just at this orange blob stage here today. Doosan has fulfilled their first order at the very end of last year led to our first royalty revenues, a big milestone after 20, 25 years of development of this project. But we need now to push on if we can become the industry standard, essentially have a portfolio effect of many, many partners building, we're really going to be able to build these royalty streams, power first, hydrogen second. As Phil mentioned, this is the same technology, but you can attack 2 markets, one right and acute now and the other coming several years after. So we're in this in order to keep on signing licensing agreements, which we know we can for the next few years, and then it's all about building the royalty base. So we like the model. Every time we make progress with Centrica and partners, we think it reinforces the success we need to have that model. But importantly, we need to show that we're financially disciplined to keep this asset-light model, which we're doing. So with that, I'll hand back to Phil. Philip Caldwell: Yes. Look, I think we have a very clear strategy. I think the steps we took last year put us in an extremely good position with the asset-light model. The 3 priorities for this year remain unchanged. We're working hard on signing new manufacturing licenses. I think we're at an exciting stage now where you'll probably hear more from our partners this year as they're starting to actually scale and launch things, but also helping to drive that demand as per the announcement with Centrica today, that also helps stimulate that demand for our partners as well. And then the single stack technology platform launch is a key milestone for us. We do believe we have the world's best solid oxide technology. And we're now at a point where we can actually bring that forward rapidly to new partners and existing partners to scale both for power first and then for hydrogen as that follows. And we're starting this year with a strong cash position. We have around GBP 45 million of contracted revenue based on existing contracts from today for 2026. So we're in good shape. And I think the market opportunity has probably never been stronger, particularly on the power side. And I think now we need to get on and actually grab that opportunity, and we're well positioned to do so. So with that, I think we'll probably move on to questions. Operator: That's great, Phil. Thank you very much indeed. Before we go to those online, Phil, if it's okay, I'm going to come to the room. If you do have a question, just raise your hand and I'll give you the microphone. Christopher Leonard: Chris Leonard from UBS. Maybe 2 questions from me. And to start with, can we go into Centrica. And obviously, you spoke to the time to power and the need there. You also spoke in the presentation to the evolution of cost and what you see is feasible here. It will be really helpful to get a gauge on where you think your partners when they first push out these fuel cell products, where you think they'll land at on CapEx price and where you think that evolution can get to? Philip Caldwell: Yes. I have to be very careful here because whenever I start forecasting our licensees prices, I get into trouble. But let's just -- if we talk in general terms, the SOFCs that are out there at the moment are available at around $3,500 a kilowatt. If you take that in the U.K. market context, and you look at the spark spread of gas and power, then you can generate power very efficiently in the U.K. I mean, obviously, gas prices are moving around a bit at the moment. So I don't want to be precise on this. But given we pay in the U.K., the highest energy bills probably anywhere in Europe and even worldwide, when we map the U.K. out, when we look at market attractiveness, spark spreads, cost of power, et cetera, the U.K. is right up there, Northern Europe, et cetera. So it's a very significant opportunity. To go back to your question, Chris, we think that we can significantly generate power at a lower cost, even at a relatively high entry-level CapEx compared to turbines and other generation because we're so efficient, because of the OpEx, et cetera, and because of the lifetimes that we can achieve. So we think that there's a big opportunity there in terms of that deployment. And then the thing I would add is I think that kind of level is a starting point because I think what we see is a window that's opened up. So people need power. I think SOFC can now fulfill that power. And as our partners scale, we expect the cost of those SOFC units to come down quite significantly. Christopher Leonard: Yes, that was the second part. And then following up on Centrica. Obviously, you spoke to the contracted revenue for this year at GBP 45 million in the books, but presumably, I don't know, but I presume that maybe didn't include Centrica's potential contribution. Like what should we think about for engineering revenues and consulting fees, et cetera? Philip Caldwell: Yes. Look, the role that we're playing with Centrica is more in the advisory support side. So at the moment, that's going to be fairly modest revenue. So it's not like -- don't think of this like an MLA, they're not an MLA partner. The big value add of Centrica, obviously, we generate some engineering support fees, et cetera, there. But really, it's the deployment of our technologies through our partner network that drives that demand that ultimately drives royalties. That's -- we see them in that Pillar 2 category, not in the Pillar 1. So that's where we see that. So the thing that would really move the needle for us this year is new MLAs. Alex Smith: Alex here from Berenberg. Just a quick one on the next-gen kind of stack technology. You kind of mentioned it in your kind of closing comments. Kind of what the real benefit you think that could have to offer? And is that like a key milestone for the business going forward? And then second one is just kind of a new licensee pipeline, how the discussions are going to kind of bring new people in and new manufacturing products. Philip Caldwell: Okay. So look, the stack launch is the culmination of several years of effort. Over the years, we've increased the cell footprint. We've increased the stack height. There's a lot of focus on the simplicity to manufacture. We will continue to drive that in terms of getting down the actual installed manufacturing CapEx of what it takes to build those factories. But that stack itself represents what we believe to be the building block that all our partners will now scale on. And our technology teams, our R&D teams are really focused on driving cost and lifetime, cost as in the unit cost of stacks, but also the manufacturing cost and then the lifetime of the product. So that's where we see that technology evolving. And I think it's a significant milestone for the company because we've been in that investment mode for quite a while on the core technology and R&D. I think by launching this product now, you can see from the optimized cost base, we've got the right team to keep on innovating around that particular platform. In terms of the pipeline. I think it's grown considerably in the past 12 months. I think we're getting incoming from most of the kind of players that are in the power system market, in particular, because I think that's the acute need that people see. Obviously, we're very strong in Asia, but we're looking at how we build out that ecosystem as well. So it's grown considerably in the past 12 months. I would say on the hydrogen side, it tailed off a bit towards the end of '24, et cetera. But I think the -- as I look at the pipeline now, I would say it's about 70%, 80% driven by the power demand side of things as well. Alexandro da Silva O'Hanlon: Alex O'Hanlon from Panmure Liberum. A couple of questions for me. Firstly, well done on the Centrica deal. I'm interested if you could give some more color on how that came about? And is there scope for similar type deals in the pipeline? And the second question is just on the cultural change. You mentioned a couple of times in the presentation. Clearly, you're shifting towards being more commercial now. How are you tracking that and making sure that the change that you want to see is actually permeating throughout the business? Philip Caldwell: Okay. So on the Centrica deal, I reached out and I saw what was happening in the U.K. we saw the opportunity in the U.K. market. It's like this market if this technology is so good, why are we not deploying it in probably one of the most attractive markets for this in the world. So Centrica was a logical choice for that. One of the biggest LNG importers, they're looking to diversify. They're making investments in small modular -- advanced modular reactors for nuclear, et cetera. And I think once we started talking with Centrica, they saw the same thing that we did, which was this acute need for power, et cetera. So we were very, very much aligned. And so I think they're an excellent partner for us in the U.K. I think the other thing we didn't talk too much about today is not just on the power generation side, but also there is the potential to combine this with nuclear in the future to do hydrogen generation on the back of modular reactors. So there's a lot of good synergies there between the 2 companies. And we're very excited about that partnership. And as part of that process, what I did is with Centrica I took them and they've actually visited our partner factories. So they've been to Korea, been to Taiwan, been to China. And at that point, I think they realized this is real. And I think this is the key thing is the question we get asked time and again is, well, yes, fuel cells have had about fuel cells. Yes, but is it real? Does it really scale? -- aren't they expensive? How long do they last, et cetera? And then you go and you walk around the Doosan factory and it's like, oh, right, got it. This is real. Even before they went into the factory, it's like, okay, we know what you're talking about now. Is there potential to do that with other partners? I don't think we need to in the U.K., but it's an interesting model. We have so if we can stimulate demand and then we can introduce our ecosystem of partners, I think it's pretty powerful. So as part of that commercial discipline in the future, we will probably look to replicate this in maybe in other parts of the world. But in the U.K., it's Centrica. So in terms of the commercial progress, how we're tracking it, et cetera, our Chief Commercial Officer, Filip Smeets, joined us last year. There's a lot of rigor now in terms of the pipeline progress. We put more people in regions. We're just getting better, better and better at it through some discipline as well. And also demand helps. So we're getting incoming, but also people are starting to realize who we are. And I think in the industry, already, we've got a very good reputation. I think people, competitors, they respect our technology. I think the thing that people have always maybe had the question mark on is, well, how does Ceres scale and go to market. And I think that's what we're going to see coming through this year. Lacie Midgley: Lacie Midgley here, Bloomberg Intelligence. Just a couple from me. Stuart, your comment on securing the one partnership every 12 months and that triggering the breakeven point. I mean, clearly, that's the place we need to be to before the royalty scale. But I mean, I'd be interested in both your comments really, but what in your mind is a realistic number there because no doubt the demand is there to have as many MLAs as you can across geographies. But presumably, your current partners won't want that number going too high given the competition that they'll likely face in certain geographies. I mean what kind of number are you thinking there on kind of a longer-term view? Do you have anything around that? I mean... Stuart Paynter: Well, if you look at recent history, we've signed 3 in the last 2 years from the beginning of '24 to the end of -- we have set ourselves up that on an average cadence every 12 months, we will achieve what you said, Lacie, sort of breakeven and cash flow neutrality, right? But that's not exciting for anyone. That's just a stop gap until the royalties come along and it helps us diversify, build a portfolio of clients. We think there's really plenty of room to play. Phil showed a 22 gigawatt solid oxide market by 2030. Even if Bloom have scaled to 3 to 5 gigawatts by that, that's 15% to 20% of the market. There's plenty of room for plenty of people to play with plenty of applications and with a much bigger market coming along later in hydrogen. So we really don't feel like there's downward pressure on this number. It's a case of execution for us, building a pipeline, instilling commercial discipline and executing. These are big agreements. So they're very -- it's difficult to predict. But we believe we've got the right team in place now, led by Filip, as Phil said, with some really, really strong people sort of backing his team up to give us the best chance of executing. It's still difficult to do, but we -- given our recent history and new commercial discipline, we believe we can as -- the short answer to your question is as many as possible. Lacie Midgley: I mean as the royalties are stacking, that makes the commercial proof point easier to sell, right? So that all becomes a lot easier. Philip Caldwell: Yes. I think also, we've done this now 5 or 6 times. So building factories is something that we're getting we're getting pretty good at, but it's a learning curve. The first time you do it, second time you do it, et cetera. So -- but we also -- what's good to see is when you -- when our first licensees came on, they had to take a fairly immature supply chain and scale that as well and equipment builders. So when somebody takes a license, it's not just to the technology, it's to that whole ecosystem of partners. And so new license discussions now are much faster, much easier because in some ways, you'd say, well, okay, this is where you would get equipment builders from. This is your choices in supply chain, et cetera. So we started off with a very European-centric supply chain. And now we've added to that to our partnerships with Doosan, but now with the Taiwanese and the Chinese, we're building out quite a formidable set of supply chain partners as well. So that -- in terms of that credibility, not only do we know how to build factories and help our partners to do that, but we can also introduce them to a whole ecosystem of very willing suppliers as well. Lacie Midgley: That's helpful. And then just lastly, on Weichai, I mean, you talked about them moving very quickly, quickest out of all your partners so far. Just trying to kind of work this out. So how much of that is because maybe of the historical work that you had with the sort of legacy partnership? And how much of that is kind of versus your own kind of technology developments, maybe reducing time frames there or just Weichai's desire to get to market more quickly? Just trying to understand, firstly, how quickly they can get to royalties, but then I guess, the time frames from MLA signing to actually getting to royalties, future partnerships? Philip Caldwell: Yes. So when we're talking to new partners, we kind of give a guidance of less than 3 years. And we're obviously looking to reduce that all the time. But some of that's incompressible in terms of technology transfer, the time it takes just to actually build either greenfield or brownfield factories and equip them. But we roughly talk about that kind of time frame. Now in parallel with that, you've got not just the stack manufacturer, which for us now is becoming more like a blueprint. We can take people around our own facility in the U.K. And like I mentioned, we can -- we've got blueprints of how you build factories, and we've got an ecosystem of partners there. But then they also have to develop the product, the power system product as well. I think we started the relationship with Weichai with a system license, and we've developed that system with them over a number of years. But now what they're doing is very impressive in terms of their own system development. So I think they can go fast because the system level maturity is very good. And then it's that desire to get to market is how quickly you build out that capacity. And I think that's -- that's what's happening extremely fast. It's a fairly typical approach in Asia, in particular in China, but they set incredibly aggressive time frame. So they're looking to obviously reduce that 3 years quite significantly. Christopher Leonard: Just a follow-up on that actually in terms of the royalty outlook and thinking about Delta scaling up this year, the target to be online end of '26. Has that changed at all? Are you still looking at that time frame? And Doosan as well? I mean, how are you feeling about them looking into '26? Obviously, you recognize right at the end of '25, some royalty perhaps, but is there more to come? And how should we look at this year? Philip Caldwell: Yes. Look, I think on this year, fresh royalties are there, but they're still pretty modest. So I don't think it's that material into '26 is our guidance. Yes, Delta is on track, but really, that's going to be like '27 type time frame and then obviously, new partners coming on. So in the near term, we're really focused on the license fees, the engineering services still through 2026 and probably into '27. And then -- but royalties build from that point. So that's how we see it. We're not changing guidance on that really. Unknown Executive: It looks as though we're doing well for much into the room. So we've got a couple online that we might start to tackle. So the first one is regarding the Centrica deal. And given they're based in the U.K., you mentioned that there's going to be revenue from U.K. and Europe. And what is the likely spread for revenue, be it U.K.-centric or more broad? Philip Caldwell: I think that's really one for Centrica to look at. But their presence predominantly, it's U.K. and Ireland as well is a very attractive market. So U.K. and Ireland, and then they're active across Europe as well. But I think initially, our focus is predominantly U.K. and Ireland. Unknown Executive: Another question coming from the supply chain. So given the fact that the technology transfer includes quite a bit of the supply chain upgrades, do we have any concerns for material, rare earth material accessibility or scaling up to match our partners for the supply chain potential constraints that you see in other industries at the moment? Philip Caldwell: No, we don't because the nature of our technology, we use Ceria where the company gets its name from the major rare earth material, which is the most abundant. We're not using Scandia. We're not using where we use other rare earths, we're using very small amounts. So we're not concerned about constraints in any of those kind of materials. Unknown Executive: We also have a question on the pipeline, which is wondering when and if there's opportunity for U.S. partners? And have there been any constraints of why we haven't signed any EU partners either recently? Philip Caldwell: There's no constraints. And look, as and when I can update you on commercial activities, I will, but I can't give specifics on particular opportunities or geographies at this point. I think there is interest in the U.S. I can say that clearly, given the market opportunity there. And yes, that's an area of focus for us as well. Unknown Executive: Switching topics slightly. We've got a question on hydrogen. So wondering if we can -- you can expand upon what the pressurized modules are, those and the balance of plant and how Thermax is looking to scale and what the time lines would be for that? Philip Caldwell: Okay. So the pressurized modules are basically taking the core cell and stack technology, putting them inside a pressure vessel. And the reason you do that is by working with OEM partners like Shell, you save a very significant compression cost even on first stage compression, just a couple of bar makes a big difference. So as we look at hydrogen at a refinery kind of level or in an industrial application like steel or fertilizers, et cetera, it makes a lot of sense to have modules that are pressurized and can be scaled. The reason for the partnership with Thermax is twofold, really. One is they're an EPC, so a contractor -- engineering contractor based in India, which is one of the key markets that we see for green hydrogen. And secondly, compared to European suppliers, et cetera, there's significantly lower cost in terms of the engineering and actually driving the unit cost of these things down. So again, we're always looking at what's the most economically advantageous way to bring this technology to market. And that's why we have the relationship with Thermax. Unknown Executive: Great. And Stuart, I'm conscious you've already touched on it, but we've got a couple of other questions on when we expect theirs to reach profitability or break point even. I'm just wondering if there's anything else you'd like to add to clarify. Stuart Paynter: Yes. I mean -- so hopefully, we've made it clear that if we can achieve a cadence of 1 MLA every 12 months, that's where we get to. These aren't as predictable as sometimes we'd like. But that would be the goal. So the moment we can continually execute the pipeline to MLA every 12 months, that's when we're going to reach that sort of profitability level. But that's not long-term sustainable profitability. That comes when the royalty streams become the dominant player in our revenues, and that's going to be a few years out. So the idea now is to have a cost base where we can maintain a technology advantage, execute the commercial strategy whilst preserving cash. And in the end, that getting new partners on board and pushing the technology forward will drive the royalties in the long term. So we think it's a really viable business strategy as Phil laid out those 3 pillars, both for the short to medium term, and it also benefits the long term when we get to royalties as well. So it's a really nice business strategy we're pursuing. Unknown Executive: Great. The only final question that's come up is regarding RFC and wondering what has happened to that investment? And are we continuing to pursue that technology? Stuart Paynter: Yes. So RFC was something we supported in the middle of the year and bought it into the Ceres Group. We're still looking to give that really, really viable long-term energy storage technology life. And we're pursuing some opportunities to see whether we can get that business funded. And when we got more news, we'll share. Unknown Executive: Great. I think that wraps up everyone. So Phil, I'll hold -- hand back to you for any final comments. Philip Caldwell: Yes, sure. Well, Yes. Thanks, everybody, for your time today. I think that we've got an exciting 2026 ahead of us. The company is extremely well positioned. We have a Capital Markets Day on 15th of April, where you'll hear more from the industrial applications with a guest speaker, hopefully from Centrica attending from that side of things. We'll have our new product launch. And then I think you'll hear more from our existing partners as well this year as they hit some key milestones. So the market opportunity is definitely very live, and we need to capitalize on that opportunity right now. But I think Ceres is extremely well positioned to do so. Operator: That's great, Phil. Thank you very much indeed. We will now redirect investors.
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: Good morning, and welcome to MiNK Therapeutics Fourth Quarter and Year-End 2025 Financial Results Conference Call. [Operator Instructions] As a reminder, this event is being recorded. If anyone has any objections, you may disconnect at this time. I would now like to turn the conference over to Stefanie Perna-Nacar, Chief Communications Officer. Please go ahead. Stefanie Perna-Nacar: Thank you, operator, and thank you all for joining us today. Today's call is being webcast and will be available on our website for replay. I'd like to remind you that this call will include forward-looking statements, including notes related to our clinical development, regulatory and commercial plans, time lines for data releases and partnership opportunities. These statements are subject to risks and uncertainties. Please refer to our SEC filings available on our website for a detailed description of these risks. Joining me today are Dr. Jennifer Buell, President and Chief Executive Officer; Dr. Terese Hammond, Head of Development; and Melissa Orilall, Principal Financial and Accounting Officer. I'd like to turn the call over to Dr. Buell to highlight our progress from this quarter. Dr. Buell. Jennifer Buell: Thank you, Stefanie. Good morning, everyone. For those new to MiNK Therapeutics, we are advancing a clinically validated allogeneic invariant natural killer T cell platform, one that is fundamentally differentiated in its ability to restore and coordinate immune function across diseases or even an immune failure. And unlike conventional cell therapies, our MiNK iNKT cells are off the shelf. They are administered without lymphodepletion, without HLA matching. And we've demonstrated clinical activity with a very favorable safety profile. MiNK cells are now in Phase II clinical trials in patients with solid tumor cancers and autoimmune inflammatory conditions like GvHD and severe lung disease. Clinically, in cancer, MiNK cells have demonstrated durable survival beyond 23 months with complete remission extending beyond 2 years in heavily pretreated refractory cancers. Cancer is expected with an expected survival of about 6 months. Outside of cancer, we're also seeing clinical activity in patients with hypoxemic pneumonia or otherwise called severe acute respiratory distress, reinforcing the broader applicability of our immune restoration cell product. We're excited to discuss with you today our upcoming trials. We have secured external funding to advance MiNK cells into graft-versus-host disease with the trial in the activation phase at University of Wisconsin. We have also externally funded a trial in Phase II in patients with gastric cancer with results presented last year at AACR and expected to be presented at a major conference in the first half of this year. And finally, our soon-to-be enrolling MiNK-sponsored randomized Phase II trial in patients with severe hypoxemic pneumonia or ARDS, a condition that affects approximately 200,000 to 300,000 patients per year. We'll talk more about that in just a few moments. Most importantly, we're doing this with a level of capital efficiency that's really uncommon in cell therapy. We're combining disciplined internal execution with non-dilutive funding through government and institutional partnerships, and we're manufacturing at a scale that appears to be the most efficient in cell therapy at this time. At the same time, we continue to build scientific validation through multiple data presentations and peer-review publications, many of which will be out in the first half of this year. Now history tells an important story here on execution. And looking back at 2025. It was a year that we moved really from promise to proof, establishing durability, validating our mechanism, demonstrating that this platform can be advanced with both rigor and efficiency. In 2022, we demonstrated that our results were really quite durable clinically and biologically. And at the Society for Immunotherapy of Cancer Annual Meeting in late 2025, just a couple of months ago, we presented updated clinical data in heavily pretreated checkpoint refractory solid tumor cancers. This is a substantial and growing population of patients. These were patients who had exhausted standard options. What we observed was meaningful. Median overall survival exceeding 23 months in combination with commercially available PD-1 therapies, complete remissions extending beyond 2 years, long-term survival across multiple solid tumor cancers, including gastric, thymoma, renal, adenoid cystic cancers and lung cancer. These outcomes matter, particularly in this patient population and importantly, because they have persisted over time. At the same time, we've deepened our understanding of how this is working. We saw activation and expansion of important immune cell populations, dendritic cell supporting antigen presentation, repolarization of macrophages towards pro-inflammatory antitumor states and reinvigorated or exhausted T cells with restored function. We also observed controlled increases in cytokines, such as interferon gamma, IL-2, TNF alpha, consistent with a productive immune response without systemic toxicity. The takeaway for us is very straightforward. The durability we're seeing clinically is supported by a coordinated immune activation state. This is not a single pathway effect, and it's what defines MiNK iNKT cells as our platform. In scientific validation beyond oncology, we asked how this biology goes beyond cancer. This year at the Keystone Symposia, Dr. Terese Hammond, our Head of Pulmonary Critical Care Medicine, presented human data showing significant depletion of iNKT cells in patients with end-stage idiopathic pulmonary fibrosis. This is important evidence of immune deficiency in patients with immune dysfunction. And when you see that forward, the path becomes really clear. Restore what's missing. This is how we're approaching expansion, follow the biology, validate in humans and then move into clinical execution. And we've taken this approach in patients with hypoxemic pneumonia or ARDS. This is a very serious condition. It's growing in prevalence and incidents and is affecting currently approximately 200,000 to 300,000 patients annually with a mortality rate of 30% to 40%, and no approved disease-modifying therapies. In our Phase I/II trial in this particular population, we dosed critically ill patients with respiratory distress. These patients were on mechanical ventilation and/or VV-ECMO. These patients are consuming substantial resources in our ICUs, and our results showed that we can get the cells into patients in community hospitals. We can dose to 1 billion cells without deleterious tox. As a matter of fact, the cells were tolerated quite well. We not only did not see cytokine release. We, in fact, dampened pro-inflammatory signals or harmful inflammation. We observed prolonged survival. 70% of patients alive compared to 10% of patients within hospital controls. We observed that these cells could locally modulate immune function in the lung, and they can restore function of lung tissue, specifically endothelial function and improved oxygenation in these patients. We saw rapid activation. We saw patients coming off of the most severe life support, VV-ECMO. We saw that these cells also not only cleared infectious pathogens, but also we saw a reduction in the onset of secondary infections. This is important because secondary infections are often the cause of death for patients in the ICU. As a result of these findings, we are now well on our way to announcing the first dosing of patients in our randomized Phase II study that's designed to expand to a Phase II/III study. This is a global program. It's designed very efficiently, and it's planned to launch with our colleagues at top centers in Ukraine and in the U.S. These are real-world environments that we are able to reach because of the practicality of our approach. We have an off-the-shelf therapy with a favorable safety profile and no requirement for complex infrastructure. We're working very closely with the Ministry of Health in Ukraine and the U.S. FDA to advance this program. With dosing starting imminently, we expect an initial clinical data in the second half of this year. These are very rapid trials. This will be our first randomized controlled study in pulmonary diseases designed for clinically meaningful and regulatory aligned end points. We believe this will enable MiNK to pursue rapid development pathways. Now in other disease settings, we've spoken to you about our graft-versus-host disease program already. We've shared more detailed foundation of this program and the study design, in fact, and our intent is to help patients undergoing hematopoietic stem cell transplantation, where more than half of the patients have graft failure and GvHD. We plan to not only improve engraftment success but prevent acute GvHD. The study is important. It's garnered the support of 2 distinct sources of nondilutive funding. The NIH NIAID STTR Award supports the development of preclinical and translational work while the Mary Gooze Clinical Trial Award directly funds the clinical trial execution at the University of Wisconsin, including patient enrollment and trial operations. The clinical trial is in final review with the university with clinical initiation targeted for the first half of this year. We believe we'll be dosing very soon. This structure allows us to advance into immune-mediated diseases in immune-tolerant settings without incremental capital burden. It's disciplined expansion. It's funded, targeted and aligned with our platform. Nondilutive funding is part of how we operate. In 2025, we secured multiple sources of nondilutive capital funding, including NIH funding, philanthropic support and consortium funding through C-Further most recently, which includes approximately over $1 million to get into our IND-enabling studies and meaningful double-digit downstream economics. The C-Further collaboration is particularly important, not just for the nondilutive funding to support IND-enabling development of a really important target, a PRAME-targeting iNKT TCR, but for what it represents strategically. This program was selected as one of the first within the C-Further consortium, an international pediatric oncology initiatives supported by Cancer Research Horizons, LifeArc and Great Ormond Street Hospital, reflecting external validation of both the maturity of our platform and its potential in high-need setting such as pediatric cancer. The collaboration advances our PRAME-targeted TCR-engineered iNKT program combining a well-characterized tumor antigen with our iNKT platform, which is designed to bridge innate and adaptive immunity and coordinate broader immune responses within the tumor microenvironment. And importantly, the program is structured to generate rigorous comparative preclinical data across multiple pediatric tumor models to support data-driven candidate selection and advance to first-in-human studies. From a strategic standpoint, the model allows us to advance the next-gen program in a high-need indication with nondilutive capital. It also allows us to leverage leading academic and translational experts without building that infrastructure or expanding it internally. MiNK gets to retain meaningful double-digit downstream commercial participation, and we preserve the platform flexibility through a nonexclusive structure. This is simply not a funding mechanism. It's really a way to expand the platform, derisk early innovation and create long-term value while maintaining capital discipline. So taken together, these sources of capital have enabled us to advance clinical programs and expand the pipeline and generate translational data while preserving shareholder equity. It's deliberate, and it's a repeatable part of how we're building MiNK. And on the financial discipline front, we're doing more with less. We strengthened our financial position over the year with our cash increasing to about $13.4 million from $4.6 million and our operating cost decreasing nearly 40% over the course of the year. The key takeaway is that we've increased cash while reducing burn and continuing to execute on important programs. With the scale and complexity of the work we're now undertaking, including randomized clinical trial execution, multi-program advancement and increasing external engagement, we've strengthened our financial leadership. We recently appointed Melissa Orilall as Principal Financial Officer. Melissa brings deep experience in financial operations planning and disciplined execution, including her work at the Whitehead Institute and in corporate banking. Her focus is on ensuring that our capital allocation, reporting and operational execution is tightly aligned as we advance through this next phase. Now on our expanded pipeline. As I've mentioned, we continue to advance our PRAME TCR NKT program by non-dilutive funding. Further, our MiNK-215, which is our CAR iNKT program targeting stromal resistance is very important. We've continued to build our translational data set on this asset as we responsibly bring it into IND enablement. These currently do not have a specific near-term catalyst, but we would expect to be announcing some within the next 3 to 5 months on our 215 program. And as our data set has strengthened, we have seen increased external interest in 797 and iNKT biology. Some of you have actually reached out to me specifically about third parties who have announced the combination of 797 in their clinical trials. And as I've mentioned now publicly, MiNK has not formally announced any of our strategic collaborations yet. We -- strategic partnering does remain core to our strategy, and we plan to continue to keep you apprised as these developments ensue. What to watch for in 2026? This year, we are focused on some substantial and measurable milestones which are really quite exciting. In the first half of 2026, as I mentioned, we expect to initiate our randomized Phase II, Phase II/III ARDS hypoxemic pneumonia study and the activation and dosing in our GvHD trial. In the second half of the year, we do expect to have initial clinical data from both of those programs, not only representing our first randomized data set in pulmonary diseases, but also early immune and translational readouts in GvHD as well as in lung disorders. In parallel, during the first half of '26, we'll continue to build scientific validation through multiple data presentations and peer-reviewed publications, extending the data sets presented at SITC and Keystone. And taken together, these milestones are designed to generate clear interpretable data that informs our next steps, both in development and in potential regulatory and strategic pathways. Now I'd like to turn the call over to Melissa to review our financials. Melissa? Melissa Orilall: Thank you, Jen. During 2025, we executed an at-the-market facility in a disciplined manner, ending the year with a cash balance of $13.4 million. Since year-end, we have raised an additional $3 million through this program, extending our runway through 2026 and supporting key clinical milestones. Our net loss for the fourth quarter of 2025 was $2.6 million or $0.56 per share compared to $2.5 million or $0.62 per share for the fourth quarter of 2024. For the full year, net loss was $12.5 million or $2.93 per share compared to $10.8 million or $2.86 per share in 2024. These results reflect continued focused investment in advance in our agenT-797 clinical programs while maintaining disciplined control over our operational spend. I will now turn the call back to Jen for closing remarks. Jennifer Buell: Thank you so much, Melissa. Thank you all for being here. I think just in closing, I'll just reiterate that for us, if you just step back, the story is pretty simple. In 2025, we demonstrated durability. We showed mechanistic validation of our technology as well as human disease relevance. Those data have now set the stage for what we're doing going forward. And in 2026, we're executing on an important randomized controlled clinical trial as well as signal detection and clinical advancement in very important disease settings, including GvHD. We'll be generating clinical data and publicizing that very quickly and advancing towards potential paths for regulatory approval. We have multiple readouts planned in the first half of this year with data from our upcoming trials and preliminary readouts in the second half of this year. We're excited and I look forward to your questions. I'll now turn the call back over to the operator. Operator: [Operator Instructions] Our first question comes from the line of Emily Bodner with H.C. Wainwright. Emily Bodnar: A couple for me. Maybe starting with the Phase II pneumonia and ARDS study. Could you kind of talk through how many patients approximately that trial is going to be? And what the appropriate control arm is here? And then you also talked about development in IPF, which sounds like it would need to be a separate trial. So maybe just talk about how you're thinking of these different indications. Jennifer Buell: Emily, thanks so much for your question. Absolutely. While we have not publicly posted the program in hypoxemic pneumonia, what I'm going to share with you is that currently in the disease population that we're pursuing, there are no approved therapies. Patients are treated with standard of care. This is the same state that we were in when we conducted our Phase I/II trial establishing the dose of these cells in this population of patients. What we've demonstrated is that patients are predominantly treated with steroid therapy with, of course, anti-infectives, antifungals, et cetera, but really physicians' choice in this disease setting. So we have 2 things that are really important. One, we've already observed and presented that these cells appear to be quite active in restoring immune functionality and clearing pathogens, independent of steroids being on board, which is unique. Many times, there's a concern about immunosuppression with steroid use, standard of care steroid use, and we're not observing that. So these cells appear to be sort of steroid-resistant. Their ability to modulate immune function, clear pathogens in the presence. We will be looking at physicians' choice as effectively standard of care. The cells will be added on top of standard of care versus the cells alone. And a critical piece of this is Dr. Terese Hammond is leading up our pulmonary disease programs. She's also clinically still seeing patients in the ICU. Terese is boarded in pulmonary critical care, neurocritical care medicine and has been treating patients with this disease profile for now decades of her life. For us to be able to have such a thoughtful leader on this program and such an informed clinician, it gives us a real opportunity to position these cells and to bring them forward into the patients who we believe they will be most effective in. And taking the cells plus or minus standard of care, gives us not only the differentiation of the cells, the added potential of the cells, but also maybe paradigm changing for these patients in the ICU. Emily Bodnar: Great. And maybe -- sorry, can I just ask one more. On the second-line gastric cancer trial, could you just remind us the status of that and when we may be able to see efficacy data from that study? Jennifer Buell: You will be seeing some efficacy data in the first half of this year at a major conference, which we'll be announcing relatively soon. And we're excited about that. But I did not answer your question about IPF, and this is, of course, a very important pulmonary fibrosis, end stage in particular, is another disease setting. It's effectively in immune-related condition. We've demonstrated that with our human data, and it's a substantial opportunity for us to develop the cells in IPF. We have some important preclinical observations as well as some new human data demonstrating that this is a pathway where we believe the cells can bring benefit. You're going to be hearing more about the design of that trial and the development path as we advance over the next couple of months. We will very likely host a special meeting in this disease setting. We have selected a scientific advisory boards, have informed clinicians in this space and have developed a program to advance. We'll be very responsible, though, about how we're going to be funding that program. So you'll hear more about that relatively soon. Operator: Our next question comes from the line of Mayank Mamtani with B. Riley Securities. Mayank Mamtani: I appreciate the comprehensive update. Just on the last point on IPF and even GvHD, what target patient population, Jen, you have in consideration? And wonder what differentiating aspects to some of the recently approved anti-fibrotic, anti-inflammatory approaches you aspire to have the cell therapy you positioned against. And then I have to ask some of the IL-15 iNKT cell combination trial launching on ct.gov. Could you help us understand how and what this 30 subject kind of total exposure would inform what you are looking to independently do with. It looks like the randomized controlled trial in the ARDS setting. I was not sure if the populations that you're exploring are overlapping across those combination and randomized trial settings. So if you could clarify that, that would be great. Jennifer Buell: Mayank, thank you for your questions. I just -- I want to make sure that I have them correct because you did cut out for just a moment. But I think on the randomized ARDS trial, the patient populations will be identified as hypoxemic pneumonia. There's a very specific global ARDS definition system that allows us to be very specific and selective about this patient population. So they will be selected and identified based on their oxygenation, so a very quantifiable way of interrogating this as well as important organ function states. So we will put a detailed eligibility criteria in clinical trials. And this is another program where we are going to be announcing very soon upon the announcement of the launch of the randomized Phase II as well as the dosing in GvHD. We'll be hosting a very special R&D meeting that will allow you to talk with our experts, our clinical development experts as well as review a deep dive of the programs and the eligibility of these patients. So in ARDS, there have been some -- there are currently no approved therapy. So this becomes standard of care, becomes really a physician's choice in this disease setting. There are no functional cell therapies in this setting. What we've been able to observe in our early stage development is that our cells really persist, and that they are not vulnerable to steroids. And that allows the cells to continue to modulate immunity in this setting. We observed that. We see we can administer the cells, 1 billion cells tolerably. We observed that the cells are in the peripheral system for some time, a number of days before they then home very specifically to lung tissue. We've been able to use a special technique that allows us, particularly in ventilated patients to take samples from the -- within the lung tissues called the bronchial lavage. This is the assessment that we can test in order to interrogate the immune cell, the local immune modulating capability of the cells. It gives us 2 opportunities. In addition to just radiologically looking at what's happening clinically for within a patient's lungs, we can start to see clearance of pathology, clearance of some inflammatory markers on, you could see this radiologically. But then also when we really dig into lung tissue, we're able to see what is actually happening. In these patients, we see the substantial pro-inflammatory signatures. And what we've publicly disclosed, and we'll be publishing even more this year in the first half will be some of the anti-inflammatory signals that we see here in this population of patients. So we're really dampening pro-inflammatory signals. We're eliminating fungal infections. We're eliminating some gram-negative bacteria, which is a major problem. And this becomes an even more substantial problem in some austere regions like war zones or places where we will be studying these cells where multidrug-resistant organisms are a substantial problem. Given that we've already been able to demonstrate, not only with our clinical trial that we published on, but also through emergency use that we've continued to help patients with, we've demonstrated that we can really do an impactful clinical activity and modulate some of these multidrug-resistant organisms, clearing them from patients with some of the most severe critical illnesses. This is such an important part of the work that we're doing right now. So you'll hear more about the eligibility of these patients, and I'm going to invite you specifically to talk with some of the experts in this disease setting. So I think that was a longer way of answering the simple question on standard of care and what will be adequate controls, which would be really just physician's choice in this population. Mayank Mamtani: I appreciate it. And I don't know if I missed that, or my question was cut out. If you could address the combination approach with the IL-15 agonist that trial, that launched on clinicaltrials.gov, what the rationale was? And how is that different than the study that you just referenced? Jennifer Buell: Mayank, thank you. Thank you very much. The study that I've referenced is the MiNK-sponsored randomized Phase II trial that we have not yet posted on clinicaltrials. We will be doing so. It's currently in review. The study that you're referring to, and I'm grateful that you brought it up. I've received a host of inbound inquiries about this from investors as well as from regulators. And I want to be very clear that MiNK has not formally announced any collaboration or any clinical trials with the IL-15 superagonist. And I think that's an important thing to understand. We will -- if we are to advance with these types of strategic collaborations, we will be very public about doing so. So at this time, strategic collaborations are really important to MiNK, and we have a number of discussions that are actively underway, not only for clinical trial combinations. There's a lot of excitement about 797, but also for broader strategic collaborations as well as minority financial investments in the company, none of which have we publicly disclosed at this time. We will do so when the -- during the appropriate time. Operator: At this time, we have no further questions. I will now turn the call back over to Dr. Jennifer Buell for closing remarks. Jennifer Buell: Thank you, operator, and thank you all so much for your participation today. Operator: Ladies and gentlemen, that concludes today's conference call. You may now disconnect your lines. Have a pleasant day.
Stocks suffered their largest monthly loss since September 2022, driven by the Iran war and a 53% surge in oil prices. Energy outperformed, while defensive and growth sectors faltered; tech giants like Nvidia, Meta Platforms, and Microsoft now trade at discounted P/E ratios.
Operator: Good afternoon, and welcome to the Dave & Buster's Fourth Quarter 2025 (sic) [ 2026 ] Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Cory Hatton, Head of Entertainment Finance, Investor Relations and Treasurer. Please go ahead. Cory Hatton: Thank you, Gary, and welcome to everyone on the line. Joining me in the room on today's call are Tarun Lal, our Chief Executive Officer; and Darin Harper, our Chief Financial Officer. After our prepared remarks, we will be happy to take your questions. This call is being recorded on behalf of Dave & Buster's Entertainment, Inc. and is copyrighted. Before we begin the discussion on our company's fourth quarter and full year 2025 results, I'd like to call your attention to the fact that in our prepared remarks and responses to questions certain items may be discussed, which are not entirely based on historical fact. Any of these items should be considered forward-looking statements relating to future events within the meaning of the Private Securities Litigation Reform Act of 1995. All such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Information on these risks and uncertainties have been published in our filings with the SEC, which are available on our website. In addition, our remarks today will include references to financial measures that are not defined under generally accepted accounting principles. Investors should review the reconciliation of these non-GAAP measures to the comparable GAAP measure contained in our earnings release this afternoon. And with that, let me turn the call over to Tarun. Tarun Lal: Thank you, Cory. Good evening, everyone, and thank you for joining our call today. I'm pleased to report that our back to back -- back to basics strategy continues to gain meaningful traction. As we discussed on our Q3 call, we saw improvement in same-store sales throughout last quarter. I'm encouraged to share that excluding the 3 days of impact from Winter Storm Fern in January, we also saw improvement throughout the fourth quarter. We have now had 6 consecutive fiscal months of improving same-store sales for the Dave & Buster's brand, when adjusting for the 3-day storm impact and ended February roughly flat in same-store sales. We're also pleased to report that during the first fiscal month of 2026, we have experienced continued momentum with roughly flat total company same-store sales as well as growth in revenue and adjusted EBITDA. Since joining the company about 9 months ago and fully immersing myself in every facet of the business, I'm even more confident in our ability to dramatically improve operating results. During financial year 2026, we will continue to make meaningful improvements to the business. Sharpening our marketing and promotions to drive brand consideration, traffic and repeat visitation, refining our food and beverage pricing and menu architecture, launching a powerful lineup of culturally relevant new games, implementing our improved remodel program and opening up several new stores at attractive returns on investment. We've also significantly strengthened our leadership team and are prioritizing our field operations and culture, because we know that exceptional execution and guest experience will lead to improved traffic and sales. We believe we have the right strategy, the right team and the right momentum to create meaningful value for our guests and our shareholders. Our priorities for financial year 2026 are clear. One, grow same-store sales; and two, generate meaningful free cash flow. To that end, during financial year 2026, this management team is highly confident in its ability to deliver an increase in same-store sales, revenue and adjusted EBITDA and to generate more than $100 million in free cash flow. Let me now provide an update on each pillar of our back to basics strategy. First, on marketing. As we discussed last quarter, we have reconstructed our marketing strategy with a clearer, more disciplined approach to planning and execution. We created a simplified marketing and promotional calendar which effectively communicates the attractiveness of our offerings. We continue to believe that improving and optimizing our marketing message as well as our media mix are one of the biggest opportunities we have to improve traffic, sales and adjusted EBITDA. We've been laser-focused on leveraging data to balance our investment between television and digital channels, and to make sure we get the right message to the right people at the right time. Looking ahead to 2026, our marketing reset will go even further. Our focus is to rebuild brand consideration while promoting culturally relevant promotions at attractive price points. We're also focused on building brand buzz, leveraging our exciting Instagram-worthy entertainments on the arcade. One recent example of this was our Valentine's Day promotion where we gave away diamond engagement rings to 5 lucky customers using our Human Crane. The campaign generated over 6 billion impressions and a tremendous amount of earned media value. We're also activating our loyalty program to drive personalized messaging and increase guest traffic through frequency. We are building a scalable special events business engine that turns even into culturally relevant moments and converts our event guests into repeat walk-in customers. For example, Super Bowl, which used to be one of the worst Sundays of the year for us, ended up being a highly productive day for us this year with ticketed advanced purchase programming where guests would enjoy our massive 40-foot screens, unlimited wings and games for $24.99. Looking ahead, and as already highlighted, the FIFA World Cup represents another significant opportunity to establish Dave & Buster's as a destination of choice for major watch occasions and drive incremental traffic this summer. Second, during the last several quarters, our food and beverage offering has been one of the earliest success stories of our back to basics strategy. As we've discussed, the percentage of guests who came into our stores to play games and then also ate food had declined significantly versus historical levels. Our menu had changed quite materially in the years following COVID. Over the course of 2025, we reversed that trend decisively. Our new menu, which is largely a return to our successful pre-COVID menu was launched in October and delivered strong results. In late 2025, traffic in our dining rooms was up meaningfully year-over-year which helped us grow our comparable food and beverage sales approximately 7% during the fourth quarter. Our F&B same-store sales have now been positive for the last 6 fiscal months through February 2026. In addition to our new menu, our improved execution around our Eat & Play Combo offering has also been a powerful driver. Guest opt-in to EPC has improved significantly to a double-digit percentage of our guests since the beginning of 2025, growing from roughly 10% in Q1 2025 to approximately 16% in Q4 2025, demonstrating the attractiveness of the offering and seamless accessibility via kiosk. All told, the percentage of people who came into the stores -- excuse me, all told, the percentage of people who came into our stores to play games and then also ate food also improved by roughly 700 basis points year-over-year in Q4. Third, regarding our games offering. As we have previously discussed, we moved away from introducing new games to the system over the last 6 years. This current management team strongly believes that was a mistake and that delivering new and relevant games and attractions as the company had done consistently before COVID is a key element to attracting new and repeat guests and drive traffic and same-store sales. To that end, we've been hard at work and are excited to be introducing at least 10 new games and attractions across our store portfolio in year 2026. This is the most new games we have introduced in a year since 2017, demonstrating that a renewed focus on our entertainment offering is a core and obvious pillar of the back to basics strategy. Many of the new games we will introduce this year will be associated with highly relevant cultural IPs, which will maximize awareness, engagement and traffic. This is one of the strongest lineups we have ever assembled as a company, and it reflects our commitment to delivering experiences that are bigger, bolder and more immersive than anything our guests have seen before. Our new lineup of innovation includes games featuring John Wick, Stranger Things, Mandalorian and Grogu. Additionally, given the exceptional demand, we have now rolled out Human Crane across the entire system. We're equally excited about our big push to leverage our highly differentiated watch offering, which includes massive 40-foot screens, promote visitation to our stores during World Cup soccer games this summer. We devised a comprehensive 360 activation around soccer this summer, which will experience new games, win items and new F&B innovation all linked to soccer. This revitalized product offering represents a significant step forward in the quality, variety and cultural relevance of our entertainment offerings. We are combining world-class IP partnerships and innovative original concepts, and we are doing it in a way that drives both per capita spend and repeat visitation. I could not be more enthusiastic about what this means for our guest experience and our business. For year 2026, our ambition is to continue to evolve our play experience and position Dave & Buster's as the fun capital of America. Fourth, regarding operations. We are reinvesting in our field operations with comprehensive training programs designed to empower our teams to deliver exceptional guest experiences and drive higher customer satisfaction. By fostering a collaborative culture that receives strong support from our shared services center, we're reducing turnover, enhancing engagement and creating an environment where our people and our brand can truly thrive. For year 2026, we are establishing what we call an obsession metric around speed of service with clear standards at critical guest moments such as 1-minute greet and 4-minute drinks time, supported by coaching and performance management. We are also revamping our labor model to optimize staffing and simplify operational processes. To bring all this together and further accelerate our momentum, we are elevating our culture and people capabilities across the organization. From launching industry-leading GM incentives to investing in training programs and simplifying task for our team members, we are sending a message to the field that our success is closely tied to our execution and to our guest experience. For year '26, we're implementing leadership development programs and tools across both the shared services center and the field to strengthen our bench, improve retention and increase internal mobility. We're also establishing our employee value proposition and unifying our culture by defining and activating a shared mission across Dave & Buster's and Main Event. We want our teams to know that we are walking the talk on the fundamental truth that our guest experience can never exceed our team member experience. Finally, we have made continued progress on our revamped remodel program. As mentioned last quarter, we have high confidence. We have found the right layout to increase traffic and overall productivity and generate highly attractive ROIs at a reasonable cost. We recently opened 3 new remodels and we have 3 new remodels under construction and plan to open an additional 4 remodels in the next 9 months. As a reminder, remodeled stores consistently outperform non-remodeled stores by approximately 700 basis points. As we have discussed before, after COVID, this company moved away from many of the very clear and obvious elements that made it successful. Marketing and promotions changed significantly. The F&B menu and offerings changed significantly. The commitment to annual games and entertainment investment changed significantly. The focus on operations excellence changed significantly and a commitment to refresh stores while maintaining the core ethos of what customers love about D&B changed significantly. We are now going back to basics piece by piece to restore those elements that made this brand and this company is successful and it's working. We have made meaningful progress over the past 9-plus months and expect that progress to now even more quickly convert to financial results. We cannot have more confidence in our back to basic plan and our ability to grow this business meaningfully in the near term and over the long term. Before I pass the call over to Darin, I'd like to spend a minute addressing a topic we have gotten from many shareholders, our plans around capital expenditures, including our investment in new stores. I want to be clear that we are highly focused on strict capital expenditure discipline, minimum ROI thresholds and generating significant free cash flow. We are consistently evaluating our capital investment plans, including our new store plans and will make adjustments as we weigh the best returns for each dollar of capital. If and as we make material adjustments, we will communicate them to you. We currently plan to spend no more than $200 million in CapEx during year '26 and to deliver over $100 million in free cash flow this year. To talk about this more and review our financial results, let me hand the call over to Darin Harper, our Chief Financial Officer. Darin Harper: Thank you, Tarun, and good afternoon, everyone. As Tarun touched on in his comments, there are several areas where we have made very solid progress over the past several months. While our comparable store sales decreased 3.3% versus the prior year in the fourth quarter of fiscal 2025. Excluding the impact from the extreme winter weather, we estimate our comparable store sales would have decreased 1.5%. Excluding the impact of the winter storm, we saw sequential improvements in our comps during Q4 with period 12, the month of January, up 90 basis points at the Dave & Buster's brand year-over-year. Also during the quarter, F&B same-store sales increased approximately 7%, special events grew nearly 7% and as Tarun mentioned, our remodel locations continue to outperform the balance of the system by approximately 700 basis points. Additionally, we drove sales improvement throughout our half-price games test on Sunday through Thursday. As Tarun mentioned, we experienced roughly flat comp sales performance to start the first period of FY '26. And while early days, we also saw year-over-year total revenue and EBITDA growth in the first period of FY '26 versus the corresponding period in the prior year. This year, we also have seen a spring break calendar shift from March into the month of April. So we need a few more weeks before we have a good read on performance during our spring break period. During the fourth quarter, we generated total revenue of $530 million, a net loss of $40 million or $1.15 per diluted share, adjusted net loss of $12 million or $0.35 per diluted share and adjusted EBITDA of $111 million, resulting in an adjusted EBITDA margin of 21%. We estimate that the negative impact of the winter storm in January was approximately $1 million in adjusted EBITDA, and there was further EBITDA headwind of $9 million related to higher deferred revenue from the prior year. We expect this deferred revenue headwind to decrease in magnitude for the next couple of quarters and to be approximately $10 million in total for FY '26. Our fourth quarter EBITDA margin decline year-over-year was impacted by 110 basis points related to this deferred revenue headwind, 100 basis points of higher marketing costs and the balance of the margin impact due to net deleverage coming from the 3.3% same-store sales decline, which, as previously noted, was impacted 180 basis points by the winter storm in January. As Tarun mentioned, we expect positive comps in FY '26, leading to EBITDA growth and steady improvement of our margin profile over the course of FY '26. Our adjusted net loss of $12 million for the quarter was impacted by $24 million of incremental depreciation expense year-over-year. We anticipate a more normalized depreciation and amortization expense in FY '26 of approximately $75 million per quarter. As a reminder, reconciliations of all non-GAAP financial measures can be found in today's press release. On the expense side, we believe that we have an opportunity to drive even more cost optimization. Over recent weeks, we have put together -- we have put significant effort into further improving our internal processes and controls and costs and have in parallel kicked off a comprehensive initiative to identify material cost savings across all aspects of our business, including bringing on a new senior resource who spends 100% of his time focused on cost savings initiatives. As a result, we believe we can meaningfully improve our margins over time. Our new store development continues to deliver strong returns, and we have had a solid pipeline of upcoming store openings. In the fourth quarter, we opened 2 new domestic Dave & Buster's stores which, as expected, took our new domestic store openings for the year to 11 plus 1 relocation. We anticipate opening 11 new stores in FY '26 comprised of 8 new Dave & Buster's and 3 main events, and we expect them to contribute approximately 280 incremental operating weeks in FY '26. On the international front, with the opening of our fourth international franchise location in the Dominican Republic, we expect 3 more international openings in the next few months in Delhi, India; Perth, Australia and Mexico City, Mexico. As a reminder, we have secured agreements for over 35 additional international franchise stores in the coming years, and we see international franchising as a driver of highly efficient incremental growth, monetizing our brand around the world with minimal investment and risk. We have a massive opportunity internationally. We generated $103 million in operating cash flow during the fourth quarter, ending the quarter with $17 million in cash and $483 million in total liquidity, combined with the availability under our $650 million revolving credit facility, net of $14 million in outstanding letters of credit. In 2025, we invested approximately $270 million of CapEx on a net basis when factoring in payments from our landlords. We are making increasing progress converting our strong operating cash flow to free cash flow through more strict management on capital spending by eliminating inefficient capital spend. As a reminder, we are committed to generating meaningful free cash flow while continuing to invest in double-digit new store growth, new games, other high ROI initiatives and a more diligent remodel program. As Tarun mentioned, in FY '26, we fully expect the net CapEx figure to be no greater than $200 million. We are constantly evaluating our capital investment program. And if we identify better uses of our capital that makes sense for the business, we will be sure to provide an update. We completed 3 remodels of our latest remodel prototype at 3 Dave & Buster's already this year in FY '26 and are under construction at an additional 3 D&B stores. We believe this new prototype will maximize the impact elements of our successful store remodels, while eliminating previously ineffective spend for a high return outcome, and we look forward to updating you on the progress in this area. As Tarun also mentioned, given our plans, management is highly confident in its ability to grow comparable store sales, total revenue and adjusted EBITDA during FY '26. Additionally, given our improved discipline around capital expenditures, we expect to generate more than $100 million in free cash flow during FY '26, which we believe positions us well to continue investing in the business, reduce leverage and return capital to shareholders at ours and the Board's discretion. Our financial foundation remains strong, supported by a business model that consistently generates high returns, healthy unit level performance, disciplined cost management and very straightforward potential to generate meaningful free cash flow. Both leadership and the Board remain sharply focused on executing our priorities to drive same-store sales growth and generate significant free cash flow. And with that, operator, please open the line for questions. Operator: [Operator Instructions] The first question comes from Andy Barish with Jefferies. Andrew Barish: I was just making sure on the opening comments, you were just referring to February because of the March spring break shift, but anything else just obviously, the world's changed a lot in March. Anything else you care to comment on just in terms of consumer behavior, just too tough to read with if everything is shifting around in the business. Darin Harper: Andy, it's Darin. Yes, look, it's -- obviously, there's a lot going on from a macro perspective from gas prices, from consumer sentiment and the like. It's just -- it's hard for us to parse through what's impacted to the macro versus some of these holiday shifts with spring break and Easter. So as typical for our business, we kind of like to get through this spring break period of time and try to get a better read on things. But it's mindful. We certainly know it's out there, but it's too early for us to really parse through what impact that's having. Andrew Barish: Okay. Helpful. I guess kind of philosophically Tarun, more value seems to be helping to stabilize the business, whether that's half price gains now more than just Wednesday or kind of eat and play and the season pass and things like that. Are we -- I guess, are we seeing the impact of that on margins sort of as we came through the back half of last year? Or do you think like the promotional stuff can be offset by more traffic? Just trying to get a sense of kind of like what the trade-off is to kind of continue to improve margins as you guys have talked about for 2026? Tarun Lal: Andy, that's a great question. And I must say kudos to our product design and our marketing teams. They've designed the product in such a way that actually there is minimal margin erosion on either half of games or on the seasons pass. In fact, what we are seeing is that our consumers are spending the same amount of money on the games, but because they're spending more time on the games floor, they're actually consuming more food and beverage. So it's working really well. And we don't see any risk of margin dilution as a result of these value promotions. Darin Harper: Yes, I'll add too, Andy, with -- because we've driven more attached on the F&B side. We're seeing more sales mix sort of weighting to F&B. And again, that's not a product of less entertainment or anything happening on the entertainment side, it's us driving more revenue on the F&B side. So that inherently -- every percentage point of sales mix into F&B will have about 16 basis points of sort of inherent pressure on gross margins. But that's something that obviously we'll live with. It's incremental penny profit. But yes, as Tarun said, we've really done a nice job designing these to be very margin neutral. Andrew Barish: Got you. And then just finally, Darin, on the net CapEx kind of finished up about $50 million more than you kind of originally had targeted. Could you give us a little sense of the variance? Was it real estate proceeds or TIs or just kind of spending a little bit more as we look at the weighting or the timing of '26 openings? Darin Harper: Yes. Most of it, Andy, is coming from there was $33 million of FY '24 CapEx that bled into FY '25 that was a cash outflow this year. So that was a big factor. If you net that out, it's about a $233 million number versus the $220 million guide and that $13 million incremental increase, some of that came from rolling out human cranes faster than we wanted and a few other areas that we anticipated. So really, most of it is just due to timing really from the prior year. FY '24, that bled into FY '25. Operator: The next question is from Andrew Strelzik with BMO. Andrew Strelzik: I wanted to ask about the amusement business. With the momentum you're seeing in F&B, obviously, that means with the overall comp amusement was down pretty solidly. And so I guess, to me, that kind of feels like a truer sense of incremental traffic. Correct me if you think I'm wrong on that. But I guess I just want to ask then in your confidence that the initiatives that you have in store for '26 can change the trajectory of that business, which still seems like it's under a decent amount of pressure. Tarun Lal: Yes, Andrew, thanks for the question. As we have acknowledged that I think one of the mistakes we've made as a business is that over the past 6 years, we've not invested in amusements at all. And the number of new games in our arcade or in general, the total number of games in the arcade or partnerships with relevant IPs, that's been missing for a long time. And consumers have told us that when we've spoken to them. And so as we've done our research and as we've heard from our customers and responded to what they have said, we actually feel extremely confident that our strategy of bringing new games and bringing not only new games, but different kind of games with immersive experiences with culturally relevant IPs will attract a lot more foot traffic. And that's what we're looking for. We're looking for same-store sales growth driven by traffic. So it's early days to share all the plans for 2026. But we are in -- I mean, in addition to the -- what we have already shared with you about these 10 games that are being launched shortly, we're actually in discussions with big brands and partnerships, again, that are very, very exciting and gives us tremendous confidence that this is going to drive consumer interest. It will lead to brand consideration, and that will drive traffic and same-store sales growth. Andrew Strelzik: Okay. That's helpful. And maybe just following up on that, as you think about communicating that to guests. I mean the first point you brought up was the marketing. And so I guess from -- for 2026, I wanted to better understand exactly kind of how to think about what's changing from a marketing perspective. Is it mostly visibility or messaging and that type of thing? Or is the spend or media mix shifting in '26 versus kind of since you came in? How should we think about that? Tarun Lal: So Andrew, I think it's a combination of several things. I think -- my very strong view is one, that you need to have the right product. If you have the right product, it just gives marketing that ammunition to fire effectively. So we believe that by investing in products, in new games, in culturally relevant IPs, we're giving marketing the right ammunition and so that's kind of one piece. The second piece really is that we've now driven every execution on the back of compelling customer insights. So these are not just kind of marketing activations that are happening because of our gut or something that someone likes. It's actually based on the foundation of what consumers are telling us. So that gives us confidence. And then finally, to your point, that I think that we had really kind of leaned on two extreme ends on media mixes. And now because we are using data and we're using MMM, we feel a lot more confident that we are reaching the right target audience through our campaigns, both using television as well as social and digital. Operator: The next question is from Dennis Geiger with UBS. Dennis Geiger: First question, I wanted to ask a little bit more on the free cash flow guide for the year. Anything else that you could share sort of on thinking about margins as we go through the year or for the year or sort of the EBITDA at a high level? And then within the context of the CapEx, the net CapEx guide, I forget if you've given gross or anything on kind of sale-leaseback assumptions for '26 that you could share maybe? Darin Harper: Yes. So on the first part of your question, yes, we're not providing any incremental EBITDA guidance for FY '26. Yes, I think one thing that might be helpful is to point you to the sort of mini deck that we had back in September that there's a slide in there with a cash flow waterfall. I think that may give you some perspective on sort of how to think about modeling this free cash flow guide a bit. When it comes to the margins for the year, overall, we feel like obviously, growing comps is what's going to drive the margin growth. We feel like we are managing the rest of our lines pretty well between what we're doing from a cost optimization standpoint. We talked about how we're designing these promos to be as margin neutral as possible. And so we feel like how we're designing these, any inflationary pressures that we're able to manage through our cost initiatives. And then again, as we've communicated, getting it to positive comp territory, all that is going to lead and drive to margin accretion. So hopefully, that's a little bit helpful. And remind me, Dennis, the second part of your question, what was your question? Dennis Geiger: That's great, Darin. I think just a part and maybe you touched on it with the slide, I have to double check that. But just on the growth CapEx and the sale-leaseback assumption... Darin Harper: Yes, yes, as far as -- yes, the gross Yes. Look, we haven't sort of historically broken that out too much. However, look, I think you could look even in our K that was filed as well. There's a table in MD&A, which breaks out the gross versus net in terms of some of the sale-leaseback proceeds. Look, I'd say that's a pretty good proxy. If you take our sale-leaseback proceeds there, divided by the number of new units. Yes, I think that will kind of give you a sense for sort of how to think about gross CapEx and sort of how we're thinking about it in FY '26 as well with -- because we're opening about the same number of units. Dennis Geiger: Got it. Very helpful. And then just a follow-up question. Just as it relates to the positive comps target for the year, really helpful to get a good sense of the key initiatives and sort of where progress is there. Anything else as you guys look into your crystal ball and you think about benefits from tax rebates over the coming couple of months, you think about maybe where gas prices might be, World Cup. Just kind of factors beyond the strategic plans, how you're thinking about some of those factors and how important they may or may not be within the context of full year comp expectations? Tarun Lal: Yes. Dennis, as far as the external environment is concerned, we cannot really predict what's going to happen tomorrow. So our focus is really on internal plans. And as we've shared before today that we are very confident that by just going back to our back to basics strategy of things that we used to do really well until COVID hit and we kind of stopped doing it. We feel very confident that, that's going to drive same-store sales growth, and we're already seeing that. We're already seeing in the last 4 periods that we've stemmed the decline. We're getting increased traffic. The business has stabilized now. Now the big investment we are making is in new games, which, again, is like not something that is just a mere hope. We have spoken to our customers. We have spoken to our teams to understand what our guests are saying, and one of the things that they've been craving for is more games, more experiences and more immersive experiences. So we're going to give it to them, not only through like the typical arcade game, but through culturally relevant IPs. So that's kind of the second piece of the puzzle. The third piece of the puzzle that gives us confidence is that as we shared earlier that a micro event like a Super Bowl became like a big day for us in our business. And we are now latching on to several such micro events, including the World Cup soccer, which is like honestly, in our mind, is going to be a catalyst for us to truly show our guests how compelling our watch program is. Like there's nobody in this country who has 40-foot televisions across the entire estate. Like this is -- and again, we are guilty of not promoting this enough, but now we have a really strong catalyst that gives us this opportunity. And then finally, as I said to you that we are in conversations with big IP holders on partnerships that we should be in a position to share when we kind of come back in 3 months' time to speak to you guys. And all that in combination gives us confidence that the trend we are seeing will continue and in fact, improve. Operator: The next question is from Mike Hickey with StoneX. Michael Hickey: Tarun, Darin, Cory, just curious, double-clicking here again on 1Q. February, flat same-store sales. It seems like we should be very excited, but March, I'm just not getting a good feel for it. Obviously, we're last day of March here, you are 2/3 through your 1Q period. You guided to inflection in same-store sales. Is this a 1Q possibility? Or should we set expectations here, which obviously are important to maybe 2Q. 2Q I'm guessing you get some new games in. You've got the World Cup, you kick in marketing. You got tax refunds, you got no tax on tips. Is it really Q2 that we should be looking for your business to inflect? Or the February that we saw being flat, should that be a signpost for us here that your business has turned. Darin Harper: Mike yes, certainly, we're not prepared to sort of say what we think Q1 is going to print out and where that ultimate inflection point is. As mentioned, I mean, the spring break period of time is honestly our -- it's our high watermark during the year in terms of sales volumes. And so when you have these shifts, it's pretty meaningful to our business, and we always like to get through this 4- to 5-week period of time and have a good sort of postmortem view of kind of where we were heading into it? What did it look like blended and kind of what's our exit velocity coming out of there. So look, we'll be very excited to share results in Q1. But at the moment, it's just too early for us to say. But as Tarun mentioned, I mean, all the areas that we're focused on, we have a lot of confidence in. I mean, I guess kind of drafting a bit off of even Dennis' questions of the income tax refunds and things like that. None of that, we sort of factored into, hey, these are going to be tailwinds that we're anticipating. But the other thing I'll say is, look, if there is some consumer pullback and consumers aren't traveling as much, having been in this space for a long time, sort of that staycation concept. D&B and Main Events are well placed to sort of take advantage of that as we get into the out of school and into the summer months as well. And that, combined with what we're doing with our 10 new games, we're really optimistic about. But I'll stop shy of sort of predicting when we think sort of that trend inflection point is going to occur? Michael Hickey: All right. I get it. You did say very excited. So hopefully, you'll be excited when you do report. It's nice to see the attach on the F&B. I think you highlighted a lot of that was the promo activity, the Sunday through Thursday half-price games. That seemed like it was a real driver for you. You pulled back on that. I'm guessing you're going to maybe start it again when you get some new games. So that's sort of a question -- a lead-in question to the question. Ten games is great. Is there anything -- your Human Crane was phenomenal. Putting IP on to boring games is not great. I mean, when you think about the -- not to say that they are, we just don't know -- when you look at the 10 games, is there anything to get excited about? Or are you just sort of installing and sort of hope and pray here? I mean besides the IP, like the games themselves, like is there anything compelling, and I didn't hear a World Cup game, I would have to imagine that you'd have the World Cup game. So any more color, please, on the games. If there's anything, innovation -- and if you're going to reengage that promo activity that Sunday through Thursday, we're all excited. It seemed like it was really moving traffic and you mentioned traffic was maybe what you need. That incremental traffic to split positive same-store sales. So it seems like the combination of those two will lead us to the inflection. Tarun Lal: I'll take that. So first of all, I think, we are far more excited than you highlighted on the new games. I think that the quality -- so as you know that in the last call, we mentioned that we brought in our Chief Games and Entertainment Officer, Putnam Shin. He's had experience with several entertainment companies in the past, including Disney, and he's worked on our games innovation calendar. And it is true that in the past, we have kind of almost kind of brought in games that are more reskin than anything truly innovative. We feel actually strongly that some of the games that we are launching now are different experiences and provide a far more social experience than the regular games that arcades have. So whether you talk about Stranger Things or John Wick these are games that will be exciting and exciting to our guests. We've actually tested these out, by the way. These are tested with guests, and we've got a lot of good feedback. We have a -- we have a game called the Perfect Pump actually, which is on the face of it, it may sound not exciting, but it's the most popular game in the lineup, and it could be because of the gas prices. But you can -- it's funny how much time our guests are spending on some of these games. Now as far as World Cup is concerned, we have 2 games that we're bringing in that's associated with soccer. We also have the arena that we are reskinning and we are bringing in 5 games within the arena that's associated with the World Cup. And that's not included in the list of 10 games that we're talking about. So honestly, once again, I want to reiterate that these are very exciting games. These are very exciting IPs. And as we move into the rest of the year, the quality of IPs, the quality of the games will only improve from here. Operator: The next question is from Jeff Farmer with Gordon Haskett. Jeffrey Farmer: Just a few follow-up questions to some of the stuff that's already been discussed. But from a same-store sales perspective in 2026, can you offer anything as it relates to what type of comp you might need to hold store level margins flat in 2026? Darin Harper: Yes. I -- in terms of holding flat comps, it's flat margins. I think you're looking at 1%, 1.5% sales lift, and that could keep us at flat margins. Jeffrey Farmer: Okay. And then -- as it relates to the Sunday, I think Sunday to Thursday LTO in terms of the half-price games, when that ran, what was the consumer response? Did you get the traffic sort of bump you wanted to in those sort of early week day parts or week parts rather? Darin Harper: Yes. So it was a really good learning for us because it was the first time that we've done it for an extended period of time. We had tested half-price Sundays for a while as well in sort of the latter half of Q4 last year. But yes, we saw traffic lift. We saw spend lift and there was some really good learnings for us to really understand the experience from some of our more loyal consumers versus the consumers that don't have as high a frequency level, how it impacted their spend, how it impacted their dwell time and how was their win experience impacted as well. So some really good learnings, and I would anticipate that you'll see more of that in the days ahead. Jeffrey Farmer: Yes. Okay. And then final question. You've been asked this in prior quarters over the last year or so. But what is the strategic upside pursuing another year of double-digit store growth on the heels of a multiyear run of same-store sales declines. Do you feel like that's what the investor community is sort of expecting of you? Or do you think that's the best way to run the model? What is the strategy in terms of maintaining that high level of unit growth as opposed to slowing down a little bit until you get the comps up? Darin Harper: Yes. Yes. Great question. And it's certainly the right question to ask. The overall historically, and here as of late, it's really been pinned on, hey, we continue to get good returns on these locations. The competition has not been slowing down, so it helps us continue to fill out markets and take a competitive advantage along the way. But I will say -- and one more comment. Obviously, the timetable for these is very lengthy in terms of turning the spigot slower or faster on it. And when we look at FY '26, we're under construction to some degree for every one of those locations, but FY '27 and beyond, there's obviously more flexibility. We are -- as we always have been hyper diligent on just making sure that we're investing these dollars correctly. But I think we are even more focused on absolutely making sure that we're going to get the right return. And that deploying capital there does not keep us from investing in something that can drive comps. Up to this point, we've been able to do both. But we are very mindful of whether separate capital allocation approach in terms of new stores can be accretive to us from a same-store sales perspective. But -- but it's very mindful. This is a very, very, very important consideration as we move forward on that end. Tarun Lal: Jeff, I just want to add to what Darin said. First of all, let me assure you that we've heard your feedback and the investment community feedback. Two, again, internally, we are committed to making sure that our core business delivers and anything that distracts us from the core business, we will not do. So it brings me to the fact that I don't believe that opening new stores that deliver very high cash and cash returns is a distraction. Now if somebody asked me "Hey Tarun, is there a growth target, are you going to open 15 stores, 18 stores, 20 stores?" My answer is going to be no, because that could become distracting. But I think that if we had sites that were very carefully chosen for their ability to deliver access to our guests to provide D&B in a way that's more convenient to our customers to ensure that the competition doesn't take the right side we are still very, very excited and committed about these opportunities. But if we feel that, that opportunity is not going to deliver, if there's a risk associated with that, we will rather conserve the CapEx and invest that into the core business. So once again, our assurance that we hear you guys and we are committed to really focusing and prioritizing our core business and making sure that it delivers positive same-store sales growth. Operator: The next question is from Brian Vaccaro with Raymond James. Brian Vaccaro: My question was just on the fourth quarter comps and the monthly cadence. I just want to make sure my notes were right. I think you had previously said that your November comps were down -- and today, I believe you said January was up 90 bps, which would imply December was down pretty significantly. Is that correct? And if so, maybe just some color on what might have driven that in December? Darin Harper: Yes, Brian, our same-store sales cadence sequentially actually improved throughout the quarter. And so P10 was the softer of the 3 as we -- and again, this is adjusting for the weather impact. So yes, there is actually a sequential improvement throughout the quarter. And keep in mind, too, the 90 basis points was the Dave & Buster's brand, specifically as well. I guess I do want to highlight that just we felt like that was worth calling out. Brian Vaccaro: Okay. Okay. That's good to note as well. And just so we're on the same page in terms of cadence of new unit openings there in 280 weeks implies pretty back-end weighted. Just -- is there any way to just high-level expectations kind of on the pace of openings, but if I heard the 280 weeks correctly? Darin Harper: Yes, that's right. Yes. You heard the 280 weeks correctly. Yes. I guess as some high level for you, we've got 3 locations expected to open in May, location in June, location in July, a couple in August, 1 in September and then 3 in November, if that's sort of helpful from a top line sort of cadence. Brian Vaccaro: Yes, that's great. And then just last one, I wanted to just ask about the marketing spend. I believe that was about $93 million in fiscal '25. Can you elaborate a little bit on your marketing plans for '26, either as it relates to the spend level or the mix you might deploy between sort of traditional TV versus digital? Darin Harper: Yes, sure. So from a spend level, overall, we anticipate sort of traditional media spend to be very similar year-over-year. Some nontraditional type of spend may go down a little bit, some nonworking, we expect it to go and add a little bit as well. But overall, sort of that core media, we expect to be similar-ish currently. As -- in terms of mix, like we're going to continue to optimize this. I think what you'll will find as in FY '25, as we leaned more into TV, linear, CTV, et cetera, that mix may wait a little bit more into digital as we've gotten better with our modeling and targeting our consumers, but certainly not where it was 2, 3 years ago. So I think a good blend as we work through our right mix analysis and just continue to iterate with the consumer on the right message and the right channel. So I hope that's helpful. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Tarun Lal for any closing remarks. Tarun Lal: Thank you, operator, and thank you to everyone for your time this evening. Let me leave you with this. Dave & Buster's is at an inflection point. We are executing against a clear differentiated strategy rooted in innovation, operational rigor and an unwavering commitment to the guest experience across every dimension of the business, brand marketing, culinary quality, in-store execution and next-generation game content, we are raising the bar, and the early returns are validating the thesis. Our strategic framework is straightforward and disciplined, building enduring brand equity over time, drive top line performance with urgency, deliver a world-class guest experience at every touch point, protect and expand industry-leading unit economics and underpin all of it with the right talent, the right culture and the right technology infrastructure. At the end of the day, the financial model is elegantly simple. Same-store sales growth-driven EBITDA expansion and EBITDA expansion drives long-term shareholder value creation. We are operating from a position of growing momentum. And frankly, we are still in the very early innings of unlocking the full potential of this platform. Nonetheless, in these early innings, we have made significant and tangible progress, including; one, 6 months of sequentially improving Dave & Buster's brand same-store sales; two, roughly flat total company same-store sales and positive revenue and adjusted EBITDA growth in February; three, securing an exciting lineup of 10 new exciting games. Four, successfully turning F&B same-store sales consistently positive; five, returning to and executing on the EPC, the Eat & Play Combo, a highly successful promotion with continually increasing opt-in rates. Six, other successful promotions, including half off games, seven, successful remodels, which outperformed the system consistently by 700 basis points and lastly, eight, continued international expansion, reaching 4 total international locations with an additional 3 more to open in the next 60 days. We see a clear path to sustain same-store sales growth, expanding free cash flow and durable value creation for our shareholders. I want to thank our teams across the globe for their extraordinary effort and dedication. They are the ones making this happen. I look forward to updating you on our continued progress. Have a wonderful evening. Thank you. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good afternoon, everyone, and thank you for participating on today's Fourth Quarter and Full year 2025 Earnings Conference Call and Webcast for Barfresh Food Group. Joining us today is Barfresh Food Group's Founder and CEO, Riccardo Delle Coste; and Barfresh Food Group's CFO, Lisa Roger. Following prepared remarks, we will open the call for your questions. The discussion today will include forward-looking statements. Except for historical information herein, matters set forth on this call are forward-looking within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements about the company's commercial progress, success of its strategic relationships and projections of future financial performance. These forward-looking statements are identified by the use of words such as grow, expand, anticipate, intend, estimate, believe, expect, plan, should, hypothetical, potential, forecast and project, continue, could, may, predict and will and variations of such words and similar expressions are intended to identify such forward-looking statements. All statements other than the statements of historical fact that address activities, events or developments that the company believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions made based on experience, expected future developments and other factors that the company believes are appropriate under the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond control of the company. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may vary materially from those indicated by such forward-looking statements. Accordingly, investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of date they are made. The contents of this call should be considered in conjunction with the company's recent filings with the Securities and Exchange Commission, including its annual report on Form 10-K and the quarterly reports on Form 10-Q and current reports on Form 8-K, including any warnings, risk factors and cautionary statements contained therein. Furthermore, the company expressly disclaims any current intention to update publicly any forward-looking statements after this call, whether as a result of new information, future events, changes in assumptions or otherwise. In order to aid in understanding of the company's business performance, the company is also presenting certain non-GAAP measures, including adjusted gross profit, EBITDA, adjusted EBITDA, which are reconciled in the tables and business update release to the most comparable GAAP measures and certain calculations based on its results, including gross margin and adjusted gross margin. The reconciling items are nonoperational or noncash costs, including stock compensation and other nonrecurring costs, such as those associated with the product withdrawal, the related dispute, certain manufacturing relocation costs and acquisition-related expenses. Management believes that the adjusted gross profit, EBITDA and adjusted EBITDA provide useful information to the investors, because they are directly reflective of the performance of the company. Now with that, I will turn the call over to the CEO of Barfresh Food Group, Mr. Riccardo Delle Coste. Please, sir, go ahead. Riccardo Delle Coste: Good afternoon, everyone, and thank you for joining us for our fourth quarter and full year 2025 earnings call. I'm very excited to report that 2025 has been a transformational year for Barfresh. One that has fundamentally repositioned our company for sustainable growth and profitability. The fourth quarter capped off an exciting year, in which we achieved record revenue of $14.2 million, completed a strategic acquisition that gives us control of our own manufacturing capabilities and secured financing that positions us to unlock over $200 million in revenue capacity. Before I discuss our quarterly and full year results, let me provide context on the strategic milestones that have reshaped our business model. In early October, we completed the acquisition of Arps Dairy, which has fundamentally changed how we operate. This acquisition brought us an operational 15,000 square foot processing facility where we immediately commenced production, along with a 44,000 square foot state-of-the-art manufacturing facility in Defiance, Ohio. We're already realizing immediate benefits from enhanced supply chain control and operational efficiency with approximately 90% of our revenue mix now manufactured in-house, giving us the ability to deliver orders that we previously would not have been able to deliver without the acquisition. After years of being constrained by third-party manufacturers, which created operational challenges, revenue limitations and increased operating costs, we now have control over the majority of our production. Our updated time line for the remaining construction and equipment installation at our larger facility is extended to the fourth quarter of 2026 due to the timing of financing. In March of 2026, we secured a $7.5 million senior convertible note financing that delivers transformative benefits. These proceeds enable us to pay off the existing mortgage on the larger Defiance facility, meaning we now own our manufacturing plant, free and clear. The financing also accelerates construction completion, enabling us to move into the enhanced facility before the end of 2026. Additionally, as previously announced, we would approve for a $2.4 million government grant to install specialized equipment necessary for full-scale production operations. For the fourth quarter of 2025, we achieved record revenue of $5.4 million, representing a 94% year-over-year revenue growth. For the full year of 2025, we achieved record revenue of $14.2 million, representing a 33% year-over-year growth. The fourth quarter and full year revenue growth was driven by the inclusion of the newly acquired Arps Dairy. Growth in our base business for 2025 was limited by the supply constraints of our co-manufacturing model underscoring the strategic necessity of acquiring Arps Dairy. With the limited manufacturing supply we have been focused on maintaining results and working on recovering lost customers, but now as we move into 2026 with enhanced capacity coming online, we are also focused on acquiring new ones. We've seen strong uptake across our existing Twist & Go portfolio and our Pop & Go 100% juice freeze pops have gained meaningful traction with several large school districts. I'm particularly excited to highlight a significant win we announced recently that demonstrates our continued momentum and competitive strength in the education channel. We successfully secured a 7-year bid award, with the largest school district in Nevada, representing the fifth-largest school district in the entire United States. This district serves over 300,000 students across the region, making it one of the most substantial wins in the K-12 channel. This win is especially meaningful for several reasons. First, it validates our ability to compete successfully for and secure placements, with the largest school districts in the country. And second, with our enhanced manufacturing capabilities through the Arps Dairy acquisition and our expanded product lineup, we are well positioned to support this district's needs reliably and consistently. This represents a major milestone in our expansion within the K-12 education channel and strengthens our position as we continue pursuing similar large-scale opportunities nationwide. Despite wins like this fifth largest district in the nation, we remain at only approximately 5% market penetration in the education channel overall, which represents substantial runway for growth. And we have tremendous growth opportunities within the districts we currently serve. A key priority throughout the fourth quarter and into fiscal 2026 has been protecting our base business and rebuilding relationships with customers who are impacted by the supply constraints we experienced earlier in the year. We successfully brought back customers who had temporarily removed our products due to our earlier supply shortfalls with many reintroductions occurring in the fourth quarter. Our approach has been straightforward and relationship-focused. We've stayed in close contact with these school districts through our broader broker network and our own sales team, communicating transparently about our manufacturing progress and our transition to owned facilities. Because these customers are already familiar with our products and have seen the positive response from students, the reintroduction process is more streamlined. This focused effort to win back displaced customers while simultaneously pursuing new district opportunities, positions us well for sustained growth as we're both recovering lost ground and expanding our market presence. The manufacturing capacity issues that constrained our first half performance were mostly resolved by year-end with the acquisition of Arps Dairy's processing plant and the contribution from our smoothie bottle co-manufacturing partners, which provided additional production capacity, giving both existing and prospective customers confidence in our ability to deliver reliably. The combination of record fiscal 2025 revenue, successful school district penetration, including major wins like the fifth largest school district in the nation, and our expanding manufacturing capabilities positions us well as we execute on our fiscal 2026 plan. We've built significant operational momentum, and with our owned facility, providing enhanced control and capacity, we're ready to capitalize on the substantial market opportunities ahead. With that overview of our strategic progress and market momentum I'll now turn it over to Lisa to walk through the detailed financial results for the fourth quarter and full year. Lisa Roger: Thank you, Riccardo. Let me walk you through our fourth quarter and full year financial results in detail. Revenue for the fourth quarter of 2025 increased to $5.4 million, representing our highest quarterly revenue in company history. Revenue for the full year of 2025 was a record $14.2 million compared to $10.7 million in the same period of 2024. This growth was driven by our Arps Dairy acquisition, which contributed $2.9 million. Gross margin in the fourth quarter of 2025 was 3% compared to 26% for the fourth quarter of 2024. Adjusted gross margin for the fourth quarter of 2025 was 4%, compared to 30% in the prior year period. Adjusted gross margin for the full year of 2025 was 22% compared to 37% for the full year of 2024. The decrease in gross margin resulted from transitioning Barfresh production to the company's new facility to capture long-term operational efficiencies and scale benefits, which involves typical startup and implementation costs that temporarily impacted margins. Additionally, we continued Arps Dairy's existing milk processing business, which operates at different margin profiles than our core business and can experience commodity pricing fluctuations that may impact revenue, but provide stable milk supply and support production and diversification. These are strategic investments in our long-term growth and opportunities. We expect incremental margin recovery to occur throughout the year and accelerating in the second half of 2026 when the equipment enhancements are completed and the new facility is commissioned. Net loss for the fourth quarter of 2025 improved to $763,000 compared to a net loss of $852,000 in the fourth quarter of 2024. Net loss for the full year of 2025 was $2.7 million compared to a net loss of $2.8 million in the prior year period. Selling, marketing and distribution expenses were $783,000 compared to $872,000 in the fourth quarter of 2024. Selling, marketing and distribution expenses for the full year of 2025 were $3.2 million compared to $3.1 million in the same period of 2024. G&A expenses for the fourth quarter of 2025 were $922,000 compared to $607,000 in the same period last year. G&A expenses for the full year of 2025 were $3.2 million compared to $3 million in the same period of 2024. Adjusted EBITDA for the fourth quarter was a loss of approximately $1.1 million compared to a loss of approximately $563,000 in the prior year period. For the full year of 2025, our adjusted EBITDA was a loss of approximately $2.1 million compared to a loss of $1.3 million in the same period of 2024. We expect to achieve positive adjusted EBITDA in fiscal year 2026 as we realize the full benefits of our integrated manufacturing model and complete our facility optimization. Turning to our balance sheet. As of December 31, 2025, we had approximately $2.3 million of cash and accounts receivable and approximately $1.7 million of inventory on our balance sheet. In March 2026, we secured a subscriptions for a $7.5 million senior convertible note financing. The proceeds were used to pay off the existing mortgage on our manufacturing facility in Defiance, Ohio, as well as other obligations and will accelerate construction completion, which will position the company to control its manufacturing destiny with significantly expanded production capacity. In addition, as previously announced, we were recently approved for a $2.4 million government grant to purchase and install specialized equipment necessary for full-scale production operations. The financing structure gives us significant financial flexibility. The ability to pay in either cash or registered stock preserves cash for operational needs during the construction phase and owning the facility free and clear, positions us to access additional capital through mortgage and equipment financing as may be required for any remaining investments. Now I will turn the call back to Riccardo for closing remarks. Riccardo Delle Coste: Thank you, Lisa. As I reflect on 2025, this year represents an inflection point for Barfresh. We delivered record revenue of $14.2 million and fundamentally repositioned this company for unprecedented growth. The strategic decision we made this year acquiring Arps Dairy and securing the financing to facilitate the completion of construction on our new state-of-the-art facility mean we are no longer constrained by third-party manufacturers or limited production capabilities. We now control our own destiny. Looking ahead, we have multiple powerful drivers of growth working in our favor. First, our own manufacturing capabilities through Arps Dairy give us direct control over production, enhanced operational efficiency and the flexibility to innovate and scale new products more rapidly. Second, once our facility expansion is complete, we will have capacity to support over $200 million in annual revenues, a significant leap in our production capabilities. The new equipment and optimized facility layout will create greater operational efficiencies, increase profit margins and provide the scalability to support aggressive growth plans. Third, we're still in the early innings of penetrating our core education channel with massive runway ahead of us. Our recent school district wins demonstrate that we're gaining traction and rebuilding momentum. Fourth, Beyond our core product lines, the expanded facility opens significant opportunities for manufacturing, both for new products owned by Barfresh and co-manufacturing for third parties, creating additional revenue streams that leverage our state-of-the-art capabilities. Now turning to our fiscal 2026 outlook. As we advance our initiatives for the year, we are making thoughtful progress on the integration and optimization of our 44,000 square foot facility. While the implementation is taking slightly longer than initially anticipated, the new equipment and optimized facility layout will create greater operational efficiencies, increase profit margins and provide the scalability to support our growth plans once fully operational. Given our updated facility and equipment time line, we are adjusting our fiscal 2026 revenue guidance to a range of $28 million to $32 million, and our adjusted EBITDA guidance to a range of $3.2 million to $3.8 million. While this represents a more conservative ramp-up schedule than our initial projections, it still reflects substantial year-over-year growth of 97% to 125% on revenue from both the full year inclusion of Arps Dairy's revenue and growth of legacy Barfresh products. We remain confident in the transformational nature of the platform we are building and believe fiscal 2026 will represent a pivotal year that demonstrates the power and scalability of our integrated model. For the first quarter of fiscal 2026, we expect revenue in the range of $5 million to $5.2 million and to be adjusted EBITDA breakeven, which is also impacted by our updated equipment time line. As we progress through the year and complete our facility enhancements, we expect year-over-year quarterly improvement in both revenue and profitability. We are building a scalable, profitable business model that positions us to capitalize on significant market opportunities while delivering sustainable long-term value creation for our shareholders. The integrated manufacturing model we're building will enable us to pursue opportunities with improved economics and operational control that simply weren't possible before. The operational momentum we demonstrated in 2025, combined with owning our own manufacturing facility and dramatically expanding our capacity positions Barfresh for what we expect to be exceptional growth beyond fiscal year 2026. We look forward to updating you on our progress as we move through 2026 and demonstrate the full potential of what we've built. And with that, I would like to open up the line for questions. Operator? Operator: [Operator Instructions] And our first question comes from the line of Thomas McGovern with Maxim Group. Thomas McGovern: First one, just as we're gaining additional clarity on the supply chain ramp here and the initiatives that are underway to kind of stabilize everything after some of the shakiness we've seen in the past. I'm just curious how the conversations have gone with -- in terms of reengaging the school districts that you might have lost due to some supply chain disruptions in the past. Just maybe unpack that for me. And then my second question relates specifically to your guidance, right? If we look at that, we're clearly expecting some growth in the back half of the year. Maybe walk me through what you're expecting in terms of timing? And then kind of what some of the underlying assumptions for that full year guidance is, is that based on essentially just your base business, including conversations that have kind of come to fruition? Or does that assume that certain relationships or contracts that are up in the air will be signed as we're entering maybe the new school year for '26, '27? Riccardo Delle Coste: Yes, sure. Thomas, so the customers that we're talking with and have been constantly engaged with love the product. we're really just now focused on keeping that communication up. We're reaching out to customers that have taken off the product due to no supply. We're going through the bidding process again. A lot of the customers are just waiting for us to have product come back into distribution in certain markets or their bid to come back around with their distribution partners. The fortunate part is that we're in the bidding cycle again now. So we're having added again to customers, and we're getting new ones as well. So we're in a very fortunate position that we've got some great customers that love our product, and they want to keep using it and the kids love the product. And as we're now getting product back out into the market in different parts of the country, we're just staying in close contact with them and working towards whatever obstacles they may have from a timing perspective in their own establishments. Does that make sense? Thomas McGovern: Yes, absolutely. And then just kind of maybe walk me through some of the underlying assumptions for the revenue -- the implied revenue growth in the back half or quarters 2 through 4? Riccardo Delle Coste: Yes. So the implied revenue obviously includes both the Barfresh business and the Arps business going forward. We would typically have a more severe drop off with Barfresh products in the second quarter, for example. With the Arps business, we actually have the addition of the ice cream mix, which is quiet in the winter months. So it's actually quite counter seasonal to the rest of our business. And then in the -- so in the second quarter, we'll have a higher than expected for our products revenue. And then in Q3, you'll have the addition of still of the ice cream mix-type products together with the Barfresh products as well, which is our biggest -- typically our biggest quarter. So the growth is coming by the combination of the 2 businesses, based on the base business that we have as well as some foresight with some of the new accounts and bids that we're winning. Thomas McGovern: Understood. And then just one more question for me. I mean, especially as you guys are kind of diversifying your seasonality, if you will, or with your product portfolio, you should expect some counterweight there, which is great. Just also curious, I know it's not as large of a component of revenue now, but as we look at channels outside of education, in the past, we've talked about foodservice and military as potential growth channels for you guys. Is there any updates on that front? And can you talk maybe a little bit about strategy and how innovation or new product launches might play a role in expanding your presence in those channels? Riccardo Delle Coste: Yes. I mean there are so many opportunities in terms of different channels for us to focus on. I mean, we've got a huge market that we're only in a 4% to 5% market penetration of in the education channel. And we haven't even been able to keep up with supply up until now in that channel alone. So we do feel that there's an enormous amount of opportunities in other channels, whether it's food service, whether it's even retail, petrol and convenience, we just haven't had the supply to get there. So we have been in this -- protect our base business mode for the last couple of years. Now that we have the manufacturing capacity, and we're in control of that we're now going to be getting back into aggressive sales mode. And that aggressive sales mode is going to be exploring the various channels out there and how we can best exploit these opportunities. Operator: [Operator Instructions] And our next question comes from [indiscernible]. Unknown Analyst: Congratulations, Riccardo and Lisa, on the record Q4 and this acquisition. I think, it has definitely changed the story where last year, the company was supply constrained. But I think at this juncture, the company -- the business just controls its own destiny. So it's really a great move. I have 2 questions. One is in terms of the production capacity, I think it was mentioned on the press release that with this new enhancements to the facility done, where it will -- basically, you'll have a capacity to support about $200 million in revenue at some point. Can you share on what's the production capacity that you have at the moment? And how does it scale? When do you get to that point? That's number one. And then number 2 is in terms of the guidance, 28% to 32%, very strong guidance. And as you mentioned, that includes the base business and the Arps business. From the base business side, does the guidance include the business that you already have signed up? And is there an upside to as you go in the school season and sign more school districts? Riccardo Delle Coste: Yes. So let me start with the first question on the capacity, and we'll circle back to the second one. The existing facility is an older facility. We're operating in there, and we're able to service to get what we need, and that will see us through up until we get to the new facility. It's not ideal, but it's working, and we're able to get product out that had we not done the acquisition, we would not have been able to supply customers. That's how important this acquisition actually was for us. When we get into the new facility, which will be later this year, the infrastructure will all be there. The base infrastructure for the processing will also be there. So it's really going to be a matter of as we ramp up and want to do more things, whether it's more products, we'll have additional capacity on our existing lines, plus room to install new lines. So we're going to have a lot more flexibility in how we grow the business, and where those revenues come from. That's why this is such an important acquisition for us because not only is it going to be instrumental in growing our base business and our base product portfolio, but it's also going to give us an enormous amount of opportunities in the future. As we look at the revenue in the base business, we're looking at 2026 as a stabilizing year for the business. And that includes the customers that we have both in the Barfresh business and the Arps business, a little bit of growth in terms of being able to acquire and get back to some of these customers that we've lost and really setting us up for a very exciting 2027, especially once the new facility is done, and we get a really significant jump in efficiencies to the bottom line. Unknown Analyst: Got it. Got it. And then one more on the recent signing of this Nevada large school district. I mean, for a 7-year deal, I mean, that's also I think it's -- from an outside, I mean, it just looks like -- I mean, the business, and you have so much confidence to supply the product to sign such a long-term deal. And in the past, I mean, Barfresh has been able to sign similar kind of deals like with Los Angeles School District at some point, but I think you guys were supply constrained. Anything you can share on what the pipeline really looks like? I mean, does this just changes where you are not really just going after like smaller school districts, is not where you just intend to go after larger school districts and you have the confidence to be able to? Riccardo Delle Coste: We will. We will. We really are focused on just making sure that we get out of the old facility into the new facility. So that we start talking to those larger accounts and really starting to build that pipeline and being able to go after the business aggressively. And that's just something that we couldn't do before because we couldn't supply. Unknown Analyst: Okay. And on that facility upgrade, what is the time line? I think you said end of 2026. Riccardo Delle Coste: It will be before the end of the year. Operator: [Operator Instructions] All right. And it looks like there are no further questions at this time. So with that, I would like to thank everyone for their participation, and this does conclude today's teleconference. We thank you for your participation, and you may disconnect your lines at this time, and have a wonderful rest of your day.
Operator: Good evening. Thank you for attending today's Super Hi International 2025 Q4 and Full Year Earnings Conference. The company leaders are present to the conference are Ms. Yang Lijuan Executive Director and CEO; and Ms. Qu Cong, CFO and the Secretary of the Board. The content of today's meeting may contain forward-looking statements, including, but not limited to, the company's statements on its strategies and business plans as well as the outlook for its performance. The content released by this conference at the earnings conference as well as the comments and responses to your questions only represent the views of the management as of today. Please refer to the latest safe harbor statement in earnings press release, which applies to all the conference calls. The meeting is conducted in Chinese with an external institution providing simultaneous English translation. In case of any discrepancies, the Chinese content shall prevent. The meeting presentation materials have been uploaded to the company's Investor Relations page for your reference. Now we remind Ms. Yang Lijuan, Executive Director and CEO of Super Hi International to review the company's performance in fourth quarter 2025. Lijuan Yang: Thank you. Host. Dear investors and analysts, good evening. I am Yang Lijuan, Executive Director and CEO of Super Hi International. I'm here to brief you on the company's performance in the fourth quarter and the full year of 2025. In 2025, under the strategy of focusing on both employees and customers, the company took the initiative to offer benefits to these core groups. We have witnessed a sustained growth in revenue and customer traffic with the quality of growth improving in the fourth quarter of 2025, that the company's overall operation continued the recovery trend of the first 3 quarters, the customer traffic of Haidilao restaurant reached 8.31 million persons times in this quarter, driving the overall average table turnover rate of Haidilao restaurant to 4x per day, an increase of 0.1x per day year-on-year. At the same time, the company's delivery business and other businesses continue to contribute to revenue in this quarter. Company's total revenue reached the U.S. dollar 230 million, an increase of 10.2% compared with USD 208.8 million in the same period last year. And month-on-month increase of about 7.5% from the third quarter, indicating that our investment in optimizing product cost performance ratio and reaching consumption scenarios and improving service experience that have gradually been recognized by customers. Looking back to the full year of 2025, for Haidilao restaurants operated by the company received a total of 32 million diners. The overall average table turnover rate of the restaurants reached 3.9 turns per day, and the same-store average table turnover rate reached 4 turns per day both an increase of 0.01 turn per day compared with the same period last year. Total revenue in 2025 was USD 841 million, an increase of 8% year-on-year. Now I shared with you some of our continuous efforts in business improvement. First, adhere to offering benefits to customers and employees and consolidated the foundation of store management in 2025 on the basis of focusing on both employees and the customers. We further clarified and implemented the proactive strategy of offering benefits to customers and employees throughout the year. In terms of the employee development, we have continuously optimized from multiple dimensions, such as salary and welfare, daily care and training and development, enhancing the sense of belonging of the diversified team. Up to now, we have about 90 reserve backbones and nearly half of whom are foreign key staff laying a talented foundation for diversifying management. In the frontline management, on the basis of a formulating corporate line principles, we have turned the focus of work to frontline stores in the regional divisions, allowing them to focus more on the market customers and employees themselves. This transformation has released very obviously, frontline vitality in the second half of the year in many excellent service cases and the management practices have been spontaneously created by regional divisions in stores. At the same time, we also encourage management, the team in various regions to conduct cross-departmental and cross-city store inspections that conducts a comparison learning and reflection in on-site work, in conjunction with the dual store management and multi-store management policies, we extend excellent management capabilities to more stores and to further expand the talent training action. Second, to create a unique Haidilao and continue to invest in customer experience this year in our work of focusing on customers that we have formulated the differentiated service plans for different scenarios such as birthdays, parent-child activities, the diners and late-night snacks and implemented the scenario-based services in [ holdings ] such as dishes, peripheral products and decorations with a more substantial investment. In terms of our products, we have continued to promote localized new product launches in various countries with a total of more than 1,000 optimized new launches throughout the year. This year, we focused on the implementation of fresh-cut food scenario. Fresh-cut meat is quite novel for overseas consumers. We have simultaneously equipped with the declaration of open kitchen, fresh-cut workshop, which can bring a better consumption upgrade experience. At present there are a total of 57 SKUs over fresh-cut beef and pork series covering 13 countries. As of December 31, the average click-through rate of the fresh-cut meat series products in overseas countries reached 12.21%. This year, we have continued to innovate in the takeout scenario, launching faster food categories such as spicy boiled food cups, fried snacks and wraps and noodles. At the same time, we launched and promoted on multiple platforms and expanded delivery coverage at the annual takeout revenue increased 68.1% year-on-year, effectively reaching customer groups beyond the dine-in meals, in terms of space and service, we selected some pilot stores to carry out the transformation of nightclub scenarios, upgrading lighting, sound effects and the interactive experience. The improvement of table turnover rate during late night snack hours in pilot stores is more obvious than not similar stores around us. In addition, we have actively explored the innovative marketing models in many countries and driven a certain degree of talk-of-town popularity and customer traffic support of the through the dual track strategies of celebrity co-branding and IP authorization. In terms of cost performance ratio, we have authorized the teams in various countries to make a reasonable adjustment in pricing, portion size and plating allowing customers to better feel the cost performance ratio. This is also one of the important reasons why our table turnover rate remained stable in the traditional off season in the first half of the year. Thirdly, enhance the capability of the headquarters and promoted the upgrading of organizational efficiency and digitalization. We have made several important progress in the capacity building of the headquarter this year. In terms of supply chain, we have continuously increased the production capacity of our own central kitchens strengthened the hierarchical management and the bargaining power of global suppliers. The continuous efficiency improvement of the supply chain since this year has offset the gross profit pressure brought by the customer benefit strategy to a certain extent, proportion of the employee cost that has also gradually approached this level of the same period last year. In terms of digitalization and organizational efficiency we have actively explored the application of AI technology in management to improve the operational efficiency of the headquarters and stores. We have also further integrated the coordination mechanisms of products and marketing guided menu optimization and the data evaluation informed in normalized product management cycle of new launch evaluation and iteration. Up to now, the scale of our overseas members has continued to expand and the application of digital tools in the members activation and scenarios reach has gradually deepened. As of the end of 2025 with the number of overseas and members of Haidilao has exceeded 8.5 million. Fourthly, the expansion of store network and the wood picker plant are promoted in parallel. In terms of expansion, we still adhere to the bottom-off strategy where country managers are responsible for site selection and implementation. The headquarters control the quality and pace. In 2025, we opened a total of 13 Haidilao stores throughout the year, covering 9 countries, including Malaysia, South Korea, Indonesia, Japan, United States, Australia, Canada, UAE and the Philippines. In the meantime, we continue to optimize the store network layout in hand and make adjustments at the right time. In 2025, we closed a total of 9 stores in Singapore, Thailand, Malaysia and Japan, some due to lease expiration, others due to active adjustments among the 3 locations that have completed the format transformation from Haidilao to the second brand and been incorporated into the Pomegranate Plan for unified operation. As of the end of 2025, we operated a total of 126 Haidilao stores overseas. In terms of store opening quality, the number of stores we have signed contracts for and should be opened it still remains in double digits with a steady overall expansion pace, we have not relaxed that -- the requirements of our profitability and implementation of a quality of new stores, 50 in terms of Pomegranate Plan, we have implemented at a steady pace of advancing gradually and verifying was a polishing the plan. As we go along this year, we continue to incubate prototype stores in the second brand, projects in different countries around multiple catering trucks, such as the hotpot, BBQ, smart spicy cups and in terms of the implantation mechanism, we adhere to bottom-up approach in the terms. The teams in various countries identify trust and promote the site selections and implantation based on the local market whilst the headquarters focuses on the construction of the middle office capabilities, such as product R&D, brand marketing, informization and business analysis forming front-end and back-end coordination. We can also show you some of the results this year. In terms of progress, we have some specific achievements that we will report to you this year, projects such as [ spa power barbecue and HiboMalatanian ] the Japanese Izakaya are progressing as an the some of which have achieved a single store probability proving that our exploration of new formats overseas is feasible. In addition, 3 original Haidilao locations were transformed into second brand operations throughout 2025, and the Pomegranate Plan has begun to link with the optimization of the existing store network rather than being an isolated new thing from the perspective of operating data, the revenue contribution of related business has also continued to increase. Other business revenue increased by 61.4% year-on-year and the substansive contributions have begun to be seen in reaching the revenue structure and expanding the customer base. And next, we'll still adhere to a prudent pace of advancement to continue to polish the proven project, buildup information, digitalization and the mid-of the support capabilities and on this basis, gradually improve replication efficiencies and enrich the company's format layout and growth sources. Looking forward into the future, we take becoming a leading global comprehensive catering group as our long-term development goal and continue to improve in 5 aspects, the customer experience, the restaurant network, operational improvement in new business and headquarter capabilities. The above is my introduction to the business development in situation. So now please welcome Ms. Qu Cong to introduce the financial situation to you all. Cong Qu: Thank you. Ms. Lijuan and next, I will report to you on the financials of the company. Our total revenue for the full year 2025 was USD 840.8 million, an increase of 8% compared with the same period last year. Operating revenue of Haidilao restaurants was USD 790 million, accounting for about 94% of the company's total revenue, an increase of 5.7% compared with last year, take out revenue USD 19 million, increase of 68.1% year-on-year. Other business revenue was USD 31.8 million, increase of 61.4% year-on-year mainly due to the continued expansion of the revenue contribution from restaurants incubated under the Pomegranate Plan and the continuous penetration of peripheral products such as hot pot condiments among local consumers and in retail channels. Full year table turnover rate of Haidilao restaurant was 3.9 turns per day and the same-store turnover rate was 4 turns per day, both an increase of 0.1 turn compared with 2021 in achieving steady improvement in operating quantities against the background of a continuous expansion of the store network -- from the perspective of the annual rhythm, the year-on-year revenue growth rate of each quarter was 5.4%, 8.5% to 7.8% and 10.2%, respectively, with the growth momentum and strengthening quarter-by-quarter and reaching the annual highs in the fourth quarter, reflecting that our continued investment in optimizing product cost performance ratio reaching consumption scenarios and improving service experience. In terms of the raw material costs accounted for 33.6% revenue increase of 0.5% over last year due to our active optimization restaurant dish quality and increase in the proportion of fresh products, which brought certain fluctuations in raw material cost in the short term, employee costs accounted for 33.9%, an increase of 0.6 percentage over last year in 2025. We systematically reached the salary and welfare for the frontline employees and increased the investment in employees daily care. Rental accounted for 2.9% of revenue increase of 0.3 percentage points compared with the same period last year. Quarter and electricity expenses of 3.4% for revenue, a decrease of 0.2 percentage points compared with last year. Depreciation and amortization accounted for 9.8% of the revenue decrease of 0.6 percentage points compared with last year. Above changes are mainly due to dilution of a promotion proportion of relevant expenses by the increase in revenue, other operation-related expenses accounted for 11.3% of revenue increase of 1.4 percentage points over last year, mainly due to the increase in our outsourcing services piece for restaurants as well as the company's increased investments in continuous promotion of the Pomegranate Plan and the brand building regional expansion in 2025. Our full year operating profit was USD 37.4 million, operating profit margin, 4.4% decrease compared with 2024, from a perspective of quarterly trends against the background we actively increased the investment in the first half of the year. Operating profit margin had a low of 1.9% in the second quarter recovered significantly from the third quarter and rebounded from 5.9% to 5.7% in the third and fourth quarters, respectively, with a clear recovery trend in the second half of this year. This resulted in line with our forecast at the beginning of the year, and this has laid a solid foundation for the company's long-term healthy development under the comprehensive influence of above factors after tax net profit to 2025 was USD 36.3 million in any substantial increases compared with 2024, significant improvement in net profit and is mainly due to the favorable impact of 2025, the global exchange trend on the company's multicurrency asset and liabilities. So now looking at Q4, achieved a total revenue of USD 230 million, an increase of 10.2% compared to the same period last year, month-on-month to 7.5% from third quarter, mainly due to expansion of the store network compared with last year, continuous improvement of table turnover rate the peak season, in fact, driving double growth of customer traffic and average customer spending among the operating revenue of a Haidilao restaurant with USD 211.9 million accounting for 92.1% of company's total revenue increase of 6% compared with the same period last year. Takeout revenue was USD 6.8 million substantial increase of 94.3% compared with the same period last year continued high-speed growth and other business revenue was USD 11.3 million, increase of $109.3 million compared with same year last year. We can continue to see the success of Pomegranate Plan with further evidence in our fourth quarter. Fourth quarter of 2025 raw material cost is USD 76 million. The gross margin, 66.6%, a decrease about 1 percentage point compared with same period of last year, mainly due to the short-term cost increase brought by optimization of further materials employee cost was USD 74 million, accounting for 32.2% of revenue, basically same as same period last year, improvement compared with the third quarter mainly benefiting from the increase in revenue scale in fourth quarter rental expenses is USD 6 million, accounting for 2.8% of the revenue basically same as the same period of last year. Quarterly, electricity expenses at USD 7 million, accounting for 3.1% of revenue, a decrease of 0.3 percentage points compared with the same period last year. Depreciation and amortization was USD 21.5 million, accounting for 9.4% of the revenue, a decrease of about 0.9 percentage points compared with the same period last year. Total revenue and other operating expenses of USD 29 million, accounting for 11.7% of revenue increased about 1.1 percentage points and mainly due to the promotion of Pomegranate Plan, brand building and the store expansion. Q4 company's operating profit was h-h. $12.98 million operating profit margin, 5.7%, decreased about 2.7 percentage points and basically, the same as third quarter, the decline in the profit margin is mainly due to active investment on the cost side, which is in line with our overall rhythm of continuously offering benefits to customers and the employees and net exchange losses in the fourth quarter was USD 3.8 million, mainly due to the revaluation impact of exchange rate fluctuation. Under this impact, in Q4, our after-tax net profit was USD 4.47 million achieving profitability by end of 2025 on and our capital reserve is USD 270 million compared with USD 250 million at the end of 2024, mainly due to the net cash inflow generated from annual operating activities. In terms of performance of the restaurants in Q4, we have served a total of 8.31 million customers, an increase of 3.89% compared with the same period in 2024. Company's average table turnover rate was 4 turns per day, increase of 0.1 turn compared with the same period of last year. Our average customer spending was USD 25.4 increase of U.S. dollar at 0.4% compared with the same period last year, mainly because we continue to optimize the this structure and marketing measures to providing consumers with a more differentiated choices. Average daily revenue per restaurant was $18,800, slight increase from the same period last year. And we can see that if the Asia performance is the most outstanding. It has increased about 0.3 turns compared to the same period of last year, reaching 5.1 turns and hence this is mainly thanks to the operating efficiency in Japan and South Korean markets as well as the incremental contribution of the newly opened stores, the average customer spending remaining at USD 28. North America, roughly the same as last year at 4.1 turns per day. In terms of average daily revenue per restaurant is USD 24,100 in the same period, roughly the same as -- same period of last year, and the average customer spending in North American market was the USD 41.4. It rebounded from USD 41 in the same period net increase of 2 Haidilao restaurants in North America in this quarter supported revenue growth. Other regions, the table turnover rate in the fourth quarter were 3.9% affected by ramping up period of newly opened restaurants during the same period. Average daily revenue per restaurant is a USD 24,300 slight adjustment from USD 26,100. Average customer spending for the USD in Southeast Asia total of 5.3 million customers and in terms of the average customer spending USD 19.3 slightly the same as last year maintaining stable operation overall. In the fourth quarter, same period revenue was $195.4 million, an increase of 2.3% for the same-store growth, achieving positive growth for Southeast Asia, we can see 12.8% year-on-year growth and for other regions, they are at 1%, 0.2%, 0.5% year-on-year. For North America, Southeast Asia and for regional same-store performance is pretty much consistent with the overall trend, and I'm not going to go into further details. So this concludes our presentation. We now go into the Q&A session. Operator: [Operator Instructions] The first question comes from [ Jong Yezhang ] from [ Yezhang ] Securities. Unknown Analyst: Ms. Yang and Ms. Qu, This is [ Jong Yezhang ] from [ Yezhang ] Security. I have two questions. The first one is on store opening. May I please ask for the next 3 years and what your store opening plan and looking at the different regions, what the approximate quantity given that there are certain global geopolitical changes and will this affect your current store opening plans? My second question is on the brand equity? And what indicators do you use to judge the strength of your brand in terms of Haidilao branding in various countries? And what is the strength and for the countries that you're not doing so well? And how would you further strengthen your brand equity in those countries. Cong Qu: Thank you. Mr. [ Yezhang ]. I will answer your first question in terms of store opening. For store opening, we continue to focus on bottom to up and we're not going to have a specific target. And in terms of our selection of the stores and in terms of the business district maturity preparation for the local team, those are more important. The present most of these plants, they will be opened up in 2026. In terms of regions, the East Asia is where we have the most confidence, we can see that single store model in Japan and South Korea have been very fine. We have also noticed that North America achieved a net increase in the fourth quarter. And for Southeast Asia, we have a large base. Hence, the focus is on optimizing the existing stock and improving quality of single stores, Middle East, Europe, Australia, and we'll be following and watching the market closely. You also talked about the geopolitical frictions and the work going on at the moment. So for our Middle East deployment, of course, for the short term, that will come as a headwind. But in terms of geopolitics and our approach is that. So we will not be making unified decisions on contractions or accelerations, but it is really country managers to make their judgments call because they are the ones who know the best about the local situation. And again, it is still bottom to upper hand, so we will maintain very prudent. In terms of your second question, how do we evaluate our brand power? and I'll have Ms. Yang to answer this question. Lijuan Yang: So you can see that these would be reflected in our internal indicators, and we mainly look at the following areas, for instance, and number one is the quality of natural growth of the members, the customer registered. Voluntarily and repurchase without relying on promotions or discounts. And second, steady growth of table turnover rate in peak season again, which reflects our customers' willingness to visit certainly continues to increase in the proportion of local customers. If the market mainly relies on the Chinese customers and then the brand barrier is fragile. Number four is the spread of word of mouth that we continue to follow the natural discussion volume and the emotional tendency in a local social media in each market by market. By markets, in the mature markets such as South Korea and Southeast Asia, the brand awareness is high and the local customer base is solid. Japan is growing rapidly with a remarkable progress in the past year. In addition, in some markets where we have entered a short-term -- short time and the brand awareness is still in the early stage, and Asian customers are still the main support. For markets with a relatively weaker brand power, our strategy has several levels. So first, the localized products and the services to make local consumers to feel that a Haidilao dishes are made for them. Secondly scenario-based marketing strategies such as Star co-branding and IP authorization have a higher leverage effect in the market with a weak brand awareness; and number three, be patient, we will not easily abandon a market because of a poor short-term data, but we will carefully evaluate which stores need adjustments based on performance. Thank You. Operator: So the next question comes from CITIC Securities [ Wei Jaba ]. Please go ahead. Unknown Analyst: Thank you. I have two questions for the management team. And the number one is with respect to the Pomegranate Plan. Ms. Yang has mentioned this in detail. Could you please share with us about some of the single store models and the profit levels of the representative of brands in this area? And what are the subsequent development plan? And my second question is about 2026 to 2027. How do you look at this in terms of customer experience and the employee benefits? How do you look at this? And how will this be reflected in operating indicators such as the expense ratio? Cong Qu: Okay. Thank you, Mr. [ Wei ] for your question. The first question, will ask Ms. Yang to answer your question. Lijuan Yang: Thank you, Mr. [ Wei ]. The Pomegranate Plan has achieved some specific results this year. Sparkora BBQ and the Canada Hi Bowl Spicy Hot Pot and the Japanese Izakaya are all progressing as planned and some of them have already achieved a single store profitability. This is a very important signal for us, proving that it is feasible to build a second brand overseas. For single store models, there are great differences among different brands in the markets. At moment, it's difficult to give a unified figure because we're now basically are literally crossing the river by touching the stones and it is not yet the time for large-scale replication and we consider there are mainly 3 factors, whether brand is worth promoting first whether a single store can make a profit without headquarter subsidies. Second, whether the model can be replicated to opened a second store in the same market. And thirdly whether the local team has the ability to operate independently. Only when all 3 conditions are met, will we consider accelerating the expansion. The other business revenues increased by 61.4% year-on-year in 2025, with the substantive contributions starting to emerge behind this growth in this follow-up, we will adhere to a prudent pace of first polish in the successful projects and build the middle platform to support capacity and gradually improve the replication efficiency. At this stage, we still focus on independent research and in incubation and selection, no clear acquisition plans at the moment. Operator: And let's wait for the next question. Cong Qu: I'll take your second question. 2025, this is a year of our active investment concentrated in the first half of the year, operating profit margin hit a bottom of 1.9% in the second quarter, but rebounded to 5.9% and 5.7% in third and fourth quarters of the second half of the year, showing a clear recovery trend. Entering into 2026, our investment strategy has shifted from increasing to optimizing the established the employee benefits of standards and customer service quality will not be reduced, and we'll continue to pay attention to any unreasonable aspects in dish and pricing. However, the strategy running in period has passed, the corporate correction has been briefly improved. The investment direction will be more precise and the more attention will be paid to the input/output ratio reflected in the expense ratio, the ratio of the employee cost of revenues is expected to gradually spin out with the revenue growth, the continuous efficiency improvement of supply chain will support the proportion of the raw materials, the fee of food delivery platforms will rise with the business growth. But the investment in brand building and the consulting will be more focused. Overall speaking, the expense ratio structure in 2024 will be optimized to a certain extent compared with the 2025, but we will not set a specific profit margin target and then reverse deduced business behavior. We will not shrink investment in customers and employees for the sake of short-term good profit margins, but they will be more precise. Thank you. Operator: And we now go into the next question, is Mr. Lai Shengwei coming from CICC. Shengwei Lai: Can I please ask about the raw material cost, and we can see that the price of the beef in [indiscernible] has recent shop team recently, and there are external environmental disturbances and how do you look at the future gross profit margin trends? How would the company hedge against the pressure of rising raw material costs? My second question is about the different store level operating profit and margin across different regions, which regions may perform relatively poorly in 2026 further? And improvement measures that the management might take? Lijuan Yang: Thank you, Mr. Lai for your questions. So first question on raw material, this is our key focus. 2025 raw material accounted for 33.6% of our revenue for the whole year, an increase of 0.5 percentage points compared with 2024, mainly due to the increase in food material costs driven by business expansion. For instance, we have introduced fresh fruit cutting. Our response measures are mainly in threefold: first centralized procurement and hierarchical supplier management to continue to strengthen the bargaining power with the global suppliers. And none of the scale effect has already been partially reflected in 2025. Secondly, continuously to improve the production capacity of our central kitchens, reduce the dependence on external processing. Number three, menu structure optimization, we have established an evaluation system of click rate, coverage rate, gross profit margin and continuously iterate the items with no gross profit contribution to avoid inefficient SKUs occupying procurement resources. Overall, we expect the ratio of raw materials to revenue will remain basically stable in 2026. Your second question, in terms of store level profit margin by region separately. We do not disclose those, but we can give you some directional judgments. East Asia is the region with the healthiest single store model at present with a table turnover rate of 5.1x in Q4, average revenue of USD 20,800 per single store. Profit contribution at the restaurant level has improved significantly. North America remains above USD 24,000 with a high absolute value, but the rent and labor costs are correspondingly be higher. Southeast Asia has a large base of stores with a great individual differences. Some mature stores performed very well and a few individual stores are still in the adjustment stage. If we look at the future improvement potential, the table turnover rate of some stores in Southeast Asia has not reached the expected level in 2026. So we'll focus on promoting the operational improvement of these stores, including deepening of product localization and upgrading of the services scenarios. The newly opened stores in North America need time to ramp up their performance and we have expectations and patience for this. The improvement direction over each region in 2026 is a clear and will not change our long-term judgment call on any of the regions due to short-term fluctuation. Operator: Next question. We have Ms. [indiscernible] from [indiscernible] securities. Unknown Analyst: Thank you for this opportunity. I have three questions. here to ask the management team. The first one is short term, we can see that right now -- Japanese relations are being affected. And so I don't know whether this would affect your table turnover rate performance. And second, about average customer spending -- we can see that 2025 average [indiscernible] trending downwards has helped with the increase in the customer traffic in 2026, what about your pricing? Would you continue to reduce your price. In terms of the mid and long term, how do you balance this short-term profit concessions? And as well as profit margin balance, how do you strike a balance between those two? And my next question is on the stores because in 2025, you have closed certain stores, underperforming stores. Right now, what is the proportion of the current store network that are still in loss or have a low operating profit margin? Going forward, how would the company evaluate those companies when you consider whether those should be close or -- what are the key indicators? Lijuan Yang: Thank you, Ms. [ Li ] for your questions. So your first question, the performance of the Japanese region in terms of what we can see right now, our operation has not been affected and our turnover -- table turnover rate is maintaining stable in terms of proportions of local customers that continue to rise, the consumption scenarios are also relatively rich, impact over short-term certain fluctuations on the overall operation is limited. This is the result of our persistent localization operation and in-depth cultivation of local customers. We have not yet been impacted, but we will continue to follow up on the external environment closely. In terms of the adjustment or reduction in average customer spending in 2025. And this is not simply about a price reduction. This is about making customers feel better in terms of cost performance, such as pricing rationality, portion science, plating and the service experience. So some of those are our active adjustments and some of these are superimposed with the structural changes on the other hand, such as the number of stores in different countries, the increase in local customers, the changes in average number of people per table and so on. Our direction in 2026 will remain to ensure Haidilao's position as the mid- to high-end restaurants whilst subordinating to the improvement of customer perceived value, healthier and fresher tissues, better new product launch experience and more dimensional consumption choices in the mid- and long-term profit concession and profit margins are not an opposing relationships. The customer flow growth and the customer stickiness brought by profit concessions are the foundation for the long-term improvement of profit margin for every 0.1% increase in the table turnover rate and the positive impact on the store level profit margin is quite considerable and the profit concessions and the profitability for a positive cycle with a time lag. In 2025, and we have closed down 9 shops and 3 of those have actually changed to a second brand. And for us, it's not giving up on those companies. And out of these 126 companies that we are running overall speaking, and overall quality is improving. We're not really able to disclose to you about the specific number of the ones that are not doing so well, were underperforming stores, but I can give you some guidance and when we look at a store whether any adjustments need to be made, mainly three aspects. Number one is to see the operating -- number one is to see whether there is any visible improvement in the pathways. Second, the trend of the table turnover rate and not only just at a single time point, but also in the past 6 to 12 months, rather, for instance, a store with a continuously declining table turn rate and even if it's not in loss at the current stage, we will also intervene. And in terms of the ones that we're seeing a positive turnaround, and we'll encourage the local managers and the division head to further improve. Number three, we look at whether the problems are management related, which we will change and update the management. And if it is about the market related and then we'll review our overall market strategy and to make adjustments accordingly. That's my answer. We also hope that the company can achieve better results in the future. [Audio Gap] Hildy Ling: My first question is about your strategy, focusing on both customers and the employees. And we can see that in Q4, the table turnover rate has improved. So if I look at this strategy itself, it in terms of the strategy itself and how will this drive the table turnover rate? And secondly, how do you look at the customer satisfaction? And because in 2026 in terms of this strategy, how would you continue on with the customer satisfaction strategy? And my next question is still asking about the Middle East impact on your business. For the Middle East, of course, that market will be affected and for European, how do you look at the European market expansion and deployment? Those are my 2 questions. Cong Qu: Thank you, Hildy, for your question. The first one with respect to focusing on both customers and the employees, hence, giving profit concessions to customers and our employees, and we not only look at the numbers, but also customer behavior. Last year, our overseas members has exceeded 8.5 million with a continuous natural growth. The second overall overseas table turnover rate has been rising continuously. Customers' willingness to visit actively is increasing. Whether it is repeat purchase or new customers that they're both increasing. And number three, same-store sales growth rate has maintained positive growth throughout the year, reaching 2.2% in the fourth quarter. Among them, the same-store growth in Eastern Asia was 12.8%, indicating that our stores have closer connections with the surrounding customers and our overall grasp of the business district customer group is improving. In terms of the local customers, we have seen that there is an increase in the number and the proportion of the customers who place the orders in local languages. So for instance, in South Korean market, the proportion of the bills placed in Korea exceeds 90%, which is the most direct signal of brand localization and the performance of a repurchase rate varies across the regions, in the regions with a strong growth momentum, both customer acquisition and the repurchase performance and are improving simultaneously in relatively mature regions. So the contribution of our regular customers is more prominent, and we have not disclosed the specific figures of the repeat purchase, but the repeated behavior of members is a core indicator that our system continuously to track. For 2026 is that the customer base construction brought by profit concession strategy will continue to take effect. This -- we have believed that last year, this is a long-term investment and not simply a short-term move. For your next question, Middle East and Europe, yes, indeed, geopolitics is indeed an unavoidable external variable for our overseas restaurant operations. We have a business and the deployment in Middle East and Europe, we have 2 stores in the Middle East at the moment for the short term in terms of some of the projects that we are working on. It has been affected negatively, but we also have authorized to the country manager. They are the ones who know the market very well and to ask them to determine the pace and the timing. In Europe, we also focus on different stores, and we are constantly visiting those stores, but whether we would sign the contract or not, depending on the location such as customer footfalls and looking at the country's macroeconomy as well as the number of population, et cetera. So there are quite a lot that we need to consider. So it's all about the bottom to up and we are very prudent, but we're very, very positive as well for the market. Operator: Thank you, Ms. Qu, for your answer. Hildy Ling: We also hope that next year, we'll see better results from your strategies. Operator: Next question comes from Jun Zeng from Huatai Securities. Jun Zeng: So how do you look at the customers' satisfaction? And at the moment, do you think that the table turnover rate is already quite satisfied? And can you please also share with us in terms of the same-store improvement for the future, how to consider the price dimension? Lijuan Yang: Thank you Mr. Zeng. And stability of table turnover rate is a result of our continuous investment in the past 2 years. There are several directions. We can continue to tap into the potential. Number one is optimization of a time period structure to present our potential for improving table turnover is mainly in off-peak hours, especially the late-night snack scenarios we have carried out a nightclub style, seeing transformation in some pilot stores. And going forward, we'll be looking at some other different investment methods and different types of sales to help us better promote the transformation. And the second is on the customer stickiness. And we already have done quite well, but we do believe that there is a lot of improvement. For instance, using digital tools to reactivate the members and to be able to reach them precisely. And we will want to make the customers change from knowing Haidilao being used to comeing to Haidilao. And number three is the enrichment of the scenarios, not only the birthdays, the parent child activities, the dinners, the late-line snacks and each have an independent customer group. This is the most direct way to improve the table turnover rate and based on different customers at different time periods in terms of the pricing, we are not going to actively raise the average customer spending nor are we going to offer disorderly profit concessions in pursuit of customer flow. And I think that the headquarters that does not have a one-size-fits-all approach, and we'll continue to monitor the market and which is more sustainable than simply our price adjustment. Jun Zeng: That's all very clear, and I also wish the company a bright future going forward. Operator: Thank you, analysts and investors online. We will see you next time. That concludes our conference result announcement today. And thank you, everyone, for joining us on the call. Thank you. Goodbye. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Operator: Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Birchtech Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] This conference is being recorded today, Tuesday, March 31, 2026, and the earnings press release accompanying this conference call was issued after market close today. On our call today is Birchtech President and CEO, Richard MacPherson; and CFO, Fiona Fitzmaurice. Before we get started, I'll read a disclaimer about forward-looking statements. This conference call may contain, in addition to historical information, forward-looking statements that are made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 or forward-looking information under applicable Canadian securities laws regarding Birchtech. Forward-looking statements include, but are not limited to, statements that express the company's intentions, beliefs, expectations, strategies, predictions or other statements relating to its future earnings, activities, events or conditions. These statements are based on current expectations, estimates and projections about the company's business based in part on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may and are likely to differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors discussed from time to time in Birchtech's periodic filings with the U.S. Securities and Exchange Commission or Canadian securities regulators. In addition, such statements could be affected by risks and uncertainties related to factors beyond the company's control that may cause actual results to differ materially from those in forward-looking statements. During today's call, the company will discuss adjusted EBITDA, a non-GAAP financial measure. Adjusted EBITDA is presented as a supplemental measure of the company's performance and exclusive of certain items that the company believes do not reflect the core operations of the company. Such non-GAAP measures should not be considered in isolation or as a substitute for GAAP financial information. Additionally, the company's definition of these measures may differ from those used by other companies, making comparisons across organizations difficult. And finally, this conference call contains time-sensitive information that reflects management's best analysis only as of the date and time of this conference call. The company does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this conference call. At this time, I'd like to turn the call over to President and CEO, Richard MacPherson. Richard, the floor is yours. Richard MacPherson: Thank you, operator, and good afternoon, everyone. Welcome to our fourth quarter and full year 2025 financial results conference call. I want to start with a few milestones that reshaped the company's trajectory over the past several months. In February of 2026, we completed our uplisting to the New York American Stock Exchange with a concurrent public offering raising the gross amount of proceeds of approximately $16.6 million, including the partial exercise of the underwriters' overallotment option. That capital raise, combined with a senior exchange listing, materially strengthened our balance sheet and broadened our investor base at a critical time in Birchtech's growth. Now on the legal front, the U.S. District Court for the District of Delaware entered our patent infringement judgment in December of 2025, which increased our judgment amount to approximately $78 million, up from the original $57 million unanimous jury verdict. Post-judgment interest will continue to accrue until this judgment is paid. Although defendants have filed an appeal, they have not posted a bond. Therefore, we have initiated collection proceedings, are pursuing enforcement of our judgment now. Since launching our IP enforcement strategy in 2019, approximately $37 million in license fees and settlements have been received, and we expect to convert other prior infringers into long-term commercial partners. Now turning to operations. Our business delivered fourth quarter revenues of $3.8 million with a 31% gross margin driven by our expanding base of licensed utilities and growing product supply relationships. U.S. coal market has stabilized and recent federal support for continued coal plant operation reinforces demand for proven emissions control solutions like our patented SEA platform. We believe this creates a longer operational runway for our core air quality business. And let me go deeper now into our air business. The SEA platform continues to anchor the company, and this quarter's results reflect the durability of that franchise. What has changed is the nature of the revenue as existing supply contracts expire for those utilities now under Birchtech's license agreements, we will actively work toward gaining their reoccurring product supply as utilities embed our sorbent formulations into their processes and directly benefit from our operational expertise and know-how. Fourth quarter air revenues totaled over $3 million, close to $4 million and mostly derived from product supply. Importantly, we expect to see a change in how utilities engage with us with our goal being that licenses that began as enforcement targets can transition to purchasing activated carbon directly, and we expect the pipeline of supply conversions to continue to grow as power demand increases in the coming years. That transition from legal resolution to commercial partnership was our core objective in our business-first approach patent enforcement efforts that began over 6 years ago. Now over the past year, we've signed several new license agreements, bringing us closer to a critical mass of licensed coal-fired utilities. Each agreement not only validates the uniqueness of our SEA process, but extends revenue visibility through multiyear procurement cycles. As licensees incorporate our sorbent formulations into their ongoing operations, we expect activated carbon sales to become an increasingly significant portion of our revenue, a shift that should drive meaningful year-over-year growth. As I noted earlier, our $78 million final judgment represents the culmination of years of patent enforcement. The defendants have appealed, but we are confident in the strength of our ruling and the thorough judicial review behind it. Collection efforts, as I mentioned, are actively underway. Now related to our air business, U.S. coal power generation is holding steady within a diversified energy mix that values grid reliability as well as domestic fuel supply. Federal policy continues to support the operational longevity of coal-fired plants, which in turn sustains demand for mercury emissions control. Our SEA technology remains the most effective solution globally recognized, and that positions us as an essential partner for utilities committed to running cleaner baseload power. With U.S. mercury emissions the lowest in the world relative to coal power generation, we're pleased to play a significant role in America's clean coal and will continue to do so as long as coal power is produced. For 2026, the Air division's road map centers on 3 objectives: continue converting unlicensed users to our technology into licensees and long-term supply customers while protecting our patents; second, grow reoccurring activated carbon sales to our expanding base of licensed utilities. And thirdly, channel the cash flow from this mature high-margin segment into our scaling of our water purification business. Now taken together, the Air division is a self-funded growth engine, generating the cash and credibility that allow us to invest aggressively in water while continuing to deliver for shareholders. So now let me turn to water, where the story shifted meaningfully since last year. We moved from laboratory validation to real commercial activity, booking our first revenues, signing our first strategic partnership and launching new products. The commercialization of our water treatment solutions began with approximately $0.9 million in purchase orders from a large Mid-Atlantic power utility for filtration system media replacement at 2 locations, removing contaminants from wastewater using our proprietary sorbent media. That engagement validated our technology in a real utility environment and gave us a reference account to build from. We then expanded our reach through a collaboration with Civil & Environmental Consultants, a national engineering firm with over 30 offices and 1,600 team members. Under this arrangement, we provide rapid small-scale column testing through our analytical design center in Grand Forks, North Dakota giving CEC's hundreds of water utility clients nationwide access to our testing and analysis capabilities. This effectively creates a pipeline of future system design and media supply opportunities without Birchtech having to build a direct sales force from scratch. For those less familiar, RSSCT replicates full-scale filter performance in a compressed time frame, enabling utilities to evaluate carbon media options and PFAS removal strategies quickly and cost effectively. Our center is one of the few independent RSSCT labs in the country with the capacity to serve the national market at this level. Beyond those 2 anchors, we hit several additional milestones. In January of 2026, we demonstrated that thermally rejuvenated granular activated carbon performs comparably to virgin carbon for PFAS removal. It was a breakthrough for our carbon rejuvenation program that could dramatically lower life cycle costs for utilities. This week, we just announced our SEA-IX nuclear-grade ion exchange resin product line targeted at an approximate $220 million addressable market, spanning nuclear power, coal-fired utilities and municipal water treatment. Birchtech's water platform covers a broad range of media supply, filtration services, our design centers RSSCT testing and analysis along with carbon rejuvenation and now ion exchange resins. So we have a comprehensive offering that didn't exist 12 months ago. Our approach to the market is completely different than our competitors. We work closely with and through engineering firms such as CEC and others alongside utilities to fully integrate the procurement of appropriate equipment, media and other ancillary services. This collaborative approach to the market will ensure water utilities with an affordable, high-effective clean water solution and will secure Birchtech's strong market position as we continue to build customers and strategic relationships. Now speaking of our design centers that launched our position into the water treatment market with our data-first approach. We are now generating a growing pipeline of lab-scale engagements with water utilities and engineering firms. We are currently participating in a grant-funded research project with a leading national engineering firm, evaluating strategy for managing PFAS contaminated drinking water waste, where Birchtech is leading advanced bench and pilot scale testing of thermal GAC reactivation using our proprietary rotary kiln system that we established in Pennsylvania. Other key projects include our role in the initial phase of a multiphase project where we are collaborating with another major national engineering firm and a large utility focused on carbon reactivation to identify the most appropriate media solutions for the removal of multiple contaminants. Our expertise in activated carbons provides our competitive edge and our ability to support both the engineering firm and the large water utility. And additionally, we're conducting water quality analysis, spent carbon evaluations and RSSCT testing for numerous other utilities to optimize media selection, reactivation protocols and overall treatment performance for PFAS and other contaminants. Each of these engagements is building relationships that have the potential to convert into long-term thermal reactivation partnerships or feed directly into our water treatment services pipeline. This data-first approach ensures that these utilities and engineering firms gain highly accurate and more effective media recommendations and receive full benefit from our unique industry expertise. We look forward to this area of our business becoming a key market differentiator and growth driver. The next chapter is about conversion and scale, turning these early engagements into reoccurring service and product revenue, progressing the development of our first GAC rejuvenation facility and expanding our water treatment solution offerings. Regulatory pressure around PFAS is only intensifying and utilities are actively seeking affordable solutions. Birchtech is now in position to meet that demand with a full suite of water purification technologies that complement our established air business and open a second significant revenue stream for the company. With that, I'd now like to turn the call over to Fiona Fitzmaurice, our Chief Financial Officer, to walk through some key financial details from the fourth quarter of 2025. Fiona? Fiona Fitzmaurice: Thank you, Rick. I will constrain my section to a concise review of the financial results for the fourth quarter. For a full breakdown of our financial results, please view our regulatory filings. Revenues totaled $3.8 million in the fourth quarter as compared to $5.6 million in the same year ago quarter. Product revenues increased 19.8% to $3.6 million as compared to $3 million in the same year ago quarter. The change in revenues was primarily due to a onetime $2.5 million licensing payment from a large Southwest utility in Q4 2024. Gross profit totaled $1.2 million, or 31% of total revenues, in the fourth quarter of 2025 as compared to $3.3 million, or 60% of total revenues, in the same year ago quarter. The change in gross profit was a result of the onetime license fee recognized in Q4 of 2024. This change was partially offset by an increase in product revenue during the fourth quarter of 2025 compared to the fourth quarter of 2024. The decrease in gross profit as a percentage of revenues was a result of the onetime license revenue generated in the fourth quarter of 2024 having higher margin. SG&A expenses decreased 42% to $2 million in the fourth quarter of 2025 as compared to $3.4 million in the same year ago quarter. The decrease in expenses was primarily due to lower legal fees in connection with patent litigation. R&D expenses totaled $0.5 million in the fourth quarter of 2025 compared to nil in the same year ago quarter. R&D expenses relate to research conducted to develop water treatment products utilizing new sorbent technologies. Net loss for the fourth quarter of 2025 totaled $0.6 million or $0.03 per basic and diluted share as compared to $1.3 million or $0.07 per basic and diluted share. Adjusted EBITDA, a non-GAAP measure, totaled negative $1.1 million in the fourth quarter of 2025 compared to negative $0.5 million in the fourth quarter of 2024. Cash as of December 31, 2025, totaled $2.2 million with no debt as compared to $3.5 million with no debt as of December 31, 2024. Subsequent to the quarter end, the company completed a $16.6 million capital raise concurrent with its uplisting to the New York Stock Exchange American in February 2026, significantly strengthening our balance sheet. I'd also like to briefly discuss the classification of our profit share liability in the amount of $7.9 million as a current liability on our balance sheet. This is a nonrecourse liability that will not be repaid from cash on hand and is only to be paid from litigation proceeds, including the proceeds of our $78 million final judgment in our patent infringement case. Interest on the judgment amount continues to accrue during this appeal period. Under GAAP accounting rules, the profit share liability is classified as a current liability as the company expects the proceeds from this judgment are likely to be received and the profit share from those proceeds repaid within the next 12 months. So ironically, the positive news of us believing receipt of these funds is likely within the next 12 months causes the profit share to be classified as a current liability, while at the same time not allowing us to reflect in our current financial statements, the expected revenue from the judgment. This completes my prepared comments. Now before we begin our question-and-answer session, I'd like to turn the call back to Rick for some closing remarks. Rick? Richard MacPherson: Thank you, Fiona. So folks to sum up, 2025 was the year Birchtech proved out its next chapter. We have since fortified our balance sheet with a $16.6 million raise in new capital, earned a senior exchange listing on the New York Stock Exchange, secured a $78 million judgment validating our IP and turned our water business from a development stage initiative into a revenue-generating platform with real customers and real orders. The execution plan for 2026 is focused. collect on our judgment, expand our roster of licensed utilities into reoccurring supply customers and obtain offtake agreements to support our first carbon rejuvenation facility. We entered the year from a position of strength, well capitalized, listed on a senior exchange and operating 2 complementary business lines that reinforce each other. The opportunity ahead is substantial, and I'm confident that this team that we have will deliver on it. I look forward to reporting on our continued progress throughout the year. With that, operator, please open the line for questions. Operator: [Operator Instructions] Our first question is from Rob Brown with Lake Street Capital. Rob Brown: Congratulations on all the progress. First question's on the air business product revenue, could you give us a sense of what the sort of run rate is on that business as you see it and maybe how it ramps throughout '26 with the customers that you've licensed to this point? Richard MacPherson: Sure. So on the product supply side, we had an increase, as you can see, in that in the last quarter of 2025. I expect to see increases as we go through 2026. The only unknown on that is when the actual contracts that are held by the companies that we just licensed will come up for renewal. As they come up for renewal, we're in a preferred position to vie for that business through RFPs. So I'll be advising the industry as we go along. But I do expect to see growth in that side of the business. I just -- at this point, don't -- I can't put a number on it, but I will expect to be able to do so in the coming month or 2. I do figure that we will be in excess of $20 million on the air side for 2026. Rob Brown: Okay. Great. And then on the remaining customers, I guess, that -- or utilities, I should say, that are potentially infringing or infringing, how many are left to settle that you haven't either got a trial on or settled with yet? What's sort of the remaining amount of potential there? Richard MacPherson: Sure. So there are -- Rob, there are a couple of very large defendants in the Iowa case that have significant product supply potential. And we are now, as you know, working through that case. I would expect that we can get to some decision with those in the first half of 2026. But they have a significant amount of opportunity should we be able to convert them to clients rather than have them remain as defendants. So as far as a specific number, I would expect that the outstanding infringers at this point hold somewhere in the $10 million a year range of supply side business should we secure it. Rob Brown: Okay. Great. Great. And then just maybe moving to the water side business, good progress there. Maybe just a sense of the pipeline of the rejuvenation customers? And maybe can you walk through how that pipeline develops and what are the sort of the steps that it goes through to turn into offtake agreements? Richard MacPherson: Yes. So where we are right now is working through the collaborations with engineering firms. We've been doing a lot of testing and analytical work with their clients. And also, we've been in discussions with a number of different end users, water utilities that would be interested in us either building a rejuvenation center for them on site or in a regional location nearby where we would be able to provide our rejuvenation services to them. We're still in the negotiation side of that. We have yet to sign any actual offtake agreements, but we're in some great discussions right now and continuing to move forward to present that option to a number of different new utilities as well. What's significant is we've basically become the tip of the spear for a lot of these engineering firms with regards to the analytical work that's necessary to be able to go back to their clients and provide some real tight assessment as to what their situation is and what can be done to get ahead of the PFAS problem. So we are a very firm part of the solution of the process. And we think that, that will lead to longer-term work for us, not just the analytical work. And what we're shooting for, of course, is to have the offtake agreements signed where we can do a collaborative effort of building out the regional facilities that we feel they're going to need. So the offtake agreements are the next step to answer your question, in the rejuvenation side of our business now that we've proved that we can do it, and we're doing the analytical work on a one-on-one basis. The next step will be to get the offtake agreements in place that will allow us to move forward with the construction of these facilities. Rob Brown: Okay. And the last question is on the new ion exchange product line. You gave some color on the market opportunity. Is that market sort of the similar customer base? Or would this be a utility customer base? Or just maybe help me understand the customer base that you're going after there? Richard MacPherson: Yes. Actually, it's a totally different market. We're very excited about it. We've had great results with this new product that we've helped to bring to market. And it is a multi-hundred millions of dollars opportunity. We're focused on the power plant side of it at this point, but we expect to be able to expand as well. And we've yet to talk about the water treatment services side of our business. And I think that will show substantial growth this year in real revenues adding to that first $1 million plus of business that we booked to date. So I really think that, that, and we're now looking to hire specialists to represent us in the field on that particular product line, but I've also been looking at and adding others to our team to move our general water treatment materials into the market. So I really think that that's one of our faster-growing aspects in 2026 in terms of adding real revenue to the company. Operator: Thank you. This does conclude our question-and-answer session. I will now hand the call back over to Chairman and CEO, Rick MacPherson, for his closing remarks. Richard MacPherson: Well, folks, thank you again to each of you for joining us on today's earnings conference call. Our IR firm, MZ Group, will be available to assist with any questions that you might have. We look forward to continuing to update you on our progress as we strive to deliver value to my fellow shareholders and execute upon our vision of becoming a leader in the specialty activated carbon space, delivering cleaner air and water to improve our environment. Operator: Ladies and gentlemen, this concludes today's conference. Thank you again for your participation. You may now disconnect your lines.
Operator: Good afternoon, everyone, and welcome to the Nano Dimension Fourth Quarter and Full Year 2025 Financial Results Conference Call. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note today's event is being recorded. At this time, I would like to turn the conference call over to Purva Sanariya, Director of Investor Relations. Please go ahead. Purva Sanariya: Thank you, and good afternoon, everyone. Welcome to Nano Dimension's Fourth Quarter and Full Year 2025 Earnings Conference Call. Joining me today is our CEO, Dave Stehlin; and our CFO, John Brenton. Before we begin, I will remind you that certain information provided on this call may contain forward-looking statements within the meaning of Federal Securities Law. Forward-looking statements are not guarantees and involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the company to be materially different from any future results performance or achievements expressed or implied by the forward-looking statements. The safe harbor statement outlined in today's earnings press release also pertains to statements made on this call. For a discussion of these risks and uncertainties, please refer to our filings with the U.S. Securities and Exchange Commission. We undertake no obligation to update any forward-looking statements, except as required by law. In addition, I would like to point out that we will be discussing non-GAAP results, which exclude certain items and reflect the results of continuing operations. I encourage you to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP measures, which can be found in the press release available on the company's website. If you have not received a copy of the press release, please view it in the Investor Relations section of the company's website. A replay of today's call will also be available on the Investor Relations section of the company's website. With that, I will turn the call over to Dave. David Stehlin: Thank you, Purva, and good afternoon, everyone. We appreciate you joining us today. I'm pleased to update you on our performance for the Fourth Quarter and Full Year 2025. And more importantly, how we are positioning the company as we move through 2026. Before discussing our results in detail, I want to briefly highlight the progress we made during the second half of 2025, following the meaningful actions we implemented to sharpen the strategic focus of the business. During that period, we streamlined operations, reduced cash burn and aligned resources around forward leading industries and our technologies, where we see the strongest long-term opportunities. We also provided financial guidance for the first time in recent history and exceeded our fourth quarter expectations. In addition, we repurchased more than 14.4 million shares in the last 3.5 months of the year because we believe that our stock is undervalued. As we move into 2026, we're seeing the benefits of these actions reflected in improved execution, stronger engagement with strategic customers and increasing momentum across our priority industry segments while leveraging our partner network to help us drive growth. Additionally, we're continuing to reduce expenses, both by trimming as needed, and more significantly by eliminating costs in areas where we do not see long-term value. This allows us to continue growing in high-value industries while remaining disciplined and capital efficient. Turning to our fourth quarter results. As I mentioned, we delivered performance that exceeded the financial guidance we provided on the third quarter call. This marked our first time providing financial guidance in recent history reflecting improved execution and coordination across the Nano Dimension organization and the strengthening demand of our advanced digital manufacturing solutions, particularly in the key industry segments where we're focused. Momentum during the quarter was generally broad-based with strength in the advanced electronics, aerospace, automotive, defense, food and beverage and next-generation computing infrastructure industries. Customers in these industry segments continue to prioritize solutions that enable faster production cycles, improved supply chain resilience, improve cost efficiency and greater flexibility. These are industry segments that reward suppliers who provide superior solutions and great customer care, and we believe we're well positioned in each of them. For the full year 2025, our performance reflects meaningful progress in shaping Nano Dimension into a more focused advanced manufacturing platform serving these high-value industries. While the second quarter was challenging, including the subsequent bankruptcy of one of the two acquisitions completed during that period, we responded decisively in the second half of the year. We narrowed our focus, executed with greater discipline across the business and strengthened our position in production-oriented additive and digital manufacturing applications. From a market perspective, tariff uncertainty eased as the year progressed, though cautious capital spending continues to create variability in certain sectors. However, our fourth quarter results reflect the benefits of a more focused strategy, sales success and our disciplined execution. We focus on helping our customers accelerate towards scalable production. These are areas where our technologies deliver clear differentiation. Customers are adopting our solutions not only for design flexibility but also for measurable operational benefits, including faster production cycles, improved supply chain resilience, reduced downtime and more efficient use of materials and labor. Our ability to integrate advanced hardware, specialized materials and software enable secure, repeatable production environments that support manufacturing at scale. At the same time, we remain disciplined in how we scale our business. We align resources around the industry segments and product areas where we see the greatest opportunity for durable long-term growth, while continuing to execute cost reduction initiatives that are already delivering results. As we move through 2026, we expect continued progress as we further streamline operations reduce cash burn and invest strategically in these priority industry segments. One example is the automotive industry, where we're seeing large-scale deployments across multiple production sites, helping global organizations accelerate new product releases and lower tooling costs. In a rapidly growing advanced computing and data center space, Nano Solutions are enabling some of the world's largest electronics manufacturers to deliver the most advanced networking gear. These engagements underscore the strategic value of our platforms and differentiated advantages we bring in enabling production at scale. We believe our focused industry segment strategy, differentiated technologies and disciplined operating model position us well for sustained growth. Within our portfolio, our composite and metal manufacturing platform continues to gain momentum across high reliability end markets with especially strong engagements in the defense-related applications. In these defense applications, our customers require secure, repeatable and traceable production, not simply prototyping capability. Our Digital Forge platform integrates advanced hardware Engineered Materials and secure cloud-based software infrastructure to enable distributed manufacturing across facilities while maintaining strict control over data integrity and process consistency. As governments and prime contractors prioritize supply chain resiliency, domestic production capability and tactical edge manufacturing, our platform is increasingly aligned with these three mission-critical requirements. During the fourth quarter and throughout 2025, we expanded deployments of our X7, our FX10 and our FX20 systems with defense programs and research institutions that are supporting long-term advanced manufacturing initiatives. In some cases, FX20 platforms have been incorporated into field deployed manufacturing systems supporting U.S. and allied operations in Europe, enabling localized production of spare parts in supply constrained or operationally complex environments. Another important development during the year was the continued adoption of our FX10 platform. The FX10 is the world's first industrial system capable of producing both high-performance composite and metal parts within the same platform. This capability allows manufacturers to move seamlessly between materials while maintaining industrial-grade precision and repeatability. For customers, this translates to greater flexibility, simplified workflows and the ability to consolidate multiple manufacturing processes into a single system. We're seeing strong interest in the FX10 across aerospace, defense, and advanced industrial segments, where the ability to produce both composite and metal components on the same system is unlocking new production applications and expanding the range of customers able to adopt additive manufacturing. More broadly, defense customers are increasingly prioritizing manufacturing at the tactical edge. For example, with unmanned systems and drone operations. field deployable, additive manufacturing allows units to produce mission-specific components on demand, iterate designs based on operational feedback and maintained assets in disconnected or contested environments. Beyond defense, we continue to see adoption across aerospace and advanced industrial segments. High-performance composite and metal solutions are enabling tooling, fixtures and increasingly demanding structural components. These customers value reliability, material performance and accelerated production cycles, areas where our technology provides clear differentiation. To support this expansion, we've established industry-focused teams with deep domain expertise, complemented by a global network of channel and integration partners. This hybrid go-to-market model allows us to scale efficiently in regulated industries while maintaining operational discipline. More recently, we expanded our partnership with Phillips Corporation to strengthen customer support and accelerate adoption in our industrial additive manufacturing platform across the Southeast United States. This initiative enhances access to the full ecosystem, including hardware, materials in the [ IGRA ] software platform while providing manufacturers with deeper application engineering expertise and faster technical support. The goal is to help customers more effectively deploy our Digital Forge platform to optimize part design, improved material selection and scale additive manufacturing for production applications. Overall, we're encouraged by the continued integration of our composite and metal manufacturing platform into customer workflows and believe we're well positioned to deepen our presence in aerospace, defense, and advanced and high-value industry segments. I'd also like to highlight our SM Tech business, which was a meaningful and growing contributor to both the fourth quarter and the full year 2025 and continues to reinforce its position as a differentiated provider of advanced electronics manufacturing solutions. During the quarter, the business expanded relationships with Tier 1 customers across multiple regions, supporting both new production programs and scaling the existing ones. Demand was driven by applications tied to advanced communications, advanced electronics, automotive, and defense industry segments where high-speed, high-precision assembly and flexibility are critical. SM Tech's product innovation remains a key differentiator. For example, in jetting and dispensing technologies that address increasingly complex and high-volume production environments. Our platforms such as our FOX Ultra, All-in-One and our PUMA Ultra systems allow our customers to improve flexibility reduce changeover times and accelerate development in printed and hybrid electronics. In addition, our collaborations with Inventec Performance Chemicals and other fluidic developers have enhanced high-speed solder paste setting and dispensing capabilities, which strengthens our ability to address the increasing complexity of PC boards. These capabilities are critical as customers and forward-leaning industries seek higher performance, precision and flexibility in electronic manufacturing. Engagement at major industry events across Asia and Europe and the Americas continues to generate strong customer interest and pipeline development, highlighting SM Tech's global relevance technology leadership and ability to scale in dynamic high-valued industry segments. Together, these deployments reflect growing demand for integrated flexibility, software-driven manufacturing solutions, that improve throughput, traceability and material efficiency, areas where our technologies position us well as production requirements become even more dynamic and precision driven. Before I hand it off to John to speak about our financial results, I would like to provide a brief update on several key initiatives. First, regarding the strategic alternatives review process that we announced last September. We recognize that our communications has been limited. This has been intentional to allow the Board and management to conduct a thorough and disciplined evaluation, working with our financial advisors, Guggenheim Securities, and Houlihan Lokey. We've spent a tremendous amount of time working through a broad set of potential paths. We completed a comprehensive review of our product lines, core technologies, market dynamics, and competitive positioning. In a short period of time, we have significantly reduced our losses and improved our product lines and yet we also recognize that a gap remains to achieving sustained profitability. So we expect that in the second quarter, we will make a series of announcements that will make clear our path forward to maximizing shareholder value in a relatively short period of time. Second, as of January 1, 2026, Nano Dimension began reporting as a U.S. domestic issuer. This transition aligns our reporting and governance with U.S. market standards including SEC rules and U.S. GAAP, while maintaining compliance with local requirements for our global operations. By aligning our governance and reporting framework with U.S. standards, we aim to enhance transparency for shareholders, reduce our operational complexity and improve efficiency in managing our global business. We anticipate completing the redomestication process in the first half of 2026, subject to customary approvals. As part of this transition, our first Form 10-K filing time line were shortened from 119 days under SEC rules applicable to foreign private issuers to 75 days as a U.S. domestic issuer. In addition, our transition during 2025 from IFRS to U.S. GAAP added further complexity to our financial reporting process. 2025 was also a highly complex year from a financial reporting and disclosure perspective. We completed two significant acquisitions, Desktop Metal and Markforged, navigated the Chapter 11 process and deconsolidation of Desktop Metal, the continued integration of Markforged and executed a reduction in workforce as part of the post-merger integration. Together, these factors required additional time to ensure accurate, complete and transparent financial reporting and disclosure. We filed our Form 10-K today. As disclosed in our Form 12b-25, we identified a material weakness in internal control over financial reporting, primarily related to resource limitations impacting accounting for and disclosure of business combinations and related valuation analysis. Importantly, while a material weakness is never good news, we have not identified any errors in previously issued financial statements do not expect any restatements and believe that our 2025 reporting results are materially correct. Under the oversight of the Audit Committee, we have implemented a remediation plan to address the material weakness and strengthen our control environment. This includes enhancing our risk assessment processes, adding experienced technical accounting and financial reporting resources and providing targeted training to reinforce consistent execution of controls. We expect to continue executing this plan through 2026 and will validate its effectiveness through ongoing testing as these controls operate over time. We're confident these actions will strengthen our control environment going forward. Finally, on capital allocation. During the fourth quarter, we repurchased approximately 10.9 million shares for approximately $19.2 million and a total of over 14.4 million shares for approximately $24.9 million when factoring in earlier repurchases in late Q3 under our existing authorization of up to $150 million. Given the ongoing strategic process review, the Board is carefully evaluating capital deployment priorities, and we will not be providing forward-looking updates regarding repurchase activity at this time. Our strong balance sheet continues to provide meaningful flexibility as we evaluate opportunities to maximize shareholder value. As we sit here today, we're already at the end of the first quarter of 2026, and activity levels remain consistent with the momentum exiting the fourth quarter, taking into account typical seasonality. This is providing us with increased visibility into near-term demand. Given the nature of our business, which includes a mix of recurring activity and larger strategic orders, we believe annual financial guidance remains the most appropriate framework for setting expectations. John will walk through our outlook in more detail and discuss the underlying assumptions. Overall, our fourth quarter and full year results reflect the benefits of a more focused strategy, disciplined execution and continued investment in differentiating technologies that address real customer needs in high-value markets. With that, I'll turn the call over to John to review our financial results and provide financial guidance for 2026. John? John Brenton: Thank you, Dave. It's a pleasure to be here with you all today. Together with Dave and the global leadership team, we remain focused on executing our key priorities to improve the company's performance and enhance shareholder value. Unless stated otherwise, all numbers I will be discussing today are on a non-GAAP basis and reflect continuing operations. A reminder that the fourth quarter represents the second full quarter of Markforged being included in our consolidated financial results. Desktop Metal is excluded from our non-GAAP results as it is classified as discontinued operations following its Chapter 11 filing and deconsolidation during the third quarter of 2025. Turning to our fourth quarter performance. As Dave mentioned, we delivered results that exceeded the financial guidance we outlined on our third quarter call, reflecting improved execution, stronger demand across our priority industry segments and disciplined cost management. Revenue for the fourth quarter was $35.3 million, representing a year-over-year growth of approximately 142% compared to $14.6 million in the fourth quarter of 2024. This increase was driven primarily by the inclusion of Markforged, which contributed $20.7 million. Excluding Markforged, Nano Dimension's stand-alone revenue was approximately $14.6 million in line with the prior year as underlying growth offset the impact of divestments. On a sequential basis, revenue for the fourth quarter increased approximately 31% from $26.9 million in the third quarter of 2025, driven by improved customer engagement, stronger order activity and continued adoption of our advanced digital manufacturing solutions across key industry segments, including advanced electronics, aerospace, automotive, defense, food and beverage and next-generation computing infrastructure. Gross profit for the quarter was $17.6 million, with an adjusted gross margin of approximately 49.7% compared to $5.3 million and 36.3% in the prior year quarter. This increase was driven primarily by the prior year inclusion of a onetime unfavorable inventory adjustment. Sequentially, gross profit increased approximately 38% from $12.7 million in the third quarter with margin expansion of about 230 basis points from 47.4% reflecting improved product mix and operational efficiencies. Operating expenses for the quarter were $27.3 million, representing a year-over-year increase of approximately 13% from $24.2 million in the fourth quarter of 2024, primarily due to the inclusion of Markforged. However, on a stand-alone basis, Nano Dimension's operating expenses decreased approximately 42% year-over-year, reflecting the benefits of divestments and disciplined cost management. On a sequential basis, operating expenses for the fourth quarter declined over 6% from $29.2 million in the third quarter and more than 16% relative to the previously identified baseline of approximately $32.5 million which reflects second quarter operating expenses adjusted to include a full quarter of Markforged. This decrease reflects our continued cost discipline and efforts to streamline operations across the organization. Adjusted EBITDA for the quarter was a loss of $9.8 million, improving from a loss of $18.9 million in the fourth quarter of 2024 and $16.6 million in the third quarter of 2025, reflecting improved gross margins and disciplined expense management. Turning to our full year results. Revenue for 2025 was $102.4 million, representing approximately 77% year-over-year growth compared to $57.8 million in 2024. Growth was driven by the inclusion of Markforged, which contributed $54.3 million and continued adoption of our solutions across key industry segments partially offset by strategic divestitures and softer demand amid macroeconomic uncertainties, including tariffs. Gross profit for the year was $48.1 million with an adjusted gross margin of approximately 46.9% compared to $26.2 million and 45.4% in the prior year. This growth was primarily driven by the inclusion of Markforged. Operating expenses for the full year were $101 million, representing a year-over-year increase of approximately 12% from $89.8 million, mainly due to the inclusion of Markforged, offset by continued cost discipline across the organization. Adjusted EBITDA for the year was a loss of $53.2 million compared to a loss of $63.6 million in 2024, reflecting increased revenue, improved gross margins and disciplined cost management. Turning to the balance sheet. Our financial position remains exceptionally strong. As of December 31, 2025, total cash, cash equivalents, deposits and marketable equity securities were approximately $459.6 million, down from about $515.5 million at the end of the prior quarter. This change of approximately $55.9 million includes $19.8 million of cash used for share repurchases during the quarter and $24.4 million related to changes in the fair value of marketable equity securities. Looking ahead, I'd like to take a moment to outline our financial guidance. As a reminder, our business generates revenue from recurring book and ship activity and larger strategic orders, which can create some variability in quarterly results. Importantly, this variability reflects timing differences rather than lost revenue. With that in mind, we are taking a disciplined approach to providing guidance, and we'll continue to evaluate providing additional metrics over time. As such, we are implementing annual guidance for 2026. For 2026, we expect revenue in the range of $130 million to $140 million, representing over 30% growth at the midpoint compared to 2025, which included a partial year contribution from Markforged following its acquisition in the second quarter of 2025. This outlook reflects continued momentum across our forward-leaning industry segments, including advanced electronics, aerospace, automotive, defense, food and beverage and next-generation computing infrastructure. We expect, on a non-GAAP basis, gross margin between 46% and 48%, reflecting improvement at the midpoint compared to 2025, driven by operating leverage and continued efficiency across our cost structure. Operating expenses on a non-GAAP basis are expected to be between $106 million and $111 million, reflecting continued cost savings initiatives and disciplined resource management. At the midpoint, this represents modest growth relative to 2025, which included a partial year contribution from Markforged as we continue to balance cost control with targeted investments to support growth. We expect adjusted EBITDA loss between $40 million and $50 million, representing meaningful improvement at the midpoint compared to the $53.2 million loss in 2025, driven by operating leverage as revenue growth outpaces expense growth. In terms of cadence, revenue is expected to be modest in the first half, ramping in the second half, with the first quarter typically the lightest and the fourth quarter the strongest. While full run rate savings from operational improvements remain a 2026 target, we are encouraged by sequential improvement in expenses and expect continued efficiencies to support margin expansion and reduce cash burn throughout the year. I will now hand it back to Dave. David Stehlin: Thank you, John. In summary, our actions we implemented in the second half of 2025 are driving meaningful results today. We believe our momentum is positive and our potential is excellent. We have grown revenue, reduced expenses, one critical new and strategic customers. We've provided financial guidance, repurchased shares and implemented a comprehensive strategic alternatives review that is rapidly progressing toward key decisions. We fully expect that 2026 will bring an excellent opportunity to maximize shareholder value. We look forward to keeping you updated on our progress. With that, operator, please open the line for questions. Operator: At this time, we'll begin the question-and-answer session. [Operator Instructions] Our first question today comes from [ Moshe Sarsari ] from [indiscernible]. Unknown Analyst: Thank you for the very elaborate call. I want to ask -- I see that you closed the Markforged acquisition on April 25 of 2025. That means you had two months in Q2 with Markforged under the Nano Dimension umbrella, plus Q3 and Q4. If I compare total revenue of Markforged in the same time in 2024 to what you reported, revenue at Markforged is actually down compared to 2024. And I say that the rest of Nano Dimension revenue is also down. How does that reconcile with what I just heard about continued momentum? And also, how is that not misleading the first line in the press release is how revenue grew by more than 100%, implying that it's all organic. Well, it's clearly not organic, it's also not growing. David Stehlin: First off, thank you very much for the question. As we're stating about the revenue growth year-over-year, that's comparing the consolidated business now after the acquisition with the prior year, which did not include Markforged. So that's specific to the comparisons to the prior year. As it relates to MarkForged specifically in the fourth quarter, consolidated, the growth that we're talking about is the sequential growth in Q4 over Q3. And the continued improvement within the key areas and product lines that were specified. So that's the improvement that we're speaking of and what we're anticipating continuing into the 2026 year. Unknown Analyst: Right. Again, I'm sorry, it escapes me how writing that the revenue is up by 100% -- more than 100% is not an attempt to mislead the readers. David Stehlin: Moshe, it's definitely not an attempt to mislead. It's the requirements on how we have to compare our actual financials year-over-year before we had Markforged. And then if you read deeper into the press release and what we talked about on the call, we described the various comparisons, both year-over-year with and without Markforged. Unknown Analyst: I see. Okay. What about the share repurchases program? Why are you discontinuing it? . David Stehlin: Yes. As we described in the call, we think that there are better uses for our money at this point, which will become very clear in the second quarter, as we said during the call. That's number one. And there we have not taken it off the table. It's still an option. We're just not going to talk about it in advance. Unknown Analyst: I see. Okay. I just don't understand how buying $2 in something for $1.70. How can you have a better use for the cash than that? Is there anything at all that can be more immediately accretive than buying $1 for $0.85. David Stehlin: Understand the point. And as we said, in Q2, things should become a whole lot more clear. Unknown Analyst: That is very not encouraging, I have to say, it's very abstract, there is no explanation here. It's just a promise that just like the ones we heard from you often that in a few quarters, everything is going to turn around. David Stehlin: Appreciate the question. And as I said, you'll learn a whole lot more in this next quarter. Operator: [Operator Instructions]. And at this time, I'm showing there are no further questions. I'd like to turn the floor back over to Dave for closing remarks. David Stehlin: Thanks for joining us today and for your continued interest in Nano Dimension. Have a great day, and goodbye. Operator: And with that, ladies and gentlemen, we'll be concluding today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.
Operator: Good evening, and welcome to the Nuvve Holding Corporation Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. On today's call are Gregory Poilasne, Chief Executive Officer; and David Robson, Chief Financial Officer of Nuvve. Earlier today, Nuvve issued a press release announcing its Q4 '25 and FY '25. Following prepared remarks, we will open up the call for questions. Before we begin, I would like to remind you that this call may contain forward-looking statements. While these forward-looking statements reflect Nuvve's best current judgment, they are subject to risks and uncertainties that could cause actual results to differ materially from those implied by these forward-looking projections. These risk factors are discussed in Nuvve's filings with the SEC and in the earnings release issued today, which are available on our website. Nuvve undertakes no obligation to revise or update any forward-looking statements to reflect future events or circumstances. With that, I would like to turn the call over to Gregory Poilasne, Chief Executive Officer of Nuvve. Gregory? Gregory Poilasne: Thank you, and good afternoon to everyone here today. Welcome to our Q4 '25 and Full Year '25 Results Call. 2025 has been a transition year where we have been pivoting from vehicle-to-grid deployments to stationary storage. Stationary battery were not new to Nuvve. We have been managing batteries for a few years in the U.S., for example, at the University of California, San Diego and in Japan with our partner at the time, Toyota Tsusho. Nuvve's platform has been designed to manage batteries from the ground up, either on wheels or stationary with the benefits of aggregation, second by second control and advanced stacking services, including behind-the-meter energy cost optimization, distribution grid support and ancillary services. We also started to integrate artificial intelligence-based functionalities 3 years ago with a focus on forecasting for battery usage and market values. Nuvve has now moved on into a full end-to-end AI-based product development cycle and is currently integrating AI-based project management, sales support and finance functionalities in order to scale our business while we are reducing our cost base. Though we are not stopping our current activities in school bus and fleets, all the market signals we are receiving are confirming that our pivot towards stationary battery deployments is the right path. In Europe, we have recently announced a partnership with OMNIA Global, a Zug Switzerland-based family office. The partnership with OMNIA is really a meeting of the minds as OMNIA has developed a 1 gigawatt plus battery pipeline across multiple countries in Europe that will be deployed over the next 24 months. The purpose of the partnership is to deploy batteries across Europe, batteries that will be owned by Nuvve. We have already announced 3 projects, a 50-megawatt 75-megawatt hour project in Sweden, a 40-megawatt 80-megawatt hour project in Austria, and a 60-megawatt 120-megawatt hour project in Romania. Different process are underway in order for Nuvve to ultimately own these batteries. The combination of these 3 battery projects represents 150 megawatts. Compensation for such battery projects can vary between $250,000 per megawatt per year to more than $500,000 per megawatt per year. This is an extremely exciting opportunity with tremendous upside for Nuvve and our shareholders. In Japan, following the termination of our partnership with Toyota Tsusho, we have then started our own entity, Nuvve Japan. The Japanese market is a less mature market, and therefore, we are pursuing different business models. We recently announced the sale of a 2-megawatt 8-megawatt hour battery for $3.35 million battery in Niigata Prefecture. We have already received a little less than $1 million as a down payment while we are targeting a battery delivery by November 2026. More recently, we have also announced that Nuvve Japan had been selected as the aggregator platform for another 2-megawatt battery projects. Outside of selling and managing batteries, other business models in Japan also include tolling, which is basically a rental agreement with a battery owner, receiving a fixed income on these assets while our advanced platform can generate high return with the battery. Our pipeline of opportunities in Japan has a similar size to our European project pipeline, but over a slightly longer period of time, about 36 to 48 months. Finally, we have similar battery opportunities in the United States, such as Kit Carson in New Mexico, driven by a New Mexico subsidiary. The U.S.-based battery projects don't seem to be moving as fast as projects in Europe and Japan. The exposure of these geographies to the conflict in Iran is making this project even more valuable. This effort to pivot the company started more than a year ago and is now on the verge of paying off. The future of Nuvve in the stationary battery space looks bright. Our partnership with OMNIA Global is absolutely transformative. Our team in Japan is doing an extraordinary job developing the business, and we are looking forward to sharing more with you on our progress very soon with a tight focus on battery deployment and reducing our operating costs. Now I will let David take you through the financial details of the quarter and the year. David? David Robson: Thanks, Gregory. I will start with a recap of fourth quarter 2025 results. In the fourth quarter, we generated total revenues of $1.93 million compared to $1.79 million in the fourth quarter of 2024. The increase was primarily driven by higher product sales and increased grant revenues, partially offset by lower service revenues due to the absence of management fees earned related to the Fresno EV infrastructure project versus the same period last year. Total revenues year-to-date through December 31, 2025, were $4.79 million, which compares to $5.29 million for the prior year period. The year-over-year decrease in revenues was driven by lower service revenues due to the absence of management fees earned related to the Fresno EV infrastructure project this year versus last year, partially offset by higher product revenues and grant revenues. Margins on products, services and grant revenues were 24.2% for the fourth quarter of 2025 compared to 15.8% for the year ago period. Year-to-date margins through December 31, 2025, were 39.1% compared with 33.1% for the year ago period. Margin was positively impacted quarter-over-quarter by a higher mix of grant revenues and improved pricing on product revenues this quarter compared with last year. Excluding grant revenues, margins on product and service revenues increased to 16% for the fourth quarter of 2025 compared to 11.5% in the year ago period. Year-to-date margins, excluding grant revenues through December 31, 2025, was 31% compared to 27.5% in the year ago period. As a reminder, margins can be lumpy from quarter-to-quarter depending on the mix. DC charger gross margins at standard pricing generally range from 15% to 25%, while AC charger gross margins are approximately 50%, but in dollar terms are a small fraction of the revenue of the DC charger. Grid service revenue margins are generally 30%, while software and engineering service margins are as high as 100%. During the fourth quarter of 2025, we determined that certain 125-kilowatt V2G DC Chargers held in inventory and purchased from our former third-party supplier were not conforming to our commercial product reliability standards, and they would no longer be offered for sale domestically. Given the commercial reliability issues of those DC chargers, we recognized a total inventory impairment charge of $3.47 million, reducing the carrying value of those inventories to zero. This inventory impairment loss is presented as a separate line item in the consolidated statements of operations due to its significance. Operating costs, excluding cost of sales and inventory impairment was $3.7 million for the fourth quarter of 2025 compared to $5.9 million for the third quarter of 2025 and $5.9 million for the fourth quarter of 2024. The decline in operating costs during the quarter was primarily driven by lower payroll expenses. Cash operating expenses, excluding cost of sales, inventory impairment, stock compensation and depreciation and amortization was $2 million in the fourth quarter of 2025 versus $5.4 million in the third quarter of 2025 versus $5.2 million in the fourth quarter of 2024. This represents a decrease of $3.4 million in expenses over the same quarter last year. Other income was $0.4 million in the fourth quarter of 2025 compared to $0.5 million in the fourth quarter of 2024. Both periods benefited from noncash gains from the change in the fair value of warrants and debt, offset by interest expense. Net loss attributable to Nuvve common stockholders increased in the fourth quarter of 2025 to $6.1 million from a net loss of $5.1 million in the fourth quarter of 2024. The increase in net loss was primarily a result of onetime inventory impairment charge, partially offset by lower operating expenses previously mentioned. Now turning to our balance sheet. We had approximately $5.5 million in cash as of December 31, 2025, excluding $0.3 million in restricted cash, which represents an increase of $5.1 million from December 2024. The increase during the fourth quarter was primarily the result of capital raised through the issuance of preferred stock and the exercise of warrants totaling $8.1 million, $0.9 million from the sale of its equity investment in DREEV, primarily offset by $4.5 million used in operating activities. Inventories were $0.8 million at December 31, 2025, compared to $4.3 million at the end of the third quarter of 2025. The decline of $3.5 million relates to the $3.47 million impairment charge for 125-kilowatt V2G DC Chargers held in inventory, reducing the carrying value of this inventory to zero. The impaired DC chargers were subsequently transferred to property, plant and equipment at zero carrying value and will be used to support our business development efforts in Taiwan. During the quarter, accounts receivable was flat at $1.1 million at December 31, 2025, compared to the third quarter of 2025. Accounts payable at the end of the fourth quarter of 2025 was $3.4 million, an increase of $0.5 million compared to the third quarter of 2025 of $2.9 million. Accrued expenses at the end of the fourth quarter of 2025 was $1.8 million, a decrease of $3.8 million compared to the third quarter of 2025 of $5.7 million. Now turning to our megawatts under management and estimated future grid service revenues. As a reminder, megawatts under management is a metric we use to quantify the aggregate amount of electrical capacity from the deployment of our V1G and V2G chargers, which are primarily deployed in the electric school bus market in the U.S. and in light-duty fleet deployments in Europe in addition to stationary batteries. Currently, these chargers and batteries are located throughout the United States and Europe. Megawatts under management in the fourth quarter increased 7.5% over the third quarter of 2025 to 28.3 megawatts from 26.4 megawatts and decreased 7.6% compared to the fourth quarter of 2024. In terms of its composition, 0.2 megawatts were from stationary batteries and 28.1 megawatts were from EV chargers. The quarter-over-quarter increase relates to the deployment of DC chargers, while the year-over-year decrease relates to the decommissioning of stationary batteries we managed in California and Japan, offset by the deployment of DC chargers. We continue to expect further growth in our megawatts under management in 2026 as we commission our backlog of customer orders we have earned in addition to new business we anticipate winning, which we have visibility to in our pipeline for both EV chargers and stationary batteries. Now turning to our backlog. At December 31, 2025, our hardware and service backlog decreased to $3.3 million, a decrease of $15.7 million from $18.3 million reported at December 31, 2024. The decrease primarily relates to the termination of the Fresno EV infrastructure project in early February 2026. As we look out to the next several quarters, we expect to see more developments from our Europe and Japan stationary battery projects. We also anticipate improvements in our cash burn resulting from the benefit of lower operating costs compared with last year. That concludes my portion of the prepared remarks. Gregory, back to you to conclude. Gregory Poilasne: Thank you, David. We are confident that our pivot towards stationary storage was the right choice. And we know that moving forward, our success is going through battery deployments, especially in Europe and Japan. Expect to hear more about our deployments soon. Thank you. Operator: [Operator Instructions] Showing no questions, this will conclude our question-and-answer session. I would like to turn the conference back over to Gregory Poilasne for any closing remarks. Gregory Poilasne: Thank you for listening to us today, and we're looking forward to sharing more with you in the near future. Bye-bye. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good afternoon, ladies and gentlemen, and welcome to the GEN Restaurant Group, Inc. Fourth Quarter 2025 Earnings Call. [Operator Instructions] This call is being recorded on Tuesday, March 31, 2026. And now I would like to turn the conference over to Tom Croal, the company's Chief Financial Officer. Please go ahead. Thomas Croal: Thank you, operator, and good afternoon. By now, everyone should have access to our fourth quarter 2025 earnings release. If not, it can be found at www.genkoreanbbq.com in the Investor Relations section. Before we begin our formal remarks, I need to remind everyone that our discussions today will include forward-looking statements within the meaning of federal securities laws, including, but not limited to, statements regarding growth plans and potential new store openings as well as those types of statements identified in our annual report on Form 10-K for the year ended December 31, 2025, and our subsequent reports filed with the SEC. These forward-looking statements are not guarantees of future performance, and therefore, you should not put undue reliance on them. These statements represent our views only as of the date of this call and are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we currently expect. We refer you to our SEC filings, including our annual report on Form 10-K and our quarterly reports on Form 10-Q for a more detailed discussion of the risks that could impact on our future operating results and financial condition. Except as required by law, we undertake no obligation to update or revise these forward-looking statements in light of new information or future events. During today's call, we will discuss some non-GAAP financial measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are available in our earnings press release and our SEC filings, which are available in the Investor Relations section of our website. Now I'd like to turn it over to our Chairman and CEO, David Kim. Wook Kim: Thank you, Tom, and good afternoon, everyone. The fourth quarter continued to be a very challenging environment for all restaurants in the business. Since the majority of our customer base is Hispanic in many of our markets, and they have been put under extreme pressure through the immigration enforcement, our customers have retracted and are very afraid to come out. This significantly reduces our customer traffic. Additionally, just as we felt we were turning the corner, the increase in the fuel prices because of the war has reduced customer discretionary spending. All of this has led to a decrease in our same-store sales. In spite of this, we completed our business plan for the year, including opening new stores, continuing to deliver an exceptional service and build our brand recognition. We opened 15 restaurants in 2025, including six located in South Korea for a total of 57 restaurants in operation. In the first quarter of 2026, we opened two additional restaurants in Tucson, Arizona and Denton, Texas. As a result of the changing economic environment, we have made several directional changes through initiatives designed to improve the company's value proposition. First, we're managing our portfolio of restaurants that have recently entered into a joint venture with Chubby Cattle International to partner on five of our non-performing restaurants. We will own 49% and Chubby Cattle will own 51% of these restaurants, which will be operated under the Chubby Cattle brand. This transaction creates a $4.5 million write-down, but will create five profitable restaurants that will generate strong EBITDA in the future for which we are entitled to 49% of the profits, which will enhance our overall profitability as a company. Second, we also have several operational initiatives to improve the financial results of our restaurants. We have adjusted our menu to streamline options in response to stubborn increase in our food cost. We have enhanced our incentive program with restaurant managers, focusing them on short-term financial results. We have tested new boba drinks as well as soju drinks, which have shown promising sales during the launch. After two quarters of research and preparation, we started to explore our new digital platform to enhance our customers' experience online. Additionally, we recently launched our GEN loyalty program and are accepting cryptocurrency for payments. Lastly, we're launching our new enhanced e-commerce website, which will be selling much more of our GEN branded products. Finally, as we slow down our restaurant development, we have initiated an AI program to create efficiencies and reduce corporate overhead. As a further update, our Costco gift card program continues to sell exceptionally well. During 2025, we sold approximately $29 million in gift card to Costco, which is 150% increase over last year as this program has greatly exceeded expectations due to our strong brand recognition. As CEO of GEN, I've contemplated for some time how we can expand a GEN Korean products and experience around the country without the heavy capital outlay to build restaurants everywhere. This is why we decided to enter into the consumer packaged goods called CPG business. We began by offering fresh frozen ready-to-cook Korean branded meats. These products feature the exact same meats and recipes used in our restaurants, ensuring an authentic experience. The CPG business has done very well in recent years. Many smaller companies have entered this business and are doing very well as current customer profile tends to seek smaller brand names. Companies like Kevin's, Marie Callender's, California Pizza Kitchen, P.F. Chang's and Bonchon Japanese Sauces have created large businesses with valuations reaching over $400 million to $800 million in a relatively short period of time. We previously announced the creation of a new division within the company to develop and sell CPG products to grocery stores. We started with four SKUs by testing our products at over 30 locations in Southern California in October of 2025. The customer response was incredible and the business blew up. Early this month, we announced that we had expanded our CPG business to over 800 locations in various supermarkets. With the strength of our restaurant labor force, GEN has deployed trained team members to local grocery stores to demo our products. This has been very successful in the early stages of moving products to consumers. Most grocery store demos done by other companies are done by employees with no product knowledge. The expertise our restaurant staff has to present these demos creates a dynamic sales presentation that exponentially increased the sale of our products. Additionally, because of our well-known GEN brand and the great taste in Korean food, it is easy for our staff to introduce our products. Our concept is simple. We bring our restaurant experience into your homes just as in our restaurants, where guests cooked their own meal using fresh frozen meats. Our grocery products allow customers to create that same hands-on dining experience and exact same case in their own kitchen. Unlike most restaurant brands in the frozen food aisle, GEN is able to deliver the exact same quality you would expect in dining in our restaurants. These are not typical TV dinners, where food is different from the restaurant level. Our products represent thoughtfully crafted meals made with same high-quality ingredients we serve at our restaurants. Introducing our products to grocery store chains takes time to set up in their IT systems, organized shelf space and complete the delivery and distribution chain. Once this initial setup is completed, the growth of this segment significantly speeds up, allowing us to achieve significant sales. By the end of 2026, we are projected to have our CPG products in 1,500 to 2,000 locations across the United States. We estimate that our CPG products could be carried to 7,000 to 8,000 locations by the end of 2027. With this expanded growth, we believe we can achieve a run rate of over $100 million in annual revenue as soon as 3 years. After accounting for slotting fees and promotional market investments, the company projects an EBITDA margin in the high teens. GEN's strong brand recognition is a key driver behind our retail momentum and a testament to the connection we've built with our consumers through our restaurants, gift cards at Costco and social media. Korean food is under penetrated, but the most sought out food in the ethnic food category. As we grow this business, GEN will offer many Korean food SKUs under the GENK food ecosystem. Due to early retail reception from both buyers and consumers. GEN is accelerating its CPG expansion trajectory and expect CPG to be a meaningful growth driver with strong margins. As a result, GEN will be working with investment bankers in the CPG space to explore possible investments, logistics and supply line partners to help grow this business and increase shareholders' value. With a solid operating model, meaningful expansion across both core and new concepts, we're executing with focus and discipline. Now I'd like to hand over the call to Tom for a detailed look at our fourth quarter and year of 2025 financial performance. Thomas Croal: Thank you, David. During the fourth quarter, we generated total revenue of $49.7 million compared to $54.6 million for the fourth quarter of 2024, a decrease of $4.9 million. As we previously reported, due to the global tariffs early in the year and extreme pressure through immigration enforcement, we experienced a downturn in our restaurant customer traffic during the remainder of 2025, which resulted in same-store sales dropping by 11.6% for the fourth quarter and some of our peers are experiencing the same downturn. For the year ended December 31, 2025, revenues totaled $212.5 million compared to $208.4 million in 2024, an increase of $4 million or 2%. Revenues increased by approximately $14 million from our new restaurant openings, offset by a same-store sales decrease of approximately $10 million. Consistent with our previous messaging, same-store sales are not the metric that defines our success, I can't stress that enough. Our AUV revenue is still over $5 million per restaurant in the casual dining space. This is a very elite level. Cost of goods sold as a percentage of company restaurant sales increased by 285 basis points to 36.9% in the fourth quarter of 2025 compared to the fourth quarter of 2024. The increase reflects inflationary cost increases, more new restaurant in operation and a minor impact from our premium menu. For the full year of 2025, cost of goods sold as a percentage of revenue increased from 33% in 2024 to 34.7% in 2025. As a result of the inflationary impact on our meat prices, we implemented a $1 price increase at the majority of our restaurants in the first quarter of 2026, which equates to about a 2.5% price increase overall. Payroll and benefits as a percentage of company restaurant sales increased by 97 basis points in the fourth quarter of 2025 to 31.8% compared to the fourth quarter of last year. For the full year, payroll and benefits as a percentage of company restaurant sales remained relatively flat from 2024 to 2025. Occupancy expenses as a percentage of company restaurant sales increased by 253 basis points to 11.2% compared to the fourth quarter of last year. For the full year, occupancy costs as a percentage of restaurant sales increased from 8.4% in 2024 to 10% in 2025. This is primarily due to higher rent at some of our new locations, along with the decrease in same-store sales for 2024 to 2025. Other operating expenses as a percentage of company restaurant sales increased 261 basis points to 12.4% compared to the fourth quarter of 2024. For the full year, other operating expenses as a percentage of restaurant sales increased from 10.3% in 2024 to 11.4% in 2025, primarily due to the decrease in same-store sales. G&A, excluding stock-based compensation during the fourth quarter was $6 million compared to $5.7 million in the year ago period. For the full year, G&A, excluding stock-based compensation was $23 million in 2025 compared to $18.4 million in 2024. This increase is primarily due to increased personnel required for new restaurant development and additional advertising, marketing and legal expenditures. G&A expenses in the fourth quarter remained flat with G&A expenses in the third quarter of 2025. Additionally, due to our decreased new restaurant openings in 2026, we expect there to be a reduction in G&A as we move forward. In the fourth quarter, we had a net loss before income taxes of $12.5 million, which equated to $0.36 per diluted share of Class A common stock compared to a net loss before income taxes of $1.2 million, which equated to $0.04 per diluted share of Class A common stock in the fourth quarter of 2024. The fourth quarter 2025 reflects higher costs associated with new restaurant development in addition to a $5.5 million provision for asset impairment and $1.3 million in preopening costs for new restaurants. For the full year of 2025, the company had a net loss before income taxes of $20.3 million, which equated to $0.59 per diluted share of Class A common stock. If you look at adjusted net income, a non-GAAP measure, we had a net loss of $5 million or $0.09 per diluted share of Class A common stock in the fourth quarter of 2025 compared to adjusted net income of $1.4 million or $0.04 per share in the fourth quarter of last year. For the full year, we had an adjusted net loss of $3 million or $0.09 per diluted share of Class A common stock compared to adjusted net income of $11.6 or $0.33 per share last year. As a result of the decrease in sales and the inflationary-driven increase in costs, our restaurant level adjusted EBITDA for the fourth quarter of 2025 was $3.9 million or 7.9% of total revenue compared to $9.3 million or 17% in the fourth quarter of 2024. The restaurant level adjusted EBITDA was $29.4 million or 13.8% for the year of 2025 compared to $36.9 million or 17.7% in 2024. Total adjusted EBITDA for the fourth quarter of 2025 was negative $2.7 million as compared to $2.1 million in the fourth quarter of 2024. After removing preopening costs from both periods, adjusted EBITDA for the fourth quarter of 2025 was negative $2.1 million compared to $3.7 million for the fourth quarter of 2024. For the full year, total adjusted EBITDA for 2025 was $0.7 million compared to $13.3 million for 2024. After removing preopening costs from both periods, adjusted EBITDA for the year of 2025 was $6.3 million compared to $18.6 million in 2024. Turning to our liquidity position. As of December 31, 2025, we had approximately $2.8 million in cash and cash equivalents. We have the majority of our $20 million revolving credit facility available. We anticipate using a portion of our revolving credit facility as we continue to open limited new restaurants in the future and grow our grocery store initiatives. In 2026, we have significantly slowed our new restaurant growth plans and focus our efforts on improving operations and margins at our existing restaurants as well as growth through our grocery store initiatives. Before concluding, I want to reiterate what we said on previous calls. Our balance sheet reflects $173 million in lease liabilities as required under GAAP through the new ASC 842 lease accounting standards. These are not financial obligations in the form of long-term debt, but rather the accounting recognition of our future lease commitments. Importantly, they are offset by $146 million in operating lease assets. To wrap up, we're targeting full year revenues of $215 million to $225 million in 2026 and achieving restaurant-level adjusted EBITDA margins in the 15% to 15.5% range. By the end of 2026, we anticipate being at an annual run rate approaching $250 million in revenue. This concludes our prepared remarks. We'd like to thank you again for joining us on the call today. We are now happy to answer any questions that you may have. Operator, please open the line for questions. Operator: [Operator Instructions] And your first question comes from the line of George Kelly from ROTH Capital Partners. George Kelly: I wanted to start just with -- Tom, you ended with your expectations for 2026. And I was hoping that we could drill into your revenue guide a little more. I think you said $215 million to $225 million. If you could give the retail contribution that's baked into that as well as -- on the core restaurant business, your comp expectations and net openings, anything that you're comfortable giving just to -- that's baked into that guide? Thomas Croal: Yes, George, we are -- on the retail side, we're working towards getting to a $20 million run rate by the end of this year. And so we should be in the $10 million range in the retail for this year, which would then put the restaurants in $205 million range looking at the low end. George Kelly: Okay. So $205 million. And what kind of -- the net openings that you talked about slowing down your opening pace. What is that? What are your expectations with respect to openings and closures? Wook Kim: So there will be no -- we haven't really contemplated on the closures. We did do a deal with the Chubby Cattle Group, which we're very optimistic and excited about. In terms of the new store openings, we opened two, we have one -- five under construction, and that will be completed this year. Maybe we'll squeeze in 1 or 2 more towards the end of the year or the beginning of '27. George Kelly: Okay. So 2 to 5 under construction, 1 or 2 more and then closures are not baked in outside of the Chubby Cattle partial divestiture. Okay. Understood. Wook Kim: Okay. As of this time, yes. George Kelly: Okay. And then last question for me, back to the retail business. You said, I think, high teens contribution margins somewhere in that range. What should we think about the kind of getting to scale there? Do you anticipate making a lot of upfront investments in 2026 as you scale the business, maybe behind promotion or just G&A infrastructure. How should we think about near-term profitability in the retail business? Wook Kim: Sure. The infrastructure costs, we're leveraging the current infrastructure we have at the restaurant side. So we don't anticipate a lot at all in terms of infrastructure cost. We will be reducing the construction infrastructure in the GEN side considerably because we're going to cut down on that side of the business. In terms of the capital, it's purely inventory now because there's a lag time between the order that's ordered and some products come from South Korea and some products are made in the U.S. So it depends on how the orders come in. Why we have such a larger number from a run rate versus actual is when you start having an interest in the larger markets order, once the order is in, you have to go through their channels of how to get -- to be on their system, i.e., their SKUs, their accounting. There's a lot of insurance. There's a lot of setups. Once the setup is done then the cash flow of money coming in and what's sold and the repeated business it's very seamless. So it works very well. The margins that we've talked about all account for the various discounts, the various slotting fees, et cetera. So when we said it will be in the high teens, that accounts for all that. And after taking all that out, we will be -- we're looking at the high teens. George Kelly: Okay, okay. And maybe if I could just squeeze in one more. The numbers you gave, your longer-term expectations around the retail business are big as far as store count and revenue productivity, et cetera. And the business is still early stage. So the question is, what is it that you've seen so far that gives you confidence in that longer-term expectation? Maybe it's the velocities you're doing or the performance outside of Southern California looks good. Like can you just give us a sense of what makes you confident? Wook Kim: Yes, several things. The -- after signing up with larger brokerage firms, and I'm actually personally making these travels and talking to the senior buyers. The numbers of supermarkets around the country is significantly higher than I expected. This is not just the Walmarts of the world. These are small regional players in the hundreds per their own sections of their markets. We, as of today, can tell you that all the meetings we've had, we have not had a single turndown of the buyers turning down our products and the continuation of interest especially we are in the Korean barbecue business and Korean-related products because of the tailwind that we're getting from the cultural changes and the customer pattern behavior on the ethnic food side. There's continuation of data is coming out saying, it's the highest demanded, but the lowest penetrated food in the United States. So that helps a lot, and it's backed by the cultural changes of movies, getting recognized, Netflix' on the K-drama, the bands, the BTSs, et cetera, et cetera, that's all fueling this. So it's a huge benefit of all the cultural younger generation knowing this food -- Korean food is actually getting the buyers from these larger institutional supermarkets, not just having interest in buying our products. Now the ones that we already in now that have placed products on the shelves. They don't keep products on the shelves if they don't have velocity. So our velocity is above their -- every retailer has their own lines of what velocity that each ones have to hit, and we are actually above their velocities, especially for a new line like this, they're very, very excited. We're very excited too. It's unusual, they say from this industry to have a hit rate of 100%. I'm sure the more we see, we will start to have challenges of certain areas, not buying our products. But it's unusual where products are presented and they bought it. So even if we introduce all the products, the lease that we've had so far is one group buying 2 out of the 4. And then we have other products growing, too. So I'm a believer that just selling into the markets is not a business model, is the continuation of -- yes, consumers coming back to buy it is actually a better measurement. So as of today, it's a small sample, but the amount of bookings that we have from supermarkets to ordering from us, and what we have in the system, that's why we are able to comfortably project those numbers. Operator: [Operator Instructions] At this time, this concludes our question-and-answer session. I would now like to turn the call back over to Mr. Kim for any closing remarks. Wook Kim: Thank you very much for your time and listening to our quarterly call. Thank you. Thomas Croal: Thank you very much. Operator: And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
Operator: Good day, and welcome to the BRC Group Holdings Fourth Quarter and Full Year 2025 Financial Results Conference Call. My name is Isabelle and I will be your Evercall moderator. The format of the call includes prepared remarks from the company, followed by a question-and-answer session. [Operator Instructions] And I will turn the call over to Bryant Riley from BRC Group Holdings. You may now begin. Bryant Riley: Thank you, and good afternoon. We appreciate everyone joining us. To start, we are pleased to report that our 10-K was filed on time. It's an important milestone for our counterparties, shareholders and the organization as a whole. With that, for nearly 30 years, BRC Group Holdings has been defined by a key principle, our willingness to be opportunistic. In the deals we took on, the capital we deployed, the companies we backed and the businesses we built. Over the years, our team has grown adept at rising to the challenges associated with capitalizing on those opportunities. The last 2 years required the firm to apply those same skills to itself, rebuilding our balance sheet, shifting operations, refocusing parts of the platform and positioning BRC GH for what comes next. We made some hard decisions along the way, but we made them deliberately and we made them so that we could get back to doing what we do best. The bedrock of success of BRC GH's platform is our ability to bring together diverse companies, aligning them to partner creatively for our clients and building a collaborative ecosystem, advisory, capital markets, wealth management, principal investments and businesses that generate recurring steady cash flow. That combination creates real value for clients and shareholders alike. Over the past 2 years, we made the difficult decision to sell some of those businesses to strengthen our balance sheet. As we sit here today, the model is intact as exemplified by our recent results. Our Communications Business Group continues to generate consistent predictable cash flow. Our broker-dealer executes complex transactions, raise significant capital for our clients and continues to grow and add talent. In our investment portfolio, anchored by our position in Babcock & Wilcox delivered results that reflect the hands-on work our team put into our portfolio over many years. In 2025, we reported net income available to common shareholders of $299.4 million and earnings per share of $9.80. We reduced net debt significantly and continue to invest in the businesses and people that drive the platform. We welcomed the new CFO, Scott Yessner, enhanced our finance staff and transitioned to BDO as our auditing partner. Looking at the opportunity in the market for BRC GH, the small and mid-cap market we've always served is at an inflection point. Traditional lenders have pulled back, generalist firms can't cover the complexity, companies in the space need experienced partners will understand the capital structure, know the equity story and can move with speed uncertainty. That's our lane, and it's been our lane for 30 years, and the demand for what we do is growing. To that end, yesterday, we announced BRC Specialty Finance, a dedicated platform that addresses this exact issue, which is very exciting for us. Also yesterday, the Delaware Court of Chancery dismissed, in full, the Marstons versus Riley derivative action, finding that the planet failed to adequately plead demand futility. BRC GH believes this outcome reflects the integrity of its Board and the governance processes. We will not be commenting further on pending litigation. We're proud of what we accomplished in 2025, and we're committed to building upon these results. We are laser focused on continued growth and maximizing profitable outcomes. The world is changing fast, AI included, and we will continue to make the shifts necessary to stay relevant and competitive. Finally, we need to take a moment to acknowledge our team. These past few years have been a demanding period for the firm. Our people leaned in, stayed focused on clients and kept us moving forward, showing exactly what the platform is built on. There are a competitive advantage, the continuity, experience, institutional knowledge, we cannot be more proud of what this team has accomplished. I will now turn the call over to Co-CEO, Tom Kelleher, for a few additional comments. Thomas Kelleher: Thanks, Bryant. As mentioned in our earnings release, we completed a number of strategic and operational objectives throughout the year. In March 2025, we closed the sale of Atlantic Coast recycling for a purchase price of approximately $102 million with net cash proceeds to BRC GH of approximately $69 million after adjustments. In April 2025, we sold a portion of our W2 Wealth Management business representing 36 financial advisers and approximately $4 billion in assets under management for a net consideration of $26 million. In June 2025, we completed the sale of GlassRatner Advisory and Capital Group and B. Riley Farber advisory, generating cash consideration of approximately $118 million. While every one of these divestitures was a challenging decision to make, they fit with our strategy to deleverage the platform and focus the business going forward. With the GlassRatner sale, we executed a Transition Services Agreement, or TSA, whereby we operationally supported that business through the end of 2025. Similarly, we also executed a TSA with our 2024 partial sale of Great American and that TSA was also completed at the end of 2025. In 2025, we also completed a multiyear project to consolidate the clearing arrangement for our Wealth Management business, which streamlines back-office operations and will materially lower costs. Effective January 1, 2026, we rebranded as BRC Group Holdings, reflecting our evolution from a financial services platform into a diversified portfolio of distinct businesses, spanning financial services, communications, retail and investments across equity, debt and venture capital. Like many other firms, BRC GH has begun deploying artificial intelligence tools. We standardized around Claude a year ago and are well positioned to capitalize on the opportunities presented by this emerging technology. More than half our corporate staff is using AI tools. Across our operating companies, AI adoption has accelerated guided by a centralized team focused on developing and expanding these capabilities throughout the enterprise. The story heading into 2026 is straightforward, a stronger balance sheet, a growing business and a market that needs exactly what we offer. Our CFO, Scott Yessner, will now walk through the financials in detail. Scott, Over to you. Scott Yessner: Thank you. I'm pleased to share an update on our 2025 financial performance, investment holdings and liquidity. To start, I'd like to walk through our financial performance for the fourth quarter and full year 2025. Year-over-year, fourth quarter revenues were $279 million compared to $179 million and full year revenues were $968 million compared to $746 million. The increase in fourth quarter year-over-year revenue was driven by $68 million on higher trading gains on investments, primarily in Babcock & Wilcox common stock and by a loss of $72 million in fair value adjustments on loans receivable in 2024, which were offset by lower service and fee income of $33 million, which was comprised of $15 million in lower investment banking revenue and $20 million in revenues related to exited businesses. These fee declines were partially offset by higher net investment advisory fees related to a fund that holds SpaceX. The full year 2025 revenue increase was driven by $183 million in higher trading gains due to $126 million in investment appreciation, primarily in Babcock & Wilcox and a loss of $325 million on fair value adjustments on loans in 2024. The year-over-year revenue increase was offset by $150 million of lower service and fee revenues and $64 million in lower interest income from securities lending. The components of lower service and fee revenue decline were $66 million lower revenue from exited businesses of Revel, Noggin and the Stifel Wealth sale, partially offset by higher net investment advisory fees related to a fund that holds SpaceX. Further, $44 million lower Communication Business Group subscription revenue, driven by subscriber attrition and a divestiture of a Lingo wholesale business, and finally, $22 million of lower investment banking revenue. Fourth quarter operating expenses were $218 million compared to $345 million in 2024 and full year operating expenses in 2025 were $892 million compared to $1.24 billion in 2024. The $128 million fourth quarter year-over-year reduction of operating expenses was primarily due to costs from exited businesses and a $78 million goodwill impairment in 2024. The $352 million full year reduction of operating expenses was due to $186 million from exited businesses and lower cost of sales linked to revenue declines. $61 million lower interest expense from securities lending and a $104 million goodwill impairment in 2024. Our administrative costs have been elevated in the past 2 years, particularly on professional fees. As we return to a normalized operating cadence, we expect to reduce these costs and will update in the future calls. Continuing down the income statement. Fourth quarter other income, excluding interest expense, was $38 million compared to a loss of $59 million in 2024. And full year other income excluding interest expense was $247 million compared to a loss of $270 million. The $98 million fourth quarter year-over-year increase was primarily driven by fair value total markups of $66 million on Babcock & Wilcox stock and double down Interactive Holdings. The $516 million full year year-over-year increase was due to gains of $86 million on gain on sale of deconsolidation businesses, $76 million in Babcock & Wilcox stock value increase $67 million on senior note exchanges, $34 million in equity gains on the JOANN's GA Group liquidation deal and $273 million in investment markdowns in 2024. Fourth quarter interest expense was $20 million compared to $31 million in 2024 and interest expense for the full year of 2025 was $93 million compared to $133 million in 2024, which was driven by debt reduction of $347 million during 2025. These details culminate with fourth quarter net income attributable to common shareholders in 2025 of $85 million compared to $900,000 in 2024 and full year net income attributable to common shareholders in 2025 of $299 million compared to a net loss of $772 million in 2024. Fourth quarter adjusted EBITDA in 2025 was $104 million compared to a loss of $114 million in 2024 and full year adjusted EBITDA in 2025 was $231 million compared to a loss of $568 million in 2024. Please refer to the reconciliation tables in our earnings press release for the adjusted EBITDA calculations. Next, I'll review our segment operating performance. Our segment presentation has been revised with the following changes. Our former Communications segment has been separated into 4 reportable segments, which we aggregate and described as the Communications Business Group. The Capital Markets segment had a few investment entities reclassified as nonreportable segments. These NAs are now captured in Corporate and Other. The Capital Markets segment, which is comprised solely of B. Riley Securities, had fourth quarter and full year revenues of $93 million and $265 million and segment income of $53 million and $89 million. The revenue and segment income increases are primarily due to a fair value increase in Babcock & Wilcox in trading gains. Core Investment Banking revenues were lower by approximately $222 million in 2025, which was a result of lower banker headcount, reduced client engagement from among things, late SEC filings at the corporate parent. The Wealth segment had fourth quarter and full year revenues of $47 million and $176 million and operating segment income of $8 million and $15 million. After completing the sale of $4 billion in assets under management in April 2025, the wealth segment completed a back-office integration and cost reduction program. Wealth ended 2025 with $13 billion in assets under management and 197 registered representatives. The Communications Business Group is the aggregate results of Lingo, MagicJack, Marconi and United Online Reportable segments. The Communications Business Group had fourth quarter and full year aggregate revenues of $63 million and $250 million and aggregate income for the fourth quarter and full year of $13 million and $47 million. The results exceeded our expectations in 2025. While the Communication Services have a declining customer base, we have a strong team who does a very good job of servicing our customers and offering a very profitable and strong cash flow business. We will continue to evaluate opportunities to leverage this business model. The Targus business, which comprises the Consumer Products segment had fourth quarter and full year revenues of $49 million and $182 million and operating segment loss of $4 million and $16 million. Lower revenues, inventory write-downs, goodwill impairments and tariff costs led to the 2025 operating loss. Tariff costs were approximately $4 million, which have been submitted for reimbursement. We'll update if the reimbursement is realized. Tariffs, complex, chip shortages remain risk to the business in 2026. After several years of declining sales from the consumer product surge around the time of COVID, sales revenues have stabilized year-over-year in the fourth quarter of 2025 and into the first quarter of 2026. We are evaluating options to refine our pricing model and cost structure as key opportunities in 2026. Next, I would like to provide an update on the company's Investment Holdings portfolio. which are reported in our balance sheet in Securities and Other investments, Loans Receivable at fair value and Equity Investments. Investments are held across the consolidated entities where valuation changes are booked as revenue and either trading gains or realized and unrealized gains, depending on the entity. Securities and other investments increased by $165 million to $447 million at year-end 2025. The increase was primarily driven by a $129 million value increase in Babcock & Wilcox and a $28 million increase in partnership interest and other related to our carried interest in funds that own SpaceX. At 12/31 2025, the Babcock & Wilcox stock price used in the valuation was $6.34. The company owned approximately 27.5 million shares at December 31, 2025, and at March 31, 2026. The SpaceX carried value was marked at $421 per share at 12/31 2025. Securities and other investments are reported in the 10-K table with subtotals, including public equities, private equities, corporate bonds and other fixed income securities, along with partnership interest and other. In the public equities in addition to the Babcock & Wilcox valuation change, DoubleDown Interactive and Synchronoss were lower primarily from selling a portion of the holdings with small changes in price. The private equities subtotal amount, which has over 60 investments, including the Venture Capital portfolio, had $34 million in new investments, $10 million in liquidations and the balance of the year-over-year change due to valuation updates. The venture capital portfolio has a few maturing investments that may be realized in the next 12 to 24 months. Corporate bonds increased $2.7 million, primarily due to an increase in value, partnerships and other investments increased primarily due to the SpaceX security interest value increase identified earlier. We operate the securities and investment portfolio to maximize shareholder returns and to support operational funding and liquidity requirements. Continuing with investment holdings loans receivable at fair value declined $64 million in 2025 to an ending balance of $26 million at 12/31 2025. Loan lending activity included approximately $110 million of fundings and $170 million of repayments, primarily driving the balance decline. Exela Technologies represents $21 million of the remaining balance, of which approximately $15 million is due in 2026. We expect to continue to fund loan and credit structures for our clients in 2026. For the last balance sheet line item in our investment holdings, equity method investments were $90 million at 12/31 2025, increasing $5 million from December 31, 2024, increase was primarily due to $4 million of investments transferred from partnerships. The GA Group investment formerly Great American, comprises $83 million of the 12/31/25 balance. In 2025, the GA Group had good financial performance and hired new executives to support their expansion, including a new CEO. Due to the GA Group capital structure, we've recorded the investment using the hypothetical liquidation at book value method. Well, we don't anticipate this booking method will result in a significant movement in our balance sheet valuation periodically, we believe the value will grow over the next few years. Having grown GA Group since 2014, we know this business well. We'll continue to update business performance periodically and seek to participate in equity and debt deals as partners to GA Group, as we did in 2025 with a $34 million equity gain in the JOANN's liquidation equity earnings and the lending we provided to GA Group in 2025. Next, I'll provide an update and remarks on our liquidity and capital. At year-end December 31, 2025, cash, restricted cash and cash equivalents balance was $229 million compared to $247 million at December 31, 2024. In 2025, BRC Group produced total debt by $347 million, which included a $147 million RILYN bond redemption on February 28, 2025, $127 million in bond exchanges and $98 million in pay downs of term loans offset by $23 million of other increases in debt borrowings. Net debt declined $437 million in 2025 to $627 million at December 31, 2025. As we enter 2026, we have 3 senior note series maturing in 2026 for a total principal amount of $457 million with an additional $16 million in scheduled paydowns on a subsidiary lending facility. On March 30, 2026. The Riley K senior notes were fully redeemed for approximately $96 million, inclusive of accrued interest. Remaining in 2026 and based on the balances at 12/31 2025 we have $178 million in principal amount of RILYN in senior notes due September 30 and $177 million in principal amount of Riley G notes due December 31, maturing. On March 12, we announced $30 million in senior note reductions through Section 39 exchanges and buybacks, which are across the senior note series, including all 3 series in 2026. We will continue to use capital actions and also use cash generated from operations and investment liquidations to fund the scheduled senior note paydowns and support our operations. Continuing interest expense in 2025 totaled $93 million. In 2026, interest expense based on scheduled paydowns is estimated to be approximately $81 million expected to be lower due to the debt exchanges already announced in our anticipation of continuing these capital actions. To conclude, our capital and liquidity plan in 2026 is to fund our emerging credit market opportunities, support our clients with capital and advisory services, support holding investments to their optimal assets, while funding the remaining senior note redemptions in 2026. Thank you for the opportunity to share this update today. We look forward to answering your questions. I'll turn the call back to the operator for a Q&A session. Operator: [Operator Instructions] Our first question comes from Amer with Imperial Capital. Amer Tiwana: Guys, first of all, congratulations on filing the 10-K. Am I reading this correctly that the remaining $350 million you'll potentially use the investment portfolio as the primary source and some cash flow from operations? Or there are other levers that you intend to pull as well? Bryant Riley: So thanks for the questions. And Scott, feel free to join in. I think the way that we've looked over the last 2 years, if you try to put in a playbook you would have changed directions 15x. So our portfolio is opportunistic. You don't know it's going to pop up in different ways. I think the year ago, it wasn't known that we had -- and we hadn't counted as much of a SpaceX partnership, ownership that we had. And -- and so there's just -- it's a pretty big book. And we've got a fair amount of assets, and we're going to be opportunistic. So I wouldn't point to one thing or another. I would point to a combination of opportunities, whether it's SPAN Swaps, which we've done a lot of, whether it's buying bonds in the market or selling some investments, all of those things will be considered. Scott or Tom, do you want to add anything to that? Thomas Kelleher: Yes. Thanks, Bryant. Really appreciate the question. And I think Bryant had summarized it very well. The way we look at it is we have investments and assets to the company that we want to maximize the value to. And we also have opportunities to supply capital to our clients. And so we balance all those different factors against our liquidity requirements for those bond redemptions. And so we have some high cash flow generating businesses and other opportunities, and then the capital actions that Bryant had levered on. So we'll be opportunistic and make the best decision for the shareholder, but we have many different levers in which to pay down the redemptions this year. And I'd also just note that the redemptions because we have had these capital actions so far this year. The principal balance on the RILYN's due in September 30 is $167 million. And then the Riley G's are -- which are due on December 31, 2026, they're down to $170 million. So those have already reduced from our reported in our 10-K. Amer Tiwana: My next question is, when you guys look at BRF, I know you guys have talked about a SPAC transaction. Is there any sense of the timing for that? Bryant Riley: Well, if anyone talked about a SPAC transaction, maybe it was -- yes, we have not talked about a stock transaction. We have carved it out so that it is an entity that you can -- there is some equity ownership by the management team, some of the partners there, and it's an asset of BRC and we're always evaluating our assets to maximize value. But it's very much an integrated part of our business as well and it does feed off -- we still do feed off of each other in terms of creating opportunities, whether it's myself being involved on the BRF side or some of the BRF helping on the wealth management side. And so we're really -- when we did have a carve-out to identify that asset a little more clearly. I would view those as still pretty integrated. Amer Tiwana: Congratulations you guys have accomplished an incredible amount over the last year or so. So it's been pretty frenetic in terms of things that have happened. But seems like you guys have found yourself in a very good spot at this point in time. So congratulations. Operator: Our next question comes from Sean Haydon of Charles Lane Capital. Sean Haydon: Thanks for all the information and congrats on the recent developments. Bryant, in your prepared remarks, you spoke of a, I believe, the word Specialty Finance Platform within the boundaries, could you kind of expand on that? And is that going to be something that's going to be on balance sheet or shared with investors? How should we kind of think about that going forward? Bryant Riley: Sure. So Thanks, Sean. This is not incredibly different from what we've done for a long time, helping facilitate transactions. And as we mentioned in our in our press release, there is a gap in the market for more short-term loans, especially around public companies when you're willing to also underwrite not only the business, but the equity and all the assets of the estate. And so we will -- we did a loan -- we completed a loan. I think it's done maybe was done today, but it was for a public company, a $10 million loan against receivables and those receivables go directly a lot, so we take a fee off of those and they'll pay us back in 4 months, but they had a direct use for that. There's not a lot of places you can go for that type of transaction. We certainly have a lot of relationships, just like anyone does that has a loan business like that, where we will consider syndicating. We have a dedicated family office that is -- partnership is a wrong word. It's not formalized, but we have a high degree of confidence that, that family office will be a participant to the extent we want to do some things bigger. So on balance sheet, depending on timing, depending on size, syndicated depending on timing, depending on size. I think the most proprietary thing and the reason that we wanted to make sure that we were in this business is, one, it's serving clients that are long-term clients, and we think we can put that in perspective. Two, we don't think it's a hugely competitive market because most lenders need a duration of their capital and a defined MOIC and have very kind of strict mandates within the lending portfolio. So we think we can be opportunistic and also be really good partners. And so we're really excited about formalizing it. And we think we're already seeing just from that press release, we're seeing opportunities. So that's how that will work. Does that answer your question? Sean Haydon: Yes. Yes. No, that was helpful. And then kind of piggybacking on the first question from the previous person where are you guys comfortable bringing the balance sheet in terms of net debt? I mean should we expect it to be lower? And how should we kind of think about it getting there? Bryant Riley: So that's -- it's a question every day based on your cash flows and realize this year, our expenses -- our cash flows were hit quite a bit because of these expenses associated with the financials and changing orders and all the legal things. And so we expect to get some tailwinds there. We think that from operations, obviously, there's going to be meaningful cash flows. And we look at it all the time. If you were to take to market our portfolio now, the debt-to-EBITDA on a trailing basis would not be hugely uncomfortable, but that's net debt, right? So we have to constantly hit these things. I don't think there's -- I don't think there's a number of mine. We just want to make sure that we can, one way or another, be on the offense and helping our clients and being able to utilize capital to do that. And so that will always be mindful of that, and we'll balance that against whether we need to utilize other methods, selling an asset or doing bond swaps. So I can give you a target. I could tell you that we feel pretty good about where we are right now, obviously, relative to where we were 18 months ago, and we're just going to keep grinding away. Sean Haydon: Yes. I guess obviously, we don't have to get any specifics here, but directionally, when those maturities come up in the latter half of the year, should we expect replenishment from that? Or is that going to be the level we should expect going forward once they've matured. Thomas Kelleher: I kind of answered the same way I answered the prior call or if -- in this business, 6 months and 9 months is like equivalent to 5 years in a legit business, if things changed 18 different ways. And I just -- I would I couldn't tell you exactly what the next steps are going to be other than we feel really comfortable about our -- about 2026 and going forward. So I would love to give you an exact linear description on the next steps, but we're just going to continue to think through what is best for the overall business and where we are in markets and how markets are. And if we're seeing a ton of opportunities, as Scott said, to put money to work at really good rates are really good opportunities that we'll be thoughtful of that. But it's similar to how we got to March. I mean, by the time we got to March, there was $96 million of maturities, and we had tipped away at them from a couple of different ways. And that's how I would think about September and December. Sean Haydon: Congrats. It's been a ride. Bryant Riley: Well, I know you've been on the ride, and we appreciate it, going forward and accomplished a lot and just are charging forward. Operator: [Operator Instructions] Our next question is a follow-up from Amer of Imperial Capital. Amer Tiwana: I just wanted to dig into the Great American business. Can we talk a little bit about what -- how do you guys value the business on your balance sheet? And secondly, you guys had invested some additional capital for the JOANN liquidation. Can you talk about what kind of returns you got are expecting on those investments? Scott Yessner: Yes. I was going to just touch on the accounting and the booking and that part of it, and then turn to you, Bryant. Yes. So there's -- the nature of the capital structure at GA Group after we did sold a portion and now have roughly 43% to 45% of that business. Because of that structure, we had to use an accounting treatment hypothetical liquidation and book value method. And it just sort of gives you a book value of that company. And when you think about the value of a firm like the GA Group, the balance sheet is not primarily the element to it. It's a fantastic business, which you know, we've honed for well over a decade. And so the part of the reason for my remarks on the call was just to identify that the -- well, we will communicate its performance as we are required to the 10-K of the actual business, the valuation on the balance sheet won't move much, and we think that's helpful to communicate to our shareholders and analysts to understand that the performance of the business may not necessarily be reflective of a hypothetical liquidation, but value, which I know everyone is very good at understanding book value versus market value. And so that's how -- sort of how to think about it is that we want to communicate the performance in its P&L sense and earnings sense, but may not be able to reflect the actual valuation change in the balance sheet. And with respect to the equity. The equity returns that we earned on the JOANN's deal, that was -- those are very, very high. We -- that was a very, very successful deal for us, something that we were very comfortable in being with as part of our means of organizing that partnership with Oaktree, the majority owner now. And those are equity participations in transactions or something that we want to supply capital for and continue to. And we also provided some lending last year to that business operation. And so we want to outside of our ownership through that equity investment, provide additional capital to support the business. So Bryant, I'd like to pick it up from there. Bryant Riley: No, that was perfect. Yes, I wouldn't add anything more. Operator: Our next question comes from Jonathan of JH Lane Partners. Unknown Analyst: I had a couple of quick ones for you guys. Number one is -- what is your ability to sell any of your shares in Babcock for liquidity purposes? Are there any restrictions associated with that given your significant ownership stake of the company. I have 2 other follow-ups. Maybe if you just want to answer that one first, and then I'm happy to get to the other questions. Bryant Riley: We are -- we've been very involved in BW in a number of ways and advisory roles, et cetera. But in terms of restrictions outside of being restricted because we would have information. Our shares are subject to 144A requirements, which means that because we own a fair amount of shares, we would have to measure the volume per month of those shares, but the volume of that company is far more than the shares that we own. So we do have a requirement to follow some volume restrictions based on our ownership, but they are not -- they don't come into play with volumes here. Thomas Kelleher: Okay. Great. And then just on the -- I've been following the story for a little bit. You guys have made obviously, a lot of progress. Is there any general comment you could comment you could provide to the broader market about changes maybe at the governance level given, obviously, it's obviously great that you got the positive litigation rule today or yesterday. But for someone new to the story and perhaps for people to just understand, there's a lot that went on here in the last couple of years. Have you had changes to the Board, other than changing your auditor is the law firm that you had worked with closely over the last couple of years, still kind of involved in your company at all? Like how can we understand kind of OldCo and NewCo, just understanding that is this kind of a new company, a new stage, obviously, some of the management have been the same, but is there any kind of fresh moves on the board and just a sense how we're going into the... Bryant Riley: There hasn't been any new member to the board. I think you can tell by -- as you may know we had a lot of governance around investigations and things like that. I think that center newer to the story, and I certainly appreciate the dynamics around FRG. But BW which you spoke of was not a dissimilar situation. That's a 20-year relationship with the management team and that company, obviously, with our help and with the number that the management team has really ended up having great returns for us. And so you're balancing things that you've done in the past and things -- and the way you're going to look in the future and what is best for the business. And I think that certainly, we have -- Scott Yessner is here, and we've implemented I think the proper amount of procedures, and I think our Board is incredibly additive and we have a new auditor, which we're very thankful for. And so I wouldn't -- I think that's how I'd answer it. I think I feel good about the procedures we have in place and balancing the opportunities with creating the right environment for everyone. And I think the disclosures we're providing, that Scott is providing is more and more, and we're trying to walk the right line between thinking about the dynamic of an FRG, but also realizing that a lot of the opportunities we have in front of us are going to be -- we need to take advantage of. So Tom or Scott... Thomas Kelleher: Yes, that's very helpful. And I appreciate it. I just would note that obviously, like a situation like Babcock is just now such a meaningful part of the situation where in the past, like obviously, FRG ended up being a very significant part of the story, obviously, not comparing the 2, but just in terms of like as a percentage of your value and assets is something cognizant from the ex markets in terms of people that invest with you, obviously, that's the more diversified you could be, I think, the better. And then the last question I had would be, is there any update on liquidity or maybe your cash position or something you could provide to us as of 3/31 or post those transactions we did in post the bond pay down that was -- that took place at the end March, I guess now. Bryant Riley: Yes. So I mean, we're going to be back on the phone, hopefully, in 5 weeks, right? I think maybe my [ otters ] are listening. So that's absolutely a hope or 4 or 5 weeks. So we'll get back to -- we're not providing guidance right now. So hopefully, we... Operator: [Operator Instructions] Bryant Riley: I think, operator, I think we're good. Thank You. Just before we go, I'll just speak personally as we've gone through this last couple of years and where we are and the momentum we have, and I'm just humbled by the team that we work with every day, and the new team members, it's been just an amazing experience to be able to be in a situation where you watch arms and you go and you battle and and we're seeing the rewards of that. And I think that the people that have been fighting through it are seeing the rewards of that. So very thankful for this team, very thankful for for TK and Scott and everybody else from our team on the call, and we're excited to be able to have a quarterly earnings call that will be normal and normalized and have a regular cadence. So thank you very much, and we really appreciate everyone for joining. Operator: This concludes today's Evercall. A replay will be made available shortly after today's call. Thank you, and have a great day.
Operator: Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Buzzi S.p.A Full Year 2025 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Pietro Buzzi, CEO of Buzzi S.p.A. Mr. Buzzi, you have the floor. Pietro Buzzi: Thank you, and good afternoon, everyone. Welcome to our conference call. And again, thanks for participating. We do publish a presentation, which I will follow at least in part, if not in full, that is available on our website. So I will mainly refer to that and to the page. So starting from the first page, we have a brief summary of what has been 2025 for Buzzi. Overall, a good year, although not as good as the 2 last one, so with some decline in profitability, but still showing, let's say, very strong results and very significant cash flow generation. So as you can see from here, we had a slight improvement in our revenues, in our net sales. This was already disclosed at the beginning of February with an impact -- positive favorable impact coming from the changes in scope. EBITDA is falling somewhat short of last year, minus 3% approximately, which would be actually minus 6% like-for-like. So the overall impact again of the Forex and the Scope changes was favorable. EBITDA margin, we are losing some profitability, which is mainly due to the fact that the additions, let's say, to the perimeter to the scope at least initially for the first year, they are coming in with an average profitability, which is below the one of the, let's call it, traditional scope perimeter and to the fact that one of the -- or the strongest country for us, U.S. declined somewhat. CapEx are, let's say, similar to last year in terms of industrial CapEx, a little bit lower than last year, considering also the equity investment, and we can let's say, enter into that later in the presentation. Net financial position also with the help of some lower CapEx improved significantly and cash flow generation was very close to last year regardless of the slight decline in profitability. We have -- we propose to the next AGM to keep the dividend unchanged versus last year. But -- and we will comment later the shareholders' remuneration in 2026 is anyway going up significantly, thanks to the buyback program, which is underway. As you can see on the following page, let's say, Page 2, one of the key feature, let's say, of 2025 was the Scope changes, which included an Asset Swap, if you wish, which occurred in Italy and Italy and its bordering country, in particularly Austria, where we sold, let's say, the Fanna plant in the Northwest, is in the Pordenone province for those that are a little more acquainted with the Italian geography. And Alpacem is the owner, is part of the Wietersdorfer group. This group, which acquired the Fanna plant is composed basically of 3 parts. It includes 1.5, let's say, plant in Austria, which is quite strong, let's say, locally. The Slovenian plant where we have already -- we used to have already a presence since some year, which is a very stronger plant just on the other side of the Italian border. And some Italian assets that now includes also the Fanna plant. So quite a strong and integrated group in the Northeast of Italy. And then we expanded our presence internationally between starting from March, April until December, it's an ongoing process, if you wish, by acquiring initially over, let's say, a 30% stake in a listed company in the Emirates name Gulf Cement Company, which is a single plant, let's say, entity, but with a quite significant capacity, very powerful in terms of machinery, let's say, and equipment. Then through the OPA, the ownership was increased. And later on, December and also something more will follow during this year. We achieved a gradual improvement in our ownership, which at the end of the year is around 66% indirectly is a little less because we participate to this investment together with a partner in a specific entity called TC Mena Holdings, where we see as 90% and the partner as 10%. So the, let's say, economic ownership is a little less than the 66% at the year-end. On the following page, you'll see the bridge, let's call it, of the turnover -- 2025 turnover by regions, so by main regions where we operate. And Italy had a fairly good year, I would say. If we do not consider -- so excluding the scope impact, actually, our volume and pricing will remain basically the same, prices slightly better. So this was quite a strong support in Italy coming from the infrastructure project of the so-called resilience plan of the European funds, let's say, allocated to Italy. Central Europe was kind of mixed. So there was a recovery in volume, but prices suffered mainly in Germany. And this translated into, let's say, an offset of the progress that we achieved in the volume in our cement, let's say, shipments. Eastern Europe, I would say, good results overall. There was a negative impact -- unfavorable impact coming from the deconsolidation from the sale of the of the Ukrainian assets. So this was the first year without Ukraine included in the scope of consolidation. But the remaining countries overall performed well, in particularly Poland and Czech Republic. And we did have also some benefits from the strengthening of the local currencies, both zloty, Czech koruna and also the ruble in Russia. U.S. was, in a sense, the worst performer also due to the size. So every time that something, let's say, negative happens to U.S. in our case, impact on our figures on our numbers is inevitably more significant. What happened in U.S., we had a minor, let's say, decline in volumes more in ready-mix actually than in cement. Pricing fairly stable, but no improvement if you look at the average or there were some improvements in specific geographic areas, but some declines in other ready-mix prices were a bit under pressure, particularly in Texas and the overall result was a little negative. And the dollar lost us some of its value affecting the translation. So around EUR 70 million or EUR 70 milliojn negative on our net sales figure. Brazil is coming in for the full year for the first time. So the comparison of the first 2 bars refers to the last quarter of 2024. But the impact is, I would say, overall positive with the exception of some unfavorable variances coming from the Forex. -- and is bringing in additionally, let's say, EUR 2,065 million of turnover. Same reasoning more or less for the UAE, which is smaller in terms of turnover and is also including -- included -- it's been included starting from May, so about 6, 7 months. And this brings us to the EUR 4.5 billion approximately level up to EUR 4.3 billion of last year that you see in the bar at the right. Not top, right side of the slide. And then if we move to the main, let's call it, operating figure for the results, which is the EBITDA. What you can see from here is, again, fairly simple, if you wish. So volumes good trend. A favorable variance of about EUR 44 million, but a number of, let's call it, negative items or unfavorable items associated, first of all, with the price environment, which was overall slightly negative besides what happened in the U.S., particularly, I would say, in Germany. So Germany and the U.S. were the 2 countries where we suffer actually Germany, more than U.S., we suffered the most in terms of pricing trend. Variable cost not so much coming from energy and fuel or electrical power. It was more related to raw material and other variable costs, for example, logistic ones. And fixed cost, typically labor, maintenance were also going up, difficult to fully, let's say, control versus the volume and price trend. Other mixed cost also showing a favorable figure. CO2, basically not an issue last year because we still remain -- this refers, of course, to the countries under the ETS scheme. And in those countries, we basically remain in line with the free allowances received with a few exceptions and a minor, let's call it, negative variance versus the previous year. FX overall negative, mainly in the U.S. And then Scope changes that refer to, okay, on the positive side, Brazil and Emirates on the negative to Ukraine, rebalancing somehow the negative impact that you see on the center of the slide by EUR 61 million. So overall, the decline is what we mentioned at the beginning, and this is the -- in brief, let's say, the explanation and more explanation can be given, of course, country by country or region by region where things did not behave, let's say, or happen in a consistent way. We had, of course, some regions more affected by costs, some regions more affected by prices, et cetera. In the following pages, the cash generation and capital allocation. You can see that operating cash flow, as I was mentioning at the beginning, remained very, very close to last year besides the EBITDA decline. CapEx industrial slightly lower than last year, not really because of our decision to decrease them was actually somehow related to the execution phase, which on more complex projects usually takes than you might budget or when you, let's say, translating the design in the engineering phase into implementation and execution usually takes longer. And remuneration of the shareholder was quite good, I would say. You can see the split between, let's say, dividend and buyback. We have an ongoing program, which started at the end of February, which has been more or less so far 50% completed and we should get to the end. We will see, of course, it depends on the liquidity of the shares on the daily trading. But normally, with this kind of trend, we should be able to complete it by the end of May or maybe even earlier. We will see. It's well advanced and likely to be completed in maybe 2 more months. There is also a proposed resolution taken today by the Board of Directors to cancel the shares that will be in portfolio, let's say, in treasury at the time of the AGM. So we don't know exactly the number. But anyway, both the shares that were already in treasury at year-end and the ones that are being bought currently will be canceled, which is also, I think, overall a positive news for the shareholders. Just to give you a little more color on the different geographic areas, we move to Page 7. The U.S. always, let's say, a very strong contributor to our results. But last year, they were not able to keep up with the same level of profitability that we enjoyed in 2024. Basically, in terms of EBITDA margin, as you can see, we went back to the level of 2023, which is anyway a very good one, both in absolute terms and also in relative terms when you compare to other peers operating in the U.S. But the trend was slightly negative. We faced difficult volume part of the year. Then in the second part, there was a recovery, but not full. So we were unable, let's say, to close with a favorable volume trend, minus 2.2%, I think, very similar to the overall market trend. And ready-mix volumes suffer like we were a little bit more in terms of shipment deliveries and also pricing ready-mix, as you know, as you recall, in our case, they are mainly in the Texas area, which was one of the -- yes, I would say, more difficult in terms of market environment also due to the presence of the significant presence of both incumbent and new importers into the -- along the coast from Houston to Corpus Christi, et cetera. So we have a structure in the U.S., a cost structure which is compared to our countries, skewed in a sense of more significant weight of the fixed cost. So when you lose also slightly volumes, this has an immediate impact on our profitability, which was the main case. So cost not really going down, volumes going down a bit, pricing not moving or more, let's say, moving unfavorable than the opposite. And this was the result. On top, we had the negative foreign exchange impact following the devaluation of the dollar, which on the EBITDA -- on the EBITDA means around EUR 26 million, not a small amount. Moving to Italy, which is the following page, more favorable situation, support, as I was mentioned before, mainly from the PNRR programs. So public building and infrastructure projects, which also are typically enjoying a greater cement intensity versus either new residential or residential renovation. So there is a decline in cement volume, but this is a direct consequence of the Scope changes that we were commenting at the beginning. Meanwhile, for example, our ready-mix concrete subsidiary has been able to increase volume by around 6%. Pricing performance was okay, some improvements. And our cost, both fuel and power were definitely under control. So we did not suffer any significant, let's call it, inflation -- energy inflation during 2025. The changes in scope on EBITDA means 13 million -- EUR 14 million let's say, about EUR 14 million of impact, which is not very different from what you see in the EBITDA variance actually. We are showing plus 3.5% like-for-like. So it was fully offset by the good trend or the stable trend in volume and favorable trend in pricing. In Central Europe, which means for us, basically mostly Germany plus Luxembourg and ready-mix operation in the Netherlands, quite a different trend if we look at Germany versus Benelux. Unfortunately, Germany has a much greater weight on the area because the performance of Luxembourg was -- and in the Netherlands was growing, was okay, was improving. Meanwhile, Germany did improve some. So there was a rebound in the volumes, but there was no rebound. Actually, there was a decline in prices, which started already on the previous year. Actually, we entered 2025, the exit price, let's say, of 2024 was already lower, and we were unable to recover or to change it significantly or just slightly to 2023 and '25. And this was the major impact on the -- I mean, the major reason for the EBITDA decline together with a cost situation, cost environment, which was not favorable or quite different from what we experienced in Italy, mainly on the -- we suffer mainly on the energy cost, on the power cost, not so much on the fuel. But yes, on power, this is also somehow related to the -- to an hedging, which was made in advance so to cover the purchases for 2025, which at the end was not, if you wish, successful in a sense that maybe it was a bad timing. But of course, I mean, the reasoning behind hedging is not to pick the right timing. Just in this year, I mean, in 2026, we will see a totally different trend because the market condition has changed in the meantime. So the change -- the favorable change in Benelux was able to help somehow the region. But Germany, clearly is waiting significantly on this specific portion of the business. And the performance in terms of EBITDA certainly was not was poor overall. I mean there are reasons behind it, which explains it, but was overall quite poor. In Eastern Europe, on the following page, we are, I think, continue to be on a steady, let's say, profitability outcome. Of course, these businesses are not as big and as significant. So their contribution, let's say, to the overall profitability of the company is not as significant as Germany or U.S. But the good news is that there is a positive momentum, both in Poland and in Czech Republic, which should also continue in the coming year. So strong cement volume dynamics in Poland was clearly -- I mean, it was quite meaningful. Czechia, it's smaller, but also stable. Our ready-mix business in Czechia performed very well. We lost cement volumes in Russia. That's the only area where I think also after some years of war, let's say, the impression is that the economy is starting to feel more, let's say, the pain than in the previous year. And also probably in Russia, the prospects for the next year are also quite difficult or more difficult than in other Eastern European countries. Ukraine is not part of the region anymore. So -- but its contribution was not very significant anyway. So if we exclude Russia, there is a margin expansion. And driven by higher production and also, in this case, lower energy cost, which did not as opposed to Germany that we commented before. Exchange rates also favorable, if you wish, not a minor, let's say, contribution, but anyway, a favorable contribution. And the impact of the deconsolidation of Ukraine was, I would say, totally absorbed and also the negative contribution from Russia was totally absorbed by the strong performance of Poland and Czech Republic. Brazil, which is a newcomer, let's say, first year in the group. So let's say that we are on a pro forma comparison here because last year, actually, only the last quarter was included in our figures. We had a volume trend, which was favorable, 2%, 3% up again compared to the full year 2024. Price trend in local currency also favorable. This translated into, I would say, significant margin expansion. Our cost also were particularly the energy costs are lower than the previous year. So -- as a first, let's say, year of full operation in the group, I think we can be fairly happy with the overall performance. There is room to do better in the coming year if the external condition and also the industry trend will go in a certain direction, which is possible. And the only negative factor, the only negative is the exchange rate trend, but not so impact. I mean, not so dramatic on our -- on the overall figure with minus EUR 5 million on net sales and minus EUR 1.5 million on EBITDA. And currently, actually, if we look at the -- of course, it's not necessarily a trend that will continue for the entire year 2026. But what we are seeing lately is actually a more stable real versus the euro since the beginning of 2026. So if the local currency -- if the trend in local currency will perform better, which is what we expect also in euro, we should have -- it should be reflected, I mean, also in euro terms in likely absence of negative FX impact in the coming -- in the current year. Mexico is not part, as you know, of the group is not line by line consolidated, but it remains a very important part in terms of, let's call it, also management involvement, but in particular, in terms of results -- net result contributed to the other company. The Mexican performance was mixed, but overall, still very good. We [ suf ] a bit on the turnover on the EBITDA in euro terms. But when we clean up, let's say, from the foreign exchange impact, actually, both figures were better than last year. And this is one of the few countries together with the Eastern European country, Poland and Czechia, that is -- was able to achieve an improvement in the EBITDA margin, which is already very, very high, as you can see. So I would say that we cannot complain about the Mexican performance. The only complaint is that it cannot be included in the line-by-line consolidation. But for the rest, very strong performance coming from this country. Some comments on how we see [ 2020 ] also on the light of what has happened so far and also recent change in the macroeconomic environment. I mean, we are -- we were, let's say, but we still are pretty confident that we can continue to perform fairly well during the year. There are uncertainties. There are certainly geopolitical tension, potential inflation pressure for how long this difficult, let's say, situation in the Middle East will last and will affect particularly the energy cost, but not only because there are anyway also impacts on the demand in part directly like in the Emirates or indirectly like in Europe or probably less in the U.S. and Brazil. But anyway. So by major, let's say, regions like we showed before, U.S., the expectation are for -- the association is, let's say, forecasting some additional decline in demand. probably in the range of 2%, 3%, something similar to what happened in the previous year. But of course, if this happens, it would be already the 3, 4, 5, 6, 4, at least fourth year in a row of decline versus the previous peak which was not historical peak, but anyway, the previous peak of the cycle in 2022. And this is something that clearly is not, let's say, helping the overall price environment because there's most of the regions of the state, some capacity available. And as I said before, due to our cost structure to lose some volumes almost immediately translates into a margin construction because the fixed costs are quite high in the area. On the other hand, we have seen also at the beginning of the year, particularly during the month of February, demand quite resilient. So it's true that on one side, you have residential weakening, but there are definitely in the nonresidential portion of the demand or yes, some kind of projects that are going well that require cement and concrete. Typically, just to mention one, which is, of course, very much on the fashionable the data center construction, but this is actually happening. It's happening and it's relatively intense in terms of cement consumption. So again, a mixed environment with the nonresidential segment and also the infrastructure probably supportive and maybe even better than what the association has been forecasting for the full year. So we will see. There are, of course, other factors to be considered in the U.S., which we mentioned in the comments of the press release that are a bit disturbing or potentially disturbing, let's say, the price environment. But okay, a situation or a scenario which is, I would say, moderately optimistic. I would be optimistic about the outcome for the U.S. in the current year. Italy should be a year very similar to the previous one as long as we continue to have demand coming from the infrastructure plan, let's say, or the European funds, there are good chances that we can more or less repeat last year results and also Italy is more likely probably than the U.S. to be able to improve somewhat the prices. There are underlying reason related to the introduction of the CBAM, the scarcity or the less availability of CO2 allowances, which also translate into a higher cost. So there are -- there's probably more room than in the U.S. on the pricing side to be a favorable variance. Central Europe, we should see some rebound. We are forecasting some rebound in Germany. The federal infrastructure plan should start -- will start to have some impact also on cement demand. We are coming from a year where the prices, as we were commenting before, remain fairly weak. So there is -- there should be a possibility also couple being within, let's say, the ETS system similarly to the -- to Italy, there should be a possibility to recover something on the pricing side. Clearly, this means also additional cost for CO2, but more chances, let's say, to gain something on the price level. Eastern Europe, with the exception of Russia, which is probably entering a much more difficult phase than what we faced in the last 2, 3 years. We don't see a reason why Poland and Czechia should be worse than the previous year. These are also countries where as opposed to Germany, Italy, we are operating at a very high capacity utilization level. And so we are definitely optimizing, I would say, our profitability, thanks to the capacity utilization, which is -- we think they have to stay. In Brazil, we mentioned it already, we see a positive trend overall, particularly in the Northeast, which has been growing in terms of volume and prices more than the Southeast. But if there is an easing of the monetary policy, which today represents significant constraints for the construction investment with interest rates at 15% or 16% the number of projects that are -- that have been on hold so far should start. And clearly, this has even more impact in the Southeast where most of the consumption and the population actually are because this is where the bulk, let's say, the cement consumption of the country is located. In the Emirates, we will certainly suffer from lower cement consumption until at least -- we will see until something different happens. But that's the country with more direct impact coming from the local, let's say, turmoil or conflicts going on. But on the other hand, we are -- we have a number of initiatives of projects that are -- that have been put in place last year and will continue this year to improve the profitability. So even with the lower cement volume, we may be able to do something better in terms of EBITDA. Mexico craze not affecting directly our numbers. But we are seeing -- we're, let's say, more positive versus last year in terms of volume trend and profitability should remain at a very, very high level. This is for the, let's say, the top line and the volume prices scenario. The risk or the, let's call it, the uncertainties are definitely more related to the cost side, where it is true that many components or many items are -- have been contracted for a certain number of months. So we have certainly some stability for a good part of the year. But it is clear that on the energy cost, in particular, the current situation is creating an environment of rising cost driven by renewed inflation like we mentioned here. So there is volatility, but volatility mainly on the high side in a sense of more expensive side. This is difficult to, let's say, assess completely right now. We ran some number, taking, of course, kind of sensitivity analysis. And there is certainly an impact that we don't know if we will be able to offset with the price improvement or not. It will mainly depend on the specific situation, demand, pricing demand, let's say, competitive environment, what is the attitude of the competitors, et cetera. So the idea is, of course, to try our best to preserve the margins. But how much we will be able to do that and how much actually the cost environment will be unfavorable is difficult to assess. In general, we do see a significant risk of rising cost, in particular, the energy component in the coming months. The FX foreign exchange is very difficult to somehow forecast. Initially, in our budget, we introduced an exchange rate for the dollar, which was definitely weaker than the 2025 average. Is this going to be true? It's not going to be true. We don't know. So far, again, not as much as we forecasted, but this could change in the coming months and can certainly move, let's say, the variance from positive to negative if the dollar will weaken more than what we expected or more than what is showing up to now. So overall, again, reviewing our numbers, reviewing our budget in a quick way, we think that it will be quite difficult or actually as of now impossible to achieve an EBITDA greater than in 2025. So our view right now is to as we wrote, let's say, marginally decline by how much is difficult to tell right now. But I think the message, which is important to give today is that looking at all the variables, looking at all the available information as of now, it is -- this is the best, let's say, forecast that we can make, and we think that is a correct one, which means that, okay, there our profitability will not improve in 2025. But if it is a marginal decline like we expect, will remain anyway at a very good level. And we would be happy, of course, to change this view as soon as possible. And -- but this, realistically speaking, is likely to occur if it does occur only after more months of actual results available. So with, say, 1 quarter or maybe let's call it, 6 months behind us, we will have definitely a clearer view on the full outlook. But I think it's important to give this message today, which has been, I mean, analyzed in a very deep and serious way with, again, running several sensitivity analysis that are giving us this kind of outcome at least at the current stage. So I think I spoke for almost 1 hour. So probably -- in order not to be tedious and to make the conference a little more interactive, I would let you read the following pages by yourself and open now, let's say, the Q&A session. Thank you for listening. Operator: [Operator Instructions] First question is from Ben Rada Martin, Goldman Sachs. Benjamin Rada Martin: I've had 3, please. My first one was on CapEx. I know in the release, you spoke to an increase planned in 2026 versus '25 and some of the buckets in terms of decarbonization and production. Would you be able to talk to what kind of quantum you expect for 2026 CapEx and then in terms of the medium-term CapEx expectations as well? And then the second would just be on the guidance assumptions and very much understand how uncertain the backdrop is currently and very helpful to kind of talk through some of those impacts. But if we look at that moderate decline or slight decline in EBITDA expected, is it right to assume that there's limited energy impacts so far in that number? Or I guess, what kind of pressure do you see embedded within that forecast? And then finally, would just be another quick one on energy. When would you expect to see, I guess, pressure come through the cost base? Is it more of a second half story at the moment? Pietro Buzzi: Yes. I mean the last 2 questions are, I think, related. And the answer, yes, is that definitely, we have -- as usual, I mean, we have in front of us about I mean, starting from January more than today because already 3 months past, but usually 5, 6 months of fairly stable energy cost or at least as we budgeted because of, let's call it, hedging policies, which is different from one country to another. So -- but if you look at the mix or the weighted average, in general, we have 40%, 50% more or less of our cost already hedged for electrical power or fuel. So yes, the trend if it changes, which I think it will change, unfortunately, will be more evident in the second half. By how much, it depends because we have, for example, also countries in Europe, typically Germany and in Europe, the debate about power cost is really significant. I mean there's a lot of political pressure on power cost being too high to reduce even talking about how to amend the ETS. Tomorrow [indiscernible] will speak about that. Let's see what he say. But -- so specifically in Europe, the big countries like Italy and Germany, we don't see a big risk on power cost. The [ famous ] also energy release has been approved. So there, we should be okay. On fuel cost is different, of course, also even if our share of so-called waste-derived fuel is increasing gradually, we are still strongly dependent on pet coke. So let's say, a price which is somehow linked or index to the -- to some extent, certainly to the oil price. So there, easily, you could see an increase of, I don't know, 20% or so. And unfortunately, this is well possible. It will impact only partially, as I said before, the full year results, let's say, 6 months, but it's well possible. On the CapEx, our trend, I think -- I mean, we are always very kind of ambitious. We are approving the budget. And then as I was explaining before, some of the biggest projects are actually taking longer to be executed to come to the execution phase. Engineering is more complex versus the initial -- I mean, at the time of the initial approval. So if you want to take an average of the next 2, 3 years, I would move it to between -- I mean, to be -- except for -- I mean, just the industrial CapEx, then there will be other kind of equity investments or M&A transaction is different. But I would move it to between 500 and 550 is probably a number that considering the major projects that we have underway, including some expansion projects is likely to be the right one. Operator: The next question is from Elodie Rall, JPMorgan. Elodie Rall: So maybe you could talk to us a bit on the price action that you're taking in Europe to start with to offset indeed the increasing inflationary environment. You talked about your hedging strategy. Are you pushing prices a bit more? Are you seeing the industry pushing prices and where are we at, at the moment in terms of price increases in Europe? And same question for the U.S. You talked about better demand year-to-date. So how do you see scope for price increases? I guess April will be the big start in the U.S. And then I had a clarification on your buyback plan. You did EUR 200 million very recently, I think. And now you announced another EUR 300 million plan. Is that the correct way to understand it? You can do another EUR 300 million from here? Okay. I'll stop here. Pietro Buzzi: Yes. On the buyback, in theory, well, first of all, we have to complete the -- undergo, let's say, EUR 200 million. And then the idea is to renew, let's say, the authority to ask for a renewal, to ask the AGM a renewal for the authorization to authorize an additional EUR 300 million. This EUR 300 million still will -- I mean it doesn't mean that we will necessarily, let's say. exercise the authorization. This is a preliminary authorization, which is given by the AGM, and then the Board will have to decide whether to actually start the program or not. What I think is likely to -- I mean this is unless, again, the market changes completely, but I think we will complete the undergoing EUR 200 million. And then we will have an opportunity or a possibility for another, let's say, EUR 300 million in the 18 months, -- is lasting, let's say, 18 months after the AGM resolution or authorization. On the price section, well, there are some countries, I would say, in Europe, mainly which are also -- the biggest one Italy and Germany. The winter has been difficult in Europe. In general, what we saw and what you also will see when we release our, let's say quarterly summary. There's been cold rain. So particularly January and February was not a good time, let's say, to go for a price increase and March is better. And also the weather has been improving. And of course, January and February are not big shipment months anyway. So the attempt in Europe to increase prices is driven yes, mainly by the cost trend, which includes an additional cost for CO2 like we mentioned in the beginning, probably an additional cost associated with the CBAM, let's call it, also a decline of allowances because you have the 2 components. And yes, more, let's say, today than yesterday, of cost pressure on the energy side, mainly fuel, as I said before, than power. The magnitude, I think, it's moderate. We have to make sure, let's say that we will not be, let's say, losing volume or market share, either against the import or local competitors. But I think there is at least in these 2 important countries in Europe, there is a chance to a price improvement and being able to offset the additional costs like we were commenting before, let's say, on the -- on our policies to at least keep the margins. In the U.S., very differentiated from area to area. There are -- okay, we don't have the ETS, but we have other issues that are associated with the, first of all, okay, the imports where they are strong. That continue to be, let's say, have a very competitive approach in terms of pricing. Second, the industry structure has changed quite significantly. As you know, in particular, I think, the growth, the presence of QUIKRETE as a cement player has changed the picture quite a bit. Also QUIKRETE being major customer of cement from us but also from other competitors. And the fact that the declining, let's say, capacity utilization is clearly for them, let's say, an opportunity to self-supply cement to their, let's say, mixing operation as much as possible. It has to be obviously, economically feasible. So if they are too far away from one of their plants, they will continue to buy from another competitor. But if they can, they will obviously buy from themselves. And this is something that is putting pressure because if you lose volume, you have to look for volumes somewhere else, to look for volume somewhere else maybe -- I mean, pricing is a tool. And this is one of the changes we have to -- which again is very regional, but can have a significant impact. Another point which we also briefly mentioned in the press release is the product mix. There was an effort 2, 3 years ago, particularly by the European player in the U.S. to move as quickly as possible to the so-called 1L product. So with a lower clinker content for limestone, which is actually a very good product, but more capacity available and again, players in the market that don't have maybe European parent, like, again, QUIKRETE, their interest in developing or in pushing 1L is much less. And this is also translating into a competitive pressure, which is different from the past where you compete not only on pricing, et cetera, but you compete also on the kind of product that you're selling. So again, a mixed environment. Anyway, if the demand stays, I think that maybe not everywhere, but some price improvement we can get also in the U.S. And then we will see how much the cost pressure -- how much cost pressure there will be on the margins. But it's a complex -- it's a more complex landscape than 2, 3 years ago certainly. Operator: Next question is from Emanuele Gallazzi, Equita. Emanuele Gallazzi: I have 3 questions. Well, the first one is on Germany. Can you just discuss a little bit more on your expectation for the German market in 2026. You mentioned a gradual recovery supported also by the infra spending plan. When do you expect the first contribution from it to kick in? The second one is on the capital allocation, very clear on the buyback. I was looking at, let's say, the M&A, can you just update us on your M&A strategy at this stage and the opportunities that you see in the current environment? And the last one is a clarification on the guidance. I probably missed it. But on which euro-dollar exchange rate is based your current guidance? Pietro Buzzi: Okay. We are at [ 120 ] right now as an average for 2026 versus [ 114 ] -- was [ 113 ] approximately in '25. So this of course, can be -- as I said before, can be better. If we look at the trend so far is better. Will it last? I don't know, anyway. M&A, yes, is the focus. I mean it is a focus in a sense that our idea is to be, of course, continue with a stronger financial discipline and consider only, let's say, targets that are -- can represent a real opportunity, not only on a strategic view, but also on the financial, let's call it soundness of the overall proposal. I think that today, but also before, it really hasn't changed much. The focus remains countries where we already are. So the opportunities -- if there are opportunities where we already have a presence, certainly they are -- we give them much more investigation, but much more, let's call it, focus than versus opening totally new country or venture with someone else. I say something that is publicly known publicly available, certainly in Brazil recently there have been movement announcement, CSN is announcing -- more than announcing, I think, it started actually a sales process of its cement division. And is it -- is this a real opportunity or not for us? Difficult to tell. I mean, we have to -- but certainly, again, looking at the main strategy, which is reinforced in a disciplined way. The presence where we already are, it could represent, let's say, an opportunity. It has to be investigated. I mean the process is at the beginning. So we need to understand a little better. But generally speaking, this kind of, let's call it, opportunities are more interesting than others. And basically, that's it. In Germany, it's not totally clear how much of the, let's call it, public infrastructure plan will translate into a greater consumption already this year. We think that something will show -- is starting to show, will start to be available. In terms of quantities, let's say, of cement coming from these kind of projects. It's difficult to tell, but maybe I don't know. I don't have -- I don't want to spend a clear number without support. But what we are seeing that, yes, there is a rebound due to the normal, let's call it, cyclicality. The fact that after 2, 3 years of declining consumption, it is rebounding. There is more, I think, also optimism let's call it, confidence within the country after the change of government. And there is a potential, but more than potential consumption coming from the infrastructure plan. So what we can do maybe is to look at -- again come back with some figure with you looking at -- because last year, the association was giving some information of some -- was somehow trying to assess the overall impact, but was more on a longer time horizon. So in the next, let's say, 5, 6 years. Maybe there are more recent, let's say, population assessment of what could be or what will be -- what can be, let's say, the impact already in 2026. But I think certainly, there is some. Operator: Next question is from Arnaud Lehmann, Bank of America. Arnaud Lehmann: So I have 3 questions, please. Firstly, on CO2. Do you have an idea how much reduction in free CO2 allowance you will get for '26 relative to '25, that's my first question. The second -- yes, go for it. Pietro Buzzi: No, no. Let's take... Arnaud Lehmann: So the other one is, I think you're announcing a stable dividend for 2025, even though your net cash position is above EUR 1 billion, it seems very comfortable. So maybe we could have hoped for a little bit of growth in the dividend. And lastly, on your assets in Russia, we've seen some competitors in different sectors are seeing their assets being seized. Do you think that's a risk for Buzzi as well? Pietro Buzzi: Well, it is a risk. It's probably the largest or the greatest or the biggest risk that we have also in our, if you call, enterprise risk management tool. The probability, extremely difficult to tell. I think -- because this thing really depends on one person now. He wakes up on a certain morning, and if you ask me, I don't see it very likely. I believe that we can continue this way, which is not great because, unfortunately, we are not able to manage the way we would like. But to see really political attack of this kind, in my opinion is unlikely. Anyway, the risk is certainly there. And it's, I think, yes, the biggest risk we have currently in our system, in our -- the second question, tell me again was... Arnaud Lehmann: So the other 2 were how much reduction in free CO2 allowances and why a stable dividend? Pietro Buzzi: Okay. Reduction is about 1 million less for the group, 1 million tons less. And I think we estimate to be in deficit, certainly in Poland and, I think, in Czechia too. And in Germany, I don't recall if we will be in a deficit also, yes. Yes. In Italy, probably slightly deficit, but not as important. And I think we will continue with our internal let's call it, guideline, which is to use the bank or the inventory of free CO2 allowances in the countries where they were coming from. So meaning in Italy, we will continue to use them and in the other country, also the way of somehow hedging the cost by CO2 rights to the extent needed. But we are also able to secure some already at the beginning of this year when the prices went down. So I think we should have a yes, of course, a cost -- additional cost versus last year, but probably a per ton cost, which is still, let's say, favorable. On the stable -- the idea behind a stable dividend was quite simple. Our net income is the same of last year. It is true that our payout is not that great, and there would be room for improvement. I think there is room also in the coming year is basically -- is basically -- and overall, to let's say, examine and to consider the overall shareholder remuneration. So it is true that on one side, we did not increase the dividend. But we do have the undergoing buyback, which makes the overall -- okay, maybe not for everyone because it depends if you're selling your shares or you're keeping your shares. But in general, I think the buyback is beneficial to everyone. And also the decision to cancel the share will adjust at least in -- finally, in a definite way the EPS with an improvement there, which should translate sooner or later, providing, let's say, that the markets are also becoming a little less volatile and improvement in the share price. So we thought that this would be a balanced decision. And also looking at the coming year, where our outlook is not for an improvement. It seems to us that to keep the dividend, which is, yes, same as last year was a balanced decision. Operator: Next question is from Yassine Touahri, On Field Investment Research. Yassine Touahri: I would have 3 questions. First, a question on pricing. I think in Germany and Italy, some of your competitors have announced price increase of 5% to 10% as soon as April. Have you seen price increase later -- in the U.S., I think it was outside of Texas. You had also price increase of like, I think, between $8 and $12 per ton sent by many of the largest players to ready-mixed concrete producer. Again, have you announced similar price increase? Then I would have a second question beyond the price development. On your vertical integration strategy in the U.S. I think that a lot of your competitors are vertically integrated. And you can see -- I understand from your comment that the lack of vertical integration, for example, versus QUIKRETE has been an issue. Is it something that you could consider addressing in the next 5 to 10 years with potentially more acquisition in aggregate of ready mix? And the last question would be on Russia. Could you give us the amount of cash which is currently in Russia when we're looking at your net debt position? Pietro Buzzi: Okay. Russia, I will check it and let you know quickly. In the U.S. as well, we are not totally, let's call -- let's say, without it, in some area, actually, our vertical integration in Texas and San Antonio, Houston, Austin, et cetera is quite significant. We don't have a presence in the aggregates. I mean, this is true. We have some aggregate production, but not -- never, never considered a business in itself and always somehow related to our ready mix activity. So as a way to supply our own ready mix activity. This will become more significant in the coming years. I would say yes. I think initially, at least more oriented towards ready-mix than aggregates because is the most important in terms of keeping your production levels steady, again, not losing customers or avoid losing customers. So it can be seen more, I would say, as a defensive move than strategy, devoted to additional vertical integration in a market which is -- has been shrinking, let's say, in a way or another in a market that's changed like we mentioned before and also changed in terms of big ready-mix producers that are importing cement for their own supply. The number -- I mean, the risk of losing customers and not being able to replace it with another customer, particularly in the ready-mix environment is great. So it can certainly make sense to add the vertical integration, as I said, more as a defensive move than something else. But it is a defensive move that will allow you to keep your volumes and also to keep your -- again, to keep your margins. On the pricing environment, I think, we moved that, but not by the same percentages there. Yassine Touahri: I think the percentages are mentioned, where the price increase announced. Not the price increase that are expected to be realized. I suspect that the message, I think, of the larger -- of some of the large cement players in the U.S. would be that a low single-digit price increase being expected which I suspect means like maybe half for the price increase... Pietro Buzzi: Yes, probably this is, again, not everywhere, but probably this is the most likely outcome, usually. You have protection, you have anyway, as I said, many players that are behaving maybe not exactly as the big ones that are particularly in this moment where the output is not going up. So clearly, looking very much to their capacity utilization than versus just even if economically speaking, it could make more sense sometimes to lower your production and increase prices in the long run. This is not necessarily a good move because if you lose a customer and you're not able to recover it in the long run, this will translate into lower profitability, too. So yes. Yassine Touahri: And another question was, have you sent a price increase letter for April in the U.S., Germany and Italy? Pietro Buzzi: In the -- so-called price increase letter is more a technique of -- more common in the U.S. than in Italy or Germany. In Italy and also in Germany is more case-by-case, customer-by- customer, let's call it, discussion or any way proposition. So... Yassine Touahri: If we look at -- if you look at your own vertical integration into concrete in Germany and Italy, are you increasing prices in April substantially to offset the higher fuel costs that you're expecting and the CO2 alone? Pietro Buzzi: Is not yet the higher fuel cost. It was more, let's call it, decision taken already at the beginning of the year. And yes, we have price improvement in place, which I don't think will be the magnitude that you were mentioning, right. Like I mean, for the reason that you were mentioning. But yes, we think it's likely to stick also because again, more recently, people are feeling pressure also on other cost factors. So it's more -- it's easier, let's say, to accept also an increase of the cement price if there is a general inflation rebound. Yassine Touahri: And maybe following on this situation. I think like the importer in Europe, especially in Italy, they will probably have to pay a CBAM cost, but it's a bit unclear they don't know. I think what kind of cost they will have to pay because the benchmark is not public. What do you feel? Do you feel that the independent importer are being a little bit careful because they might have EUR 10, EUR 15 extra cost, but they are not yet increasing prices? Pietro Buzzi: No, I think they've been already increasing in general. It is like you're saying, it's not totally clear what will be the -- it depends actually on their CO2 content. And yes, each importer can have a different impact according to the kind of product that is bringing in. But yes, I think everyone is considering just maybe as a conservative move to make sure that they are not losing, let's say, versus the previous price. So that they will be able somehow to offset the additional CO2 cost associated with the CBAM scheme. Yassine Touahri: And on the pricing as well, I think, on one side, you've got the imports that are making it difficult to increase prices. But at the same time, I guess, the cost of importing is probably increasing a lot with the oil price making shipping more expensive? Is it something that could be helpful for you to either increase prices or get back the market share that you lost versus especially the big bag imports? Pietro Buzzi: Yes, yes. It is a chance. The -- anything that makes the import more expensive will allow, let's say, or will help, let's say, domestic supply to be more and more competitive, certainly. Yes, it is a chance. Yassine Touahri: On the other side, on Texas, you've got a new cement plant. I think it's the first time there is a cement plant in Texas for many, many years in West Texas. It looks like it's 10% of the Texas capacity, so it's a lot. And the -- it looks like they're going to -- it looks like the cement plant could be -- I guess, do you see a risk for your market share in West Texas? I think where there is a lot of oil well cement. Do you see a risk as well in your market share in the Dallas Fort Worth area where I guess that if they want to ramp up, they will have to sell to Dallas and Fort Worth. Is there a risk for sure? Pietro Buzzi: Of course, there will be more competition, particularly on the oil well. On the other hand, it is true that GCC was already preparing, let's say, the commissioning of the plant by importing cement from Mexico in the area. So it's not totally new. I mean, of course, they have more capacity locally, so they are more competitive, and they can be more aggressive, but they were anyway preparing the commissioning already before. And on the oil well, yes, at the end, the oil well is really a matter of what is the oil price. So if the oil price stays or goes up, I think, yes, okay. There can be more comments. I think this kind of customer is a little different. I mean, being really special products with a very strong significant quality requirements, consistency must be difficult -- it's much more difficult for a customer of oil well to change supplier versus the normal ready-mix customers. So there must be -- okay, there is a huge pricing difference they will consider it, but then they have to test it. I mean they have to go through their quality department is quite complex. So -- and again, the demand is driven purely from the cost -- from the price -- oil price. Yassine Touahri: Okay. Is it fair to assume that in the U.S. in your forecast, you've assumed maybe a bit of a price increase in land, but no price increase in Texas at this stage? Pietro Buzzi: Correct. Yassine Touahri: Maybe on Russia, on Russia, you don't have the number on even approximately the amount of cash that you have in Russia? Pietro Buzzi: EUR 150 million. Operator: Next question is from Alessandro Tortora, Mediobanca. Alessandro Tortora: A few questions, if I may, as -- so the first one is on you made a comment on a very significant margin expansion. Clearly, volume were up, let's say, low single-digit prices, let's say, not slightly up. So the game changer not to stay in this, let's call it, new level, very good level. So you -- it was the work you did on the cost side. And the real mission of the market is I don't know, to be structurally above 30%. So just to understand that clearly, I understood your comment on we need, let's say, more, how can I say, disciplined competitive landscape and for the CSN deal could help on this. So just your thoughts on this because clearly, the margin expansion, especially in the second half was very, very good operationally. Pietro Buzzi: Yes, yes. It was driven, yes, by -- well volumes were good, let's say. So capacity utilization is some plant is really pro capacity, which is giving the best operating leverage. So this is always -- the energy -- power cost, in particular, we save some. We are also becoming in a sense, indirectly, but let's say, producer of renewable energy. We have now an investment into a renewable energy company, which is allowing us to enjoy, let's say, better -- lower, let's say, power cost. And pricing, not a great change. I mean you don't see such a significant improvement. But there are some improvements in prices. Also again, because the market is quite brilliant, let's say. And yes, CSN could be an opportunity besides -- I mean, whoever buys it, will buy anyway, we'll have to invest a significant amount of money because -- okay, relatively speaking can be cheap or expensive. It depends on how much we want to take. But in absolute term, is any way sizable company. So -- and yes, CSN has been certainly more aggressive, let's say, than other competitors on prices, particularly in the Southeast region. So we hope that this could translate into a more disciplined competitive environment that is certainly a chance, let's say. Alessandro Tortora: Comment on pricing strategy discussion client by client in some countries. So is there at least with some clients in some countries, some kind of indexing with, let's say, CO2 price and so on? Because we saw the decline in CO2 price recently. So just to understand if there is or not. Pietro Buzzi: No, there's not. It would be too dangerous in our -- I mean someone definitely did it in the past, but it's very dangerous. I think in our opinion, will not be the right commercial marketing strategy. Alessandro Tortora: Okay. Because there are different opinions on that. And on the CapEx side, the question is, first of all, you mentioned this run rate for the next 2, 3 years with EUR 500 million, EUR 550 million per year CapEx. Does this include the, let's say, U.S. expansion project you had in mind? Pietro Buzzi: Yes. Yes. Correct. Alessandro Tortora: And which is... Pietro Buzzi: I mean, which will start, but we'll start at a slow pace, let's say. But it will start, yes. Alessandro Tortora: Okay. Okay. And secondly, in theory, we should have, let's say, a second round of grants, let's say, in Europe also for, let's say, some innovative carbon capture projects. Is it something that you're still monitoring? Do you believe that maybe you can take, I don't know, a decision on developing at least one single project for this technology? Or let's say, the approach is to be extremely, let's say, conservative and maybe waiting a little bit for technology getting more mature? Pietro Buzzi: Monitoring, yes. Lorenzo, you want to add something? Lorenzo Coaloa: No, I mean, again, monitoring for sure and -- but let's say, at the same time, we need probably more clarity on the regulation and also on the criteria that will be, let's say, considered by the commission when it comes to the evaluation of the project. Pietro Buzzi: Let's see if there is -- what happens on the ETS side, I say tomorrow, but not tomorrow, I mean the so-called revised ETS by June, I know it's, if I recall correctly, let's see what happens there. Because still, we believe that the cost benefit of a carbon capture project is unjustifiable, let's say, today. So what you are focused much -- is -- and also to -- okay, if you build a totally new plant, but again, cost benefit very difficult to justify, it can make sense. I mean you build a totally new plant. You introduce also the carbon capture installation. But to add the carbon capture installation to an existing plant, which dates to maybe the 70s or the 80s, they are not bad, but let's say there's plenty of room for improvement in energy consumption and also fuel consumption before carbon capture installation. So we are a little bit shifting our focus on projects in countries like Poland or Deuna. Deuna, where we put on all the carbon capture projects to something that will reduce, let's say, maybe CO2 emission by 20%, 25% and modernize the plant. So being ready to possibly at a later time, which I think it will be inevitable because the deadline that are set today are realistic at a later time to introduce a carbon capture on a plant, which has already been optimized, instead of doing it on a plant, which is again 30 -- 40 years old. Lorenzo Coaloa: And maybe if I may add, with a return -- I mean, return on investment definitely much more interesting than a single installation, carbon capture installation with, let's say, a business plan, which is at the moment and with the current situation is not really flying. Pietro Buzzi: It's a better way to lower CO2 emissions for sure. Alessandro Tortora: Okay. Okay. Just if I may, sorry, you mentioned that the financial, let's say, income was not pretty high this year. Can you help us to quantify, sorry, the FX gain component in that number? Pietro Buzzi: Yes. Well, one item, which is included into that figure is also the bad will of the UAE acquisition, which is EUR 44 million positive. If you look at the fewer net interest expense and net interest income in this case, we have EUR 60 million and last year, it was EUR 55 million -- EUR 60 million, yes. Last year it was EUR 55 million. So it is EUR 5 million up. This is the cash portion. The noncash portion, the 2 big items are [ 75 ] of ForEx, so nonmonetary. And -- well, I don't know if it nonmonetary, the bad will because we paid anyway. So -- but we paid less than the equity -- book equity. And so we have [ 44 ] positive that we are also inside the same line item. Operator: [Operator Instructions] Mr. Buzzi, there are no more questions registered at this time. Pietro Buzzi: Okay. Good. Thanks, everyone, for listening. I don't know how many are still listening. But anyway, I hope it was somehow helpful. And we stay in touch, of course, with our Investor Relations team and looking forward to meet you personally in the coming months. Thank you. Operator: Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.
Operator: Good afternoon, ladies and gentlemen, and welcome to today's Rekor Systems, Inc. conference call. My name is Kevin, and I'll be your coordinator for today. [Operator Instructions] As a reminder, this conference call is being recorded for replay purposes. Before we start, I must remind you that statements made in this conference call concerning future revenues, results of operations, financial position, markets, economic conditions, product and product releases, partnerships and any other statements that may be construed as a prediction of future performance or events are forward-looking statements. Such statements can involve known and unknown risks, uncertainties and other factors, which may cause actual results to differ materially from those expressed or implied by such statements. We ask that you refer to the full disclaimers in our earnings release. You should also review a description of the risk factors contained in our annual and quarterly filings with the SEC. Non-GAAP results will also be discussed on the call. The company believes the presentation of non-GAAP information provides useful supplementary data concerning the company's ongoing operations and is provided for informational purposes only. I will now turn the presentation over to Rekor's CFO, Mr. Joseph Nalepa. Joseph Nalepa: Good afternoon, everyone. I'd like to start by thanking all of our investors and stakeholders who have joined us on today's call. Today, I'll walk through our financial results for the year ended December 31, 2025. We've been focusing on execution and operational efficiency and are encouraged by the progress we continue to make. During 2025, we continued to deliver top line revenue growth while also finding efficiencies within our operations. For the year ended December 31, 2025, we recognized revenue of $48.5 million, an increase of 5% compared to revenue of $46 million in 2024. This increase represents continued growth across our public safety and urban mobility businesses. Throughout 2025, we continue to see growth in our sales pipeline and active deployments. As of December 31, 2025, our remaining performance obligations increased to $25.9 million, a nearly 80% increase from December 31, 2024, which highlights strong momentum, giving us confidence in our ability to drive growth into 2026. For the year ended December 31, 2025, recurring revenue was $23.9 million, up 6% year-over-year. This reflects our long-term strategy of expanding our recurring revenue base through software and Data-as-a-Service subscription contracts. Adjusted margin for 2025 was 56% versus 49% in 2024. This improvement was largely driven by a greater portion of high-margin software sales relative to our service and hardware-based contracts as well as operational efficiencies within our deployments. As we continue to grow, we expect margins to fluctuate over time, but to gradually stabilize as our Software and Data-as-a-Service businesses become a larger share of total revenue. As mentioned in our recent press release, we made the decision to onshore our engineering efforts to optimize our engineering operations and cost containment efforts. As a result of this decision, we recognized a noncash asset impairment charge of $3.8 million in 2025. A key highlight this year was our continued focus on optimizing our operations. Total operating expenses, excluding depreciation, amortization and asset impairment charges, declined 20% year-over-year, representing an $11.4 million reduction. These reductions were achieved across all major areas of the business and reflect continuing disciplined cost containment and a deliberate realignment of resources to support our strategy. The combination of revenue growth and improved operational efficiency resulted in significant profitability improvements. Adjusted EBITDA loss for 2025 was $18.1 million, an improvement of $11 million or 38% compared to 2024. A meaningful indicator of our progress in 2025 is the trajectory of our adjusted EBITDA loss throughout the year. Our adjusted EBITDA loss in the first half of 2025 was $13.1 million compared to a loss of $5 million in the second half of 2025, demonstrating that the operational improvements and cost discipline we've implemented throughout the year are taking hold and moving us in the right direction. We are encouraged by this trend and believe it reflects the early results of our strategic realignment. As we continue to evaluate our operations and identify further efficiencies heading into 2026, we do anticipate incurring onetime charges in the first and second quarters, primarily related to the cancellation and restructuring of existing agreements. While these charges are near term in nature, we view them as necessary steps in building a leaner, more scalable operating structure that positions the company for improved performance and long-term value creation. We entered 2026 with strong momentum and remain committed to driving sustainable growth and long-term shareholder value. I'm grateful for your continued support and partnership. Thank you for your attention. Robert, over to you. Robert Berman: Thank you, Joe, and good afternoon, everyone. 2025 was a defining year for the company. We made a deliberate shift away from building the company of the future and refocused the organization on executing a pragmatic, profitable business model. That shift is now clearly reflected in our results. We are a more disciplined, efficient and resilient company, having transitioned from a development-heavy R&D-driven organization to a customer-focused business with fully productized solutions. As our rightsizing actions conclude towards the end of Q2 and the bulk of our efficiency work moves behind us, we are entering a new phase of the company, one focused on scaling. In the back half of 2026, we expect to aggressively ramp sales execution and drive accelerated growth, supported by strong and expanding demand environment and a platform now built for scale. From a financial standpoint, we delivered solid progress. Revenue grew year-over-year despite a significant focus on efficiency. More importantly, our mix towards higher-value recurring revenue and tighter cost controls drove gross margins to 56%. We reduced net loss by 49% and importantly, achieved operating cash flow positivity in the fourth quarter of 2025. Combined with meaningful improvement in adjusted EBITDA, this makes a critical inflection point and demonstrates that our model is both viable and scalable. We have already captured substantial efficiencies through our rightsizing efforts and expect additional gains as we continue to align the cost structure with the current scale of the business. That said, we want to be clear, there may be some quarter-to-quarter variability as we complete this process. The long-term trajectory, however, remains firmly intact. We are also taking a disciplined approach to innovation spend. We are reducing and normalizing R&D to a run rate of 7% to 10% of gross revenue by the back half of 2026, aligning investment levels with a company of our size. At the same time, we are improving development efficiency through the use of modern tooling and focusing resources on near-term customer-driven priorities. Operationally, the decision to onshore our engineering team is already delivering results. We are seeing faster development cycles, improved responsiveness and stronger customer engagement. This is not only a cost and efficiency improvement, it enhances our competitive positioning. Between late '21 and late 2023, we completed 3 acquisitions, each with distinct technologies, teams and operating models, making integration a complex undertaking, after which we navigated a period of leadership transition across both the Board and executive teams, which added another layer of complexity. That work is now largely behind us. Integration is substantially complete, and we are operating on a unified platform and the organization is now aligned, stable and focused. Importantly, we continue to execute and make meaningful progress throughout this period, positioning us to fully leverage these assets as we enter a growth phase in 2026. We also launched Rekor Labs in 2025, focused on identifying synthetically created and modified media known as deep fakes. This initiative builds on technology we have been developing internally for years. Professor Sanjay Sarma has agreed to chair Rekor Labs and stepped down from the parent company Board to do so. In closing, we have materially strengthened the foundation of the business. We now have a more efficient cost structure, higher quality revenue base and a clear path to sustained profitability. With the heavy lifting behind us and a platform built to scale, we are entering our next phase focused on execution, growth and value creation. We believe we are well positioned to drive meaningful, scalable long-term value for our shareholders. Thank you for your continued support. And operator, we can now turn the call and open it up for questions. Operator: [Operator Instructions] Our first question is coming from Michael Latimore from Northland Capital Markets. Mike Latimore: Congrats on getting cash flow positive here in the fourth quarter. I guess as you look to '26 here, do you think -- do you expect the year to be cash flow positive, maybe excluding maybe onetime items? Robert Berman: Joe? Joseph Nalepa: Yes. So without -- I don't want to provide specific profitability guidance, but we are encouraged by the progress we made at the end of 2025, and we hope to continue to build on that momentum as we enter 2026. I think you'll see some additional cost savings related to the onshoring of engineering efforts as well as some other things that we're working on to kind of help reduce our expense base while also maintaining top line revenue growth. I do want to be conscious that there are going to be those onetime charges that come in as we look to restructure the business. But I think it all gets back to ensuring that we're running a lean operation and working towards that goal of becoming profitable. Mike Latimore: Yes. Great. Okay. Sounds good. And then maybe an update on the Georgia deployment. That was a big contract you guys won last year. Maybe talk a little bit about any deployments in the fourth quarter? How does that kind of play out through '26? Robert Berman: Yes. So Mike, typically, the state agencies or DOTs usually shut down between Thanksgiving and New Year's. It will let you do a lot of work. And then obviously, around the country, depending on the weather, it may be impossible. So we just started to crank things up there, probably towards the second half of the first quarter. And we're working down there right now at a pace that's more than we've ever done in Georgia before, and hopefully, it will continue. Mike Latimore: Right. Great. And you highlighted -- for '25, you highlighted the public safety sector growing. Can you just describe a few of the more important customers you had in '25 for public safety? [indiscernible] said in the press release. Robert Berman: Yes. We have a couple of large OEM customers. Unfortunately, that -- where we cannot use their name, but they've been using our engine and software for years. And the LPR business is growing. It's picking up, and we're seeing that. We still have probably one of the best engines there is given that it operates not only in the U.S. but in 90 other countries. So we're seeing more licensing of our software, which is where our focus is. And we're going to continue those efforts going into '26 because it's just a better business model, right? Less overhead, boots on the ground, sales churn and so forth. So we're focused more on the software side of it now, which is good. Mike Latimore: Great. And last one for me. There's been some talk about just political and, I guess, regulatory resistance to ALPR technologies. How do you view that? I mean is that elongating sales cycles? Is that creating obstacles? Or is it accelerating opportunities since you have some solutions there? Robert Berman: We -- the majority of our software license sales are not in the law enforcement arena. They are theme parks, parking companies and others. So we don't have that issue there. In law enforcement, it's always been an issue, Mike. It's not going away. But we don't operate like others. We don't have data lakes. We don't sell the data to third parties. That's where you see a lot of issues. So we kind of stay in the background and let others battle that out. Mike Latimore: I guess I'll sneak one more in, if that's all right. In Texas, there's a good kind of, I guess, master contract there and you have Austin and you're trying to sell other big cities. Maybe update on kind of the receptivity of other big cities to Command in Texas? Robert Berman: Only that it's moving forward. It's a very slow grind. These agencies do not move quickly, although we would like them to, and sometimes we're naive to think that, that was a much faster process. I do think the good news is that we're in front of them. I know we have a couple of meetings coming up later in April with a number of the districts. So there is interest. And we are in the process of working on a couple of new contracts and a couple of renewals of existing contracts. So I think onshoring command was a good thing for us to do because it brought us closer to the customer. And frankly, it fixed a lot of bugs that the system had that where attention wasn't being paid to it. So we'll be able to get that to scale a lot faster now and tweak it. Operator: Our next question is coming from Louie DiPalma from William Blair. Louie Dipalma: For Robert and Joe, for both of you, you referenced the Georgia DOT $50 million contract. In another geography during the summer of 2024, you won the 1,000-plus camera contract with the Florida DOT. What has been the progress of the Florida rollout? And do you expect that program to generate further growth in 2026? And what are the other prospects in Florida besides that particular contract? Robert Berman: Yes. So Florida, it wasn't 1,000. It was 150 systems and District 7. And it was a pilot as a state is looking to move to a Data-as-a-Service model for the entire state, and it's gone well, and we're in discussions with them now and the program is expanding. It's not public. I can't talk about it yet, but we're making good progress down there. The growth of the model and Data-as-a-Service is clearly starting to scale. So that's a good thing. And we're seeing that across a number of states, right? Louie Dipalma: Maybe the opportunity was 1,000 and your deployment was in the 100. Thank you for that clarification. Robert Berman: Yes. Yes, we deployed 150 systems in District 7. We have more cameras in Florida than 150. We deployed at least, I think, another 50, maybe a little bit more, and we're deploying now. But if you look at what the apparatus that we deploy does, okay, and you look at what it can replace, yes, there's thousands of systems that this technology can replace just in Florida alone, right? Louie Dipalma: And for the year that just concluded 2025, did you disclose what percentage of the $49 million in revenue came from recurring revenue versus equipment revenue? And what was the growth of your recurring revenue? Robert Berman: Yes, Joe, you want to take that? Joseph Nalepa: Yes. So it was about a 50-50 split, and we had about a 6% growth in our recurring revenue year-over-year. Louie Dipalma: Great. And should we think of that trend continuing in 2026? Joseph Nalepa: I think so. I think it is part of our strategy, we're working to push customers more to a recurring revenue model, and then that aligns well with Data-as-a-Service, Software-as-a-Service it's a little dependent on the buying power of the certain DOTs, but we do expect as part of our strategy to continue to push that into a recurring model. Robert Berman: One way to think about it is that the -- look, when we first went to the LPR business way back when law enforcement agencies, PDs, large and small, were not doing subscription-based procurement. They were buying hardware and software with maintenance packages. And that's traditionally how DOTs have operated. And we were the pioneers, the company we acquired SCS was the pioneer of the concept of Data-as-a-Service. So the idea that you get what you need to be able to have the data to manage your roadways, both for planning and public safety, but you don't have to buy anything. You just pay a company for the data, and they're responsible for the hardware, the software and the maintenance is a very appealing model. It's just that it takes government a little bit of time to catch on to that, but it is catching on. And we've got multiple states doing that now. So that's going to continue to expand because they get -- they can stretch the dollars that they spend much further, right? Operator: [Operator Instructions] And we reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments. Robert Berman: Look, everybody, thanks for your support. If you recall, back during the call, -- it was just a few years ago that we completed the acquisitions of these 3 disparate companies. And we've gone through a lot, and Rome isn't built in a night, right, or a day. And I think we've got the company stable. We're focused on profitability. I would encourage you to look at the back half of 2025 with regard to the EBITDA loss compared to the first half of 2025. And I would remind you that a lot of the rightsizing and cost savings and efficiencies that we're doing have taken place here in the first quarter of this year, which will probably be equal to, if not greater, than what we did last year. So you can look at the balance sheet and you can do the math, and you can see that the company is headed in the right direction. And the back half of '26, we're going to focus on scale, and then you'll see the company grow but grow profitably and smartly. So it's growing anyway, but growing a lot faster. So anyway, thanks, everyone. Appreciate it. Operator: Take care. Thank you. Thank you. That does conclude today's teleconference webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.