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MRMD 2025 Q4 财报电话会议

Operator: Thank you for standing by. At this time, I would like to welcome everyone to the MariMed Fiscal Year and Fourth Quarter 2025 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Andrew Pacheco, General Manager for MariMed in Massachusetts. Sir, the floor is yours. Unknown Executive: Hello, and good morning, everyone. I'm [ Andrew Pacheco ], General Manager for Massachusetts at MariMed. I'm honored to kick off today's 2025 fiscal year and fourth quarter earnings call. My team at our New Bedford cultivation and processing facility is responsible for the manufacturing of our great brands that is distributed throughout the state. I'm privileged to see firsthand the expertise collaboration and dedication our employees contribute on a daily basis. They take the company's mission to improve lives every day very seriously. You're going to hear during this call about our performance in Massachusetts in 2025 relative to the rest of the market. And I think it's our team's commitment to our success, that's a huge part of what differentiates us and our performance in Massachusetts. Joining the call today are Jon Levine, our Chief Executive Officer; Ryan Crandall, our Chief Commercial Officer; and Mario Pinho, our Chief Financial Officer. This call will be archived on our Investor Relations website and contains forward-looking statements. Actual events or results may differ materially from these forward-looking statements and are subject to various risks and uncertainties. These risks are discussed in the Risk Factors section of our 10-K and 10-Qs available on our website. Any forward-looking statements reflect management's expectations as of today and we assume no obligation to update them unless required by law. Additionally, we will refer to certain non-GAAP financial measures, which are reconciled in our earnings release. I will now turn the call over to Jon for his overview. Jon Levine: Thank you, Andy. Good morning, everyone, and thank you for joining us. Last night, we reported full year revenue of $160 million for 2025, a 1% increase over 2024. 2025 also marked the sixth consecutive year we generated positive adjusted EBITDA. The cannabis industry continues to evolve rapidly. As we have consistently said, we believe an enduring advantage in this environment will come from only the strongest and most accessible brands. That conviction continues to guide our expand the brand road map, which is built around 3 strategic pillars. First, capturing meaningful market share in our existing markets; second, investing thoughtfully to bring our best-performing brands into new markets; and third, a further strengthening our balance sheet to support long-term growth initiatives. We made progress across all 3 pillars in 2025. And have continued advancing them into early 2026. With respect to the first pillar, owning a meaningful share in each of our existing markets, our proven wholesale capabilities delivered another strong year as wholesale revenue grew in each of our core markets. Our integrated expertise across cultivation, manufacturing, distribution and marketing. In addition to the quality of our products, has enabled several of our brands to secure leading market positions, notably for the fourth quarter, Betty's Eddies was the #1 selling edible across the markets where it's available. In the beverage category, which includes hundreds of ready-to-drink options, our Vibations power to drink mix ranked fourth. Turning to the second pillar, expanding into new markets, in 2025, we laid the groundwork to bring our brands to Pennsylvania and New York and launched Betty's Eddies in Maine through a new licensing agreement, expanding through licensing is a clear validation of our brand strength. We're very confident about the revenue potential for our brands in Pennsylvania, especially with adult sales likely to come in the next year or 2. We've watched our product thrives in the neighboring states of Maryland and Delaware. They're already learning a lot about the Pennsylvania market through the managed services partnership we entered into in 2025. In fact, we helped significantly grow our partners' revenue during the short period in which we've managed their business in Pennsylvania. We've established licensing agreements with the same partner last year and they've submitted our products in packaging for state approval. Turning to New York. Construction is underway on the processing kitchen we're building with our partner. That project is on schedule. In Maine, our new licensing partner began distributing Betty's Eddies during the fourth quarter of 2025, and we're tracking with our expectations, achieving positive results with exceptional sell-through at the accounts opened to date. Collectively, Adding these 3 states provide a strategic foothold for MariMed across the Northeast and Mid-Atlantic. Licensing allows us to pursue growth and expand brand distribution in a capital-efficient manner, and we'll continue to pursue other agreements as part of extend our brand strategy. This brings me to our third pillar, continuing to strengthen our balance sheet. We have always maintained a strong balance sheet, and we intend to continue fortifying it to support our future growth initiatives. Last week, we successfully completed the restructuring of the convertible stock held by our Series D shareholder. The agreement extended the maturity of the preferred shares further enhancing our financial flexibility to support our growth initiatives. We are pleased to execute the agreement with favorable market terms for the company, along with reductions in operating expense that Mario will discuss our objectives to provide the stability and flexibility required to execute our growth plan. We recognize that implementing all the initiatives I've outlined only get us part of the way to our goal of value creation we seek and our investors deserve. To help us achieve that goal accretive M&A remains an active and imperative avenue for the company. Our Thrive retail stores also play an integral role in our growth plan. First, they serve as premium showcases for our brands. Second, they enable us to cultivate direct-to-consumer relationships through our Thrive loyalty program. Third, and perhaps the most important, retail will continue to generate the majority of our revenue and operating cash flow. In Ohio, we intend to leverage our second retail license with a new Thrive store to be located in the Columbus area. We anticipate it opening this year. In summary, in 2025, we maintained or strengthened our bend leadership across core markets and expanded our geographic reach. We intend to build on our momentum in 2026 while continuing to reinforce our financial foundation. Our primary growth driver this year will include continued wholesale penetration and full year contributions from Delaware's expanding adult-use market in our main licensing partnership, and anticipated revenue generated by our new Ohio dispensary. At the same time, we will do everything in our control to move up the time line for distribution of our brands in Pennsylvania and New York. While we remain optimistic about the potential for federal reform and Schedule 3 finally getting over the finish line, our growth strategies do not depend on it. It depends on disciplined capital allocation and the execution capabilities of the strongest team in cannabis and we are fortunate to have both. I want to thank our employees for their dedication, hard work and unwavering commitment. Their contributions are the foundation of our success. I'll now turn the call over to Ryan to provide details around our fourth quarter performance. Ryan Crandall: Thanks, Jon, and good morning, everyone. Let me walk you through our performance at a high level and then across each of our core markets. Our sales, marketing and operations teams delivered another strong year with aggregate wholesale revenue increasing 11% in 2025. Wholesale represents 44% of MariMed's total revenue, up from 40% in 2024. Our diversified portfolio across flower, vapes, edibles and concentrates continues to resonate with consumers, delivering compelling value and performance across multiple price tiers and in every market we serve. Overall, we increased our penetration into dispensaries in 2025 by 200 basis points, selling our brands into 85% of retail stores in the markets in which we operate. Turning to retail. We finished the year with momentum, achieving sequential growth of 4% during the fourth quarter compared to a decline of 5% during the same period in 2024. We also increased transactions in our stores by 4% sequentially and 8% year-over-year. Adding Delaware adult-use sales in August was certainly part of our growth story but several initiatives we implemented during the year really started gaining traction toward the end of 2025, helping offset price pressures across our core markets. Those initiatives included centralizing our retail buying, which delivered cross market intelligence and buying power for the company. Second, we improved our assortments and decreased our days on-hand inventories. Working together, these steps elevated our customer experience while also supporting margin expansion. Third, we unified the Thrive brand across all of our stores, and at the same time, launched a new, more user-friendly website to make online purchasing easier. Fourth, we made it easier to shop inside our stores by expanding our store hours as well as our payment options. And fifth, we focused on generating more revenue through our loyalty program, whose members shop more often and with larger basket sizes than nonmembers. We accomplished that by reactivating dormant membership and by implementing strategies to increase membership. Membership in the program increased 7% sequentially during the fourth quarter and 31% year-over-year. The results of those initiatives give us confidence as we look ahead to this year, especially when combined with new initiatives we're executing in 2026, which include the following: continuing to focus on accelerating the growth of our loyalty program membership by personalizing its offerings based on member demographics, geographics and buying behaviors. Next, we launched a Thrive retail app, which will enable us to increase and personalize our communications with Thrive customers at greatly reduced cost. You can download the app thrive dispensaries from the Apple and Android stores today. Third, we're putting a heavier emphasis on increasing the internalization of MariMed-produced brands in our stores, helping expand the company's margins. Turning to individual market performance. In Massachusetts, wholesale revenue was flat year-over-year and for the year, mapping the state's performance according to state sales figures. We ended the year with our products in 83% of the dispensaries in the state, a 4% increase since 2024. In an environment defined by price pressure, the strength and consumer appeal of our brands enabled us to expand our presence across more dispensaries statewide. Betty's Eddies and Bubby's Baked continued to shine, ranking #1 in their respective edible categories. By basins, Nature's Heritage pre-rolls and InHouse gummies all owned significant share as well with each ranking among the top 10 in their categories. Retail revenue in Massachusetts was flat sequentially and year-over-year. We view that outcome positively given we were able to increase transactions by 5% during the year versus 2024. It's a recurring theme that sustained pricing pressure in Massachusetts resulted in declines of our AOV. In Maryland, wholesale sales grew 3% in 2025, which was in line with the market's performance year-over-year. We also maintained nearly 100% penetration across open dispensaries with our products available in 108 of 109 dispensaries. There's no resting on our laurels for our Maryland team. Their goal in 2026 is hyper focused on expanding our shelf space in those open accounts. Our brands sustain strong leadership positions in the state with Betty's Eddies, Bubby's Baked by basins and InHouse companies all ranked within the top 5 in their respective categories by market share. During the fourth quarter of 2025, retail revenue in Maryland increased 14% sequentially and 18% for the full year compared to 2024, with particular credit due to our Upper Marlboro team for delivering outstanding games. Overall, we increased transactions across our 2 Maryland dispensaries by 35% in 2025 versus 2024. Turning to Illinois, where we began distributing our brands just 2 years ago, wholesale revenue increased 39% in 2025 versus 2024 as we continue building scale. That compares favorably to the state's overall cannabis sales, which declined 5% according to [indiscernible]. We expanded distribution into 27 additional dispensaries in Illinois during the year, finishing the year with 82% penetration and reinforcing the competitiveness of our brands in a crowded marketplace. Retail sales in Illinois were flat sequentially and decreased 26% for the full year versus 2024, primarily attributable to the price pressure in that market. In Delaware, we have been very pleased with wholesale performance following the commencement of adult-use sales in August 2025. Wholesale revenue increased 37% sequentially, supported by the expansion of our Milford cultivation facility, which positioned us to meet rising demand. Our products are available in every Delaware dispensary and according to [indiscernible], our portfolio achieved the #1 overall market share in 2025. Betty's Eddies, Bubby's Baked, Vibations and InHouse gummies each ranked #1 in their respective categories. And total sales for both Nature's Heritage and FSC brands placed us #1 in the flower category. At retail, revenue tracked in line with our expectations following the adult-use transition with sales across our 2 Delaware stores increasing 1.25x following the AU launch. In summary, our business remained resilient in 2025 despite a challenging operating backdrop. We entered 2026 with momentum on our side and well positioned to further strengthen our brand leadership and build on the foundation we have established. Before turning the call over to Mario, I want to thank all our wholesale and retail employees. They demonstrated the creativity, expertise and commitment necessary to deliver strong results in the challenging environment. I will now turn the call over to Mario to provide the financial update. Mario Pinho: Thank you, Ryan, and good morning, everyone. For the fourth quarter, total revenue was $41.7 million, bringing full year 2025 revenue to $159.8 million, representing 1.3% sequential growth in the quarter and 7% growth for the full year. Against a broadly flat industry environment, we delivered growth, maintain margin discipline and strengthen liquidity, reflecting continued operational focus across the business. From a mix perspective, fourth quarter retail revenue was $23.4 million, up 3.6% sequentially. Beyond top line growth, retail continues to generate the majority of our operating cash flow and remains the driver of our cash generation profile. During the quarter, we saw a stabilization in store level contribution margins and improved inventory efficiency, reflecting the operational initiatives Ryan outlined earlier. Wholesale revenue for the quarter was $17.6 million compared to $18 million in the prior quarter. while sequential pricing pressure persisted in certain mature markets, we continue to manage production planning yield optimization and brand positioning to protect contribution margins. Importantly, performance in newer markets with healthier supply-demand dynamics such as Delaware continues to validate our strategy with stronger demand dynamics supporting healthier unit economics. Non-GAAP cost of revenue for the quarter was $25 million, resulting in gross profit of $16.5 million. Non-GAAP gross margin declined modestly to 40%. Operational efficiencies across cultivation and manufacturing helped offset pressure in certain mature markets, allowing us to maintain margin stability. Turning to operating expenses. Total operating expenses were $56.9 million for the year, representing only a 0.7% increase compared to 2024. This reflects continued discipline across SG&A even as we invested selectively in brand expansion and new market infrastructure. This expense discipline demonstrated the scalability of our operating model and our ability to generate operating leverage as revenue grows. Operating income for the quarter was $2.4 million, down $667,000 sequentially. For the full year, operating income was $8.8 million compared to $11.4 million in 2024. The decline primarily reflects lower gross profit in certain mature markets as well as a negative contribution from our Missouri operations prior to our exit in October. Excluding Missouri, the year-over-year decline would have been meaningfully smaller, reflecting disciplined cost control across the organization. On an adjusted basis, operating margin declined less than 1 percentage point year-over-year, demonstrating the effectiveness of our cost discipline. From a full year cash earnings perspective, non-GAAP EBITDA for the 2025 was $16.9 million, representing a margin of 10.5%. This margin reflects a disciplined balance between protecting profitability in a pricing compressed environment and continuing to invest in long-term value drivers such as brand expansion and market positioning. For the full year, non-GAAP EBITDA declined 12.8% year-over-year, primarily reflecting lower gross profit and the impact of Missouri operations prior to our exit in October. These factors were partially offset by disciplined cost control and operational efficiencies across the business. Turning to capital discipline and liquidity. Cash flow from operations remained positive during the quarter and for the year, supported by disciplined working capital management -- we exited noncore operations with Missouri maintain measured capital expenditures and prioritize liquidity preservation in a constrained capital environment. We ended the year with $8.9 million in cash and cash equivalents, up from $7.3 million at the end of 2024. In addition, as Jon mentioned, we recently completed the restructuring of our Series B preferred shares, extending maturities and enhancing financial flexibility. Importantly, we have no material debt maturities in the near term, positioning us to execute our growth strategy without near-term capital pressure. Looking ahead, our financial focus remains centered on 3 objectives: driving margin expansion through mix optimization and cost management, prioritizing capital deployment into the highest return opportunities and finally, strengthening liquidity and financial flexibility. We believe our disciplined approach to liquidity will position us to create long-term shareholder value while navigating near-term sector volatility. With that, I'll turn the call over to Jon. Jon Levine: Thank you, Mario. In summary, I'm proud of what MariMed accomplished in 2025, and I'm excited about our prospects for 2026 and beyond. Our company performed well in a challenging environment. Looking ahead, we have a strong leadership team, strong business fundamentals, outstanding brand and no material debt maturing for the next several years. Together with the strategic initiatives we have underway, we are confident in MariMed's tremendous upside over the long term. Operator, you can now open the line for questions. Operator: [Operator Instructions] Your first question comes from Pablo Zuanic with Zuanic & Associates. Pablo Zuanic: Look, special thanks to Ryan for all the color that he gave at the state level. I just want to follow up on a couple of points there. I think you said Illinois retail revenue flat sequentially, but down 26% for the year. My question is more about we've seen the rise in the number of stores in Illinois. I think we're already getting close to the gap. So the effect from the new stores should begin to subside. I mean, correct me if I'm wrong on that because, I mean, the fact that you -- after a big growth for the year, that Illinois store revenues are stabilizing, that's a good sign? Or do you still expect deflation in 2026 and still expect more revenue per store erosion in 2026? I'm speaking specifically about Illinois. Unknown Executive: Thank you for the question. I think we still see some price compression happening in Illinois. But I do tend to agree with you overall that we do believe the market seems to be stabilizing, at least our stores seem to be stabilizing. But price compression is still real in that market, and it is forecasted to compress more in '26. Pablo Zuanic: All right. And if you don't mind, I think you gave the detail for revenues for Illinois in terms of retail, but can you say in total, what happened with Illinois in the fourth quarter, accounting retail and wholesale and then Massachusetts also retail and wholesale? And again, I don't know if you provided that or not in the prepared remarks, I'm not sure. Mario Pinho: Pablo, it's Mario. Specific to Illinois? Pablo Zuanic: Yes. I'm just trying -- I know as you said for the year, Retail, Illinois was down 26%, but wholesale was up, right? So I'm just trying to -- and again, we can follow up offline. But just trying to understand the total revenue for Illinois will happen in the fourth quarter and the full year and the same thing for Massachusetts. Obviously, Massachusetts more stable in total compared to Illinois, but just trying to gauge that. Mario Pinho: Yes, we can definitely follow up in detail offline, but sequentially in Illinois, we were down. and primarily driven by the retail side of our product revenue. Aaron Grey: Right. Okay. And then just moving on to Delaware. Can you comment on your expectations for how fast the number of stores can grow in Delaware, I mean, obviously, that will create great opportunities on the wholesale side but may lead to some revenue erosion at the store level. But what's the outlook there on timing in -- from what you know for the market in Delaware? Unknown Executive: Yes. Pablo, thank you. We are closely working with new stores prior to opening. I think it has been good. We have seen some new stores getting close to coming online. But at this point, it has been a relatively slow rollout of new stores. We are increasing our sell-in to stores across the state and as I mentioned, our brands are leading positions across the state in almost every category, and we have a plan to get there in every category. So very bullish as the new stores come online that we're going to be able to supply those stores and be partners with them out of the gate and make our brands really kind of first movers in every store in that market. Pablo Zuanic: Right. And then just a follow-up here. These are more modeling questions, but in Ohio, Columbus store, when do you expect exactly that to open roughly. And then in the case of the Upper Marlboro store, trade growth sequentially, is that base -- again, is that sustainable that growth pace or was that one-off related to the fourth quarter? Jon Levine: Pablo, this is Jon to speak to you again today. First of all, [indiscernible] it, but we do know that it will be in this year, and we're going to expect as we can to get the building up and running. [indiscernible]. That's a big positive that we are seeing is that [indiscernible] is very willing to work quickly. As far as the [indiscernible], that business has been very strong there for a very small store. It is just a pleasure to watch that continue to grow. And I do believe that it will continue to see additional growth and can handle it. I just think part of it is that the -- that it is so hard to find real estate in Upper Marlboro county that we're getting an advantage even though we're a small store, not easily seen, but we're seeing positives that people are hearing about it and coming in droves. Pablo Zuanic: And the last one, maybe bigger picture. I know that you are following an asset-light expansion model. I guess, in my opinion, those are my words, of course, with the licensing deals in New York and Maine. But what about acquisitions in terms of entering other states and buying hard assets? Is that part of the strategy or not for now, just protect the balance sheet and keep it asset light? Jon Levine: No, Pablo, as I said, the big growth opportunities is to still be active in the M&A and we're out there talking to quite a few different groups. There's a lot of fire sales going on, but they have to be for the right price. We don't want to do something that will be not beneficial for the company or make our balance sheet worse. So we are constantly negotiating but they also have to have some upside. We don't want people that are not capable of running a place that we could go in and turn it around, but we would also want to make sure that we're not buying something that's being the price compression and competition take away from their ability to survive in that market. Massachusetts where there's the biggest over slot of licenses is you're seeing a lot of people going out of business. And there's the opportunity coming up with the expansion in Massachusetts that we hear that they are going to increase the number of licenses. So we are actively looking at trying to gain some more market share. Pablo Zuanic: I had one more, if I may, my apologies, if there's anyone else in the queue here. In the case of the licensing agreement in New York and the MSA in Pennsylvania, is there a path to take control of those assets someday or nothing on paper right now? Jon Levine: There is presently nothing on paper. We're also -- I mean, going into these markets on the licensing ability to learn the markets and to see how those markets react not just to our brands, but just to see what there is in the market in terms of growth potential. And we will look at negotiating with our partners if there is the opportunity to either buy them or join them in some other way than just the licensing agreement. Operator: Your next question comes from Joe Gomes with NOBLE Capital. Joseph Gomes: I wanted to follow up on the Pennsylvania and New York. Jon, doesn't -- from your comments as to what you were looking ahead for '26 to fuel growth doesn't sound like either one of those will be big contributors in '26. I just wanted to make sure I am reading that properly. Jon Levine: You're reading it properly in the way that we've made the statements. We are presently in construction in New York. We're hopeful that we can get that operation up and running before the end of the year. and build the inventory to start revenue either late the year or early in '27. And Pennsylvania is just basically, we have to get the approval of our brands and everything by the state, and then we can go into the manufacturing and building up the inventory in that state also, but it's more of the timing that is out of our control. So we are just not sitting here saying that we're going to have that done. So we're going to be a little bit conservative on that approach. But we're very excited about the opportunity in Pennsylvania. And we're still building up our brands in the state of Maine with our licensing up there also. So the licensing is working positive up there. Joseph Gomes: Okay. And then given the fact that your penetration already is at about 85% in the core market, how much more is available, do you think, from that to help drive growth in '26 and getting additional penetration? Jon Levine: Yes, Joe, thank you for the question. We talk about that often. And it's a tremendous opportunity for us having that type of penetration in these core markets. And so from a product and brand standpoint the ability to go wider and deeper with these customers as we're already a trusted vendor of theirs. I think that's our opportunity. We do believe that, that's a tremendous opportunity on the wholesale side. And I think as you see the trajectory of going from 40% of our revenue to 44% and still increasing the revenue year-over-year, that increased penetration can only help us if we have more products to bear for buyers. Joseph Gomes: Okay. And just one more for me, and I'll get back in queue. So great job on the refi. Just what will that increase in interest cost or interest expense for on an annual basis? Jon Levine: That number is approximately $800,000. Operator: This concludes the question-and-answer portion of the call and today's call. Thank you so much for attending. You may now disconnect, and have a wonderful rest of your day.

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VRA 2026 Q4 财报电话会议

Operator: Greetings, and welcome to the Vera Bradley Fourth Quarter Fiscal 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mark Dely, Chief Administrative Officer [ for very ]. Thank you. You may begin. Mark Dely: Good morning, and welcome, everyone. We'd like to thank you for joining us for today's call. Some of the statements made during our prepared remarks and in response to your questions may constitute forward-looking statements made pursuant to and within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 as amended. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from those that we expect. Please refer to today's press release and the company's most recent Form 10-K filed with the SEC for a discussion of known risks and uncertainties. Investors should not assume that the statements made during the call will remain operative at a later time. We undertake no obligation to update any information discussed on today's call. I'll now turn the call over to Vera Bradley's Chairman and Chief Executive Officer Ian Bickley. Ian? Ian Bickley: Good morning, everyone, and thank you for joining us for Vera Bradley's Fourth Quarter and Full Year 2026 Earnings Call. Before I begin discussing our quarterly results and continued transformation progress, I want to share some important leadership news that reflects the Board's confidence in our strategic direction and the momentum we are building. I am pleased to announce that the Board of Directors has named me as Vera Bradley's permanent Chief Executive Officer in addition to my current role as Chairman of the Board, transitioning from my role as Executive Chairman. Additionally, our Chief Financial Officer, Martin Layding, will be expanding the scope of his responsibilities as Chief Operating and Financial Officer. I want to express my sincere gratitude to our Board of Directors for their support, confidence and this tremendous opportunity to lead Vera Bradley into its next chapter of growth. This leadership transition reinforces the Board's belief in our existing strategies under Project Sunshine and validates that we are on the right path forward. I remain confident that with the right focus, effort and execution we have a tremendous opportunity to increase market share and return the business to growth by reengaging our loyal customer base while also expanding our reach and relevance to new customer segments. In addition to my appointment to the permanent CEO seat and Martin's added role as COO. Over the past few months, we have added new leadership talent across all key customer-facing functions including merchandising, marketing, digital commerce, wholesale and stores. This was achieved through a combination of new external leadership appointments as well as internal promotions of top talent, demonstrating our commitment to the path of continued progress in reinvigorating and reimagining the iconic Vera Bradley brand. I'm also pleased to report that the fourth quarter marks our first quarter of profitability in over a year. We are stabilizing our business gaining better visibility to the underlying growth and efficiency opportunities and beginning to make meaningful progress on our transformation journey. Looking to FY '27, we are planning our sales to be between $255 million and $270 million. The Board's decision to formalize our leadership structure at this pivotal moment underscores the collective confidence in our transformation plans and ability to deliver long-term sustainable results. Over the past quarter, we have remained focused on delivering Project Sunshine which anchors on reclaiming Vera Bradley's joyful optimism and acts as our North Star, bringing creative energy to how we work within functions and across the Vera Bradley team. It is leading us to new ideas for products, marketing and channels, transforming how we work with each other and encouraging us to think differently about our operations. At the same time, we have been addressing past missteps with urgency and implementing comprehensive changes across the business and organization, demonstrating the focus and agility of our team. To remind you, the 5 strategic pillars under Project Sunshine are: first, sharpening our brand focus through product relevance and storytelling. Second, resetting our go-to-market approach with data-led insights. Third, rewiring our digital ecosystem across all touch points. Fourth, implementing [ outlet 2.0 ] for a more brand-enhancing retail experience. And fifth, reimagining how we work with new capabilities and organizational alignment. Before updating you on our progress across these 5 pillars, I would like to provide a few fourth quarter highlights that clearly demonstrate continued sequential improvement and measurable progress towards our goal of achieving long-term sustainable growth and profitability. For the fourth quarter, we achieved strong sequential improvement in our Direct channel registering a revenue decline of 2.6% compared to the prior year, 270 basis points of progress from Q3 and nearly 1,400 basis points from Q2. The Q4 Direct channel top line results represent our third consecutive quarter of sequential improvement. And I'm pleased to report that our fiscal '27 Q1 Direct channel revenue is tracking positive marking a significant milestone in the stabilization of our business. While we have work to do, this performance is building confidence in our teams and reinforces that the direction we are taking is beginning to resonate with our consumers. Overall sales for the fourth quarter were down 1.7% versus Q4 of the prior year. benefiting from positive year-over-year indirect channel revenue growth of just under 5%. Our indirect channel growth was driven by a large wholesale order from an upcoming spring collaboration which we're very excited about and will be able to announce shortly. During the quarter, we also successfully and intentionally leveraged holiday traffic to clear through the discontinued product from last year's Project Restoration while rebuilding our assortment of hero products, including the original 100 bag, iconic heritage prints and select IP including Snoopy and Lilo and Stitch. We continue to see strong consumer acceptance to the strategic reinvestment in our cotton-based assortment and in our brand channels, we experienced a second consecutive quarter of strong double-digit positive comp growth, further validating that we're moving the overall product assortment in the right direction. In our outlet channel, a more impactful and better executed end of season sale in January drove clearance and successful sell-through of discontinued and aged products. At the same time, customers responded positively to the return of classics and handbags, including the triple zip, glenna and [ Vera ] franchise as well as the giftability of our Cody collection. We are also encouraged by the positive response we are seeing to the first deliveries of new spring/summer product that flowed into our stores at the end of January. For the quarter, comparable sales declined by less than 1% and when we account for the negative impact of winter storm firm during the last week of January, our comparable sales were essentially flat. As I mentioned, this marks our first quarter of achieving profitability in over a year with net income of $2.5 million and an EPS of $0.09, a positive year-over-year swing of $0.28. Our bottom line disciplined cost management, while our overall results demonstrate that we are stabilizing the business gaining better visibility and beginning to make meaningful progress on our transformation journey. Martin will provide greater detail, but through an improvement in product acceptance, continued inventory management efforts and disciplined pricing and promotional strategies while delivering smart value to our customers, we generated year-over-year gross margin expansion of approximately 100 basis points. We also managed our SG&A spend prudently with total costs down more than $10 million to the prior year or a favorable decline of 22%. From a cash flow perspective, we generated $17 million in operating cash flow in Q4. This strong cash flow generation allowed us to pay off our ABL facility, further strengthening our balance sheet and providing additional financial flexibility as we continue executing Project Sunshine. While we recognize there's still significant work ahead, these early wins give us confidence that our focused approach to product innovation brand storytelling and operational excellence is moving Vera Bradley in the right direction. The sequential improvement we've achieved across multiple quarters, combined with our return to profitability this quarter, validates that Project Sunshine is gaining traction and positioning us for long-term sustainable growth, profitability and cash flow generation. I want to personally thank our entire team for their disciplined execution, agility and commitment to operational excellence during the all-important holiday season, which allowed us to achieve these results. Now for an update on our Project Sunshine strategic initiatives. First up, sharpening our brand focus. As I've discussed on prior calls, we lost track of what made Vera Bradley special and unique and what customers love about us. We became indistinguishable from other brands and over reliant on promotions, sharpening our brand focus has been all about bringing our unique and distinctive brand positioning to life through our products, marketing and storytelling and where consumers can find our products. Since I joined in my executive chair role, roughly 8 months ago, our #1 focus has been on improving the product. This is an effort that doesn't happen overnight but our Q4 results are testament to the early success we're experiencing. We are seeing strong initial indicators of our product strategies effectiveness and our continued momentum in Q4 was fueled in part by the return of discontinued styles that our customers had been asking for. This 20% of the assortment that we were able to influence this quarter delivered encouraging results, validating our merchandising approach. The great news is that through a combination of reintroduced styles and high demand coupled with newly designed products, the team has successfully influenced approximately 80% of the spring assortment and is generating positive customer response and early sales momentum. The assortment changes we have made remain anchored in the brand attributes, which are core to our DNA. Vera Bradley is feminine, creative, cheerful, whimsical, joyful, fun, colorful, approachable, high-quality and smart value. To support the significant progress we have made on the product assortment during the past 8 months, we are now putting increased focus on storytelling through an enhanced social-first marketing strategy to engage both our existing customers and new audiences. From a creative standpoint, under new marketing leadership and leveraging our core brand attributes, we have shot a new spring campaign that reflects our return to joyful optimism and authentic Vera Bradley roots. This refresh creative is being deployed across our website and e-mail marketing with a major social media push that just began last week. Our marketing strategy has been focused on 3 key priorities: channel optimization, refined messaging and enhanced media efficiency. Despite reducing overall marketing spend year-over-year, we achieved strong performance across multiple metrics, return on ad spend improved meaningfully, e-mail open rates increased, and we successfully scaled our paid social programs while maintaining consistent returns. In addition to product and marketing, we have also been focused on our channels of distribution in order to sharpen our brand focus and amplify our messaging. Let me first spend a moment on our wholesale strategy and partnerships. As I've stated before, while the overall landscape of wholesale partners has evolved, we believe that rebuilding the wholesale channel with the right partners will be a key component of our success in regaining brand relevance and market share. Under new wholesale leadership that has recently joined, we are building a tiered strategy with focus on key retailers, strategic collaborations and specialty accounts. In the meantime, we are thrilled about a large wholesale order that shipped late in Q4 for a very exciting upcoming collaboration, which we will be able to announce soon. We are also seeing recognition of the brand momentum by some leading retail accounts. For Back to School, we will launch a focused Vera Bradley capsule collection in [ 89 ] Nordstrom doors and on nordstrom.com. Let me also spend a moment discussing our IP partnerships, which remain an important driver of brand heat and commercial success. And as we engage both new customers and repeat purchasers looking to collect items. Our strategy is to focus on fewer, more impactful and qualitatively executed IP launches going forward. The success of this strategy was evidenced by our Peanuts, Lilo and Stitch and recent Winnie the Pooh collaborations, which achieved excellent social media engagement and strong product sell-through, some of the best results we have ever had. Second, resetting our go-to-market approach. As previously shared, we have been fundamentally updating our go-to-market approach to deliver what our customers truly need and value working across 6 critical areas. More focused investments into bigger product ideas and [ hero ] styles, alignment of our channel assortment strategy, integrated social-first marketing to support our big ideas in moments like Back to School, better planning and inventory management capabilities to improve terms, stronger pricing and promotion governance to protect margins and enhanced analytics and business intelligence capabilities to inform data-driven decisions. Our goal has been to rebuild the engine that turns our creativity into commercial results and to work in a more integrated and agile manner. In Q4, we saw several examples of this newly new approach positively impacting our business performance. The team began the process of coming together cross-functionally and scrutinizing how we work from product development to buying, to marketing and executing strategies in our channels, ensuring the right products to reach our customers through their preferred shopping channels. We have now integrated consumer insights into this process with the implementation of various customer ethnographies, segmentation focus groups and quantitative analyses that are informing product development to address our customers' needs and wants more effectively going forward. Operationally, we were much more agile, reacting to our data to adjust promotions, marketing and digital communications to meet real-time customer needs, improving gross margin year-to-year and enabling reductions in overall inventory. For Q1, we have developed a streamlined promotional plan that is more focused and less complex to execute that we believe will lead to further gross margin improvements. We also began to impact the business upstream with a new creative team quickly conceiving and executing this spring's campaign with an on-location shoot at dramatically lower cost than historic levels. and producing recognizable and relatable campaign imagery to which our customers have positively responded. We are excited about these early achievements and optimistic about the impact that our integrated approach will continue to have on the business in the year ahead. Moving to our third pillar, rewiring our digital ecosystem. As previous -- as mentioned previously, our digital commerce business across owned sites and third-party marketplaces is already a very important business for Vera Bradley, both in terms of the business size and overall profitability. However, our various digital platforms, there has not been a cohesive customer journey for Vera Bradley customers. During Q4, we took the important step of consolidating the P&L of all our digital platforms, including DTC e-commerce and third-party marketplace operations, and we are currently recruiting a new Head of Digital Commerce to lead this integrated function. At the same time, while taking these important strategic steps, we made significant enhancements to our e-commerce platform with improved site navigation and a better overall customer experience. Our data-driven approach to pricing and promotions has enabled us to operate with lower promotional intensity while maintaining strong customer engagement. Additionally, we deployed enhanced digital capabilities that are driving customer engagement, early results also show strong adoption of our streamlined checkout process, which is contributing to improved conversion rates. Fourth, Outlet 2.0. As a reminder, our Outlet 2.0 initiative represents a fundamental shift in how we approach our outlet channel. Outlet 2.0 is designed to elevate customer experience while maintaining our smart value proposition and reaching customers where we currently do not have brand stores. The enhancements included a curated more focused assortment with an initial 35% SKU reduction, strategically adding new brand products from our heritage and select IP collections. We have introduced elevated visual merchandising elements, including mannequins, light boxes and brand fixtures that hero our signature color, pattern and lifestyle stories. Our enhanced selling experience incorporates updated training, improved in-store tools for selling and personalization. This transformation moves us from a discount-focused model to a smart value curated experience that reinforces brand equity while driving conversion and profitability. Building on the pilot that we launched during the holiday season, we have been taking a disciplined test and learn approach. So far, in addition to the positive qualitative feedback from our customers and employees, we have seen measurable improvements in retail KPIs, including overall sales, conversion rate, average spend and gross profit per visitor versus a control group of stores. This tells us that the Outlet 2.0 experience is engaging consumers in a more meaningful way with the brand. We are continuing to monitor and track these results while also refining the Outlet 2.0 pilot with a view to rolling out additional stores in the near future. And last but not least, reimagining how we work, streamlining our organization while building and investing in new capabilities. rebuilding Vera Bradley for long-term sustainable growth and profitability has required us to make tough decisions to reduce personnel costs. At the same time, reimagining how we work is not only about cutting costs. but also about redesigning our organization to be future fit, building new capabilities and making significant investments in our talent. To date, this has been most pronounced across our customer-facing product, marketing and commercial functions, which are vital to reinvigorating the relevance of our brand and driving brand heat. In addition to the appointment of a new Chief Brand Officer in October, we have now also appointed new leaders across merchandising, marketing, stores wholesale and a soon to be appointed new head of Digital Commerce. We have strategically strengthened our team through a combination of internal promotions and strategic external hires with particular focus on roles that directly impact the customer experience across all touch points. To sum up, we remain confident that the 5 strategic pillars we are pursuing under Project Sunshine are the right initiatives to revitalize the Vera Bradley brand, expand market share and return the business to long-term sustainable growth, profitability and cash flow. To execute these plans, we have been building a best-in-class team with relevant experience that will allow us to move quickly to win in the marketplace. We are reimagining how we work, building a culture of performance, agility, accountability and strong cross-functional collaboration, leveraging data-driven insights to make smart decisions. We are still in the very early stages of our transformation, but remain encouraged by the results we achieved in Q4, the stabilization of our business, the greater visibility we have to the underlying opportunities and the strong belief in alignment, our entire team and Board of Directors has behind our transformation plans. As the newly appointed CEO, Vera Bradley, I am extremely excited about the opportunity to lead us into the future and write the next chapter of this iconic and storied brand. With that, I will turn the call over to Marty for a detailed financial review, and then we'll be happy to take your questions. Martin Layding: Thanks, Ian. Good morning, everyone, and thank you for joining us. I have a few brief comments to make about our performance for the quarter. Before I begin, I want to thank the Board for their unwavering support and confidence in entrusting me with expanded operational responsibilities. Our focus remains on transforming our operational processes to deliver enhanced business performance and greater efficiency across the organization. For the sake of clarity, all of the numbers I am discussing today are non-GAAP and exclude the charges outlined in today's press release, the complete detail of items are excluded from the non-GAAP numbers as well as a reconciliation of GAAP to non-GAAP can be found in that release. For the fourth quarter of fiscal 2026, our consolidated revenues totaled $84.9 million compared to $86.4 million in the prior year fourth quarter. Net income from continuing operations for the fourth quarter totaled $2.5 million or $0.09 per diluted share compared to a net loss from continuing operations of negative $5.4 million last year or negative $0.19 per diluted share. In terms of segment performance, Vera Bradley Direct segment revenues for the current year fourth quarter totaled $74.5 million a 2.6% decrease from $76.5 million in the prior year fourth quarter. Comparable sales declined 0.7%, which represents a sequential comparable sales improvement in each quarter of the current fiscal year, our original 100 handbag heritage prints, along with leveraging holiday promotional activity resulted in positive brand comps and overall positive growth versus last year. Total revenues year-over-year were also impacted by 2 store openings -- new store openings, 13 store closures since the prior year fourth quarter and negatively impacted by approximately $0.4 million due to the temporary store closures associated with [ winter storm firm ] in week 52. Vera Bradley Indirect segment revenues for the fourth quarter totaled $10.4 million, a 4.9% increase from $9.9 million in the prior year fourth quarter. The increase was driven by a large wholesale spring collaboration to be announced in the future date. Fourth quarter gross margin totaled $40.5 million or 47.8% of net revenues compared to $40.4 million or 46.8% of net revenues in the prior year. The increase in year-over-year margin rate resulted from lower promotional activity in outlet channels, A favorable adjustment to the Q3 inventory reserve and freight cost savings, partially offset by sell-through of project restoration inventory as part of clearance and incremental duty costs. SG&A expense totaled $37.3 million or 43.9% of net revenues compared to $47.9 million or 55.4% of net revenues for the prior year fourth quarter. The $10.6 million decrease in expenses was primarily due to continued cost reduction initiatives, reduction in phasing of marketing expenses during the year and reduced lease costs. Fourth quarter operating income from continuing operations totaled $3.6 million or 4.2% of net revenue compared to an operating loss from continuing operations negative $7.3 million or negative 8.5% of net revenues in the prior year. We continue to be pleased with our operational performance, demonstrating increased levels of agility as we react to changes in the marketplace, enabling us to take advantage of opportunities, thus improving our sell-through of age inventory through more focused strategies and tactics. Now turning to the balance sheet. Cash and cash equivalents at the end of the quarter totaled $18.5 million. Cash flow for the year while negative $11.9 million has significantly improved from FY '25 to negative $46.9 million. We had no borrowings on our ABL facility at year-end. Fourth quarter inventory decreased year-over-year by nearly 17% to $76 million compared to $91.4 million at the end of fourth quarter last year. Tariffs increased year-end inventory value by approximately $4.2 million. Excluding tariff impact, inventory dollars would have decreased over approximately 22% versus last year. Our inventory turns were 1.6%, improved from 1.5% from fiscal year '25. We recognize that this is a key measure we need to improve on while also reducing our overall level of inventory in FY '27. In FY '27, we will begin experimenting with new strategies to improve our responsiveness to our consumers when sell-through is ahead of expectations while looking for opportunities to continue ourselves down a project restoration inventory thus improving our net working capital position and inventory productivity overall. As Ian mentioned, we are providing some guidance for fiscal year 2027. For fiscal year '27, we plan for sales to be in the range of $255 million to $270 million as we continue to focus on stabilizing the direct business and rebuilding our wholesale business under new leadership while at the same time, placing less emphasis on liquidation channels. It is important to note that we will not be holding our annual outlook sale in the first quarter as we focus on the inventory for our stores and look to elevate the overall customer and brand experience for this event, which we hope to bring back and better in the future. Further, due to our continued operational focus in fiscal 2027, we expect to see year-over-year rate improvement in both gross profit and SG&A, enabling operating loss improvement of 40% or better compared to an adjusted operating loss of $21.7 million in fiscal 2026. In closing, I want to reiterate that we are encouraged by the progress we have made throughout fiscal 2026, we have significantly improved our operational efficiency, reduced our cost structure and strengthened our balance sheet. While we still have work ahead of us, we are confident in our strategic direction and our ability to drive sustainable, profitable growth over time. Now I'll open the call to your questions. Operator? Operator: [Operator Instructions] Our first question comes from the line of Eric Beder with SCC Research. Eric Beder: Congratulations on the appointments and the strong Q4 results. When we look at it, I know you continue to make progress, when should we feel that the product flows and kind of the product mix is where you want it to be? I know you've worked through kind of prior -- some of the [ prior manages ] pieces. How should we be judging what we're seeing as we go to the stores and beyond through this year? Ian Bickley: I'll begin. Thanks, Eric, first of all, and appreciate the comments. Obviously, this is a really exciting opportunity. And delighted to have a chance to step into this role. I think pretty consistent with what we have said before. We -- our impact on product has gradually improved over time, right, in terms of what we could impact. As I mentioned in the call, about 80% of what is in there for spring/summer, we've been able to impact. I think to fall winter we basically have a blank sheet of paper and everything that is there, we will have been able to impact. And additionally, we are continuing to learn from the product that has flowed in already in terms of the decisions that we've made. With that said, as you are well aware, we are still managing through and balancing some overhang of inventory from Project Restoration, a lot of the discontinued and aged products. So I think this is going to continue to be a path that we're going to have to navigate through over the next 6 to 12 months. And I think overall, I really do think that we need to look at fiscal '27 still as a year of both stabilization of the business, but also a year where we are continuing to build the strong foundation that we believe are going to lead the business to growth in FY '28 and beyond. Eric Beder: Great. And when you think about the future, some of the shifts going on in terms of stores, other pieces. Where should we be thinking about the [ death and where ] the focuses are going to be on this force versus the digital versus the other pieces? And how the store flows can kind of look going forward? Ian Bickley: Yes. No, I think it's a great question. Obviously, let's not downplay the digital business because it is a very important part of our business today. It is an important source of profitability. And it is an important way in which we can reach consumers, especially new consumers when our retail and outlet fleet may not be optimized in the way that we would like it to be. But with respect to the brick-and-mortar, I think first of all, we're going to continue to leverage the fleet that we have and optimize the productivity of that business. That's a big reason for Outlet 2.0 because the majority of our fleet today is outlet stores, which is sort of a -- which is a legacy that we have inherited. But these stores are, as you know, very productive. They get incredibly high foot traffic and the majority of them are located in centers where there are also luxury brands and other premium accessible luxury brands. And so there's a very high-quality footfall and eyeballs that we get. So our -- it is important for us to be the best that we can be in those outlet centers because that's where we're getting the majority of the retail footfall visibility today. In terms of the brand stores, this for us is an opportunity. And as we get more confident about the performance of the product. And as you know, we're now really going to step into a much higher here with the marketing now that we're feeling good about the product pipeline, this is going to be something we're going to be looking at very carefully in terms of where we could selectively open new brand stores in pockets which would make sense for [ us and where we don't ] have coverage. And I would say the last piece of this is going to be the wholesale channel, which for us is going to be a very important channel that we need to focus on and rebuild because one of the things we hear from many of our consumers when we do research is they don't know where to find us. And in many of these sort of more affluent areas, we don't have brand stores. And so I think we also have an opportunity with our wholesale accounts to develop the business there. So focusing on key retailers specialty accounts, in particular, this is a way to -- for us to broaden awareness and reach and fill in some of the gaps that we don't have with our own fleet. And so I think all boats will rise. Eric Beder: Great. We -- so your [ 7 ] Outlet 2.0, do you think you'll open any more of them in 2026? Or should we be thinking about it as another year of kind of increasing the experimentation with the group? Ian Bickley: I can't say that definitively. I think you meant when we opened anything in FY '27, right, this fiscal year? Eric Beder: Yes. FY '26. Ian Bickley: Yes, yes. No worries. But look, I think if I had to place a bet, I would say we are inclined to do a few more Outlet 2.0 stores this fiscal year. I think there are just some opportunities to refine what we do in Outlet 2.0 and also to think about where are going to be the best places for us to do it. Eric Beder: Again, congratulations and look forward to '26. Operator: And this -- we have reached the end of the question-and-answer session. And this also concludes today's conference call. You may disconnect your lines at this time, and we do thank you for your participation. Have a great day.

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RPID 2025 Q4 财报电话会议

Operator: Good day, and thank you for standing by. Welcome to the Rapid Micro Biosystems Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] Please advise that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Mike Beaulieu of Investor Relations. Please go ahead. Michael Beaulieu: Good morning, and thank you for joining the Rapid Micro Biosystems Fourth Quarter and Full Year 2025 Earnings Call. Joining me on the call are Rob Spignesi, President and Chief Executive Officer; and Sean Wirtjes, Chief Financial Officer. Earlier today, we issued a press release announcing our fourth quarter and full year 2025 financial results. A copy of the release is available on the company's website at rapidmicrobio.com under Investors in the News & Events section. Before we begin, I'd like to remind you that many statements made during this call may be considered forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results or performance are forward-looking statements, including, but not limited to, statements relating to Rapid Micro's financial condition, assumptions regarding future financial performance, anticipated future cash usage, statements relating to the company's term loan facility, guidance for 2026, including revenue, expenses, gross margins, system placements and validation activities expectations for and planned activities related to Rapid Micro's business development and growth, including the expected benefits from our distribution and collaboration agreement with MilliporeSigma. Customer interest and adoption of the Growth Direct system and the impact of the Growth Direct system on their businesses and operations and statements regarding the potential impact of general macroeconomic conditions on our business and that of our customers. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors, including our ability to meet publicly announced guidance the impact of our existing and any future indebtedness on our ability to operate our business, our ability to access any future tranches under our debt facility and to comply with all of its obligations thereunder. Our ability to deliver products to customers and recognize revenue and market and macroeconomic conditions. For a more detailed list and description of the risks and uncertainties associated with Rapid Micro's business, please refer to the Risk Factors section of our most recent quarterly report on Form 10-Q filed with the Securities and Exchange Commission as updated from time to time in our subsequent filings with the SEC. We urge you to consider these factors and you should be aware that these statements should be considered estimates only and are not a guarantee of future performance. Please note that today's remarks include certain non-GAAP financial measures. These non-GAAP measures should not be considered in isolation or as a substitute for or superior to financial information presented in accordance with GAAP. They have provided a supplemental information to enhance investors' understanding of our operating performance and may differ from similarly titled measures used by other companies. Reconciliations between these non-GAAP measures and the most directly comparable GAAP measures are available in our earnings release issued this morning. We encourage you to review these affiliations carefully. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, March 12, 2026. The Rapid Micro disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. And with that, I'll turn the call over to Rob. Robert Spignesi: Thank you, Mike. Good morning, everyone. I will begin with a brief overview of our fourth quarter performance and recent commercial wins as well as an update on our key priorities. I'll then share a few comments on our 2026 outlook before turning the call over to Sean for a detailed review of our Q4 financial results and 2026 expectations. Before reviewing our fourth quarter results, I'd like to highlight the first press release we issued this morning announcing that Samsung Biologics is expanding its deployment of the Growth Direct platform through a new multisystem order received in the first quarter of 2026. This follow-on order builds on our existing strong partnership and we are proud to support Samsung's next-generation manufacturing strategy. This expansion yet again highlights the impact that Growth Direct delivers to the world's leading pharmaceutical manufacturers as they seek to automate and modernize their critical quality and manufacturing workflows. Now turning to our performance. This morning, we reported total fourth quarter revenue of $11.3 million, representing 37% year-over-year growth and a quarterly record. These results exceeded the increased guidance we provided in November and marked our 13th consecutive quarter of meeting or exceeding expectations. We placed 16 growth direct systems in the quarter, and ended the year with 190 systems placed globally, of which 155 are fully validated. A highlight of the quarter was a record multisystem order from Amgen reflecting our continued investment in the growth -- in the global rollout of the Growth Direct platform. Amgen is deploying systems across multiple sites in North America, Europe and Asia and fully leveraging all applications to include environmental monitoring, bioburden and water testing. Additionally, Amgen will sponsor our first-ever North American Growth Direct Day in the second quarter. Product revenue increased 78% in the fourth quarter with outperformance driven by strong system placements. For the full year, consumable revenue increased 17% reflecting continued strong utilization across our installed base. Consumable growth remains one of the clearest indicators that customers are actively using their systems and realizing meaningful ROI. Importantly, consumable strength underpins recurring revenue, which increased 15% for the full year and accounted for 53% of total revenue, highlighting the durability and visibility of our business model. Turning to gross margin. Fourth quarter gross margin was impacted by inventory-related charges that Sean will discuss shortly. This does not diminish the significant progress we made throughout 2025 in reducing product costs improving manufacturing efficiencies and increasing service productivity. As I look back at our performance over the last 3 years, total gross margin has improved by over 50 percentage points trajectory, we are confident we can sustain. Now turning to the MilliporeSigma collaboration. Our partnership is entering its second year, and we are pleased with the progress to date. In support of their commercial growth strategy, we have completed specialist training and MilliporeSigma has established customer demo labs across Europe and Asia. These labs will serve as an important part of the sales process to give customers hands-on experience with the Growth Direct system. As a reminder, Rapid Micro operates demo labs in North America, Europe and Asia as well. We continue to work with the MilliporeSigma team as they expand their funnel and drive sales, which we expect will meaningfully contribute to our 2026 system placements. Turning to our supply chain. We are advancing opportunities to reduce product costs and leverage MilliporeSigma's broader logistics network and other capabilities. Combined with our internal efforts, we have already secured meaningful consumable cost reduction benefits that will positively impact product margins starting in the first half and accelerating in the second half of 2026. Now I'd like to briefly review our priorities and 2026 outlook. We are off to a strong start of the year and our priorities remain consistent: accelerating system placements, expanding gross margins continue to innovate new products and prudently managing our cash, all while maintaining disciplined and consistent execution. On the commercial front, we remain focused on expanding and converting our sales funnel. The multi-system global rollout at Amgen and today's announcement that Samsung Biologics is meaningfully expanding its deployment of the Growth Direct platform underscore the substantial opportunity we see across the global pharmaceutical market. In addition, our partnership with MilliporeSigma continues to complement our direct sales efforts by broadening our global reach in our core pharmaceutical segments and providing access to attractive adjacent customer segments. As we work to expand the sales funnel, our annual Growth Direct Day remains one of the most effective customer-focused forums. This year, we are expanding the impact by adding events in North America and Asia. In addition to our premier recurring event in Europe. As a reminder, these sessions bring current and prospective customers together to showcase our automation and improved data management delivered by the Growth Direct can drive meaningful operational improvements and compliance within manufacturing and quality control. We are especially pleased Amgen will sponsor the North American event in Q2, reflecting their confidence in and commitment to the Growth Direct platform. Looking at the broader market landscape, there are strong tailwinds augmenting our consistent commercial execution. These include increased adoption of full automation, a greater focus on data integrity by industry and regulators, advanced manufacturing modalities driving the need to modernize and growing investment in the onshoring of pharmaceutical manufacturing in the U.S. We believe these tailwinds will remain strong and durable, which will contribute to position us well for sustained long-term growth. In addition to staying highly focused on our priorities of accelerating growth direct placements and expanding gross margins, we continue to innovate to provide new value-add solutions to our customers. To this end, we expect to release our next-generation cloud-native software platform in the second half of 2026, which will redefine the growth direct experience for our customers. Our AI engineers have spent 15 years developing and refining the industry-leading algorithm for microbial growth detection. And this new platform will leverage that experience to deliver significant additional value through AI-driven analytics and insights across our customers' global data. As a Growth Direct installed fleet expands globally and generates increasing volumes of digital data, this new software and data platform will provide meaningful value to our customers by enabling deeper insights and faster decision-making power for global quality and manufacturing operations. Against this backdrop, we are initiating full year 2026 revenue guidance of $37 million to $41 million, including 30 to 38 system placements. We expect meaningful gross margin expansion and expect to achieve approximately 20% gross margin for the full year, with performance accelerating in the second half. We believe this guidance is both prudent and achievable and reflects our track record of consistent execution. Sean will provide some additional details around the assumptions included in our outlook as well as potential upside opportunities and we look forward to updating you as the year progresses. And with that, I'll turn the call over to Sean to discuss our fourth quarter performance and 2026 outlook in more detail. Sean? Sean Wirtjes: Thanks, Rob, and good morning, everyone. I'll begin my comments this morning with a review of our fourth quarter 2025 results and then discuss our first quarter and full year outlook for 2026. We'll then open the call up for questions. Fourth quarter revenue increased 37% to a record $11.3 million compared to $8.2 million in Q4 2024. During the fourth quarter, we placed 16 Growth Direct systems, which was also a record compared to 6 systems in the fourth quarter last year. We also completed 3 validations in the quarter compared to 4 in Q4 last year. Product revenue, which is comprised of systems and consumable revenue, increased 78% to $9.3 million in the fourth quarter compared to $5.2 million in Q4 2024. This was primarily driven by the increase in system placements. Consumable revenue grew 11% in the fourth quarter compared to Q4 last year. Service revenue was $2 million in the fourth quarter, which was in line with the guidance we provided in November, compared to $3 million in Q4 2024. As a reminder, the timing of validations tends to be the largest driver of quarter-to-quarter variability in service revenue and the validation revenue we generated in Q4 2024 and remains a company record. Fourth quarter recurring revenue, which consists of consumables and service contracts increased 10% to $4.6 million compared to $4.2 million in Q4 2024. Nonrecurring revenue, which is comprised mainly of systems and validation revenue increased 65% to $6.7 million. Turning to margin. Product margin was negative 8% in Q4, this includes a $1.1 million or 12 percentage point impact related to the write-off of unusable consumable inventory in the period. Our manufacturing team has addressed the underlying situation, and we do not expect any further charges related to this in 2026. Excluding the impact of this write-off, Q4 product margin was positive 4%, which was consistent with our guidance. Service margins were 22% in the fourth quarter compared to a record 47% in Q4 last year. The lower service margins in Q4 this year were due to the lower service revenue in the period, which more than offset the positive impact of service productivity improvements and cost reductions made during 2025. On a combined basis, fourth quarter gross margin was negative $0.3 million or negative 3% compared to positive $1 million or 12% in Q4 last year. Excluding the impact of the inventory-related charges we recorded in the period, total Q4 gross margin was positive 7%. This was in line with our guidance and slightly lower than the Q4 last year due to the impact of lower service revenue on service margins. Moving down the P&L. Total operating expenses were $11.9 million in the fourth quarter compared to $11.2 million in Q4 2024. Within OpEx, R&D expenses were $3.2 million, sales and marketing expenses were $3.3 million and G&A expenses were $5.3 million. For the full year, total operating expenses decreased by 3%, while revenue increased by 20%. Interest income was $0.5 million and interest expense was $0.8 million in the fourth quarter. Q4 net loss was $12.5 million. This compares to a net loss of $9.7 million in Q4 last year. The larger net loss in Q4 this year was primarily attributable to the inventory charges we recorded as well as the lower service margin and higher interest expense in the period. Net loss per share was $0.28 in Q4 compared to net loss per share of $0.22 in the prior year quarter. With respect to noncash expenses and capital expenditures, depreciation and amortization expenses were $0.8 million, stock compensation expense was $0.6 million and capital expenditures were $0.1 million in the fourth quarter. We ended the year with $39 million in cash and investments, which was in line with our guidance as well as $25 million of unused capacity under our debt facility with Trinity Capital. Our net cash burn was $3 million in Q4. As a reminder, Q4 is typically our lowest burn quarter, while Q1 is typically our highest burn quarter each year. Now I'll turn to our 2026 outlook. For the full year 2026, we expect total revenue to be in a range of $37 million to $41 million, which assumes we place between 30 and 38 systems. This system placement range reflects a few key variables. First, our guidance continues to account for some ongoing uncertainty around the timing and scale of customer purchase decisions, particularly with respect to larger multisystem opportunities which often involve more complex purchasing considerations. Second, the low end of our guidance range assumes we do not place any new large multisystem orders in 2026 other than the Samsung order announced this morning. And third, we continue to expect MilliporeSigma to contribute meaningfully to system placements in 2026. However, the low end of our guidance range does not assume they satisfy their full year 2 system commitment since some of those systems may be placed in Q1 2027. For Q1, we expect revenue of at least $7.5 million, including at least 5 system placements. Consistent with historical trends, we expect at least 30% of our system placements to be made in the first half of the year with the remainder in the second half. We also expect revenue and placements to peak in Q4, in line with typical seasonality. Turning to consumables. We expect revenue in Q1 and Q2 2026 to be slightly higher than Q4 2025 and then increased gradually over the remaining quarters with variability driven by the timing of customer orders and shipments. Looking at service, we expect revenue between $2.3 million and $2.6 million in Q1. We then expect service revenue to step down slightly in Q2, followed by meaningful increases in Q3 and again in Q4 based on our current expectations with respect to the timing of installation and validation activities. We expect to complete at least 25 validations in 2026 and with at least 3 in the first quarter. Turning to margins. We expect our Q1 gross margin as a percentage of revenue to be in the mid-single digits with product margin of negative single digits and service margin above 30%. Thereafter, we expect to reach and maintain positive product gross margin in each of the remaining quarters of 2026, led by improving consumable gross margin, which we expect to turn positive in the second half of the year as we fully realize the benefit of meaningful material cost reductions we recently locked in as well as benefits from other cost reduction and manufacturing and efficiency initiatives. For the full year, we expect total gross margin of approximately 20% with a Q4 exit rate in the mid-20% range or better, product margin in the high single digits to low teens and service margin above 40%. Consistent with prior years, we expect quarter-to-quarter variability in gross margin to be driven by progress on our product cost reduction and service productivity initiatives, overall revenue volumes and the revenue mix between systems, consumables and service in each period. We expect operating expenses to be between $47 million and $51 million for the full year. We expect $10 million in noncash expenses, including depreciation and amortization expense of $3 million and stock compensation expense of $7 million. We also expect CapEx of $2 million, interest income of $1 million and interest expense of $2 million. Looking further ahead, our strategic priorities of accelerating system placements, improving gross margin, innovating new products and prudently managing our cash remain unchanged. We continue to build momentum in our business, including our partnership with MilliporeSigma, which we expect will further accelerate progress on these strategic priorities over the coming years, including the meaningful contribution to system placements we've incorporated into our guidance for this year. That concludes my comments. So at this point, we'll open the call up for questions. Operator? Operator: [Operator Instructions] And our first question comes from the line of Tom Flaten of Lake Street Capital Markets. Thomas Flaten: I appreciate all the detail on the guide. The gap between placed and validated systems has widened since 2023. What are you guys doing to or are you doing anything to shrink that gap over time? Is that just more engineers to complete the validation? Can you help us think about that a little bit? Sean Wirtjes: Yes, Thomas. I'll take a shot at that. I think part of that -- a lot of that has to do with timing actually in terms of there can be variation between when we deliver a system and when that validation process gets started, depending on the customers' plans and resourcing that goes along with that. So I think we'd expect to see that come down. I think we talked about Amgen this time. I think as we look at that, some of the color we gave in the call -- prepared remarks, it really ties into how we expect that to roll out, which think the majority of that work is right now, our plan working with them would be that a lot of that would happen at the end of this year. So I think if you look at a deal like that, the expectation would be if you'll see that placed in Q4 last year, we'll get most, if not all that work done with them by the end of this year. So that gives you some indication of how these things can typically go. So there is a natural lag in there. I think you'll see that variance come back in a bit as we work through that and a few other customer situations. So I don't -- it's nothing we're concerned about. It is something we keep our eyes on, and it's something that we will continue to work to keep tight as much as we can. So I don't know, Rob, if you have any comment on this. Robert Spignesi: Yes. It's clearly a robust validation year as well. You can see that backlog being worked and some of this is to Sean's point, driven by order timing, size and timing of orders and just the sequencing of our team and our customers' teams and working through the validations. Thomas Flaten: That's great. I appreciate that color. And then just with the Samsung announcement this morning, could you just comment on the percentage of your place systems that are within CDMOs and how you see that space evolving over time relative to the manufacturer -- or to the drug originators themselves? Robert Spignesi: Yes. So it's interesting. I don't know the exact percentage. So I don't want to put that out. But it's sizable. We've previously announced Lonza as a customer. Samsung, obviously, in other CDMOs as well. We have a very strong value proposition for CDMOs as well as probably call principal manufacturers. We're growing clearly, today is a good example of both Amgen and Samsung. So you've got both a principal manufacturer and a CDMO. But CDMos in particular, or benefit from our ability to turn their lines faster or lease product faster. And also, to a certain extent, in some cases, market the use of advanced technologies and their quality control and manufacturing operations. So yes, quite strong in CDMOs and we plan to stay that way and grow with the CDMO space. We also have talk about it significantly on these calls. We also have small mid CDOs globally as well. So generally, it's a very strong segment for us as well as the principal manufacturers. I can't say it's one stronger than the other. They're both strong right now, and we tend to be in both segments, as we've said, generally more in the advanced modalities, primarily biologics and also in the cell and gene categories within CDMOs and also principal manufacturers. Operator: Our next question comes from the line of Dan Arias of Stifel. Daniel Arias: Sean, on gross margins, where is the confidence in the 20% number for 2026 kind of felt like a good 4Q number would be the jumping off point for what you're going to do this year. I understand it was due to the inventory charge, but the number is sort of the number. So what are the key moving pieces and risks when it comes to your own process? And then as we think about product gross margins being back to negative in 2Q, how do we get comfortable with the idea that as we start to feel better about placement momentum, which has been good, we can also feel good about gross margins that there doesn't have to be an offset there. Sean Wirtjes: Yes. Yes. I'll take that one, Dan. I thinking about it, there's a couple of key drivers to focus on from my perspective. One is -- we talked -- or I talked to my comments about the fact that we have recently locked in some meaningful product cost reductions with some vendors that will benefit us beginning in Q2 with that accelerate in Q3 and Q4. So that is a substantial reduction from what we're paying for some of the key materials in our product, and that's consumables, specifically. So that's number one. Number two, I'd say is I talked a minute ago about how we expect the year to roll out from a validation and service revenue standpoint, you kind of see in recent quarters, what lower service revenues can do from a leverage standpoint in our service margins. We expect to see that go back the other way as we work our way through this year. So to get to 20%, I think the two of the largest drivers, if not the largest drivers are that those cost reductions kind of kicking in full bore in the second half and us getting our service revenues back up to levels where they can generate meaningful margins beyond where we've been over the past quarter or two. Volume is also a big part of it. So as we progress through the year, we're manufacturing more. We expect to sell more. I talked about peaking and placements in those things also contribute. So I think it's important to note the comment that we expect Q4 exit to be mid-20s or above. So that trend should be growing as we work our way through the year overall for total margins. And those are the key factors that give us confidence in being able to achieve those kinds of numbers for the year and exiting the year. Robert Spignesi: And Dan, just to put maybe an estimation point on one thing Sean said on the product cost, in particular. With regard to execution risk, we have contractual agreements in place with the supply base, which is meaningful with regard to how we get comfortable and confident in that cost out in addition to the other elements that Sean mentioned. Daniel Arias: No. Okay. Okay. That's helpful. All right. And then maybe on the systems to Samsung and Amgen, how do you see utilization ramping there? And then just on overall utilization, can you maybe just talk about consumables pull-through per system consumables growth has been pretty good here. We all presumably have this placement and pull-through driven model. So Sean, we've talked a little bit about this. Can you just maybe set a baseline for where 2025 pull-through came in? And then to what extent that number might be higher in 2026. Sean Wirtjes: Yes. So I guess on the first question, Dan, I think -- in terms of what will happen with Amgen and Samsung in terms of pull-through, I think I talked about Amgen a little bit ago, latter part of the year, likely when we get those fully validated. Samsung, I don't know that we have a fixed timetable for that yet, but I'm sure it kind of follows that similar time line would be my best guess. So in terms of where we get with them, I think validations are definitely in play for 2026, our expectation, frankly, in terms of when they start to contribute to recurring revenue, I'd expect that to be more a 2027 factor. In terms of pull-through, I think we continue recently, I'd say, to be kind of in that single-digit year-over-year improvement range that we've talked about historically. So I'd expect that, that will be similar. I think with big orders that kind of a bolus of validations like we're talking about with these larger orders, I think there is an opportunity for us to see more meaningful step-ups in that as we bring those systems online kind of in short periods of time. So for now, I'd say, think about it as single digits in 2026. I think as we look at '27 that we would potentially have opportunity to see a bigger step-up than that in '27. Operator: Our next question. Our next question comes from the line of Anna Snopkowski of KeyBanc. Anna Snopkowski: Congrats on the quarter and the exciting announcement with Samsung. Maybe to start do you think you could share more insight on the Samsung multisystem order? Maybe would you say it's fair that this is in the double-digit range and should we expect this to roll out over the course of 2026 or just Q1? And then just also on this more on the strategy. Is this one site? Is this part of the global rollout or maybe a therapeutic area? And then I have one follow-up. Robert Spignesi: Yes. Generally, Samsung. We won't get into the specific quantum of it, but it's the next phase of rollout. I think many of you may remember, we had the initial launch with Samsung a couple of years ago. This is a second way, which is actually a larger order size. And it's focused primarily on their principal area in South Korea, although some of you may know that Samsung is also acquiring around the world. So also in scope. And as I mentioned a couple of years ago, we expect to grow at Samsung in the quarters and years ahead. And I'll say it again, we expect to grow a Samsung in the quarters and years ahead. Interestingly, which we didn't talk about in the prepared remarks, but also discussing other collaboration opportunities with Samsung, which we're quite excited about. So more to follow on that. And part b, Anna? Anna Snopkowski: Okay. Perfect. And then my second question, just more in general on repeat orders versus new customers. Do you expect these customers, repeat customers like Samsung to move through your pipeline quicker? And then just in terms of validation, is that usually a quarter lag? Or what should we expect both from Samsung and just repeat customers in general? Robert Spignesi: Yes. So a general rule of thumb is repeat customers go faster, generally, both in the sales process and the validation process. It's a general takeaway. Now certain things like some of these large orders Amgen as an example, and other large customers. We haven't specifically mentioned by name across several sites around the world. The sites have projects going on at a given time. So the timing could be throttled by a site-based activity. But generally, it's quite faster, generally, we have what's called a modular validation, which basically leverages the knowledge and work we've done on the initial validation usually at a starter site, and we can roll that out in an expedited fashion to accelerate the process. And as you may imagine, our land-expand strategy is focused on that. But also to your point, we're also -- the team is also out there. acquiring new customers as well, which can be a bit longer, both in the sales process and the initial validation. Operator: And our last question comes from the line of Brendan Smith of TD Cowen. Brendan Smith: I wanted to actually first ask about the kind of next-gen cloud-native software platform you referenced in the prepared remarks. Can you maybe just give us a bit more color on how this gets integrated into devices moving forward? Is this something that all new orders will automatically include some of these analytics capabilities? Is that software update push you can monetize into existing installed base? Just kind of wondering how we should think about that contributing to growth. Robert Spignesi: Yes. So thanks for the question, Brendan. It's a -- think of it as a a bit of a phased approach. So out of the box, first of all, it's a complete rewrite of our application software for the Growth Direct. So it's a completely different architecture. So day 1, the customers benefit from a modern UI, much easier integration into some of their IT infrastructure. And by cloud native, it's been built around a cloud infrastructure. We envision the customers' cloud will run it. But from a future revenue standpoint, we could also provide cloud services. Right now, the system is in a prelaunch phase with a major customer operating in their cloud, running the Growth Direct and the feedback has been exceptional. So we're quite excited about that. So out of the box, a couple of benefits. First, a complete rewrite, so customers benefit from easier navigation, easier integration, a more modern UI, the ability to access data from the cloud, from any device versus through their IT infrastructure attached to their limbs. Over time, we see the ability to provide services against that cloud data. So imagine a fleet of Growth Direct generating. And the idea came from we had these Growth Direct around the world is generating all this data. How can we help customers benefit from that. So the Growth Direct would be effectively an appliance other technologies can also plug into this technology and feeds into a cloud infrastructure. And then against that, we could provide services against that, predictive analytics, other types of insights on seasonality, quality failures, potentially speciation and ID services. And that's really part of the vision. We're not going to get into too much detail on what those are and how we plan to monetize it. But think of this as step one to a couple step multiyear process to really advance from the automation side into the, I'll call it, the AI sort of higher-powered analytics and cloud-enabled side of our business, which will -- the goal is to continue to drive to recurring -- high-margin recurring revenue over time. And -- what we've seen is that customers are -- especially in pharma, which can be a little conservative, are open to discussing how AI and cloud, in particular, can enable their environment. So we're not really pushing against the closed door. It's really -- it feels like we're pushing against an open door. And in some cases, customers are asking us for services in this general category. Brendan Smith: Got it. Super helpful. And then maybe just one last one on some of the consumable cost reduction benefits. I think you guys spoke to starting to see now. Can you maybe just expand a bit on what some of the moves you guys have made on your side, even within the Millipore network, I know you referenced maybe what else you're planning there this year to kind of drive that added production in the second half. Sean Wirtjes: Brendan, it's Sean. Yes, so we are still working with MilliporeSigma on several different opportunities. I think some could benefit this year. Some are more longer-term focused in terms of things we could do in very -- as we've talked about in the past, it's quite a broad pallet of things that we're looking at in terms of things that could benefit our margins, not just material cost reduction. I'd say that the locked-in savings that we have at this point that are going to benefit consumables in 2026 are not with Merck Millipore directly, but they are things that are direct inputs with other vendors that we have in place that our procurement team has done a really good job with and leveraging our growth, leveraging other relationships to be able to get us. What I would say is kind of a step change reduction in cost for a couple of different key inputs into the material that will benefit us this year. So we're excited about that. As I said earlier, it's going to be a key driver of our gross consumable margin expansion by association overall gross margin expansion. And we think it's something that we can use as a template to drive future reductions in others in the future and continue to drive those consumable margins up. Robert Spignesi: Thanks, Brendan. Well, thanks, everyone, for your time and attention. We'll wrap the call up at this point. Thanks again, and look forward to speaking with many of you shortly. Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

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SRI 2025 Q4 财报电话会议

Operator: Good morning, everyone, and welcome to the Stoneridge, Inc. fourth quarter and full year 2025 earnings conference call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on your touch-tone telephones. To withdraw your questions, you may press star and then two. Please also note today's event is being recorded. At this time, I would like to turn the floor over to Kelly K. Harvey, Director of Investor Relations. Please go ahead. Kelly K. Harvey: Good morning, everyone, and thank you for joining us to discuss our fourth quarter and full year 2025 results. The release and accompanying presentation were filed with the SEC and are posted on our website at stoneridge.com in the Investors section under Presentations and Events. Joining me on today's call are James Zizelman, our President and Chief Executive Officer, and Matthew R. Horvath, our Chief Financial Officer. Also on today's call are Natalia Noble, our President of Stoneridge Electronics and incoming Chief Executive Officer, and Bob Hartman, our Chief Accounting Officer who will be stepping into the role of interim Chief Financial Officer on April 1. During today's call, we will be referring to certain non-GAAP financial measures. Please see Slide 2 of the presentation for a more detailed description of these non-GAAP measures, and the appendix for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures. In addition, certain statements today may be forward-looking statements. Forward-looking statements include statements that are not historical in nature, and include information concerning our future results or plans. Although we believe that such statements are based upon reasonable assumptions, you should understand that these statements are subject to risks and uncertainties and actual results may differ materially. Additional information about such factors and uncertainties that could cause actual results to differ may be found on page 3 of the presentation and in our most recently filed Form 8-K and the 2025 Form 10-Ks which will be filed in the next few business days with the Securities and Exchange Commission under the heading Forward-Looking Statements. After our speakers have finished their formal remarks, we will then open up the call to questions. I will now turn the call over to James Zizelman. James Zizelman: Thank you, Kelly, and good morning, everyone. Let me begin on page 4. In 2025, our focused growth strategy, continuous improvements on material and quality-related costs, and rigorous structural cost control enabled us to successfully navigate another year marked by very challenging macroeconomic conditions. We are proud of our ability to continuously outperform our end markets even in a significantly challenged production environment while also limiting the impact on our bottom line. Our outperformance was primarily driven by continued momentum with MirrorEye resulting in sales of over $110,000,000, or approximately 70% growth compared to the prior year. In addition to strong performance this year, our strategy to grow the MirrorEye platform continues to pay off with additional business awards and expansion across many of our global OEMs. Our focus on long-term growth, enabled by our advanced technology offerings, drove significant new business awards in 2025. New business awards announced this year for Electronics and Stoneridge Brazil total approximately $830,000,000 in estimated life revenue. This included the largest business award in Stoneridge, Inc. history for a global OEM MirrorEye program extension, and the largest OEM program award in Stoneridge Brazil's history, as well as several other significant programs for secondary displays, the SmartTube Tachograph, and other electronic control products. In 2025, we limited the impact of significant end market headwinds by reducing material costs by 80 basis points, reducing quality-related costs by $6,600,000, and driving continued inventory reductions to support positive cash flow performance. Our focus on cash performance and inventory management resulted in positive free cash flow of approximately $19,000,000, driven by a significant improvement in inventory balances of $18,700,000. Earlier this year, we announced that we completed the sale of our Control Devices segment for a base purchase price of $59,000,000, reflecting an important milestone for the company's long-term strategy. As a result of this sale, Stoneridge, Inc. will now focus its resources on our highest growth, highest return businesses and reduce overall organizational complexity leading to a clear, focused strategy for the company. Additionally, this transaction strengthens our balance sheet, as proceeds from the sale will be used to pay down debt and reduce interest expense burden. As part of this next chapter for Stoneridge, Inc., we are thrilled to announce that Natalia Noble, our current President of Stoneridge Electronics, has been promoted to President and Chief Executive Officer effective April 1. Natalia will continue focusing on the strategic vision of the company by advancing the rigor and discipline we have built into our daily execution over the last several years to drive long-term sustainable performance. Later on the call, I will more formally introduce Natalia, and she will provide her perspective on the deeply embedded strategy for Stoneridge, Inc. and our unshakable commitment to long-term value creation for our stakeholders. We are proud of our accomplishments in 2025. Yet again, we successfully navigated a year of macroeconomic pressures and maintained operational discipline and focus. With the expected favorable market tailwinds ahead, a revitalized company following the divestiture of Control Devices, sustained momentum from our growth products driving continued outperformance, and keen monitoring of potential headwinds such as geopolitical volatility, we are quite optimistic about the years to come. Page 5 covers our fourth quarter financial performance and summarizes our key financial metrics for the full year 2025 compared to the prior year. While we continue to make significant progress across our key priorities in 2025, fourth quarter results did underperform our prior expectations. The Control Devices segment, which was subsequently divested in January 2026, underperformed by approximately $2,000,000, driven primarily by the unfavorable impact of foreign exchange and incremental tariffs. Similarly, tariffs impacted the remaining business by an incremental $1,200,000 in the quarter relative to our prior expectations. While we expect to recover a significant portion, if not all, of these incremental costs, there are timing differences between when the tariffs are incurred and when the recovery is realized. We have shown historically strong performance in recouping these tariff-related costs and expect to continue to do so with those incurred at the end of the year. Finally, during the fourth quarter, we incurred incremental quality-related costs of approximately $3,300,000 relative to our prior expectations. As evidenced by our full year quality cost reduction of $6,600,000, our relentless focus on continuous improvement has been effective. As stated, we have continued to face challenges with certain legacy warranty issues culminating with settlements with key customers to bring them to conclusion. While this drove incremental cost in the quarter, it also allows us to move on from these historical issues and focus on building stronger relationships with these customers to drive growth in the future. This is why it is imperative that we remain committed to improved quality processes early in the product development cycle to prevent quality issues with long tails as the ones we dealt with this quarter. Now shifting to our full year performance. There is no question 2025 presented some challenges for the broader transportation industry as production volume declined significantly compared to the prior year and fell well below our initial expectations. Even with significantly reduced production volumes, we outperformed our weighted average OEM end markets by 150 basis points in 2025. This market outperformance was driven primarily by the substantial growth in MirrorEye sales as our OEM programs continue to mature, take rates continue to increase in Europe, and new programs launched with Daimler and Volvo in North America. This resulted in MirrorEye OEM revenue growth of 84% compared to the prior year. We continue to be encouraged by the overwhelmingly positive response to our MirrorEye technology from our customers, and their customers alike. Later on the call, we will discuss how this strong market acceptance is expected to continue to drive substantial growth over the long term. Adjusted operating margin was significantly impacted by the decline in sales and the underlying macroeconomic pressures, including tariff-related headwinds and significantly reduced production at certain customers. However, our actions to improve material costs, manufacturing performance, and quality-related costs partially mitigated this impact. Our focused efforts to reduce material-related costs resulted in an 80 basis point improvement relative to the prior year. In addition, and as indicated earlier, quality-related costs improved by $6,600,000, contributing an additional 50 basis points to operating performance, as we continue to focus on built-in quality, responsiveness, and a proactive process to address any historical quality issues. Excluding other non-operating expense of $3,600,000 primarily related to adverse foreign currency impacts, full year adjusted EBITDA was $28,600,000, or 3.3% of sales. This resulted in a 60 basis point decline compared to the prior year and reflects our success in limiting the impact of the significantly reduced volumes faced during the year. We achieved this by our strict focus on improved operational performance, which drove a decremental contribution margin of just 14.2% versus our historical average of 25% to 30%. Finally, as I mentioned previously, our focus on cash and inventory management drove positive adjusted free cash flow of approximately $19,000,000. Lower contribution margin was offset by the significant improvement in our inventory balances, which declined by $18,700,000 this year. Overall, despite continued and significant challenges in our end markets, we were able to outperform our weighted average end markets, significantly improve our operational performance, and drive cash performance in 2025. Turning to page 6. Just a few weeks ago, I announced that I will be retiring effective May 20. As part of Stoneridge, Inc.'s long-term, thoughtful succession planning strategy, the Board has prioritized leadership continuity and a smooth transition to support the company's next phase of growth. That said, I was pleased to announce that Natalia Noble, our current President of Electronics, has been appointed as incoming President and CEO and member of the Board of Directors. I will remain as President and Chief Executive Officer through March 31. On April 1, Natalia will assume the role of President and Chief Executive Officer, and I will remain on the Board of Directors and transition into a Strategic Adviser role to support the transition and key stakeholder relationships through May 20. I will also be a Board nominee for election at our next annual meeting to provide continuity and support for the company. Natalia is the right leader for this company. For nearly two years, Natalia has led the Electronics segment with focus and discipline, making this a natural and well-prepared transition. Natalia is a highly experienced global leader with deep roots in the commercial vehicle industry. She consistently delivers on our commitments and operational excellence while strengthening meaningful relationships with our customers. During her tenure, Natalia led the segment in securing several significant new business awards, including the largest program in company history. Her customer connections and commitment to excellence in execution demonstrate her ability to drive growth, strengthen competitive positioning, and deliver measurable results. Over the course of her career, she has held various senior leadership roles within global transportation technology companies including ZF and Wabco, where she led complex multi-regional businesses with full profit and loss responsibility. Her broad cross-functional leadership experience and proven ability to drive performance make her a natural choice to lead Stoneridge, Inc. through its well-planned evolution. Natalia's appointment marks an exciting new chapter for the company. Over the next few months, we will continue to work very closely together to ensure a seamless, well-organized transfer of responsibilities. I am confident that under her leadership, Stoneridge, Inc. will continue to accelerate its drive forward. Before I conclude, I would like to take a moment to say thank you. Serving as the CEO of this company has truly been an honor. I am incredibly proud of what we have built together—our focus, our rigor, and our discipline to drive operational excellence and the establishment of a strong performance culture. To our employees, our customers, our shareholders, and other partners, thank you for your trust and your commitment. I am confident the improvements we have made are built into the company DNA, positioning it for sustainable long-term growth well beyond my tenure. I will now turn the call over to Natalia to walk us through Stoneridge, Inc.'s refined company strategy and position. Natalia, the floor is yours. Natalia Noble: Good morning, everyone, and thank you, Jim. I am fortunate enough to have already spent nearly two years with Stoneridge, Inc. as President of the Electronics division and as a member of the executive staff where I have contributed to shaping the company's next phase of disciplined, sustainable growth. I look forward to working closely with the Board of Directors, our senior leadership team, and our talented, dedicated global teams as we continue to execute on a strong long-term strategy focused on sustainable, profitable growth. Now turning to page 7. Stoneridge, Inc.'s strength is rooted in our global footprint, with strong operations in Europe, North America, and Brazil, each positioned for significant growth over the long term. Earlier this year, Stoneridge, Inc. took a significant step in its long-term strategic vision by completing the sale of the Control Devices division. As Jim just mentioned, this transaction allows us to focus resources on our highest growth, highest return businesses, and reduce overall organizational complexity leading to a clear, focused strategy for the company. We will continue to utilize our global footprint to serve our customers. Our strong global presence enables us to remain a preferred global supplier of industry-leading technologies to the world's leading commercial and off-highway vehicle manufacturers. Furthermore, we will continue to leverage our global engineering footprint and technology expertise. Our global engineering capabilities remain focused and robust, aligning our technologies with key industry trends, including safety and vehicle efficiency. Brazil remains a critical engineering center that augments our global teams located in Europe and North America, and our dedicated engineering partners in India strengthen our capabilities to meet the evolving needs of our global customers. We will continue investing in and scaling our cost-advantaged engineering presence to deepen customer partnerships. Overall, Stoneridge, Inc. will continue to drive global growth and invest in the resources required to advance our capabilities within a more cost-efficient structure. Turning to page 8. Our portfolio is focused on advanced technologies and electronic solutions primarily serving the global commercial vehicle and off-highway end markets. Over the past several years, the commercial vehicle industry has been undergoing a fundamental transformation with more automation and connected vehicle technologies focused on advanced safety and vehicle efficiency. Our product portfolio related to vision and safety, connectivity, vehicle intelligence, and electronic controls is directly aligned with this transformation and represents significant growth opportunities. Beginning with our vision and safety systems, we are a global leader in camera monitor and vision systems in the truck, bus, and off-highway end markets. Our award-winning, industry-changing MirrorEye technology replaces traditional rear and side-view mirrors with external digital cameras and digital displays inside the cab of the vehicle. The best-in-class technology offers innovative features and functionality that enable fleets to reduce operational costs while enhancing safety for everyone on the road. Our technology sets us apart from the competitors. Next to the fact that it is a significant growth driver, MirrorEye provides us with the opportunity to not only expand on our current product, but also enables a pathway to new technologies and capabilities. This includes connected trailer and 360-degree surround view suite of technologies. With focused resource deployment, we expect to further accelerate these opportunities. Our vehicle intelligence and electronic control products include digital driver information systems and secondary displays primarily for the commercial vehicle end market. These fully configurable displays allow customer differentiation and flexibility. They are the main source of data for a driver in the vehicle and will enable increased in-vehicle connectivity and customized solutions for future technology packages including Schrader connectivity and 360-degree surround view technologies I just mentioned. This category also includes our electronic control units that range from basic controls to highly engineered system-based products. Electronic control units will be at the center of the consolidation of existing products into complex electronic systems. Stoneridge, Inc. is well positioned to take advantage of this consolidation. Furthermore, we recently announced Stoneridge Brazil's largest program in its history for an OEM infotainment controller. Through our continued delivery of high-quality products and focus on customer support, we continue to win in this market. Finally, our connectivity portfolio includes our Telematics and Tachograph products, as well as our digital services. We also offer end-to-end tracking solutions for logistics, cargo security, and fleet management in Brazil. Our connectivity products provide streamlined solutions to efficiently monitor individual drivers and fleets, providing readily accessible data on their vehicles, allowing them to ensure compliance with legal requirements. Decades of design and manufacturing coupled with our insight and experience allow us to remain a leading supplier of connectivity products. Our products occupy a significant amount of real estate inside the cockpit of the vehicle. As such, we plan to further integrate these complex electronic systems into a large system offering. This will bring advanced technology to our customers to help differentiate their vehicles, improve vehicle safety and efficiency, and provide opportunities for long-term profitable growth for the company. Our customers are choosing to work with us for our technology and our proximity and flexibility. We are not just delivering product, systems, and services. We are improving safety on the roads, reducing emissions, improving overall efficiency of the vehicles, and enabling better driver comfort. Our strong product portfolio has built a meaningful and growing backlog of awarded programs, and we expect to continue this momentum in the coming years. Turning to Slide 9. As President and CEO, I will continue the strong focus on excellence in execution, to sharpen our strategy and drive financial performance. As the President of our Electronics division, I played an integral role in establishing our focus on sustainable long-term value creation. Therefore, our key drivers for sustainable performance remain the same: drive market outperformance, margin expansion, and cash flow conversion to create long-term value for shareholders, customers, and employees. To accomplish this, we must continue to deliver a strong customer value proposition and differentiation. First, we will continue to deliver advanced technology solutions that solve critical challenges and help our customers achieve their long-term goals, whether it is improving efficiency, enhancing safety, or increasing driver comfort. Supported by our strong backlog of awarded business and deep customer integration, our robust technology roadmap will continue to create opportunities with both existing and new products to the market. As such, we expect to continue to drive market outperformance of two to three times over the long term. Later in the call, I will provide further perspective on top line growth expectations through discussion of our long-term target. Second, we are focused on excellence in execution in everything we do. This starts with consistent delivery of our promised outcomes. Whether it is to our customers, our employees, or other stakeholders, we must drive disciplined execution to meet the expectations. In turn, this allows us to build trust and confidence of our customers and other stakeholders. We will continue to embed rigor and discipline in all our processes to drive operational efficiency and continuous improvement. By investing in quality-related processes and resources, we not only improve product reliability and performance for our customers, but also reduce internal quality costs. At the same time, our robust pipeline of material and manufacturing cost reduction initiatives, through smarter engineering and more efficient supply chains, enhances cost efficiency. Together, these efforts lower quality, manufacturing, and material-related costs, drive margin expansion, and support sustainable growth. As part of this overarching driver, the executive team and I are committed to organizational cost efficiencies by streamlining corporate costs to better support our company in this structure. Finally, when passion, process, and priorities are aligned, a strong performance culture emerges—one that consistently drives long-term value. By fostering a culture of accountability, creativity, collaboration, and continuous improvement, we drive outcomes that matter most to our customers and business. With empowering leadership, our talent aligned with core technology strategy, and a global footprint providing flexibility and proximity, we can bring faster innovation and problem-solving strategies to better support our customers. By combining our operational levers, we will convert our strategy into measurable outcomes. We want our customers to see tangible results, our teams to feel motivated and aligned, and our stakeholders to benefit from sustainable long-term value. Later on the call, we will provide further detail on how we will drive long-term shareholder value through market outperformance, margin expansion, and cash flow conversion, both in the current year and over the long term. I am excited about this next stage of our strategy and am committed to executing on the long-term plan that Stoneridge, Inc. has in place. I will now turn the call over to Matt. Matthew R. Horvath: Thank you, Natalia, and again, congratulations on your new role. Page 11 summarizes our key financial metrics specific to Electronics and Stoneridge Brazil. For Electronics, full year sales of $551,000,000 outperformed our weighted average OEM end markets by approximately 430 basis points. This market outperformance was driven by MirrorEye sales which totaled $111,000,000 in 2025, resulting in growth of $45,000,000, or 69%, compared to the prior year. This includes increasing take rates in Europe and the ramp-up of new programs for Daimler and Volvo in North America. Additionally, MirrorEye bus revenue grew by approximately 34% as our latest generation camera systems have received extremely positive market feedback. We expect continued expansion of MirrorEye as our end markets improve and our recently launched programs continue to mature. Electronics adjusted operating income declined by 140 basis points, primarily driven by lower contribution from sales. While we were able to offset a portion of our tariff-related expenses, our adjusted operating income was also impacted by incremental tariff-related expenses of approximately $2,000,000. This was partially offset by material cost improvement of approximately 120 basis points and lower quality-related costs of $3,700,000 compared to 2024 for the Electronics segment. Stoneridge Brazil full year sales growth of $15,000,000, or approximately 30%, was primarily driven by incremental OEM sales as our Brazilian OEM business continues to accelerate. OEM sales in Brazil set a record at $26,700,000, which approximately doubled compared to the prior year. We expect OEM sales in Brazil to continue to expand as new programs launch and we continue to win local OEM business. Full year adjusted operating income improved by $4,600,000, or 660 basis points compared to the prior year, primarily driven by increased contribution from incremental sales. As we have previously announced, this will be my final earnings call as I have accepted a role outside the company. It has been a privilege to serve in this role, and I am proud of what we have accomplished. With that, I would like to turn the call over to Bob Hartman, our Chief Accounting Officer, who will serve as the interim Chief Financial Officer upon my resignation from the company effective March 31. Bob Hartman: Thank you, Matt. I am looking forward to stepping into the role of interim CFO and I am confident that this team will continue to drive long-term value for our stakeholders as we transition to a more focused, leaner global company. Turning to Slide 12. As mentioned earlier on the call, the commercial vehicle end market created significant headwinds during 2025. This is highlighted by an almost 7% decline in our weighted average OEM end markets in 2025 compared to our initial expectations of approximately flat end market conditions. That said, in 2026, our end markets are expected to begin to recover. More specifically, the European commercial vehicle market is expected to show stabilization with potential for moderate growth after subdued demand over the last two years. Similarly, in North America, we expect that soft freight demand and continued capital spending discipline will persist, resulting in relatively flat first half revenues. However, we are beginning to see increasing order strength from our customers and third-party production forecasts have improved for the second half of the year. Additionally, with EPA 2027 regulations becoming clearer, we expect a pre-buy effect as the year progresses in our North American commercial vehicle market. As a result, North American OEM production is forecast to improve by 9.8% this year while European production is forecast to improve by 6.6%, resulting in expected full year 2026 weighted average end market growth of 7.1%. For 2027, current third-party production forecasts suggest 6.6% growth for our weighted average OEM end markets. We are seeing moderate improvement in production levels in 2026. More importantly, we are also receiving increasingly positive indications from customers that would align with third-party forecasts, particularly in the second half of the year. That said, turning to Slide 13, we are taking a relatively conservative approach to our revenue expectations for the year as we are assuming OEM end markets will remain flat. While third-party forecasts have indicated potential upside to this expectation, we believe continued geopolitical volatility warrants some level of conservatism. We are expecting yet another year of strong growth for our MirrorEye products. In total, we expect MirrorEye to grow by approximately $50,000,000 to at least $160,000,000, which translates to approximately 45% growth compared to 2025. Of the $160,000,000 in sales forecasted for MirrorEye, we expect approximately $140,000,000 in OEM sales, or approximately 45% growth relative to 2025. We expect continued strong improvement in take rates this year as recently launched programs continue to mature and strong customer feedback drives further adoption in both Europe and North America. Our MirrorEye OEM programs continue to gain positive momentum from our customers’ committed marketing campaigns that highlight the substantial benefits of our system, including improved safety, fuel economy, and driver comfort. We are also expecting significant growth in our MirrorEye bus programs due to strong market feedback on our latest camera system. After two years of strong SmartTube Tachograph aftermarket sales, driven by incremental regulatory requirements, we are expecting a sales decline of approximately $12,000,000 in 2026 relative to the prior year. Overall, SmartTube will still contribute significantly to sales in 2026, with OEM programs expected to be flat year over year. As highlighted by a recent award announced in the second quarter, our SMART II Tachograph continues to win new business in Europe. We will work with our current customers, as well as prospective customers, to drive continued OEM growth in this segment. Finally, we expect that customer price reductions and continued pressures in our aftermarket and other end markets will substantially offset foreign currency tailwinds, tariff-related reimbursements, and continued growth in our off-highway end markets. However, similar to our OEM end markets, recovery in off-highway vehicle production could drive upside to our guidance. In summary, based on our midpoint guidance, we are expecting revenue growth of approximately 4.2% in 2026, primarily driven by continued MirrorEye growth as our weighted average OEM end markets are expected to be flat. Slide 14 outlines our expectations for 2026 EBITDA in detail. We expect that the revenue growth of $26,000,000 will contribute approximately $6,500,000 of EBITDA growth based on the low end of our historical contribution margin of 25% to 30%, as the SMART II Tachograph business generally drove a higher margin and we are expecting lower sales from that product this year. As Natalia discussed earlier on the call, we are committed to driving organizational efficiency by streamlining our corporate costs to more effectively support our company's current structure. This year, we expect the benefit of at least $5,000,000 from these structural cost reductions. In 2027, we expect to realize additional savings as we complete our obligations under the transition services agreements from the sale of Control Devices. As our markets recover and overall company performance continues to improve, we expect that our incentive compensation programs will return to target levels in 2026. This increase, in addition to merit-based wage increases, is expected to drive a $6,700,000 headwind year over year. As Natalia and Jim also mentioned earlier in the call, we remain focused on improving operating and manufacturing performance, including reducing quality-related and material costs to drive gross margin improvement. We have incorporated some incremental warranty costs in our guidance for this year as we address the few remaining legacy issues that Jim mentioned earlier in the call. Overall, we expect that our continued focus on quality during the product development process will drive fundamental improvement in the long-term quality of our product portfolio. In summary, we are expecting revenue growth, continuous improvement in our operating performance, and structural cost reductions to drive EBITDA improvement in 2026 to our midpoint EBITDA guidance of $22,500,000. As it relates to the cadence of our guidance, we are expecting a relatively muted first quarter as production volumes remain lower to start the year, resulting in approximately breakeven EBITDA in the first quarter. This assumes first quarter revenue to be slightly below 2025. Following the first quarter, we are expecting improving volumes and structural cost benefits to drive improved EBITDA in the second quarter and beyond. We are expecting EBITDA to continue to improve in the second half of the year aligned with continued revenue growth and the ramp-up of benefits from structural cost improvement. This expected cadence would result in significant EBITDA improvement in the second half of the year compared to the first half. Turning to page 15. As Matt mentioned earlier on the call, we continue to manage cash efficiently even as production volumes remained significantly lower than originally expected in 2025, driven primarily by inventory reductions and capital expenditure management. In 2026, we will continue to prioritize efficient cash generation as we remain focused on optimizing inventory levels to reduce working capital levels. Additionally, we will maintain disciplined oversight of our capital expenditures. Last week, we completed an amendment of our current credit facility to extend the maturity date to 07/01/2027 to allow ample time to refinance our existing credit facility and align our long-term capital structure with the structure of the company after the sale of Control Devices. Based on our current EBITDA guidance and our amended covenant ratios, we expect to remain in compliance with all of our covenant ratios and have sufficient liquidity to navigate continuing volatility. Based on our 2026 guidance, we expect a compliance ratio between 3.0x and 3.5x by the end of the year. With that, I will turn it back over to Natalia for detail regarding our medium- to long-term targets. Natalia Noble: Thank you both. Slide 17 lays out the drivers of our medium and long-term financial targets. First, as a reminder, our weighted average end markets are expected to improve by 6.6% from 2026 to 2027, which would drive approximately $42,000,000 of incremental revenue in 2027. In addition to a strong market, we are expecting continued expansion of our MirrorEye programs driven primarily by the continued ramp-up of our OEM programs and improved customer take rates in both North America and Europe. Based on the third-party market forecast and our expectations for MirrorEye by 2027, we currently estimate revenue of at least $715,000,000 in 2027, which would represent approximately 12% growth versus our midpoint expectation for 2026. We continue to focus on market outperformance and believe that incremental opportunities in both our Brazilian OEM business as well as our off-highway business could drive upside to these expectations. Looking beyond 2027, we are expecting continued strong growth in our key product categories. In addition to market growth, we expect continued expansion in our MirrorEye programs as they mature. Similarly, we are expecting our other products to outpace market growth, including the continued adoption of camera-based safety systems in the off-highway market, as well as the expansion of our connected trailer and 360-degree surround view technologies as we continue to build on our existing systems and capabilities. In turn, we expect these growth drivers to result in revenue of $850,000,000 to $1,000,000,000 by 2030, representing a five-year compound annual growth rate of 6.8% to 10.3%. We expect that revenue growth will drive significant earnings expansion as well. Based on our historical and expected contribution margin, we expect that our growth will improve EBITDA to at least $44,000,000 in 2027, based only on market growth and continued momentum with our MirrorEye programs. We will have the ability to outperform this contribution-based target as we will continue to execute on our pipeline of material cost improvement activities, quality improvement initiatives, and structural cost reductions. Similarly, based on our long-term revenue targets, we expect EBITDA growth aligned with the midpoint of our historical contribution margins of 25% to 30%. Based only on contribution from incremental revenue, we are targeting EBITDA of approximately $80,000,000 to $120,000,000 in 2030. Again, we will rely on our robust pipeline of material cost improvement activities and the continued focus on long-term excellence in overall execution to drive to and beyond these targets. Stoneridge, Inc. is well positioned to significantly outpace our underlying end markets even as they are forecasted to recover over the next several years and provide a tailwind to overall growth. Our industry-leading product portfolio, focused on our vision and safety, connectivity, and vehicle intelligence and controls products, is expected to drive significant growth forward as we build on recent momentum, particularly with our MirrorEye platform. We expect that this growth will drive meaningful earnings expansion that will be amplified by excellence in execution as we continue to build on the recent success of reducing material costs, improving our quality processes, and utilizing a lean, global structure to optimize performance. Turning to page 18. In summary, with favorable market tailwinds ahead, a revitalized company following the divestiture of Control Devices, and sustained momentum from our growth products driving continued market outperformance, while monitoring potential headwinds such as geopolitical volatility, we are quite optimistic about the years to come. Under Jim's leadership, we built a strong foundation. Now, with our simplified company structure and focused strategy, we will continue to drive strong performance going forward. We will continue to focus on excellence in execution to drive significant earnings expansion and, as a result, strong shareholder returns both in the short and long term. Stoneridge, Inc. remains well positioned to outpace our weighted average end markets, significantly expand our earnings, and drive long-term shareholder value. We will now open for questions. Operator: Ladies and gentlemen, at this time, we will begin the question-and-answer session. To ask a question, you may press star and then one on your touch-tone phones. If you are using a speakerphone, we ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality. To withdraw your questions, you may press star and then two. Again, that is star and then one to join the question queue. Our first question today comes from Gary Prestopino from Barrington Research. Please go ahead with your question. Gary Prestopino: Yeah. Good morning, Walt. Several questions here. First of all, I think I heard you say that there are going to be legacy warranty costs related to the Control Devices business this year and possibly, I do not know how for how long really, but that would assume that when you sold the business, those warranty costs were not part of the sale and transferred to the new owners of the business. Is that correct? Matthew R. Horvath: Gary, actually, no. When we referred to legacy warranty questions, those were legacy warranty questions for issues within our Electronics products themselves. Any warranty that related to Control Devices was passed with the business to the new buyer. Gary Prestopino: Okay. Alright. I guess some other questions here. I just want to refer back to one of the slides where you broke out your sales footprint. Your three markets, I think you talked about here. I am referring to Slide 8, at least on my computer. You have got connectivity, vision and safety, and intelligence and electronic controls. Can you give us an idea of what percentage of the revenues between Electronics and Brazil make up those three markets? Matthew R. Horvath: Yes. Hey, Gary. It is Matt. How are you doing? Generally, you will see two different breakouts. One on Slide 7 there where you see revenue by region and end market. We do not break out specifically by product category. As we talked about, the Brazilian OEM business is growing pretty significantly, so you are seeing some pretty strong growth across a couple of those product categories. In Brazil, for example, the connectivity devices that we call out on Slide 8 has the track-and-trace business and digital services. A large portion of that is Brazil. Of course. So I would say we do not break it out specifically. But the connectivity business is certainly more global than the other businesses. But we are seeing some things—as we talked about, OEM sales doubling in Brazil—we are seeing some increased penetration of some of those other product categories in Brazil. And we would also say that the Europe versus North America, these are global customers. So we really do consider them as a singular customer across the globe. Their purchasing teams are operating that way. So the only real split we would say is Brazil currently about 15% of the business. Electronics business globally is 85%. That is the best way. That is the way we deal with our customers on it as well. Gary Prestopino: Okay. So if we look at the numbers for this past year, your MirrorEye sales were up dramatically, so there had to be a dramatic downturn in the Electronics business in some of these other areas. Is that really a correct assumption? I mean, I have to go through and work through the numbers, but it seems like if your MirrorEye sales were up $111,000,000 but your other sales were down, where are you seeing the most impact across these three areas? Natalia Noble: I agree. It is Natalia. So, yes, the MirrorEye platform was representing a big increase in the sales. Overall, when you look at the vehicle production, especially in North America, but not only, in other products that are really linked with the vehicle production, this is where the biggest downside is coming from. Matthew R. Horvath: Yes. So looking at commercial vehicle volumes, there were some months in 2025 that set all-time record lows for actual orders placed in the commercial vehicle space. That is how weak that sector got during the course of the year. Fortunately, toward the end of the year, we saw a nice uptick there in December. And we expect a lot more of that coming forward. And so do the third-party prognosticators—ACT and S&P Global—they are starting to show a recovery, especially in North America on the commercial vehicle side. Gary Prestopino: Right. I have seen the first two months of the year that that has been pretty strong. And I guess that was a lead into the next question. How has your sales force in the market when trying to sell MirrorEye—what have they been experiencing here for the first two months of the year, given that truck production looks like it is starting to move up? At least, I saw the North America numbers. I did not see European. Natalia Noble: Right. Indeed, we see first very positive signals from the third-party companies that are showing the orders of the trucks, Class 8 in North America, but also looking at Europe. We are also seeing first slight increases in the orders from our customers, primarily in the second half of the year. We are also very cautious of the overall geopolitical situation and monitoring that very closely. But indeed, the first positive signals are out there. Gary Prestopino: Okay. And then just one quick question, and I will jump off. Let me understand something here with your business, especially on the telematics. With everything that you are doing, you are basically selling product that allows for this telematics to happen. Are you also the backbone on the connected service side through a network? Or are the products that you have agnostic and able to work with any network? Natalia Noble: Thank you for that. Indeed, especially in Brazil, but not only, with our track-and-trace business, we are quite successful in digital services. This is direct recurring revenue and a business that is completely different from the hardware or hardware with embedded software. We do also have a certain portfolio of digital services linked with our Tachograph products as well as MirrorEye products. That is an area that we are also growing. The strongest market here for us is Brazil at this point. Gary Prestopino: Okay. Thank you very much. Operator: Thank you, Gary. It is showing no additional questions at this time. I would like to turn the floor back over to Natalia Noble for closing remarks. Natalia Noble: Thank you, everyone, for joining us for the call. I know your time is very important, and as always, we truly appreciate your willingness to engage with us today. We have built a strong foundation that will allow us to drive significant earnings expansion as we grow. We will continue to deliver on our commitments by focusing on our advanced technology and excellence in execution delivered by our talented and passionate team. We expect that our performance, along with our unique mix of industry-changing product platforms, will continue to drive strong shareholder value. Thank you. Operator: And with that, ladies and gentlemen, we will conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.

74天前Insight Analytics约5分钟阅读

BGSF 2025 Q4 财报电话会议

Operator: Good morning, everyone. Welcome to the BGSF, Inc. Fiscal 2025 Fourth Quarter and Full Year Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press 0 on your telephone keypad. As a reminder, this conference call is being recorded. I will now turn the call over to Sandra Martin with Three Part Advisors. Please go ahead. Sandra Martin: Good morning. Thank you for joining us today for BGSF, Inc.’s 2025 Fourth Quarter and Full Year Earnings Conference Call. On the call with me are Keith R. Schroeder, Co-CEO and CFO, and Kelly Brown, President and Co-CEO. After our prepared remarks, there will be a Q&A session. As noted, today’s call is being webcast live. A replay will be available later today and archived on the company’s relations page at investor.bgf.com. Today’s discussion will include forward-looking statements which are based on certain assumptions made by the company under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by the forward-looking statements because of various risks and uncertainties, including those listed in the company’s filings with the Securities and Exchange Commission. Management’s statements are made as of today, and the company assumes no obligation to update these statements publicly, even if new information becomes available in the future. Management will refer to non-GAAP measures including adjusted EPS and adjusted EBITDA. Reconciliations to the nearest GAAP measures are available at the end of our earnings release. I will now turn the call over to Keith R. Schroeder. Keith R. Schroeder: Thank you, Sandra, and thank you all for joining us in today’s call. Fiscal 2025 was a transformational year for the company. After the sale of the professional division, we retired all outstanding debt, returned a meaningful amount of capital to shareholders via a $2 per share special dividend, and announced a $5,000,000 share buyback. As a result of those actions, today, we are a solely focused property management staffing organization, debt-free with a strong cash position. The fourth quarter was a very busy quarter for our team. As discussed in our third quarter earnings call, there are three major directives where we have been strategically focused. First, we utilized the findings from an independent consulting firm to shape our top-line revenue initiatives as we finalized our budget for 2026 and beyond. Kelly will discuss those in more detail following my remarks. Second, we continued to take aggressive actions to resize our general and administrative expenses to be more in line with our stand-alone property staffing business. We are now estimating ongoing G&A costs to be in the $12,000,000 range, with public company costs estimated at approximately $2,000,000. And third, we are utilizing results of an organizational and incentive compensation study to take further actions to reduce selling and G&A costs, primarily in the selling cost area. Those actions have been identified, and we started taking action in late Q1 with the full effect benefiting us in Q3 of this year. The annualized cost savings are approximately $1,000,000. Additionally, we continue to operate under the TSA agreement following the sale of the professional division. The process is going very well, and we expect to wrap it up by the end of Q1. With that, I will now turn it over to Kelly to cover the strategic initiatives that are underway. Kelly Brown: Thank you, Keith, and good morning, everyone. Before we discuss our fourth quarter sales and 2026 initiatives, I would like to highlight an important change to our go-to-market strategy with clients and candidates. At the completion of our TSA agreement in April, we will transition our website to bgstaffing.com. Our analysis of search trends and AI activity proved that including “staffing” in our name consistently ranks us in the top three results for both clients seeking talent and job seekers exploring opportunities. We believe this change will significantly improve SEO performance, clarify our brand positioning, and enhance the overall effectiveness of our marketing efforts. As Keith mentioned, we are executing on our 2026 top-line strategic initiatives, leveraging insights from the market study completed late last year. A key opportunity identified through that work and reinforced through internal discussions is our expansion into the prop tech support market. In February, we announced our first software partnership with Yardi, an industry-leading property management technology platform. Through the Yardi Independent Consultant Network, we are pairing our industry expertise with technology-enabled talent solutions. PropTech is a sizable adjacent market to our core business and further enhances our differentiated positioning across multifamily and commercial property management staffing. Turning to technology-enabled solutions, we continue to optimize our AI investments to further differentiate our platform and deepen engagement with our clients. Our focus is on elevating the overall client and candidate experience, which positions BGSF, Inc. as an innovative workforce solutions partner. These technology- and AI-driven enhancements have improved front- and back-office efficiency while reinforcing our people-first culture. We believe the right combination of talent and technology suite enables us to deliver quality candidates faster and more efficiently, driving better outcomes for our clients. We continue to advance the operational performance initiatives discussed last quarter, and early insights indicate progress in strengthening our competitive differentiation. These efforts and strategic partnerships are beginning to support incremental top-line revenue growth and improve overall financial performance. Finally, we are excited to participate as an exhibitor at the Apartmentalize Conference hosted by the National Apartment Association, as well as the Building Owners and Managers Association International Conference, both of which are held in June. As two of the premier gatherings in the rental housing and commercial real estate industry, we expect the events to be a strong platform for customer engagement and lead generation. I will now turn the call back to Keith to cover our fourth quarter financial results. Keith R. Schroeder: Thank you, Kelly. Our comments today mostly refer to continuing operations unless otherwise noted. Quarter revenues were $22,000,000, a 9.4% decline compared to the prior year, driven by lower billed hours and weak demand due to overall cost pressures on property management companies and property owners. Gross profit in the fourth quarter was $7,700,000 compared to $8,700,000 in the prior year quarter. Gross profit as a percentage of revenue was 35% and was negatively affected by $147,000 in out-of-period workers’ comp costs. Adjusted for those costs, our gross profit as a percentage of revenue was 35.6% in the quarter, consistent with the prior year’s quarter and the year of 2025 in total. SG&A expenses for the fourth quarter were $9,300,000 compared to $10,500,000 in the prior year’s quarter. SG&A this quarter included strategic review costs of $403,000 compared to $88,000 in the prior year quarter. SG&A expenses in 2025 were negatively affected by approximately $460,000 of out-of-period expenses, mostly related to the medical expenses under our self-insurance plan and the process of finalizing our closing balance sheet for the sale of the professional division. Fourth quarter adjusted EBITDA was a loss of $947,000 inclusive of the medical insurance adjustment mentioned above, compared to an EBITDA loss of $1,600,000 in the prior year. This reduction in EBITDA loss came in spite of $1,000,000 of lower gross profit due to lower sales. Significant cost-cutting measures implemented in selling and in general and administrative expenses during 2025 were the main drivers behind the improved EBITDA loss. We reported fourth quarter GAAP net loss from continuing operations of $0.11 per diluted share, compared to a non-GAAP adjusted EPS loss from continuing operations of $0.09 per share. Consolidated adjusted non-GAAP EPS for the quarter was $0.09 per share. For the full year of 2025, net cash provided by continuing operating activities was $117,000, which included a $5,200,000 escrow receivable from the sale of the professional division. We expect to finalize the settlement of this cash escrow amount during Q2. Our capital expenditures were minimal at $138,000. During 2025, we purchased 351,200 shares of stock totaling approximately $1,500,000. Our purchases to date total 522,000 shares at a total of $2,400,000. Finally, the team remains focused on executing our strategic priorities and our new roadmap while also managing the transitional work related to the sale of the professional division. Kelly and I want to thank everyone across the organization for their continued dedication and hard work over the past year. The execution of the TSA was a particularly heavy lift, and we are deeply grateful to the entire BGSF, Inc. team for their thoughtful planning, strong execution, and sustained commitment. We look forward to updating investors each quarter on our progress and hope today’s discussion has been valuable. We will now open for questions. Operator? Operator: Certainly. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, that is 1 to ask a question. One moment while we poll for questions. Your first question for today is from William Dezellem with Tieton Capital. William Dezellem: Thank you, and good morning. A couple of questions. Let us just start, if we could, please, with the Yardi relationship, and walk us through that relationship, what you are doing with it, and what the potential implications are for the business longer term. Kelly Brown: Yes. Good morning, Bill. Thank you for the question. I will take that one. The Yardi partnership is an exciting one for our group because Yardi, as a company, has established an independent consultant network, and what that means is that Yardi as a company will obviously sell and implement software to our property management customers that they use for their day-to-day operations. So when and if there are gaps between what Yardi provides as a company and the implementation or training that is needed to actually have the end user fully implemented into the software, they will leverage independent consultants to do that work. And that is exactly where we will come in with our consultant base to be able to fill those requests. So Yardi essentially serves as a base when they know they have needs among their clients so that we can then pick that up, and it is a really basic model of hiring the consultant, placing them, and then billing accordingly. William Dezellem: And, Kelly, what is the potential size of that business? Or is it more important, the relationship enhancement that it leads with your customers? Kelly Brown: Yes. You know, we chose Yardi as our first partnership of this nature because they are the most widely used software in the property management space. So the potential is very large across all of our customer base. They are certainly not the only software used; they are the most widely used. So when you look at potential, you think about all the properties that we bill with across the country; they all have software that they use. So every single one of them would have some type of support that they could need at any given point in time. In addition to that, even at the corporate office level, when you think about their accounting needs and things like that, Yardi is also leveraged for those types of services. So there is potential at both the corporate office level as well as the on-site end user level. William Dezellem: Alright. Great. Thank you. I appreciate that. And then, Keith, would you please walk through your comments about SG&A on an ongoing basis, and I did not catch all the numbers, number one, but maybe related to the $9,300,000 of SG&A that was reported in the fourth quarter? Keith R. Schroeder: Okay. So the G&A cost that we are estimating going forward once we are clear of the TSA and all of that is around $12,000,000. Okay? And then the number obviously continues to unfold as we continue to look for ways to cut costs and software costs and things like that. So that is kind of an ongoing work that we have. There is about $2,500,000 or so of public company costs in that number. Alright? So the Q4 number, which you cited, which was selling and G&A, that number is higher than what we expect in 2026 because we were still supporting the sale, and we were not able to get out of all those software changes that we expect to change. So the Q4 number is not reflective of what we expect in 2026. Does that help? William Dezellem: Yes. That is helpful. And, following up on that, the SG&A that includes—there is the $9,300,000—how much of that is the G&A number? Keith R. Schroeder: Oh, the G&A number for the quarter, it is actually in the press release. It was about $3,500,000, but there is about $460,000 that hit in Q4 that did not relate to Q4, and that was the things that I cited that we, as we broke apart the balance sheet for the sale and we looked at our IBNR in our reserve, we ended up taking $460,000 of expense in Q4. So that is included in those numbers. William Dezellem: Great. That is helpful. And then, one additional question, please. Relative to the overall market environment, how would you characterize it today versus what you were seeing a year ago at this time? Kelly Brown: Yes. You know, what we are seeing today based on customer feedback, there is definitely an interest and a budget to spend on our services. This year is a much more optimistic sentiment than what we were experiencing last year. I think our customers have navigated a lot the last couple of years economically. And this year, the feedback is, absolutely, look, we plan to leverage staffing as well as PropTech support services. And so we are finding from a willingness to spend perspective there certainly is a lot more positive feedback this year than what we were navigating this time a year ago. William Dezellem: And, Kelly, is it your sense that since we have had a couple of years of tight or conservative spending that there is some catch-up and delayed or deferred maintenance that could lead to a higher-than-average level of activity, maybe not in 2026, but as we push further into 2027, and you start to see some catch-up? Kelly Brown: I think it is reasonable to assume that there could be a certain level of that. What we have heard from customers is that as much as possible during times when they have to be conservative on their spending, they will do their best to just leverage the existing employee base that they have, even if that means one employee that may typically work at one property needing to float or visit several properties and try to help. So to an extent, there may be a little bit of that. Nothing like what we saw after COVID or anything like that. But there may be a small amount, but I think as much as possible, they really have tried to make it work with the existing employees that they have. William Dezellem: Great. Thank you both for taking all the questions. Kelly Brown: Absolutely. Thank you. Keith R. Schroeder: Bill, one other thing just to back that up with our top-line sales: through the first two months are slightly ahead of 2025. So it has been off to a solid start for this year. William Dezellem: So just to be clear, what you are saying is if March continues the trend that you saw in January and February, the first quarter revenues would be up, which would be the first time in many quarters that that is the case. Correct? Keith R. Schroeder: Yes. That is correct. William Dezellem: Great. Thank you for that additional perspective. Do you want to share a percentage change that you saw in January and February combined? Keith R. Schroeder: No. But I will say that we do expect full-year sales in 2026 to be over 2025, in the mid-single digits. So if that helps. William Dezellem: That is helpful. And I am going to take the bait and go one step further. Thank you, Bill. So relative to the monthly trends, when you look at the fourth quarter, was November decline less than October, and was December better than November? And then January being better than December, and then was February up more than March? Are we seeing that sort of trend, each and every month improving? Keith R. Schroeder: You are going sequentially. Right? William Dezellem: Yes. Basically, Keith, I am essentially saying let us just take, for example, if October was down 6%, then November being down 4%, December being down 2%, January being up 2%. And I totally just made those numbers up for illustration. Keith R. Schroeder: Yep. So I think the best way to answer that is that as we ended 2025, the seasonality effects that we would expect, we were better than those in the last month of last year. And so we have started out where we are higher in sales than last year for January and February. So it is a positive trend. William Dezellem: That is helpful. Did that positive trend begin late in the fourth quarter in December? Or is it really— Keith R. Schroeder: Yes. William Dezellem: Yes. It did. Keith R. Schroeder: And, of course, we had one really tough week in February because a snowstorm basically shut down the entire country for a few days. But, still, we came out pretty strong. William Dezellem: Yes. That is very helpful. Appreciate that additional color. Anything else you would like to add on that front before I turn it back to the operator? Keith R. Schroeder: No. I think that is it. But thank you. William Dezellem: Thank you again. Operator: Your next question is from George Melas-Kyriazi with MKH Management. George Melas-Kyriazi: Thank you. Good morning. Keith R. Schroeder: Good morning. George Melas-Kyriazi: Trying to clarify the answer that you gave, Kelly, to Bill regarding the PropTech. It seems like it is a very different line of business. Right? It is not your regular consultants or staffing that is more focused on maintenance and leasing. So is that a new segment of the business, could we say? And how many consultants do you have and what kind of revenue are you expecting in 2026 from PropTech? Kelly Brown: Yes. Well, good morning, George. Thank you for the question. Yes. It is different from the type of staffing that we have delivered in the past. You are correct. And the reason why we selected PropTech as an adjacent market that we were interested in is because it is a need that the people that we place and our existing customers have on all of their properties. They are leveraging technology, as all of us are, in their day to day. So we saw an opportunity to explore the support of that technology, and it really does two things. It helps solve customer problems that exist today, but it also helps lift up our candidate base as we know they are going to be, when they are out to work, leveraging the same technology. And so, learning about how Yardi structures their independent consultant network really became of interest to us because we are building that consultant base. To answer your question, we are going to start with a pool of 8 to 12 consultants and get them out working, and it will just grow organically over the year. So, early projections for 2026, we expect to be able to organically grow the revenue and ramp up through the year. First-year top line may be $1,000,000 to $2,000,000, but we really are just launching it organically this quarter. So we are going to look at the next couple of quarters very carefully as sales accelerate, and we will be able to give much more accurate forecasting after that point. George Melas-Kyriazi: Okay. That is exciting. And how many people do you have on staff now? How many consultants do you have, and do you train them in the Yardi tech, or are they pretty much already trained and ready to go? Kelly Brown: Yes. They tend to come in with existing Yardi experience. If we are going to hire them, they have existing Yardi knowledge. We are not hiring folks to come in and then train them. Now I will add that Yardi does provide really impressive resources to make sure their consultant base has access to training and to knowledge and continuing education. Yardi does a really great job making sure that their consultant network is very well equipped to stay knowledgeable on their technology. So that is another reason why we selected Yardi as a partner: those resources that they have, the knowledge base that they offer. Therefore, that is not really a lift that we have to take on internally, that type of training. We will hire consultants that have existing knowledge, then leverage Yardi’s resources to make sure that they stay fresh on that knowledge. George Melas-Kyriazi: Great. And maybe I am digging too much into the weeds, but I am really curious. Are you starting in Texas, for example? Are you starting in one market? How do you see the ramp of that business segment unfolding? Kelly Brown: Fortunately, this service is not necessarily geographically driven because a lot of the work that these consultants can deliver is remote. So we will not be a geographically based expansion. It will really be more of a customer-by-customer-based expansion. And so we will grow that way between both our own sales initiatives and Yardi’s referral base. It will not necessarily have a geographic component. George Melas-Kyriazi: Okay. Great. That sounds like an exciting initiative. It is nice to see having these growth initiatives. Maybe just also trying to clarify a little bit what you said at the end regarding a solid start to the year. The fourth quarter, year over year, was down 9.4%, right, I think the top line. Keith R. Schroeder: Yes. That is correct. George Melas-Kyriazi: If part of December was a positive comp, it sort of means that, actually, maybe October and November were down double digits. And then so that seems like a very dramatic change from down double digit in a few months to going up comp. And how do you explain this change, and to what extent is this change market-driven, and to what extent is it your own execution and what you are doing internally that is driving that, in your opinion? Keith R. Schroeder: Yes. I think there is some market improvement in there, but really from our perspective, it is more driven by execution. The things that we learned from one of these studies are the speed to fill, giving them the right candidate in the right spot quickly. Those things all make a big difference, and we have changed some things up, and we are laser-focused on that stuff. George Melas-Kyriazi: And let us see if we can try to extrapolate that to the year. So you expect mid-single-digit growth. Does that mean that you expect growth pretty much in every—year-over-year growth, I mean—in every quarter of 2026? Keith R. Schroeder: Yes. That is correct. George Melas-Kyriazi: Okay. Great. That is really good to know. And to what extent is that driven by—I think, Kelly, you mentioned that you feel like customers have a slightly greater propensity to purchase and to spend. So you have that on the one hand. On the other hand, you have that execution on your side. Is that the way one would look at it? Kelly Brown: Yes. It is definitely a mixture of both of those factors that would lead to the year-over-year performance being more favorable. George Melas-Kyriazi: Okay. Great. Good. And then on the cost side, thank you very much for what you have as the property management segment. It is super helpful, and it really helps us understand the business much better. So if we look at the G&A, it is $3.9. But if we take out the medical and the cost of the review, it comes down to pretty much $3.1. So let us say $3.0 to $3.1, and if we annualize that, it is roughly $12. Which I think is what you said, Keith, as kind of the ongoing expenses of G&A. Does that mean that if we take out those two one-time things, we are pretty much at the steady-state level for G&A? Keith R. Schroeder: Yes. But just to make clear that we are looking at ways ongoing to bring down those costs. So it is not a done deal. That is where we are now, but we are constantly looking at ways to bring down those costs. George Melas-Kyriazi: Okay. And with, of course, seasonality, your second and third quarter are your best quarters from a revenue perspective. That impacts somewhat selling expenses. But would that have an impact on G&A, or is G&A basically flattish from quarter to quarter? Keith R. Schroeder: G&A is pretty flat. So selling would go up some. You have more sales; you have more bonus dollars, commission dollars, things like that. But with the G&A, it is basically pretty fixed across all four quarters. George Melas-Kyriazi: Okay. Great. Thank you very much for taking my questions. Operator: Thank you, George. We have reached the end of the question-and-answer session, and I will now turn the call over to Kelly for closing remarks. Kelly Brown: Thank you for your time today. We appreciate your continued support and look forward to providing an update on our first quarter in a couple of months. Have a great day. Operator: This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.

74天前Insight Analytics约5分钟阅读

BKTI 2025 Q4 财报电话会议

Operator: Good morning, ladies and gentlemen, and welcome to BK Technologies Corporation Conference Call for 2025. This call is being recorded. All participants have been placed on a listen-only mode, and following management's remarks, the call will be opened for questions. There is a slide presentation that accompanies today's remarks, which can be accessed via the webcast. At this time, it is my pleasure to turn the floor over to your host for today, Brett Maas of Hayden Investor Relations. Brett, please go ahead. Brett Maas: Thank you, operator. Good morning, and welcome to our conference call to discuss BK Technologies Corporation results for the fourth quarter and full year 2025. On the call today are John M. Suzuki, Chief Executive Officer, and Scott A. Malmanger, Chief Financial Officer. Please take a moment to read the safe harbor statements. Statements made during this conference call and presented in the presentation that are not based on historical facts are forward-looking statements. Such statements include, but are not limited to, projections or statements of future goals and targets regarding the company's revenue and profits. These statements are subject to known and unknown risks and factors. The company's actual results, performance, or achievements may differ materially from those expressed or implied by these forward-looking statements, and some of the factors and risks that could contribute to such material differences have been described in this morning's press release and in BK Technologies Corporation filings with the U.S. Securities and Exchange Commission. These statements are based on information and understandings that are believed to be accurate as of today, and we do not undertake any duty to update such forward-looking statements. With that out of the way, I will now turn the call over to John M. Suzuki, CEO of BK Technologies Corporation. Go ahead, John. John M. Suzuki: Thank you, Brett. Good morning, everyone, and thank you for joining us on our fourth quarter and fiscal year 2025 conference call. I will start by reviewing our operational and financial performance and then turn it over to our Chief Financial Officer, Scott A. Malmanger, for a deeper dive into our financial results for the fourth quarter and fiscal year 2025. Following the discussion of our financial results, I will provide an outlook for our fiscal year 2026 and introduce the core objectives of Vision 2030. We will conclude by opening the call for a brief Q&A. The fourth quarter capped off an excellent year for the business, marked by substantial achievements and the successful execution of our Vision 2025 objectives. We delivered results ahead of annual guidance by all measures, including revenue growth, margin expansion, and increased profitability. Our results underscore the strength of our product portfolio and accelerated customer adoption of our solutions in the public safety communications market. Our business performed strongly in 2025, with revenue of $21,500,000, increasing 20% year over year, which is the second consecutive quarter of 20%+ top line growth. Revenue growth was driven primarily by robust state and local agency order volumes, including increased purchase volumes of our BKR Series radios by agencies within our core Tier 2 and Tier 3 target markets. As a reflection of favorable product mix and continued wider-scale adoption of our BKR 9,000, gross margin increased by over 900 basis points in 2025, a material expansion to 50.4% compared to 41.2% in the year-ago quarter. This powerful combination of revenue growth, gross margin expansion, and diligent cost management resulted in a 78% year-over-year increase in adjusted EBITDA, reaching $4,700,000 in 2025. For the third consecutive quarter, we delivered adjusted EBITDA margin north of 20%, expanding to 22% in 2025 from 14.9% in the year-ago period. Profitability continued to advance in 2025, with non-GAAP fully diluted adjusted EPS reaching $1.17, up from $0.61 in 2024. As a result of the strong performance, we closed 2025 with a record cash position of $22,800,000, a significant increase from $7,100,000 at year-end 2024. Our financial strength gives us the flexibility to invest strategically in innovation and commercial expansion, supporting opportunities to capture market share and unlock long-term value creation. Currently, our disciplined capital allocation strategy and inherent operating leverage are driving improving returns, with return on invested capital of over 20% for the second consecutive year. We delivered sustained gross margin improvements during the 2025 period and successfully navigated substantial industry-wide headwinds, starting with the supply chain disruptions in 2022. At that point, we implemented meticulous cost management initiatives, followed by securing a strategic partnership with East West for outsourced manufacturing, which significantly improved supply chain resilience while reducing manufacturing complexity. Stepping into 2025, gross margins steadily expanded throughout the year, supported by firm customer adoption of our high-margin BKR 9,000 multiband radio and resulting favorable product mix. For the full year 2025, gross margin expanded by over 1,000 basis points to 48.8%, comfortably above our 47% target. Gross margins improved from 19.3% in 2022 to 48.8% in four years, a trajectory that is the result of growing customer adoption, disciplined cost management, optimized supply chain, and the successful repositioning of our manufacturing and sourcing footprint. These structural advantages provide us with the ability to invest in long-term growth. To expand on the positive impact from the BKR 9,000, our multiband radios continued to attract agencies for their unmatched combination of performance, interoperability, affordability, and ergonomics. BKR Series radios fueled solid revenue growth into 2025, leading to full-year revenue growth of 12.5%, exceeding our guidance range of high single digits. While fourth quarter revenue declined sequentially from the third quarter due to normal ordering patterns among public safety agencies, it still represented our strongest fourth quarter on record. As I discussed in our third quarter conference call, we shipped 2.5 times the number of BKR 9,000 multiband radios in 2025 than we did in 2024. This continued sales ramp was driven by expanded agency deployments and recurring replacement cycles. This higher-margin mix, in tandem with operating leverage, resulted in a 91% year-over-year increase in operating income for 2025, which outpaced revenue growth. This momentum, coupled with the upcoming launch of the BKR 9,500 radio, positions us with a strong growth lever as we commence our Vision 2030 road map. As we close Vision 2025 and enter Vision 2030, our competitive positioning has never been stronger. Our results validate the strength of our product portfolio, the accelerating adoption of our solutions across public safety communications, and the team's successful execution of our strategic priorities. With that, I will now turn it over to Scott A. Malmanger, our CFO, to give a more detailed overview of our fourth quarter and full year 2025 financial performance. Go ahead, Scott. Thank you. Scott A. Malmanger: Thank you, John. Sales for the fourth quarter totaled $21,500,000, an increase of 20% compared with $17,900,000 in 2024. For full year 2025, sales expanded by 12.5% to $86,100,000, growing ahead of the high single-digit guidance. Gross margin in the fourth quarter was 50.4% compared with 41.2% in 2024, reflecting favorable product mix and continued robust adoption of the higher-margin BKR 9,000. For the year, gross margin expanded by 1,086 basis points from 37.9% to 48.8%, exceeding our guidance of more than 47%. Selling, general, and administrative expenses for the fourth quarter increased to $6,600,000 compared to $5,200,000 in the same quarter last year. SG&A expense for the quarter includes non-cash stock-based compensation expense of approximately $500,000. For the full year 2025, SG&A increased 23% to $26,000,000, primarily driven by marketing and promotion costs for the BKR 9,000 and non-cash RSU compensation expenses within our software engineering team, both of which align with our previously communicated investment strategy to drive sustainable growth. Operating income was $4,200,000 in the fourth quarter 2025, with operating margin expansion from 12.3% in the year-ago quarter to 19.7%. For the full year, operating income more than doubled to $16,000,000 from $7,800,000, with operating margin expanding by over 830 basis points from 10.2% in 2024 to 18.6% for full year 2025. For 2025, the company delivered GAAP net income of $4,200,000, or GAAP EPS of $1.12 per basic and $1.05 per diluted share, compared with net income of $3,700,000, or $1.03 per basic and $0.93 per diluted share, in the prior-year period. For the full year 2025, GAAP net income reached $13,500,000, or $3.69 per basic and $3.44 per diluted share, comfortably above the $3.15 per diluted share guidance. This compares to $8,400,000, or $2.35 per basic and $2.25 per diluted share, in 2024. Net income of $13,500,000 for the full year 2025 includes the impact of tax credits for the remediation of the uncertain tax position recorded in the 2024 financial results. The company's effective tax rate for 2025 was percent compared to an estimated rate of 25% as we look forward to 2026. The higher tax rate reflects the normalization of our tax profile and profitability increases. The impact of our higher tax rate on 2026 fully diluted EPS is estimated to be approximately $0.55 per share. Non-GAAP adjusted earnings, which add back net realized and unrealized loss on investments, non-cash stock-based compensation expenses, non-cash income tax provision expense, and severance expenses, were $4,700,000, or $1.24 per basic share and $1.17 per diluted share, in 2025. This compares to adjusted earnings of $2,400,000, or $0.67 per basic and $0.61 per diluted share, in 2024. For the full year, non-GAAP adjusted earnings reached $17,000,000, or $4.63 per basic and $4.32 per diluted share, exceeding our guidance of $3.80. This compares to full year 2024 non-GAAP adjusted earnings of $6,800,000, or $1.92 per basic and $1.84 per diluted share. We reported non-GAAP adjusted EBITDA of $4,700,000 with adjusted EBITDA margin of 22% in 2025, representing a material increase compared to $2,700,000 and 14.9% in 2024. This marks our third consecutive quarter of adjusted EBITDA margin above 20%. For full year 2025, adjusted EBITDA reached $17,600,000 with adjusted EBITDA margin of 20.5%, a significant expansion from $9,600,000 and 12.5% in 2024. Turning to Slide 7, we have delivered noticeable improvement in our profit trajectory dating back to 2024. Although we have achieved continuous profitability increases overall, we did recognize a slight decrease in non-GAAP adjusted earnings on a sequential basis from the third quarter to 2025, which was related to a non-cash provision for income taxes of approximately $932,000 in 2025. This is associated with a year-to-date R&D tax credit adjustment stemming from the “Big Beautiful Bill” signed in July. Our profitability trend has been strong, and we anticipate this trajectory will continue as product mix shifts and we increase BKR 9,000 sales. Turning to the balance sheet, we ended 2025 with a record cash balance and debt-free balance sheet, underscoring the strong cash-generating capability of the business. At 12/31/2025, we had $22,800,000 in cash on the balance sheet, a significant improvement over the $7,100,000 as of 12/31/2024, as well as no debt. The company, as part of its capital allocation plan, established a Rule 10b5-1 nondiscretionary stock repurchase program in September. During the quarter, the company repurchased approximately 19,000 shares of its common stock as per the conditions of the plan. Working capital improved to $37,300,000 at 12/31/2025, compared with $23,000,000 at 12/31/2024. Shareholders' equity increased to $44,700,000 compared with $29,800,000 at 12/31/2024. To conclude, the strength of our business model and disciplined execution by our team enabled us to deliver on our Vision 2025 objectives and successfully navigate industry-wide challenges. We remain confident that our positioning will enable us to accomplish our Vision 2030 objectives, with our guiding principles being to surpass customer expectations and create and advance value for our shareholders. I will now turn the call back over to John, who will provide our 2026 outlook and Vision 2030 goals. Thanks, Scott. John M. Suzuki: We closed Vision 2025 in a strong financial position and are poised to carry forward the momentum into 2026 and beyond. Accordingly, we are introducing the following full-year 2026 guidance: revenue of at least $90,000,000; full-year gross margin of 50% or greater; full-year GAAP EPS of $3.15; and full-year non-GAAP adjusted EPS of $3.55. These targets reflect our current expectations for continued revenue growth, further margin expansion, and operating leverage, particularly on the SG&A line. However, the above guidance also includes the impact of the estimated income taxes described earlier that we believe we will encounter in 2026. We believe there is upside, and we will adjust guidance as we execute our growth plan. In addition, we continue to make meaningful progress on the development of our soon-to-be-launched 9,500 multiband mobile radio, a companion radio to the 9,000, which is on track now for shipping in 2027. Initial customer validation has been strong, with agencies preferring to buy both handheld and in-vehicle devices from the same manufacturer for seamless interoperability. The 9,500 represents a significant opportunity to deepen existing agency relationships and expand our customer base. As we reviewed the remaining development work for the BKR 9,500 multiband radio, we made the decision to expense future development costs rather than capitalize them. While this reduces reported EPS by approximately $0.50 in 2026, we believe this more conservative accounting treatment better reflects the economics of our R&D investments and strengthens the transparency of our financial reporting. Turning to Vision 2025 and Vision 2030, Vision 2025 was drafted shortly after I arrived in July 2021. Our base year was 2020, and we set a goal to more than double our revenues, increase our gross margins, and dramatically improve our EBITDA to 20% from 3.5%. We did not know within six months we would be at the start of a global supply chain crisis that dropped our gross margins down to 14%. What was perhaps worse, our new flagship BKR 9,000 multiband handheld radio would take another 18 months to be released. Despite these challenges, the team battled back and ended 2025 with results just shy of doubling our revenue while achieving the 50% gross margin target in the fourth quarter. This resulted in a full-year adjusted EBITDA margin of 20.5%, exceeding our 2025 Vision target of 20%. As we look forward to 2030, we have set new targets. Our goals for Vision 2030 include the following: increase our market share and double our revenue to $170,000,000; deliver continued gross margin expansion to 60%; achieve adjusted EBITDA margin of 35%; triple our earnings per share to $13; and flow through to free cash flow generation of over $55,000,000. Year one of Vision 2030 is 2026. We have reiterated our strategic focus on extending our reach beyond wildland fire into structured fire, law enforcement, and everyday mission-critical communications, as we expand our addressable market meaningfully. Our Vision 2030 targets are driven by three primary levers: expanding our installed base of BKR 9,000 radios; the introduction of the BKR 9,500 mobile platform; and continued margin leverage as our manufacturing model scales. Next month at our Investor Day, we will provide a comprehensive deep dive into our Vision 2030 initiatives, including a roadmap for our product innovation, channel expansion, and capital allocation, among other playbook objectives. The event will be held virtually on April 2. Registration details will become available shortly, and we hope you can attend. Before we begin the Q&A, I would also like to mention that Scott and I will be attending the 38th Annual Roth Conference on March at the Ritz-Carlton in Dana Point, California. We encourage you to contact your Roth representative to register. With that, we will now open for questions. Jenny? Thank you very much. Operator: At this time, we will begin polling for questions. If you would like to ask a question, please press star 1 on your phone keypad now. A confirmation tone will indicate that your line is in the queue. You may press star 2 if you would like to remove your question from the queue. For anyone using speaker equipment, it may be necessary to pick up your handset before you press the keys. Please wait a moment while we poll for questions. Our first question is coming from Jason Schmidt of Lake Street Capital. Jason, your line is live. Jason Schmidt: Hey, thanks for taking my questions. John, I know you do not want to give specific details on the 9,000 for competitive reasons, which is understandable. But just curious if you could provide some color on what you are seeing from sort of sales cycle length, if you are seeing any sort of significant pushback from customers. And I guess, relatedly, with the traction you saw in 2025, was most of that coming from initial orders or expanding orders at existing customers? John M. Suzuki: Jason, thanks for joining us this morning, and thank you for the question. The expansion on the 9,000 is definitely coming from new orders. A lot of our customers are coming from the fire side, with some in the law enforcement side. The anecdotal feedback that we receive from our customers who test the radios and have made purchases is that it is a quality radio that performs well. They really like the ergonomics. And the ones that have received their radios, the feedback has been very positive. So no pushback to date. Jason Schmidt: Okay. That is great to hear. And on the 2030 Vision, I want to dig in a little bit to some of those metrics. Obviously, a significant ramp is expected on the top line. Not looking for a specific breakout, but at a high level, how much should we think about sort of that 9,500 being a driver? Or can you get there with just continued penetration of the 9,000? John M. Suzuki: So I think in general, the expectation is that for every two handheld radios that are sold in the marketplace, one in-vehicle mobile radio would be sold. That is just kind of a general rule of thumb in our industry. So we expect the same ratio between the BKR 9,000 and the BKR 9,500. We do believe that come 2030, a substantial amount of that revenue will come from the 9,500, but even more, again, from the 9,000. Jason Schmidt: Okay. That makes sense. And then just the last one from me, and I will jump back into the queue. Sticking with some of these 2030 Vision metrics, free cash flow generation is expected to be significant. How should investors think about sort of capital plans going forward? John M. Suzuki: I think the first and foremost priority is investing in ourselves and in our portfolio. We do believe that we are just starting to penetrate this market on a wider scale, and that there is a huge runway for our solutions. So the funding will always be prioritized towards our core portfolio and building on that portfolio, especially as we look towards the solution side, which should drive further adoption of our BKR Series radios. After that, we are looking at different acquisitions. Those acquisitions would be tailored around, again, our core solution offering. Anything that could drive further adoption of our radios would be top of mind for an acquisition. And then lastly, in terms of priorities, it would be returning the money to the shareholders if we at that time could not find better alternatives, or in the case we did in the fourth quarter, where we felt that our share price was undervalued, we purchased shares back. So that would be the priority. We will talk about that more on our 2030 Vision call coming up, and I will expand on our capital allocation priorities at that time. Jason Schmidt: Sounds good. Thanks a lot, guys. John M. Suzuki: Thank you, Jason. Operator: Thank you very much. Just a reminder, if anyone has any questions, you can still join the queue by pressing star 1 on your phone keypad now. The next question is coming from Robert Van Voorhis of Vanatoc Capital Management. Robert, your line is live. Robert Van Voorhis: Hey, good morning, guys. Great quarter and good execution from the team. I just have a couple quick questions. My first is on the R&D development expense for the 9,500, and I understand it is somewhere around $2,000,000. Does that expense essentially go away once the 9,500 is released, or is it sort of run-rated at a higher rate to sustain the 9,500? Scott A. Malmanger: Yeah. Our expectation is that we are going to continue to invest in our core products, so we do not expect our engineering expense to go down over time. That being said, less of that investment is going to be in the sustainment of the 9,500 versus the development. But we are planning to continue the roadmap and continue our investment in engineering. Robert Van Voorhis: Okay. That makes sense. And then my second question, and maybe this is more suited for the call you guys have coming up, but, John, just long term, in terms of pricing strategy, I understand this industry has quite a lot of pricing power. There is a lot of brand loyalty. What is the pricing strategy long term here? Is it low single-digit increases over time? How do you guys think about that? John M. Suzuki: That is an excellent question, Robert. In the context of where we are today, we have 3%–3.5% market share, so I would say very modest at best. We also think that we can at least get to a 10% market share with our current plan and our marketing strategy. My goal right now is to garner as much market share as I can, and at the point at which we feel that the incremental increase in market share is less than what we could achieve through a price increase, at that point we would start raising prices. That being said, we did have some price increases last year that were related to the administration's tariffs. If we have a disruption in our cost structure, then, of course, we are going to pass that on to our customers, just like all our competitors did in our industry. If I look at the trade-off between the opportunity for us to gain market share, once you gain these customers, the stickiness is there. I think the priority really is to get as much market share as we can, and then at some point, we will be shifting to continued improved profitability through sustained price increases over time. Robert Van Voorhis: Okay. That makes total sense. Very rational. My last quick question, if I could just get one more, is maybe more suited for Scott. On Slide 10, the target 2026 diluted GAAP EPS number is $3.50 versus, I think, the diluted GAAP EPS number that you guys gave in the outlook was $3.15 for this year. How should we look at the difference between those two? What really is the difference? Scott A. Malmanger: It should be $3.15. John M. Suzuki: Apologies, Robert, we did catch that, but, obviously, version control caught us on that. We will get that updated. Scott A. Malmanger: Yeah, GAAP diluted EPS is $3.15. The non-GAAP diluted is $3.55. Robert Van Voorhis: Okay. Thank you. That is it for me. Appreciate it. Operator: Thank you very much. We appear to have reached the end of our question and answer session. John and Scott, would you like to make any closing remarks? John M. Suzuki: Thank you, Jenny. Thank you all for participating in today's call. We are confident the foundation we have built, anchored by continuous revenue and profit growth, a strong debt-free balance sheet, and an increasing free cash flow trajectory, positions us to deliver long-term value creation for both our customers and shareholders. We look forward to speaking to you again at our upcoming Investor Day next month. All the best to all of you, and have a great day. Operator: This concludes today's call. You may now disconnect.

74天前Insight Analytics约5分钟阅读

CRMT 2026 Q3 财报电话会议

Operator: Good day, and thank you for standing by. Welcome to the America's Car-Mart, Inc. Third Quarter Fiscal 2026 Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Jonathan Collins, Chief Financial Officer. Please go ahead. Jonathan Collins: Good morning. I am Jonathan Collins, the company's Chief Financial Officer. Welcome to America's Car-Mart, Inc.'s Third Quarter Fiscal Year 2026 Earnings Call for the period ended 01/31/2026. Joining me on the call today are Doug Campbell, our President and CEO, and Jamie Fischer, our COO. We issued our earnings release earlier this morning; a supplemental presentation is available on our website. We will post the transcripts of our prepared remarks following this call and the Q&A session will be available through the webcast. During today's call, certain statements we make may be considered forward-looking and inherently involve risks and uncertainties that could cause actual results to differ materially from management's present view. These statements are made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. The company cannot guarantee the accuracy of any forecast or estimate, nor does it undertake any obligation to update such forward-looking statements. For more information, including important cautionary notes, please see Part I of the company's Annual Report on Form 10-K for the fiscal year ended 04/30/2025 and our current and quarterly reports furnished to or filed with the Securities and Exchange Commission on Forms 8-K and 10-Q. As a note, the comparisons we will make will be for 2026 versus 2025 unless otherwise stated. Doug, I will turn it over to you now. Douglas Campbell: Thank you, Jonathan, and good morning, everyone. Thank you for joining us today. I want to start by being direct about what happened in the third quarter. Our retail volume declined 22.1% year over year. That is a significant number, and I want to address it head on. This was not a demand story. It was a capital structure story. Let me explain what that means. Throughout the third quarter, ability to purchase inventory at full capacity was constrained by the ongoing transition of our financing platform. Specifically, as I mentioned last quarter, we need a revolving warehouse facility to bridge originations to securitizations. Without that facility, our purchasing had to be managed against available cash rather than a rotating credit line, and that limited how much inventory we could put on our lots. Top-of-funnel demand tells the real story here. Website traffic was up 4% year over year. Credit applications remained elevated. Our customers are there. Our team is there. The constraint is capital deployment. And we are actively working to resolve that. I also want to note an incremental headwind unique to the third quarter. Winter Storm Fern struck in January and directly impacted our entire South Central operating footprint. The timing—final days of the quarter—compressed what was already a volume-challenged period. Jamie will speak to how the Pay Your Way platform performed through the storm, and the performance that gave us real confidence in the resilience of the collections infrastructure we are building. The subprime auto capital markets have been operating in a more measured environment since last fall. The industry absorbed significant disruption following the failures of several subprime lenders—events that raised serious and legitimate questions among warehouse providers, rating agencies, and ABS investors about collateral integrity, loan tape accuracy, and the controls governing these businesses. In the midst of that negative industry noise, we completed our 2025-4 ABS transaction: $161.3 million in asset-backed notes, rated and successfully placed in a turbulent market. It was our first ABS transaction incorporating a residual cash flow structure—a non-turbo deal. For those less familiar with ABS mechanics and jargon, a turbo structure accelerates principal payment to investors as a form of credit protection. We call that overcollateralization. A turbo structure is structurally simpler to rate and easier to sell because the collections on the assets—remaining after paying service provider fees and interest on the notes and topping up liquidity reserve accounts—are used to repay principal to investors. As a result, the investors get their money back faster, and the level of overcollateralization increases during the life of the deal. A residual cash flow structure does quite the opposite. Rather than using all the collections remaining to repay principal on notes, the issuer repays principal on the notes only in an amount necessary to achieve a targeted level of overcollateralization. Once that level is met, the funds remaining each month—after paying the provider fees and interest and principal on the notes and topping up liquidity reserves—are released back to the issuer, the company. The company's ability to complete this 2025-4 transaction with a residual cash flow structure can be viewed as a sign of investor and rating agency confidence in the company and its asset-backed securitization program, which is particularly noteworthy in light of the heightened sensitivity and market stress plaguing the securitization markets in 2025. We have made meaningful progress on the transformation of our capital structure this fiscal year, and I want to recognize that even as I acknowledge there is more to do. In October, we closed a $300 million term loan which fully retired our revolving line of credit and removed the income statement covenants that had previously limited our operating flexibility. In December, we completed this 2025-4 ABS transaction with a residual cash flow structure that delivers monthly cash flows to the company, improving capital efficiency and reducing our long-term cost of capital. These are real milestones. The ABS markets remained a viable and productive funding source for us throughout this period, and we intend to continue accessing it on a regular cadence. However, the capital markets are not without their challenges: elevated rates, the complex macro backdrop, and the heightened scrutiny that followed the industry disruptions I mentioned. But we have demonstrated that we can execute in that market. The critical remaining step is securing a revolving warehouse facility. That is the bridge financing that connects originations to securitizations and will allow us to fully serve the demand that we are seeing. We are actively working on this, and we will update you when we have something definitive to share. Until that facility is in place, volumes will remain below what our demand and team are capable of producing. While we have been working on our capital transition, we have also been executing on the operational side. We have executed phase one and phase two of our SG&A cost control plan, which included a reduction in workforce and store consolidations, which are now complete. Eighteen total locations have been rationalized, and our active store count now stands at 136. These consolidations are not just about reducing cost. They are about concentrating resources and inventory to our strongest performing locations, so that when volume recovers, we can recover into a more productive and efficient footprint. The financial benefits of these consolidations are expected to be reflected in the fourth quarter, as full run-rate savings flow through the P&L. And with that, I will turn it over to Jamie for the operational detail. Jamie Fischer: Thanks, Doug. You have outlined the capital structure context and its impact on volumes. Let me now provide the operational detail behind those results, as there are a few dynamics worth separating clearly. I will start by sharing about Winter Storm Fern and its ripple effects on the operations of the business. To provide some context on the scale of that disruption, Winter Storm Fern was a significant weather event, not a routine weather day. The storm was an ice and snow event concentrated in the South Central U.S., which is precisely where our entire dealership network operates, meaning there was no part of our business that was insulated from its impact. Our entire operating footprint was closed, including our corporate office, for a period of three days. However, the effects extended well beyond these days. The residual impact of excessively cold temperatures, infrastructure damage, and supply chain disruptions in the aftermath meant partial closures, delayed reopenings, and operational constraints which included closed wholesale auctions in our markets, halting our ability to dispose of inventory; disruptions to vehicle transportation preventing us from moving vehicles; repair and reconditioning timelines extended well after we reopened as parts supply chains experienced storm-related delays; and, critically, our customers' ability to make payments and our associates' ability to collect them were both meaningfully impacted during and after the storm. We will speak to those specific impacts as we move through the operational discussion; we wanted to frame the magnitude of the event so the results can be viewed in the proper context. As Doug noted in his remarks, retail units sold decreased 22.1% to 10,275 units. The decline in sales volume was driven by three primary factors: lower inventory availability across the quarter, a 12% smaller footprint versus prior year, and Winter Storm Fern. Total revenue was $286.8 million, down 12% year over year. While average retail sales price increased 7.1% year over year to $20,634, the revenue was partially offset by improved gross margin and interest income. Interest income was $64.2 million, up 3.1% year over year, supported by the continued strong performance of the existing portfolio. Despite lower volumes, gross profit per retail unit sold was up 8.8%, outpacing the vehicle sales price increase, indicating that we also achieved a 1.9% improvement in underlying unit cost. That cost discipline was driven by continued progress in vehicle quality as reflected in lower service contract repair costs. Inventory levels bottomed in December, which corresponded with our lowest sales volume of the quarter. We began rebuilding inventory in January in preparation for tax season, and that investment began to show. Sales volumes were improving throughout the month before Winter Storm Fern tempered the recovery right at quarter end. By the time tax season kicked off in February, inventory had increased 44% from the December bottom, providing a meaningfully stronger foundation than our quarter-end numbers alone would suggest. That said, sustaining the inventory build trajectory is dependent upon the completion of our warehouse facility, which will enable us to normalize the pace and scale of ongoing inventory purchases going forward. Pay Your Way adoption continues to expand in ways that matter for the long-term economics of the business. Since launch in Q1, we have seen more than a 250% increase in customers enrolled in automatic recurring payments, and approximately 65% of payment transactions are now consistently made remotely, a level that has stabilized since Q2. One highlight worth calling out is how the platform performed during Winter Storm Fern. In response to storm-related disruptions, we temporarily suspended remote payment fees to assist our customers and saw a significant increase in remote payment activity as a result. Historically, a weather event of this magnitude would have required us to wait for normal store operations to resume before we could meaningfully reengage collections. Pay Your Way fundamentally changed that dynamic, giving us the ability to maintain business continuity, simultaneously giving our customers the convenience and peace of mind to make payments on their own terms during an otherwise disruptive period. That is a direct proof point for what our upgraded digital payment infrastructure means for our business resilience, and it gives us confidence in the platform's long-term value. The Salesforce Collections CRM, we scaled significantly during Q3, moving from a three-store pilot at the end of Q2 to approximately 15% of our store base live on the platform by quarter end. Achieving full chain-wide adoption remains the prerequisite to entering phase three of our SG&A cost control strategy, as we expect rapid expansion as we move into the new fiscal year. Finally, on our SG&A cost control strategy, the consolidation operation was a deliberate and carefully managed process, integrating thousands of customer accounts into nearby locations, while ensuring our associates have the support needed to maintain continuity of service throughout the transition. That level of intentionality is reflected in early results. Collections performance at phase one inheriting locations is tracking in line with the rest of the company, which we view as meaningful proof that the integration was executed well. It is too early to draw similar conclusions from phase two as those consolidations occurred midway through January, but we are encouraged by the phase one trajectory and we will continue to monitor phase two performance closely as those locations mature into their new footprint. Jonathan, I will now turn it over to you. Jonathan Collins: Thank you, Jamie. SG&A totaled $51.5 million for the quarter, or 23.1% of reported sales. The current quarter included approximately $2.8 million of non-recurring impairment and restructuring charges related to the phase two store consolidations. Excluding these items, adjusted SG&A was $48.7 million, or 21.9% of sales. Put that 21.9% in context, the gap versus our 16.5% long-term target is almost entirely a volume denominator issue. We have taken significant fixed cost out, but those savings become most visible at normalized origination levels. As Doug and Jamie mentioned, phase one and phase two together eliminated 18 locations from our footprint. These consolidations also remove meaningful costs from both our field and corporate structure; the associated savings are expected to be reflected beginning in the fourth quarter. Our guiding principle is straightforward. Our cost structure must match our volume and receivables base. We will not wait passively for volume to recover. If our top line requires a different expense profile, we will take the necessary actions to align accordingly. We continue to evaluate opportunities for further efficiency across the business. Turning to credit performance. Underlying credit performance remained stable throughout the quarter. Net charge-offs as a percentage of average finance receivables were 6.5% compared to 6.1% in the prior quarter. Two dynamics explain the headline increase. First, a denominator effect. Slower origination growth has reduced the average finance receivables, which mechanically puts upward pressure on the charge-off rate, even without a change in underlying loss behavior. Second is portfolio mix. Acquired locations purchased over the last few years now represent approximately 13% of our portfolio and are maturing into their expected loss curves. Modest year-over-year increase in loss frequency was driven almost entirely by these locations. Core legacy locations were essentially flat. Loss severity also remained flat, and losses per dollar of principal were slightly improved. This is consistent with our underwriting expectation and does not reflect credit deterioration. These dynamics, combined with Winter Storm Fern, influenced the quarter's headline metrics. What matters most is whether the underlying portfolio is getting healthier. And it is. Our highest credit tier customers now represent 66.7% of accounts receivable, up from 62.8% a year ago. Contracts originated under LOS continue to represent a growing share of the portfolio, and those vintages are performing as expected. On current origination quality this quarter, our highest quality tier ranked seven customers maintained its share at 18.4%, essentially flat from Q2. In a volume-constrained environment, we focused on retaining the strongest deal structures—appropriate down payments, affordable monthly payments, and customer equity—rather than stretching to close weaker deals. This was true across all customer segments. The volume decline was concentrated in transactions with less favorable financial terms, regardless of the customer's credit profile. Our LOS v2 platform enabled this discipline by helping field teams identify and prioritize the strongest deal structures available. On delinquencies, our 30-day-plus metric was elevated at quarter end due to the timing of Winter Storm Fern, which struck in January. Accounts over 30 days past due increased to 4.4% from 3.7%, but the storm's impact extended beyond customers who were already delinquent. It affected payment behavior across the portfolio. Our recency percentage, excluding one- to two-day grace period accounts, declined to 71.4% from 81.3%, reflecting the broad disruption to customers' ability to make timely payments during the storm. As Jamie mentioned, in response, we temporarily suspended remote payment fees while stores were closed, and our Pay Your Way platform allowed customers to continue making payments. Since the quarter end, we have seen meaningful normalization in both metrics. By mid-February, accounts over 30 days past due had improved to the 3.7% to 3.8% range. Despite the disruption, total collections were $179 million, up 1.5% year over year. Cash collected as a percentage of average finance receivables improved 11 basis points year over year. That improvement reflects both the quality of the portfolio and our team's execution. Average collected per active customer account per month was $581 compared to $568 in the prior-year quarter, a 2.3% improvement that reflects continued portfolio health and the effectiveness of our Pay Your Way platform. Our allowance for credit losses as a percentage of finance receivables increased to 25.53% at 01/31/2026 compared to 24.31% at 01/31/2025. Importantly, this increase occurred while realized credit performance actually improved sequentially. Net charge-offs declined from $106 million to $96 million. Units charged off fell roughly from 10,300 to 9,200. The reserve increase reflects the portfolio dynamics I described earlier, as well as the macroeconomic pressures that our customers face. As the receivable base contracts, and the LOS portfolio seasons into expected loss curves, the allowance ratio rises, even without deterioration in expected losses. At current levels, our reserve represents approximately 3.6 times quarterly charge-offs, and we believe this appropriately reflects the risk profile of the portfolio. Doug covered our capital structure transformation in detail, including the strategic importance of the December ABS transaction and the residual cash flow structure. Let me add the financial specifics. On the term loan, we closed $300 million in October, which fully retired our revolving line of credit. On the ABS side, the 2025-4 transaction resulted in $161.3 million in asset-backed notes at a weighted average coupon rate of 7.02%. Turning to the balance sheet. Total cash, including restricted cash, was $237 million at 01/31/2026, compared to $124.5 million at 04/30/2025. Total debt was $892.2 million. Debt, net of total cash to finance receivables, was 44.7% compared to 43.2% at 04/30/2025, a modest increase reflecting the full-quarter impact of the term loan. As Doug emphasized, securing an additional financing source such as a revolving warehouse facility remains our critical next step in our capital structure transition. Interest expense for the quarter was $21.8 million, or 5.8% of sales, compared to $16.9 million, 6.4%, in the prior-year quarter. The increase reflects the full-quarter impact of the $300 million term loan. On a nine-month basis, interest expense was $54.5 million compared to $53.3 million in the prior-year period. That is a much more modest increase reflecting favorable ABS coupon improvements we have realized this fiscal year. As origination volumes recover, and a larger share of our funding comes through residual-structure ABS transactions, we expect the blended cost of our capital to decline and interest expense as a percentage of revenue to improve. Turning to taxes. During the quarter, we recognized a noncash income tax charge of $47 million. This charge establishes a full valuation allowance against our deferred tax asset associated with the net operating losses at Colonial Auto Finance. Under GAAP, we are required to assess all available evidence when making this determination, and that evidence includes three years of cumulative pretax losses at Colonial Auto Finance. I want to be clear about what this does and does not mean. This allowance has no impact on our cash tax position. It also does not affect our ability to utilize net operating loss carryforwards in the event of a return to profitability. It is an accounting adjustment, not an economic change. And finally, on earnings per share, loss per share for the quarter was $9.25 on a GAAP basis. The loss included three significant noncash and nonrecurring items. First, the $47 million tax asset valuation allowance I just described. Second, $18.2 million in credit loss allowance adjustments reflecting the reserve build. And third, $2.8 million in asset impairment charges related to our phase two store consolidations. Adjusted for these items, adjusted loss per share was $1.53. With that, I will turn it back to Doug. Thank you, Jonathan. Douglas Campbell: Let me close with a few points that I want to leave with investors this morning. The story of this quarter is straightforward. Volume was constrained by our capital structure transition, not by demand. That matters because it tells us the path forward. We are not rebuilding demand. We are not re-underwriting the portfolio. We do not have a broken business model. We are closing the final gap on our financing platform so that the demand that we already have can be served by operational infrastructure that we have already built and can generate the volumes that we are capable of. And I want to return briefly to the point I made in my opening, because I think it is underappreciated. We executed a non-turbo residual cash flow ABS deal in December in one of the most difficult subprime capital market environments in recent memory, and the market priced our paper. The market accepted our structure. That does not happen unless people on the other side of the trade trust what is in the portfolio. That trust has been earned over time and is the foundation on which we will build the rest of the capital structure. Let me be direct in where we stand with the warehouse facility and what makes it genuinely difficult to predict timing. We have identified partners. The conversations are very active, substantive. But completing a warehouse facility in the current environment requires aligning multiple stakeholders, each with their own view of risk, their own obligations, their own timelines. In a normal market, that alignment moves quickly. In this market, it moves deliberately. And we respect that because the parties that we are working with are being appropriately careful. Our job is to give them every reason to say yes through our credit performance, through our leadership, our transparency, and our operational discipline. And we are doing that work. But I want to be radically transparent with our investors. The path to closing is not determined by us alone. It requires simultaneous agreement across parties whose cooperation we are actively cultivating but cannot unilaterally compel. That is an honest description of where we are. We are managing, excuse me, this business with clear eyes about our options. Market conditions and counterparty timing require us to operate more conservatively, concentrating our resources for collections, deferring origination growth, or making structural decisions about our footprint that further reduce our cash obligations. We have the framework and the willingness to do that. Some of those decisions, if required, are reversible when conditions improve. Some are not. We will make the irreversible ones carefully, only when necessary. But I want investors to understand we are not waiting passively for a solution. We are actively managing our resource base to preserve optionality, and ensure this business has the runway it needs to reach the outcome that we believe is achievable. Our near-term priorities are clear. First and foremost, the warehouse facility. That is the singular focus. Everything else matters—normalized origination capacity, volume recovery, managing our SG&A—but it all flows from that. Second, volume recovery. Inventory has already begun building, as Jamie mentioned earlier, ahead of the tax season and from our December low point. The tax season demand is real from our customers, and we intend to serve it as well as our capital position allows. Third is cost structure. We are a leaner organization today than we were 12 months ago. The phase one and phase two consolidations, the SG&A reductions that we have already taken—those benefits are starting to flow through. And we will not be passive about our cost structure. We have the willingness to align our expense base to our revenue environment, whatever that environment requires. And we will use those levers decisively if we need to. Fourth is continued quality of credit. The underlying credit story is a good one, and it is getting better. I also want to acknowledge the broader environment our customers are navigating, and I want to be honest that we focus on our execution within our existing capital structure, not on tailwinds. Inflation remains elevated. The geopolitical backdrop, including the ongoing conflict abroad, carries the risk of additional pricing and supply shocks that could affect vehicle costs, fuel prices, and household budgets of our customers. We are not oblivious to that. A persistent conflict does not resolve these pressures. It compounds them. We are building a business that can perform in a very difficult environment, not one that requires conditions to improve in order to succeed. Every decision we are making on cost, inventory, and collections is calibrated on that reality. Our customers are resilient. The need for reliable, affordable transportation does not diminish in a difficult economy. It tends to become more acute. Our markets are durable, and we are managing this business to serve it well across a range of different outcomes. Before I open the line for questions, I want to take a moment to thank our associates across the country who show up every single day for our customers and for each other—especially those who navigated Winter Storm Fern with professionalism and care. I also want to thank our customers who have trusted us with their transportation needs, their payments, often in very difficult personal circumstances. And I want to thank our investors and analysts for their continued engagement and patience as we work through this transition. We believe in what we are building. We have the team, the platform, and once the warehouse facility is in place, our capital structure to execute. We are not done. We are clear on what needs to happen next. And with that, I will hand it back to the operator to open the line for questions. Operator: Thank you. And our first question comes from John Hecht of Jefferies. Your line is open. John Hecht: Morning, guys. Thanks very much for taking my question. Doug, you gave us a very, you know, deliberate update on the warehouse negotiations. I am wondering, can you give us, like, what are the sticking points? Are they environmental? Or is it just negotiating factors tied to the mechanics of the deal? I am just kind of wondering if there is any other details you can provide us around that. Okay. That is helpful. And then yeah, we are, I guess, in the early innings, but we are in the innings of tax refunds. And you know, the expectations are there—they are generally larger this year. How are you seeing the effects of that at this point? Or, I guess, is weather still a constraint? And how do you think about how that affects the sales in the coming months? Douglas Campbell: Good morning, John. Good to be with you. As I said before, I get the frustration with the lack of a specific timeline, but I want to be direct without creating a sense of false certainty. We have identified partners. These conversations that we are in are very active and substantive. And that level of specificity does give us confidence that we are working towards a close. But it is difficult to predict timing. And that timing is structural. It is not motivational. All parties at the table want to move forward. Completing this kind of financing arrangement requires simultaneous agreement across multiple stakeholders. Each of them have complicated credit committee processes, their own view of risk in the market, as you mentioned, and then their own obligations. But we cannot close until we get all parties aligned. And as I mentioned, in a normal environment, that happens pretty quick. In this sort of environment, it takes what it takes, especially given what has happened in the subprime auto market over the last six months. And, candidly, we respect that. And we want partners who have been appropriately rigorous. We think the testament of us entering the market and executing our 2025-4 transaction, they understand they are partnered with the right type of company and the right quality receivables, you know, but there are other factors that they are trying to measure and calculate for. Sure. So as you have reported and others, the tax refund per consumer is up about 10%. The question is, like, what does that mean to us? Are we able to capitalize on that? And the early indicators, John, are that we are. Deal structures are better, have more down payments that we are collecting, and we have seen throughout the month of February. And the tax seasonal payments that we schedule here annually—we are at a high rate of collections. And so those are all indicators that that additional cash flow the consumers have, which is an incremental $300 or $400, that we are getting a piece of that and that, for the tax seasonal payments, they are able to make those payments even more timely given that the macro environment certainly has not improved since last year. And so one could argue that there was more risk going into this year. And I think that buffer helps create and insulate us a bit just based on the collection rates we are seeing. So those are favorable. In terms of the stores, all stores are back online since the storm and have been since February 1. John Hecht: Great. Thank you guys very much. Douglas Campbell: You got it. Thank you, John. Operator: Thank you. And our next question comes from Kyle Joseph of Jefferies. Your line is open. Kyle Joseph: Hey, good morning, guys. Thanks for taking my questions. Just wanted to get a little more color on the unit decline. I know you guys—it was 22%, and there were three primary factors. You know, between the factors, call it weather, inventory, and the smaller footprint, how would you allocate that 22%? Is it fairly ratable across all three of those, or did one have a disproportionately large impact on sales in the quarter? Yes, just following up on John and trying to get a better sense for how sales are trending in the fourth quarter. Got it. Very helpful. And then, on a similar question, Jonathan, I think I picked up on it, but just kind of ex the storm, how you think the delinquency would have trended? I get the dynamics going on with charge-offs, but specifically on delinquencies. Is there any way you could quantify the impact of the storm on DQs? And I know the timing was right at the end of the quarter as well. Got it. Very helpful. One last one from me. I think on G&A, you guys, ex the one-time items, are running a little below $49 million for the quarter. And then, you know, how much more is left to take out of that factoring in the incremental store closures and the RIF in the third quarter? Douglas Campbell: Yeah. You know, first of all, good morning. Good to be with you. The inventory levels are the single biggest driving force there. With more inventory, we certainly would have sold more cars. And so just given what we know, we would expect that to be the number one driver. Number two, as Jamie mentioned, was Winter Storm Fern. And for us, that hit right in the heart of our organization and from, you know, Alabama, Mississippi, bursted pipes, stores out of commission. Like, we sort of went through it all. And then the persistent cold weather following that where schools were shut down for more than a week and the ice, etcetera, just meant consumers there really sort of, you know, when people think about that, they think people cannot get to us and shop. But then we also have to worry about the portfolio management, right, and how they can get to us and make payments. And so Winter Storm Fern, certainly, if you just sort of break down the impact for us, it was an eight- or nine-day event. And so, you know, that might be, you know, one looking at 8% or 9% of the quarter. So if you are thinking about that as sort of 8% or 9% with no sales, and then you have, you know, what we would call a 12% smaller footprint, you could argue that that makes up for most of it. The performance we saw with the inventory that we did have was exceptional. And so I am really proud of the team and sort of what they have done. But to me, the inventory piece is the largest opportunity, and that is just based on the credit apps. We certainly could have served more customers with more inventory. Jonathan Collins: Yeah. Hi. Good morning, Kyle. Difficult to say with precision, I think there are—I would call out two things. One is by mid-February, delinquencies have pretty significantly come down. That was a very positive sign. It is true that coming out of the holidays, our customers are slightly more stressed than they are at any other time, and so we typically see a little bit elevated delinquencies, but, you know, adjusting for kind of seasonality, the winter storm definitely had an impact. And like I said, by mid-February, those had come down into what we would have normally expected the ranges to be. Douglas Campbell: The other thing, Jonathan, I would add to that—you know, Jonathan called out this decline from our recency metric from 81% down to 71% or thereabouts. That sort of showed you that was not related to just the 30-day. That was portfolio-wide. And as he mentioned, those operating metrics have come well within line just a couple weeks later. And so, like, that is what we look at. The other side to that question—and for our more savvy investors, they would go with the did that get flushed out in charge-offs? And the answer is no. We did not see any elevated charge-offs in the month of February, because you can certainly clean that up with write-offs, but that is not what happened either. So Jonathan Collins: We will start to see the full impact of that starting this quarter. I mean, just as a reminder, we closed phase two stores in mid-January. And so from a quarterly perspective, you are not seeing really the savings—you are seeing the impact of the impairment, but you are not seeing the savings flow through. So we will see that flow through starting in Q4. Douglas Campbell: Yeah. The important thing there also, Jonathan, you know, when we did these phased closures and consolidations, we did one in November, and we did the other one the week of January 13, so the week right before the storm. And so we largely did not see the benefits of that. So the $48.7 million, I would not look at as the run rate. If I just sort of isolated, you know, January alone, we are more in that $45 million to $46 million range. And so, like, our expectation would be to be somewhere between $45 million and $46 million where we sit today, and there are still some things there that are cleaning up, and then we should see flow through the fourth quarter as well. Kyle Joseph: Got it. Really helpful. Thanks for taking all my questions. Douglas Campbell: You got it. Thanks, Kyle. Thank you. Operator: And our next question comes from Vincent Caintic of BTIG. Your line is open. Vincent Caintic: Hey, good morning. Thanks for taking my questions. And I do appreciate all the detail and directness with the transparency here. On the inventory, so I see they are down 30% year over year in this quarter. I guess, if you could maybe talk about where we are now—so in February and March, how have those trended? Have you been able to get—sounds like you have been able to get some inventories back. So maybe if you can talk about that in more detail. And maybe if you can put into context the inventories being down 30% this past quarter year over year versus where you would want to be now just to kind of frame the sales impact? Thank you. Got it. That is helpful. Thank you. And then talking about the tax refund season, if you can maybe describe what has been going on so far. Have you been seeing an increase in maybe some cash inflow as a result of, hopefully, people paying down their loans? Thanks. Okay. Great. Thank you. And then, last one for me. Just on the capital structure discussion again. And I understand you cannot talk much about the warehouse line. But so is that process the, I guess, the floor plan for your inventory? Is that what is—if you could talk about that, what that is supporting specifically? Or is it beyond just floor plan for inventory? And then are there other things you can do—I mean, you had a successful December ABS issuance, to your point about the non-turbo—wondering if there are other sort of transactions that might work out in the meantime. Thank you. Douglas Campbell: Vincent, brother, good morning. It is good to hear from you. So if I think about this, if you are tying sort of our financial transactions and trying to understand inventory flow, we closed our securitization the week—I think it was December 17. And so that was right in the midst of the holidays. We largely did not really start to build back inventory until the turn of the year. Obviously, you know, a bunch of the auctions, etcetera, are closed for the holidays. And so there was not a ton of ground that could be made there. But we were off to the races in January. We had been purchasing vehicles right up through January and still right into what I would call the third week into February building for the tax season. And so I do not think the January 1 exit rate is representative of sort of where we sit and are set up for the tax season, you know? And that is not what February's results would indicate. The question there would be, like, you know, can we sustain what we are seeing in February, which I would consider largely positive, through the remainder of the quarter, and that will—that is a function of the warehouse and the capital structure, and we just need to make sure we are mindful of that. But the inventory levels out there, the affordability crisis that is out in the auto market—there is a ton of demand for these inexpensive cars. It is that category, this six-, seven-, eight-, nine-year-old vehicle, that is sort of really on fire. And so we have seen pronounced pricing in those assets—December, January—really just all year. And, of course, that is on the back of, you know, the inflationary environment that we saw, you know, coming out of Q2. And so there is incredible demand. I would say we have gotten our fair share for January and into February, and I feel really good about that. The question will be, you know, do we have the structure to continue to support that through the remainder of the quarter? So, it is a great question. For those who understand our business, the tax seasonal payments we set up are usually scheduled at January and then throughout February and March just based on when people file their refunds. And so, it is a really great question in terms of, like, are we getting those refunds, or are those—are people coming to show up? Obviously, the storm disruption was a huge issue and drove a lot of concern for us here internally. What was interesting, and as we mentioned, overall collections were still up despite the storm for the quarter. So if you just sort of think about this sort of 8% or 9% of the quarter that was disrupted from the storm, it was such a godsend to have our Pay Your Way platform stood up. And what we did, tactically, is remove the fee structures around all the ways that a consumer could pay. And we were really, really pleased at how much cash inflow we saw when people did not need to come into the store. And so we have seen the largest amount of remote payments that we have ever had on these tax seasonal payments. And as you mentioned, you know, these tax seasonal payments per customer, they are up. We feel like we are getting our fair share. And throughout the month of February was really positive as well. And so I feel good about that. On the deal structure side, we are getting some more money down relative to prior year for what we are seeing here in February, and so that is positive. We had started to see that in January as well, as people who are using their last paycheck of December, getting early advance refunds and tax refund loans. We are starting to see that as well. So I will answer the second question first and then go back. On the ABS transaction structure, yes, we had a successful issuance. We are always both working, you know, with our partners who run the deals and the rating agencies as well. There is a lot we can do. Obviously, we talked about the new sort of finance team between Jonathan and Marie and others on the leadership team there. And they are really doing fantastic work, not only on the execution of the structures, but the iterative nature of the improvements to remove our single-A ratings cap and working along the rating agencies. And so there is always ongoing work there. And, obviously, it is more important now than ever to make sure that we have touch points with these investors so that when we need to go execute a deal, we can. And so we sort of always leave, you know, that proverbial pump primed. In terms of the financing, you know, we talked about this broader language in terms of is it an ABS deal or a warehouse facility or an inventory line. That broad language is just prudent disclosure practice. You know, we need a warehouse. That is the main thing that seasons the receivables. A warehouse line is something that, you know, we have looked at as well. But what we are going to need to host and season the receivables is a warehouse line and a revolving facility. So that is sort of the thing that we are focused on. Vincent Caintic: Okay. Great. Very helpful. Thank you. Operator: This concludes our question and answer session in today's conference call. Thank you for participating and you may now disconnect.

74天前Insight Analytics约5分钟阅读

BBW 2025 Q4 财报电话会议

Operator: Greetings, and welcome to the Build-A-Bear Workshop, Inc. fourth quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please press 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Gary Schnierow, Investor Relations. Thank you, sir. You may begin. Thank you. Gary Schnierow: Good morning, everyone, and welcome to Build-A-Bear Workshop, Inc.’s fourth quarter 2025 earnings conference call. With us today are Sharon Price John, Build-A-Bear Workshop, Inc.’s Chief Executive Officer; Christopher Hurt, Chief Operating Officer; and Voin Todorovic, Chief Financial Officer. During this call, we will refer to forward-looking statements that are subject to risks and uncertainties. Actual results could differ materially. Please refer to our Forms 10-K and 10-Q, including the Risk Factors section. We undertake no obligation to update any forward-looking statements. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today’s earnings press release, which is distributed and available to the public through our Investor Relations website. I will now turn the call over to Sharon. Operator: Thank you, Gary. Sharon Price John: Good morning, and thanks for joining us for Build-A-Bear Workshop, Inc.’s fourth quarter fiscal 2025 earnings call. In addition to our earnings release, you may have read this morning’s announcement concerning my decision to retire as President and Chief Executive Officer of Build-A-Bear Workshop, Inc., and that long-time Chief Operations Officer, Chris Hurt, has been appointed by the Board of Directors to assume the CEO role on 06/11/2026 in accordance with a multiyear planned succession process. Given his instrumental impact on both the company’s turnaround and current success, Chris has proven to be an invaluable partner over the last ten years, and I am confident that his outstanding leadership skills, strategic insights, business acumen, and intimate knowledge of the brand and culture of this iconic company underscore his ability to take the organization to new heights. With this news as a backdrop, after we provide the 2025 highlights, financial summary, and the 2026 outlook, we plan to share more about Chris and the transition, as well as an outline for the go-forward strategic framework before opening up the call for questions. Fiscal 2025 was a dynamic year marked by our continued focus on strategic store and global brand expansion while we also worked to manage and mitigate tariff and global supply chain disruption. With gratitude to the team, I am pleased to share that we ultimately delivered a solid year with both pretax income and revenue within our guidance range. In fact, we hit an important milestone for the company by delivering more than a half-billion dollars in annual revenue for the first time in Build-A-Bear Workshop, Inc.’s history. However, we did not just barely cross the mark on the top line. Specifically, revenue hit close to $530,000,000, which represents nearly 7% growth. After accounting for $11,000,000 in tariff and related costs, pretax income increased marginally to $67,200,000. We believe this performance not only reflects the company’s proven tenacity and resilience, but, even in disruption, our ability to continue to focus on the ongoing execution of Build-A-Bear Workshop, Inc.’s long-term strategic initiatives that we have shared over the past several years: one, expanding and evolving our experiential retail footprint; two, advancing our comprehensive digital transformation; and three, investing to leverage the powerful equity of the Build-A-Bear Workshop, Inc. brand, while continuing to return capital to shareholders. With that, I will turn our first initiative—expanding our experiential retail location—over to Chris. Over the past decade, Chris has been central to evolving and improving performance across our corporate store base while also building the capabilities and models that allow us to efficiently grow the Build-A-Bear Workshop, Inc. experience around the world. Chris? Christopher Hurt: Thanks, Sharon. We remain committed to bringing our signature workshop experience—the cornerstone of the Build-A-Bear Workshop, Inc. brand—into new markets through a mix of our corporately managed, partner-operated, and franchise business models. In the fourth quarter, we made significant progress, adding 11 net new experience locations across four continents, bringing our total to 64. For the year, we entered eight new countries, following the ten countries added in 2024. This doubles our international footprint to 36 countries in just two years. Our entry into new markets and our expansion within established markets underscore the global appeal of the Build-A-Bear Workshop, Inc. experience, the brand’s scalability, and our ongoing international growth. We ended the fiscal year with 375 corporately managed stores, 109 franchise locations, and 178 partner-operated locations. Since 2023, we have more than doubled the number of asset-light partner-operated locations, which we have grown to nearly 30% of our total portfolio. As we shared on our third quarter call, Build-A-Bear Workshop, Inc. reentered Germany in the early part of the fourth quarter through one of our existing European partners, Intersource, opening four stand-alone stores in key markets with tremendous success, as guests were thrilled to experience the brand once again in their home market. I am pleased to announce that this expansion continued in the first quarter with openings in Cologne and Hanover, marking an important step in our European growth strategy. Shifting back to the U.S., we continued to expand our corporate store footprint, building on the momentum from the opening of the first Build-A-Bear Workshop, Inc. Hello Kitty and Friends Workshop in the popular Century City Mall in Los Angeles in October 2024. In February, we opened two additional Build-A-Bear Workshop, Inc. Hello Kitty and Friends Workshops in high-traffic, premier tourist malls: at the Mall of America in Minneapolis and American Dream just outside New York City. These cobranded experiential stores complement our already established Build-A-Bear Workshop, Inc. Workshops at both destinations. These locations opened to strong traffic with early results outpacing initial expectations, to the delight of enthusiastic Hello Kitty and Build-A-Bear Workshop, Inc. fans of all ages. Looking ahead, we plan to continue expanding our corporate store footprint and to debut our new multilevel next-generation retail experience at ICON Park in Orlando, Florida later this year, a showcase for the brand’s experiential innovation. Exciting plans for this multilevel store include a new Build-A-Bear Workshop, Inc. Design Studio, offering a high level of customization as guests collaborate directly with a personal consultant to create a truly one-of-a-kind furry friend. This location will also feature the Build-A-Bear Workshop, Inc. Bake Shop, an outdoor rooftop entertainment and event space, along with reimagined signature experiences including our Stuff Me and Hear Me stations plus our new Scent Bar. This will truly be a must-visit attraction in this epicenter of global tourism. Overall, across our three business models, we expect to open at least 50 net new locations in 2026, with the majority of those openings in our partner-operated asset-light model. This continues our commitment to expanding all three of our business models and diversifying our location portfolio. As new Build-A-Bear Workshop, Inc. experience locations open around the globe, we are not only expanding our reach—adding a little more heart to life in more places for more people—and positioning Build-A-Bear Workshop, Inc. for sustained global growth. I will now hand the call back over to Sharon. Sharon Price John: Thank you, Chris. Brand expansion is critical to the long-term growth strategy, and bringing the unique and memorable Build-A-Bear Workshop, Inc. experience to more markets and more consumers worldwide is paramount to achieving that goal. For our second initiative, the digital transformation effort, while progress was made on select consumer-facing upgrades, including the online digitization of our Record Your Voice offering to make it easier and faster for e-commerce guests to add a special personalized message to a new furry friend, most of our focus last year was on evolving behind-the-scenes infrastructure. This included continued IT work toward a necessary sweeping upgrade of a legacy inventory management system to enable future growth. As a result, some of our previously planned e-commerce advancements, which are a key part of the overall digital initiative, were delayed, contributing to disappointing online sales. Additionally, we believe the more aggressive rollout of AI changes by Google late last year, which have altered traditional SEO and digital advertising dynamics and have been linked to broader traffic headwinds across a wide array of DTC websites, contributed to suppressed traffic to buildabear.com as well. Addressing this shift will require both strategic and tactical changes, including reducing our reliance on organic search, upgrading our product schema to better align with emerging AI-driven discovery criteria, increasing the use of direct email, and expanding our social media efforts with more engaging content designed to drive direct click-through. As the digital environment continues to evolve, it is important to note that we both recognize and strongly believe in the value of a true omnichannel strategy that includes a robust e-commerce business focused on collectors and gifting. Looking ahead, we expect improved integration, stronger marketing and merchandising alignment, greater loyalty club engagement to extend lifetime value, and continued enhanced personalization options, all designed to improve traffic, conversion, and revenue while rebuilding our online foundation to address this evolving digital dynamic. Our third strategic initiative has been investing in the company in a manner designed to leverage our powerful brand equity to expand business opportunities and create new revenue streams. In short, these investments are intended not only to drive sales within our own retail space but to also extend beyond it while still directly returning capital to shareholders. As an example, in 2024, we launched a new line of pre-stuffed branded Mini Beans with the intention of first selling them in our own workshops to gauge popularity and gain momentum before introducing them to other retailers. Since launch, we have sold more than 3,000,000 Mini Beans units, and as envisioned, this success led to product placement at a variety of independent retailers and, more recently, to a multimillion-dollar wholesale order in 2025, which is now hitting shelves in approximately 1,500 Walmart locations across the U.S. In addition to returning nearly $40,000,000 directly to shareholders via a combination of tax and dividends, another key investment has been in the expansion of Build-A-Bear Workshop, Inc.’s growing storytelling and intellectual property ecosystem. With the launch of Kabu, this fun, new animated episodic series for kids about friendship and positivity is based on some of our original characters like Bernard the teddy bear and Paulette the bunny, and it is translated into a popular kawaii aesthetic. Kabu launched on Build-A-Bear Workshop, Inc.’s very own YouTube channel toward 2025, paired with a coordinated Make-Your-Own product introduction of core characters. I am pleased to report that the rollout of our Kabu episodes has already driven over 1,000,000 views, and our Kabu character plush has already surpassed $1,000,000 in sales. This marks an important step in building yet another proprietary IP concept intentionally designed to drive elevated consumer engagement through the strategic integration of content, product, and experiential retail to create fandom. Overall, even as we navigated unexpected and evolving supply chain disruption with the financial impacts of tariffs, 2025 was a year of forward momentum. From delivering record results for the fifth consecutive year with the highest revenue in our history, to operating in the greatest number of countries we have ever reached, to breaking ground on what will be our largest retail location ever, we continue to reinvent and reimagine what is possible for this beloved brand. Turning to the first quarter, thus far, we have seen mixed results ranging from challenging traffic trends to achieving a record Valentine’s Day. In fact, Valentine’s Day was the largest revenue day in our North American store history, surpassing even last year’s record-breaking Black Friday. We believe the Valentine’s Day performance was achieved through a combination of factors including trend-right product, impactful in-store execution, and the evolved digital Record Your Voice technology, all brought together with a new marketing campaign entitled “A Squeeze Away,” which turned storytelling into outstanding results, earning recognition from Ad Age, who specifically noted our evolution into a multigenerational, highly customizable, and emotion-driven gifting platform. This serves as a proof point of what our brand can deliver when we effectively integrate product, marketing, and digital capabilities. Conversely, we estimate that some of the challenging traffic trends are due to a combination of factors including tough comparative timing related to strong collector launches last year and the impact of severe weather across large portions of the country. Importantly, the team is actively addressing the quarter-to-date traffic trends through targeted actions, including driving momentum around our e-holiday collection, leveraging relationships tied to a slate of kid-focused entertainment, and introducing new merchandise collections such as the innovative Frosted Animal Cookies assortment, which debuted last week. Although still early, boosted by the positive response to social marketing and UGC content—which has already generated nearly a quarter-billion media impressions in less than a week—I am pleased to share that since the launch of this creative new collection, we have seen a trend change with incremental improvements across key metrics, including traffic, dollars per transaction, and sales, both online and in stores. With that, I will turn the call to Voin. Voin Todorovic: Thank you, Sharon, and good morning, everyone. It is good to speak with you again today and review our fiscal fourth quarter and full-year 2025 results. Before turning to the financials, I would like to highlight a few key takeaways from the year. First, we met our guidance and delivered our fifth consecutive year of record results, underscoring the durability of our business model. We grew across all segments, expanded gross margin, and increased pretax income versus last year, even with the absorption of a negative tariff impact on our profitability. Moving to a more detailed review of our performance, total revenues for the quarter were $154,500,000, an increase of 2.7% year over year, and net retail sales for the fourth quarter were $139,500,000, essentially flat with last year. Looking more closely at our direct-to-consumer business, although adverse January weather weakened our store traffic and caused select store closures in the quarter, overall we saw a more significant challenge on a percentage basis than the national benchmark. Specifically, we estimate that adverse weather conditions resulted in approximately $2,000,000 in lost revenue. Impact from traffic challenges was mostly offset by higher dollars per transaction, as selective price increases and improved product mix contributed to growth in average unit retail. Our overall traffic for fiscal 2025 outperformed the fourth quarter and outpaced the national average, ending slightly down for the year, and on a two-year stack we were down less than 1% compared to the national benchmark, which was down about 5%. E-commerce demand decreased 13.6% for the quarter, primarily due to traffic declines and difficult comparisons from strong licensed product launches last year. As a result, e-commerce demand was down 5.5% for the full year. Commercial revenue, which reflects wholesale sales to our partner operators as well as Walmart shipment late in the year, increased 42.2% for the quarter and 23.4% for the year. Gross margin for the quarter was 55.2%, down 140 basis points compared to last year, reflecting the negative impact of tariffs partially offset by selective price increases. SG&A expense was $63,900,000, or 41.4% of total revenues, compared to 38.4% last year. The increase was driven by higher compensation costs, medical expenses, additional inflationary pressures, and the timing of marketing expenses. Pretax income was $21,500,000 compared to $27,500,000 last year. This reflects approximately $6,000,000 in tariffs and related costs and over $1,200,000 combined in increased medical expenses and labor costs related to minimum wage increases, which were previously shared as part of our full-year estimate. Earnings per share was $1.26 compared to $1.62 last year, reflecting lower pretax income and a higher effective tax rate, partially offset by a lower share count. Now moving to select full-year results. Fiscal 2025 was a record year, with total revenues of $529,800,000, up 6.7% year over year. Pretax income of $67,200,000 was also a record, though it was negatively impacted by approximately $11,000,000 of tariff-related impacts and about $5,000,000 of higher medical and labor expenses, which were previously shared. Earnings per share were $3.99, representing 5% growth for the year. Tariffs and related costs reduced full-year EPS by approximately $0.65. Turning to the balance sheet, cash and cash equivalents totaled $26,800,000 at year end, compared to $27,800,000 last year. Inventory at year end was $82,200,000, an increase of $12,400,000. This increase reflects the inclusion of tariffs in inventory costs and incremental investments to support our expected growth across different business channels. As a reminder, inventory held for our international corporate and partner-operated stores is not subject to tariffs. Turning to the outlook, we expect total revenues to grow at a mid-single-digit rate, driven in part by the addition of at least 50 net new experience locations, the majority of which are expected to be international partner-operated. Revenue growth should accelerate as the year progresses, with first-quarter revenue roughly flat with last year. Retail segment revenue is also expected to build as the year progresses, supported by easier comparisons in the second half of the year and increased store count. In the Commercial segment, we expect revenue growth of at least 20% for the year, with significant back-half weighting. Pretax income is expected to range from a mid-single-digit decline to low-single-digit growth, reflecting a $16,000,000 full estimated impact from tariffs and tariff-related costs, and approximately $3,000,000 in longer-range investments to support wholesale growth and international expansion, as well as preopening costs for our ICON Park location. This outlook includes approximately $5,000,000 in incremental tariffs compared to last year. Specifically, the first half of 2026 will have approximately $8,000,000 of incremental tariff costs, while the second half, based on current rates, should have approximately $3,000,000 less of tariff costs versus last year. For purposes of this guidance, we are assuming the current 10% tariff rate will be in effect for the remainder of the fiscal year. The amount and timing of any potential tariff changes or refunds remain uncertain; however, any refunds received would create an incremental benefit. With that, I would like to thank all of our store and warehouse associates and corporate team members for contributing to our record 2025 results, which have positioned us for a sixth consecutive successful year in 2026. I will now turn it back to Sharon. Sharon Price John: Thank you, Voin. As I approach nearly thirteen fulfilling years at the helm, I have made the decision to retire as President and CEO of Build-A-Bear Workshop, Inc. As noted, my departure follows a multiyear planned succession process culminating with the transition of my responsibilities to our Chief Operations Officer, Chris Hurt, on June 11, after which I look forward to continuing to serve on the Board and as an adviser to Chris in his new role. In preparation for today, my fifty-first earnings call, I could not help but reflect on the progress the company has made and thought it would be appropriate to share a few highlights comparing 2025 to the last pre-COVID year of 2019. Since then, the impact of our strategic execution has been striking, driven by deliberate investments that have reshaped our business model and potential long-term trajectory. Beyond expanding Build-A-Bear Workshop, Inc.’s addressable market and global footprint, the transformation is most evident in the significant operational and financial improvements we have achieved, from store productivity to meaningful growth in revenue and margin, including delivering a more than 50% increase in total revenues, nearly doubling our store contribution margin to approximately 25%, and expanding pretax margin from roughly zero to almost 13%. The combination of revenue growth and margin expansion since 2019 has generated materially higher free cash flow after strategic investment. Again, that free cash flow has enabled a combined $170,000,000 in dividends and the repurchase of more than 4,000,000 shares, reducing our share count by 25% from its peak and contributing to earnings per share growth from $0.02 to $3.99, as well as meaningful share price appreciation. We have built a robust infrastructure supported by a clean balance sheet and a team that has demonstrated the ability to navigate challenges and deliver profitable growth. Importantly, this strategy, including our investment in the brand, was designed to position the company to scale more rapidly over time. Simply put, we have been building a strong foundation while continuing to invest in the iconic brand status, diversifying and growing the business by reaching more consumers in more places with more products for more occasions. Against that backdrop and with Build-A-Bear Workshop, Inc. positioned at the center of pop culture, nostalgia, consulting, in-person experiences, and personalization, we believe the timing is right for the next phase. This step is intended to continue the company’s success, given Chris’s instrumental role spanning from the multiyear turnaround to the current record results. Over the past decade, Chris has led the company’s largest business unit, Global Retail Operations, delivering top-tier economic performance while also overseeing the logistics, real estate, and store development teams. He is also the architect of the recent successful international expansion, with his focus on leveraging a unique asset-light partner-operated model to efficiently introduce the brand to more fans around the world, in addition to applying his brand, operational, and leadership expertise to other key areas of the organization, including merchandising, marketing, and licensing. Chris’s broad company history and relevant experience have wholly prepared him to lead Build-A-Bear Workshop, Inc. to its next great chapter of success. In preparation, over the past few years, Chris and the team have been identifying, vetting, and researching a framework to establish a future-looking strategic construct designed to focus on scaling the company. From that work, we have defined four strategic pillars supported by four platform areas. These four pillars are intended to drive incremental revenue, with pillars one and two continuing to leverage proven strategy, with an expectation that they will help fund the expansion into the newer revenue streams represented by pillars three and four. With that, I will hand it over to Chris. Christopher Hurt: Thank you. I would first like to take a moment to express my appreciation to the Board for entrusting me with the opportunity to evolve and expand our successful strategy as the next CEO of Build-A-Bear Workshop, Inc., and personally thank Sharon for her leadership, ongoing counsel, and an inarguable positive impact on this company. I am very proud of my tenure and contribution to the success of this iconic business across multiple areas of the company, and I look forward to this opportunity to drive Build-A-Bear Workshop, Inc. forward with the goal of continuing to create long-term shareholder value. With that, I would like to take you through our strategic pillars that Sharon just mentioned. Pillar one is organic growth. While we expect to add new and faster-growing revenue streams over time, we must also continue to drive our core business. We plan to do this by optimizing our omnichannel model via deeper integration, greater visibility, and more meaningful engagement with guests to improve lifetime value. Our physical experience locations remain critical in building the strength of the Build-A-Bear Workshop, Inc. brand with our core kids consumer. At the same time, our e-commerce business remains our single largest store, serving as a key information destination and a highly complementary channel that extends our reach beyond the core by over-indexing with teen and adult gifting and collectible consumers. Pillar two is location expansion. We expect to continue growing our experiential location footprint across all three business models—corporately operated, partner-operated, and franchise—with a particular focus on international growth through our asset-light partner-operated approach. We expect to continue opening across global locations in a broad range of formats, from smaller shop-in-shops to larger tourist destination locations, including ICON Park. Pillar three is wholesale and outbound licensing. We are enhancing our capabilities from systems, to sourcing, to replenishment to be able to seamlessly sell branded pre-stuffed products based on a variety of form factors to traditional wholesale customers beyond our Workshops. This effort is not only designed to drive incremental revenue, but also to extend the brand presence to tens of thousands of new points of sale. We also intend to leverage our nearly thirty years of multigenerational brand equity to access substantial white space and enter adjacent non-plush categories through outbound licensing relationships, again to bring Build-A-Bear Workshop, Inc. branded items to more places. Importantly, we view this additional space as complementary to our Workshops, with the intention of ultimately serving as a mechanism for awareness and trial, driving more traffic to our stores for the full Build-A-Bear Workshop, Inc. experience. Pillar four is gifting and personalization, and is designed to gain more share of those growing multibillion-dollar markets. Build-A-Bear Workshop, Inc. is a beloved gift that creates memories for both the gift giver and recipient across multiple age groups and occasions. With over a third of our revenue currently driven by birthdays, we have already proven that the brand is associated with gifting occasions, but believe there is a robust opportunity to expand into gifts for more of life’s special moments, ranging from baby showers to retirement parties, with our powerful brand and personalization options serving as an important competitive point of difference. As noted, these four pillars will be supported by four platform areas focusing on brand, content, digital, and talent. I am very proud of this organization and the contributions I have been able to make in support of the success of this iconic business across multiple areas of the company. I look forward to continuing to create long-term shareholder value as we execute on these strategic pillars. Sharon? Sharon Price John: Thank you for that, Chris. Again, your track record of success at the company is unmatched, not only clearly supported by the Board’s stated confidence in you, but also the confidence of the entire leadership team and across the organization. Congratulations. Christopher Hurt: I am genuinely thrilled for you and for the future of this company. Sharon Price John: And I look forward to continuing to serve on the Board as an adviser. In closing, there is no way I could possibly capture the range of emotions I feel or properly acknowledge all of the people who have been a part of my Build-A-Bear Workshop, Inc. journey. Even so, I would like to extend my sincere gratitude to Maxine Clark, our founder; the entire Build-A-Bear Workshop, Inc. family—from our stores to our warehouses to our Bearquarters and our Board of Directors, past and present—to hundreds of partners and our investor community; but most importantly, to the millions of incredible guests whose Build-A-Bear Workshop, Inc. stories have never ceased to amaze and inspire me. Thank you for reminding me every day of the power of a teddy bear and the importance of our mission to add a little more heart to life. I will now turn the call back to the operator for questions. Operator: Thank you. We will now open for questions. We will now be conducting a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before speaking. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Eric Beder with SCC Research. Please proceed with your question. Eric Beder: Good morning. Thank you. Congratulations, Sharon, on a great period of time here, and look forward to the next venture. I want to talk about it very granular. We were at the FAO Schwarz store yesterday, and I want to talk about some—talk to us about how that kind of expansion flows in here. And I think the other piece here, when you talk about personalization, was the ability to do embroidery in the store. How should we be thinking about the opportunities to continue to expand that personalization, like being able to offer almost immediate kind of in-store personalization opportunities? Sharon Price John: Thank you, Eric. First of all, we love that you go to our stores and that you shop. That is good. You know that we have been in FAO Schwarz for many years, and what you walked into is an entirely new and updated version of it, and we recently moved and expanded our square footage pretty dramatically just a few years ago. That is an exciting new location, and I know a lot of you are in New York—feel free to stop by. What Eric is referring to is one of the pillars that Chris noted: that personalization, customization, and gifting pillar. We already have embroidery online, but having that kind of in-store, visible experience for consumers is important, and personalization and customization are rising trends for consumers, and it is perfect for Build-A-Bear Workshop, Inc., as we have already been in that space for many years. We see this as an opportunity to expand in key markets—more of these large tourist locations. Chris mentioned that it would be at our ICON store, but this is a test and learn, and absolutely something we want to roll out. Chris, I do not know if you want to add any additional color to that. Christopher Hurt: Yes. FAO Schwarz has been an important brand area for us, as we have been able to, as Sharon said, expand that location and, most recently, update the look of that store by adding the personalization of embroidery there. We also are able to do heat transfer to T-shirts to be able to provide an even more personalized experience in that location. As we said, this will provide us an opportunity to understand how we can incorporate that into more stores across our entire fleet, and in the ICON Park store we will have an even more robust personalization and customization design shop where people can make a one-of-a-kind furry friend. Eric Beder: Great. Voin, could you talk a little bit about the inventory? I know that the tariffs are going to kind of skew the inventory flows, but how should we be thinking about inventory flows going forward for the rest of 2026? Voin Todorovic: Yes. Our inventory finished the year a little bit more elevated compared to last year. As I mentioned, a portion of that reflects the tariff cost, and, as a reminder, the tariffs were at a much higher level. We also plan to open at least 50 new locations this year. As we are growing in different business channels, the flow of that inventory may be different than what we have had in the past, just managing more of our direct-to-consumer piece. We are diligent in managing our inventory and our expenses. We will continue to adjust, and at the same time, we are keeping our options open because there is a lot of uncertainty around tariffs and tariff rates, and we are choosing to pull or push inventory to mitigate some of those things that are outside of our control. Eric Beder: Great. Thank you, and good luck with the rest of the year. Sharon Price John: Thank you, Eric. Operator: Our next question comes from the line of Keegan Cox with D.A. Davidson. Please proceed with your question. Keegan Cox: Hi. Thanks for the question, and congrats, Sharon, on the update, and congrats, Chris, on the new role. My question is on the kind of $3,000,000 in long-term investments you talked about. I think it was on the digital business and some operations, I bet, in manufacturing. Can you bucket how much you are spending in each area that you talked about in the prepared remarks? Voin Todorovic: I will take that. Thanks for the question. It is very important for us to continue to make strategic, longer-term investments to support growth. Over the last five years, we delivered record results and record profitability, and we continue to make investments in our business. We are trying to maintain this ratio of SG&A and pretax and continue to have high flow-through. At the same time, as we are making some of these longer-term investments, I will pick a couple of those that we highlighted. ICON Park, which Chris shared a lot more detail about—that store has elevated preopening expenses and things that we are trying to do around that store. Similarly, when we talk about growth of wholesale and international expansion, we are making these investments upfront, and the revenue is expected to come at a later date. We are calling out some of those things specifically, especially around the uncertainty in international markets considering the current geopolitical situation and the impact of tariffs and how that may impact our wholesale order flow. There are investments that we are committed to because we believe in them. We are guiding to mid-single-digit growth in 2026, and we are going to continue to make investments. The $3,000,000—we wanted to help people out as we provide guidance for next year. Our pretax margin is going to grow at a slower rate than our revenue growth. Sharon Price John: As Voin noted, we need to be able to make some investments where the return might be at a future date, not necessarily within the quarter or the year. ICON is a great example. Even in these disruptions, we believe—and the numbers prove it—that the underlying strength of the brand and the strategy are strong. We cannot operate just based on constant disruptions of a changing tariff rate or a situation overseas. Of course, we plan on numerous fronts regarding how we import, what we do, and the choices we are making on a global basis, but Build-A-Bear Workshop, Inc. has been here thirty years, and we believe Build-A-Bear Workshop, Inc. can be here thirty more, and we have to think like that. Keegan Cox: Got it. And just a follow-up on the momentum you are seeing in your Commercial and franchise businesses. You talked about the win with the Walmart wholesale orders. On the partner-operated stores, are there any new partners there? Which countries did you open in? And how are those stores maturing at this point? I think you have been in Italy for a year or two now. Christopher Hurt: Thank you. As we talked about, our strategy is to expand our global footprint in our three business models—our corporate-operated, our partner-operated, and our franchise business. This has contributed to these record-breaking results. Last year, we opened in eight countries: Estonia, Finland, Georgia, Germany—as I mentioned, a key market for us in our European expansion—along with Panama, Peru, Uzbekistan, and Venezuela. As we move into these global markets, we will continue to grow the existing stores opened over the last two years. Over the last two years, we have opened over 125 experience locations. As we said today, we will open at least 50 new experience locations this year, and most of those will be in our international partner-operated, asset-light format. These provide us an opportunity to expand the brand quickly and with established partners. Italy is our biggest area, where we have 15 partner-operated locations right now, and it shows there is a lot of white space in global expansion. Keegan Cox: Great. Thanks for taking my questions. Operator: Our next question comes from the line of Chris Moore with CJS Securities. Please proceed with your question. Chris Moore: Congrats, Sharon and Chris, as well. Maybe start with the guide on pretax margins—mid-single-digit decline to low-single-digit percentage increase. Can you talk about some of the key variables that will determine where you wind up on that continuum? Voin Todorovic: Sure. As mentioned, our full-year guide reflects incremental $5,000,000 of estimated tariff impact assuming the current rate. As I shared earlier, there is going to be timing between the first half and second half. We expect in the first half to see about an $8,000,000 negative impact of tariffs, and we would expect to see a benefit of $3,000,000 versus this year in the second half. This is caused by the fluctuation in tariff rates and the inventory flow-through we are seeing. In addition, we are making approximately $3,000,000 in longer-range investments to support wholesale growth, our international expansion, and preopening costs for our ICON Park location in Orlando. When you think about it, we have about $8,000,000 of additional cost between those two things. Even though our mid-single-digit revenue growth is solid, from the pretax perspective it is challenging to absorb in one year the level of impact that we are seeing, thus the range we have provided. Some of the investments are already committed because the ICON store is going to be opening in the early second half of this fiscal year, and the investment to bring talent and support the wholesale organization is important to make upfront, with the expectation for revenues and growth to come in subsequent quarters and years. Chris Moore: Got it. Appreciate that. Very helpful. And maybe just as a follow-up, a little bit longer term: in terms of the current mix between North America and global locations, it had been 75/25. I am guessing at the end of the year we are getting closer to 70/30. Is that right? Christopher Hurt: Yes, that is accurate—70/30% in our international business. Chris Moore: Is there a typical mix goal for a successful global toy store in the 60/40 or 50/50 range? Is that your goal, and is it a five-year target? Just trying to get a longer-term thought process in terms of where you might be driving this to. Christopher Hurt: One of our pillars is expanding our experience locations. Over the last two years, we have been able to open over 125 of those locations. We look for opportunities in both our domestic business and our international business, and we are going to look to see where those partners are located and where the best opportunities are for us to deliver the brand and bring that experience to our guests. There is not a particular exact mix we are driving to; we are looking across the globe to see where the best places for our brand will be. Voin Todorovic: To add to that, we do not have a specific time frame or a specific number like 30/60. We believe there is a big opportunity. We are only in 36 countries around the world, so Chris and team have done a terrific job expanding. Even in existing markets like Germany and Italy, we have plenty of opportunities. Also, when we talk about the stores and the type of stores and formats that we have, they are not all the same. When we compare our full-line stores versus shop-in-shops, there are different economics and different types, but we believe there is growth. Previously, we felt there is no reason we should not have as many or more stores outside of the U.S. as we have within the U.S. Chris Moore: I appreciate that. I will take the rest offline. Thanks, guys. Voin Todorovic: Thank you. Operator: Our next question comes from the line of Steve Silver with Argus Research. Please proceed with your question. Steve Silver: Thanks, operator, and good morning, and thanks for taking the questions. Sharon, congratulations, and Chris as well. My first question: I know you mentioned not managing inventory based on near-term movements. Have expectations for changes in the tariff landscape this year prompted any shifts in the product sourcing mix? Voin Todorovic: Thank you for the question. Inventory management and supply chain disruptions over the last twelve to eighteen months have been really challenging, to say the least. Some of those things have been completely outside of our control, especially fluctuations in tariff rates over the last couple of years. We have been proactive and aggressive in our decision-making to mitigate some of that impact, and I think we have executed well considering the uncertainty. As we move forward, there is still a high level of uncertainty about what may happen and how the administration will use tariffs to impact our business. We continue to work with our sourcing partners to manage things that are within our control, to manage flow. As I mentioned on previous calls, we have the luxury that a lot of product we sell all year long is core product, and it is the same or similar assortment that can be dressed in a variety of different outfits. That gives us flexibility to work with our factories from production planning, from costing, and to support our international expansion. Once things get back to normal or before we had these fluctuations in tariffs, we will address some of the things, but it is also very important for us to continue to make investments as we are creating goals to continue to grow our revenue. We are expanding in different channels, and some of those channels have different inventory turns and timing; bringing in inventory to support wholesale business versus retail has a different dynamic. Sharon Price John: I will add a little more clarity. When Voin talks about the fluctuation in tariff rate, we are not talking about just tariff rates going up and down; we are talking about tariff rates changing from country to country on a monthly basis. When I spoke about my gratefulness to the team for delivering a strong 2025, that shout-out is largely to the logistics and financial groups for what they have been able to do with an ever-changing environment: creating core products with the ability for us to import from multiple factories in multiple countries so we can shift in the moment, and delays or pull-forwards of our products and inventory. When you look at the elevated inventory number and how we have been managing it, I am really proud of where we landed for the year. Remember that toys, prior to this situation, were tariff-free. This was not something that we had to deal with, so I am incredibly proud of the way this company has worked through this disruption. Steve Silver: That is helpful. Great. One more if I may. You mentioned the expectation for there to be 50 new locations opened in 2026. Is there any color from your discussions with your partners on the mix of international expansion—whether a majority will be new countries being entered versus penetration into some of the recent countries you have entered over the last couple of years? Christopher Hurt: We have guided to at least 50 net new experience locations, and those will be with some of our current partners. We are also looking at new countries and new partners to expand our global footprint. As Voin mentioned, we believe there is a lot of white space within our global opportunity to bring the brand to more places. As we talked about reentering Germany—with four stores in the fourth quarter and two in the first quarter—clearly that country has a lot of opportunity for us to expand. We look at Italy with 15. We will look at both new countries for expansion and partners that can expand within their territories and areas over the course of this year and beyond. Steve Silver: Great. Thanks so much, and best of luck across the year. Sharon Price John: Thank you. Operator: Our final question comes from the line of Greg Gibas with Northland Securities. Please proceed with your question. Greg Gibas: Great. Thank you. Thanks for taking the question. Congrats, Chris. Congrats, Sharon. I think you addressed a lot of my tariff-related questions—appreciate the color there. Maybe I wanted to follow on your commentary around the SEO challenges and the headwinds there. To what degree do you believe that impacted traffic? What is the level of headwind you are looking to offset with those measures you discussed? Sharon Price John: Thank you. It is an interesting dynamic how quickly the digital environment is evolving and changing. You can track what is going on in the digital world with the shift to AI-driven searches. Now, when consumers search, the solution is often presented in its full form versus providing a list of different websites for an automatic click-through. There is a new terminology happening called the “click collapse,” where direct click-through via organic search has significantly declined. Reports on a macro basis indicate a double-digit impact to direct click-through from organic search to consumer websites. The shift we need to make—we are actually well suited for the positive attributes of brands that can overcome this. One is being a strong, branded company so people are really looking for you and your brand. Another is creating unique and engaging content. Another is the ability to speak directly to consumers, which we are able to do—we have roughly an 80% capture rate at our stores of people that shop at Build-A-Bear Workshop, Inc., so we can send them direct email. We are also building the muscle you saw with the Animal Cracker launch in social media and getting more engaged and involved, because every time we get a direct click-through to a PDP page or product page, that goes around organic search. That will have to be a bigger part of the way we market and the dollars we spend, to make sure we are getting directly to the consumer versus relying on what was a growing aspect of driving sales online—organic search and SEO. There will be a decrease in our SEO spend and an increase in direct marketing. Greg Gibas: Thanks. That is very helpful. Appreciate that. I wanted to follow up—trends within the Mini Bean product line. How did that trend in the quarter? Sharon Price John: We mentioned we sold 3,000,000 Mini Beans since launch, and we are still seeing positive trends on Mini Beans. We are not just launching core products; we are launching Mini Beans with some of our licenses and things we know collectors will love. We are integrating them into our seasonal products. We are using Mini Beans to drive our marketing stories as well as product sales. We are also creating unique Mini Beans for some partners, like Walmart with the 1,500 stores. Some of the early UGC is all about the search and the hunt for some of these unique Mini Beans at Walmart right now. Greg Gibas: Got it. That is great to hear. Last one—are you able to comment on the rough cadence of expectations for new unit growth throughout the year? Christopher Hurt: As we discussed in our prepared remarks, growth will be back-half weighted, where you will see most of our experience location openings this year. Sharon Price John: Most importantly, that ICON store—a big, single-location opening in the back half of the year. Christopher Hurt: Yes. Greg Gibas: Great. Thanks very much. Sharon Price John: Thank you. Operator: Mr. Hurt, I would like to turn the floor back over to you for closing comments. Christopher Hurt: Thank you for joining us today. I look forward to sharing more details on the EVOLVE strategic pillars and platform areas on upcoming calls as we usher in this exciting new chapter for the company. We look forward to you joining us for our first quarter 2026 call. Thank you. Operator: Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.

74天前Insight Analytics约5分钟阅读

REFI 2025 Q4 财报电话会议

Operator: Good day, and welcome to the Chicago Atlantic Real Estate Finance, Inc. Fourth Quarter 2025 Earnings Call. All participants will be in listen-only mode. Should you need assistance after today's presentation, to ask a question, you may press star then 1 on a touch tone phone. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the call over to Tripp Sullivan of SCR Partners. Tripp, please go ahead. Tripp Sullivan: Thank you, Bailey. Good morning. Welcome to the Chicago Atlantic Real Estate Finance, Inc. conference call to review the company's results. On the call today will be Peter Sack, Co-Chief Executive Officer; David Kite, President and Chief Operating Officer; and Phil Silverman, Chief Financial Officer. Our results were released this morning in our earnings press release, which can be found on the Investor Relations section of our website along with our supplemental filed with the SEC. A live audio webcast of this call is being made available today. For those who will listen to the replay of this webcast, we remind you that the remarks made herein rather than today will not be updated subsequent to this call. During this call, certain comments and statements we make may be deemed forward-looking statements within the meaning prescribed by the securities laws, including statements related to the future performance of our portfolio, our pipeline and potential loans and other investments, future dividends, and financing activity. All forward-looking statements represent Chicago Atlantic Real Estate Finance, Inc.'s judgment as of the date of this conference call and are subject to risks and uncertainties that can cause actual results to differ materially from our current expectations. Investors are urged to carefully review various disclosures made by the company, including the risk and other information disclosed in the company's filings with the SEC. We will also discuss certain non-GAAP measures including, but not limited to, distributable earnings. Definitions of these non-GAAP measures and reconciliations to the most comparable GAAP measures are included in our filings with the SEC. I will now turn the call over to Peter Sack. Please go ahead. Peter Sack: Thank you, Tripp, and good morning, everyone. Chicago Atlantic Real Estate Finance, Inc. operates within a unique intersection of real estate, credit, and the emerging sector of the U.S. cannabis industry. Our thesis is simple: apply best-in-class sector expertise, highly developed relationship-based sourcing capabilities, and fundamental credit and real estate investment principles to make debt investments in an industry with limited sources of debt capital. We take advantage of limited lending competition to structure, first, what we believe to be differentiated downside risk of senior secured positions, and, second, a highly outsized return profile relative to the broader credit and real estate lending portfolios. Most lending companies are limited in their ability to invest in underwriting and originations expertise in any one particular sector. They become masters of none, and they are price takers, investing in whatever the next investment banker or private equity sponsor offers. Because we focus on one sector with limited lending competition, we have the luxury of investing in a highly respected originations team made up of the best-known leaders in our space. We maintain an outsized underwriting, real estate, and analytics team that specializes solely in this unique niche of cannabis. We directly originate and agent nearly all of our investments. We maintain a team of over 100 professionals overseeing only $2.3 billion in capital under management because we know that with limited lending competition, our investment in expertise and execution capabilities translates directly into alpha generation for our investors. Our discipline, our focus, and institutional investment platform built for the long run is reflected in the execution of Chicago Atlantic Real Estate Finance, Inc. in 2025, and already nearly three months into 2026, we are exceeding our expectations and more enthusiastic than ever about our opportunity set for the coming year. Thank you for indulging me in this reappraisal of the fundamentals of Chicago Atlantic Real Estate Finance, Inc.'s differentiation. It is important to reimburse this in the context of the investor community's recent reconsideration of risk and reward in the broader private credit ecosystem. Our portfolio has extremely limited overlap with other private credit markets. The drivers of current private credit market pressure simply are not relevant to us. We have no exposure to software, receivables factoring, nor recent examples of fraud in syndicated facilities. Our sector has not experienced an over-allocation of capital leading to compressed yields that is happening across other sectors of private credit. Our strategy is built on a disciplined focus on credit and collateral. We work collaboratively with our borrowers to create value, and our work is executed by a team of originators and underwriters with deep industry and rigorous risk management expertise. I spoke last quarter about how optimistic we are about our current environment. The pipeline remains strong and currently stands at $616 million. We continue to get first looks at the largest opportunities within the cannabis sector, but we are also leading when it comes to creative solutions for our borrowers as well. For example, during the fourth quarter, the Chicago Atlantic Real Estate Finance, Inc. platform closed on a credit facility to support the largest cannabis ESOP completed to date. We have talked about ESOPs as a compelling opportunity; we believe this loan highlights our capabilities to trailblaze, bringing financial solutions common in broader lending markets to the more nascent cannabis lending markets. Over recent months, there has been positive momentum in cannabis policy with bills introduced in several states to change the legality of the product. In December 2025, President Trump signed an executive order directing his administration to reclassify cannabis from a Schedule I to a Schedule III regulated product. While this is not federal legalization, rescheduling would represent the most significant federal policy change in years. We highlight on a slide in this quarter's supplemental how this sets the stage for improved industry economics without opening the door for increased lending competition. We believe Chicago Atlantic Real Estate Finance, Inc. is well positioned to benefit from these developments, but the success of our strategy is not dependent on these changes. As we mentioned in previous quarters, we underwrite every investment assuming no regulatory-driven credit improvements. We continue to create a differentiated and low-levered risk/return profile that is insulated from cannabis equity volatility and outperforms our industry-agnostic mortgage REIT peers. As David will break down for you in a moment, because we have structured our floating-rate loans with high interest rate floors and no caps, only 9% of our total loan portfolio is exposed to further rate declines based on the prevailing prime rate. That discipline provides a meaningful measure of protection to the portfolio. We are focused on outperforming and delivering a consistent yield to our shareholders despite volatile industry sentiment. The pipeline is expanding, and we have already established strong momentum to kick off 2026. David, why do you not take it from here? David Kite: Thank you, Peter. As of December 31, our loan portfolio principal totaled approximately $411 million across 26 portfolio companies with a weighted average yield to maturity of 16.3% compared with 16.5% for the third quarter. Gross originations during the quarter were approximately $19 million of principal funding, of which $5 million was advanced to a new borrower and $14 million was advanced to existing borrowers. As anticipated, all the loans that had maturities at the end of 2025 were extended with new contractual maturities in 2026. During the quarter, we made significant progress on loan number nine. We funded an advance for the borrower to acquire three additional dispensaries in Pennsylvania, bringing their total to six operating dispensaries. In connection with this advance, the company received all past-due interest from the borrower, which brought the loan current as of 12/31/2025. We expect the six dispensaries to provide sufficient free cash flow to enable the borrower to remain current on its outstanding indebtedness and applicable covenants. Despite being brought current, which resulted in a risk rating upgrade from four to three, we maintained the loan on nonaccrual status as of 12/31/2025. We expect to restore the loan to accrual status once the operator demonstrates sustained performance and continued timely debt service payments. As of 12/31/2025, our portfolio consisted of 37.6% fixed-rate loans and 62.4% floating-rate loans. The floating-rate portion is primarily benchmarked to the prime rate. Following December's 25 basis point rate reduction, which brought the prime rate to 6.75%, only 9% of our portfolio remains exposed to further rate decline. The remaining 91% is either fixed rate or protected by prime rate floors of 6.75% or higher. Importantly, our floating-rate loans are not exposed to interest rate caps. This structural advantage, combined with our rate floor protection, positions our portfolio favorably to most mortgage REITs. We have included a slide in our supplemental presentation that highlights how well we have safeguarded our portfolio from interest rate volatility. You will note that based on the current portfolio as of December 31, a hypothetical 100 basis point decline in benchmark rates is estimated to result in a mere $14,000 decrease to net investment income, and a 200 basis point decline would actually result in an increase to net investment income, all else remaining equal. This is primarily the result of minimal exposure to rate decline within our asset portfolio, offset by the positive impact of interest rate expense declines resulting from a revolver loan bearing a prime rate floor of 3.25%. Should rates begin to move back up, then, of course, we should expect to see material gains in net investment income. Total leverage equaled 32% of book equity at December 31, compared with 33% as of September 30. As of December 31, we had $49.1 million outstanding on our senior secured revolving credit facility, and $49.3 million outstanding on our unsecured term loan. As of today, we have approximately $53 million available on the senior credit facility and total liquidity, net of estimated liabilities, of approximately $50 million. I will now turn it over to Phil. Phil Silverman: Thank you, David. Our net interest income of $14.2 million for the fourth quarter represented a 4% increase from $13.7 million during the third quarter of 2025. The increase was primarily attributable to the collection of past-due interest on loan number nine, totaling $1.7 million, which is recognized upon receipt. This was offset by the impact of the multiple benchmark prime rate cuts in the fourth quarter totaling 50 basis points, 25 each in October and December 2025. Total interest expense, including noncash amortization of financing costs, for the fourth quarter was approximately $1.8 million, an increase from $1.6 million in the third quarter. The weighted average borrowings on our revolving loan increased to $33.6 million compared to $14 million during the third quarter. Our CECL reserve on our loans held for investment as of December 31 was approximately $5.1 million. On a relative size basis, our reserve for expected credit losses represents 1.23% of our outstanding principal of our loans held for investment. The reserve remained consistent with the prior quarter. On a weighted average basis, our portfolio maintains strong real estate coverage of 1.2 times. Our loans are secured by various forms of other collateral in addition to real estate, including UCC-1 all-asset liens on our borrower credit parties. These other collateral types contribute to overall credit quality and lower loan-to-value ratios. Our portfolio has a loan-to-enterprise value ratio on a weighted average basis of 44.2% as of 12/31/2025, calculated as senior indebtedness of the borrower divided by the fair value of total collateral to refi. Distributable earnings per weighted average share on a basic and fully diluted basis were approximately $0.44 and $0.43 for the fourth quarter and $1.92 and $1.88, respectively, for the year. And in January, we distributed the fourth quarter dividend of $0.47 per common share declared by our Board in December. Since inception, we have distributed $8.47 per common share in dividends, which represents an annualized yield on cost of approximately 12.4% when measured against our IPO price. Our book value per common share outstanding was $14.60 as of 12/31/2025; there were approximately 21.5 million common shares outstanding on a fully diluted basis as of such date. During the subsequent period from 01/01/2026 through today, the company has advanced new gross loan principal of approximately $51.1 million, comprised of $16.2 million advanced to one new borrower and $34.9 million to existing borrowers on delayed draw and revolving credit facilities. Additionally, the company received a total of $40.4 million in loan repayments, comprised of $3.1 million of scheduled amortization payments and $37.3 million in early prepayments, which included the full repayment of loan number one and loan number 27. We expect to continue to maintain a dividend payout ratio based on our basic distributable earnings per share of 90% to 100% for the 2026 tax year. If our taxable income requires additional distributions in excess of the regular quarterly dividend to meet our taxable income requirements, we expect to meet that with a special dividend in the fourth quarter. Operator, we are now ready to take questions. Operator: We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question comes from Aaron Grey with Alliance Global Partners. Please go ahead. Aaron Grey: Hi, good morning, and thank you for the questions. First question, it is encouraging to hear the commentary on demand for growth capital that you are seeing. Just in terms of the pipeline, can you provide maybe some general line of sight as to when some of those originations might come to fruition? And how many of those may be at the later stage of being finalized? And then secondly, can you provide comfort in being able to potentially deliver another year of net portfolio growth? Peter Sack: Thanks. Thank you. We are still targeting net portfolio growth for this year. I think we have a fairly high degree of confidence in our ability to execute on the pipeline. And I think it is helpful to put in context that as of March, as of March 12, we have about $50 million of liquidity available. And this, frankly, just is not as much as we would like relative to the pipeline that we have. That amount of liquidity can be deployed relatively quickly. The bigger unknown at this point earlier in the year is what repayments in the portfolio will occur between now and December 31. And that is difficult to forecast. Aaron Grey: I appreciate the color, Peter, and can understand some of the uncertainty in terms of, you know, the repayments. So maybe a second question, you know, outside of that. Can you talk about maybe the outlook in terms of current yields for potential deals in the pipeline? And has rescheduling, you know, been coming into play on, you know, rate negotiations, the underwriting process? Or has that largely been, you know, not quite taken rescheduling into account yet? Thanks. Hi. Can you guys still hear me here? Peter Sack: Oh, apologies. Rescheduling is driving increases in demand for debt capital that we are seeing in the market. Operators are accelerating investment decisions and accelerating merger and acquisition decisions. It has not changed the conversation around pricing, nor has it changed how we underwrite and evaluate risk. That is largely due to the fact that the announcement of rescheduling, and even the execution of rescheduling, has yet to lead to new lenders entering the market from the vantage point that we sit at. Aaron Grey: Okay. Great. So, yes, increased demand, but you are not seeing more come to market. Okay. That is helpful color there, Peter. Thanks very much. I will jump back in the queue. Operator: Our next question comes from Christopher Muller with Citizens Capital Markets. Please go ahead. Christopher Muller: Hey, guys. Thanks for taking the question. And I guess I will stay on a similar line of questioning here. So nice slide you guys have on the regulatory reform in the deck there. On the point about not seeing increased competition, is that as we sit today, or does that assume Schedule III gets finalized? And then maybe a second layer to that question. What do you think would increase competition in the space? Peter Sack: Alright. Well, as we sit today, we have not seen new lenders enter the market due to the follow-on of Trump's announcement of rescheduling. We also have not heard of lenders or significant lenders sitting on the sidelines and saying, well, when rescheduling happens, we are ready to deploy X amount of capital, and we are gathering opportunities to be able to do that. We have not observed that in the market. What do I think would be required to support a large influx of new lenders into the cannabis market? I think there is a series of reforms that would be very helpful, and we, in general, look forward to that. One, full legalization would open up cannabis and would open up, really, the broader wave of private credit market participants to enter. A framework under which existing cannabis operators could produce, market, and distribute cannabis as a Schedule III substance perhaps would do that. I think it would be helpful to have cannabis companies listed on the New York Stock Exchange and Nasdaq. It would be helpful to have the broader pieces of the financial ecosystem open to servicing cannabis companies. That includes major accounting firms, major law firms, major custodians. There are a lot of, I think, little steps that individually do not seem like big hurdles but are very important for opening up access to capital markets that are required and that I think are still going to take a long time to evolve in terms of how broader participants in our financial system approach and view cannabis as a market. And that process perhaps has not even begun yet. Christopher Muller: Got it. Very helpful. And then I guess changing gears a little bit. It looks like there are two new nonaccrual loans. Both of them are in Arizona. Are these loans to the same sponsor? Is it something market-specific in Arizona going on there? Peter Sack: They are loans related to the same sponsor. Arizona is having, I think, a challenging pricing environment that our borrower in this case is navigating in close collaboration with us. Christopher Muller: Got it. Appreciate you guys taking the questions today. Operator: Our next question comes from Pablo Zuanic with Zuanic and Associates. Please go ahead. Pablo Zuanic: Thank you, and good morning, everyone. Can we just go back to loan number nine? I know you gave a little color there. But I am just trying to understand. I think the combined principal in September was $19 million, and now it is $29 million. So you decided to lend more money to a borrower that is in trouble. Right? So I am just trying to understand the logic of that. And then if you can provide more color in terms of what is going on with that borrower, please. Thank you. I know you gave some color in the call. Thanks. Peter Sack: Absolutely. I think this is an effort—no, number nine has been a good example of really the full toolkit that Chicago Atlantic Real Estate Finance, Inc. can bring to the table in addressing challenging credit situations and challenging workout and restructuring opportunities. In this position, we completed a full foreclosure on the assets and change of control of the assets in 2025, over the course of the recapitalization of the business. Over the course of 2025, the business reorganized its operations, improved its cash flow and revenue significantly, and at the end of 2025, Chicago Atlantic Real Estate Finance, Inc. supported the company's acquisition of additional dispensaries within its market. And it did so both with capital from Chicago Atlantic Real Estate Finance, Inc. and additional junior capital behind Chicago Atlantic Real Estate Finance, Inc., and it dramatically changed the operating profile of the business, the cash flow of the business, and it permits the company to become current on all of its interest in 2025. And so we hold this loan in—I think, as we said at December 31, 2025, it is in a little bit of a gray area from an accounting position on how we need to present this loan. I say gray area because as of 12/31/2025, the loan is current on all interest, but we have chosen not to formally take it off nonaccrual. I think that represents a high level of conservatism in how we view the portfolio and how we present the portfolio, which I think is important in this environment of private credit investor skepticism. But I think that those series of events make us confident or hopeful that we will be revisiting that nonaccrual status shortly in 2026. Phil Silverman: And, Pablo, just to be clear, despite the loan being on nonaccrual, the borrower made their January and February payments, so we recognize those as income on a cash basis. So despite the loan not being accrued, to Peter's point and for the reasons that he noted, we are still recognizing income as it is received in cash. Pablo Zuanic: Right. Thank you. And then just moving on to the early repayments on loan number one and loan number 27. You know, when those things happen, I try to think in terms of, well, it could have been extended, or maybe you did not want to extend it because of credit issues, or maybe that borrower had better alternatives out there. I do not know if you can give some color in terms of those two early repayments. Peter Sack: Loan number one was refinanced with a new credit facility in which Chicago Atlantic Real Estate Finance, Inc. participated. So we did not extend the loan, but we executed, or we participated in and led, a refinancing of the existing loan. Number 27 did pay off, and we opted not to pursue a refinancing for a number of decisions, some pricing, some credit-related. But I think it is a healthy mix that you should expect to see, that some loans will be refinanced, some loans will be extended, and, in the case of a loan being refinanced and Chicago Atlantic Real Estate Finance, Inc. not leading the refinancing, it does not mean that the relationship is over and that there will not be opportunities in the future. Pablo Zuanic: Thank you. And then just a bigger picture, I was looking at the press release on the third quarter conference call. I think back then you talked about a pipeline of $415 million and now it is $616 million. Right? So, obviously, you have $200 million more. But on the other hand, you said, you know, no changes in pricing, no changes in terms of discussions. I am just trying to reconcile the fact that the pipeline increased, you know, by 50%. And on the other hand, you are saying you are not changing the way you are evaluating risk based on rescheduling potential and that there are no changes in pricing. I am just trying to connect the two. Peter Sack: Yes. Pipeline is a proxy for opportunity set, but within that pipeline, there is a broad range of risk/reward opportunities. As our capital becomes particularly constrained—perhaps this is where you are going with your question—as our capital becomes constrained relative to the opportunity set, you obviously will see a forced change in selection and a forced change in the opportunities that we can fund and the risk/reward that we are funding. And we are constantly evaluating what is the pricing that we can extract and how can we manage those levers of risk for the advantage of the funds. What I think I wanted to address more specifically is that rescheduling has not led us to lower the bar of underwriting, to decrease our credit underwriting standards, or to increase the leverage at which we are willing to lend, as another example. It is not leading us to decrease the pricing at which we are deploying capital or changing our willingness to deploy capital at lower levels. I hope that gives you some clarity on our mindset as we approach what is an evolving market opportunity. Pablo Zuanic: Right. Thank you. That is very helpful. And one last one, if I may. You know, obviously, thank you for all the color you gave on the slide deck about, you know, the reform outlook and the positive impact for the industry. And, of course, I agree, but maybe playing a little bit devil's advocate, and I am not pushing back. You know, one could make the argument that from a cash flow perspective, nothing changes for the companies because none of them, including Green Thumb, are paying 280E tax. So the only thing that could change is that share prices go up a lot and the companies are able to issue equity. But as we saw on December 18, you know, the jump in share prices did not last very long. Right? So I am afraid that we would have a situation: we get rescheduling, but cash flow does not change, obviously, because you are not paying 280E, and then we do not really have the ability for companies to issue equity because share prices do not go up so much. So from that perspective, you know, in practical terms, very little would change. I mean, I am sure you would disagree with me, but if you can comment on that, Peter, then that is my last question. Thanks. Peter Sack: Yes. I think the fundamental disagreement—the fundamental piece that I would push back on—is how you view the current environment. The concept that companies are accruing a tax liability and are not paying those taxes is not a particularly sustainable one in the long term, and it is an aspect of underwriting that we focus on very intensely when we are evaluating new opportunities. We are evaluating what amount of taxes are unpaid on their balance sheet today. If they are not current and not paying their 280E taxes, how might that balance grow over the life of our investment? And then what guardrails can we put in place from a covenant perspective and a loan agreement perspective to ensure that those balances do not grow and that those balances and their nonpayment of taxes are factored into how we measure risk on a monthly basis when we receive their compliance certificates. And so we look at the current environment—and to paraphrase your words—we do not say, oh, they are not paying their tax, so it does not matter. We look at that current environment with a very healthy amount of skepticism and factor it into how we underwrite our loans. And so when rescheduling does occur and those taxes are no longer being accrued because they are no longer due on a go-forward basis, that, to us, is a strong credit improvement. Pablo Zuanic: Right. Thank you very much. That is great color. Thanks. Operator: This concludes our question and answer session. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

74天前Insight Analytics约5分钟阅读

UONE 2025 Q4 财报电话会议

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Urban One, Inc. 2025 Fourth Quarter Earnings Call. As a reminder, this conference is being recorded. We will begin this call with the following Safe Harbor statement. During this call, Urban One, Inc. will be sharing with you certain projections or other forward-looking statements regarding future events or its future performance. Urban One, Inc. cautions you that certain factors, including risks and uncertainties referred to in the 10-Ks, 10-Qs, and other reports it periodically files with the Securities and Exchange Commission, could cause the company's actual results to differ materially from those indicated by its projections or forward-looking statements. This call will present information as of 03/12/2026. Please note that Urban One, Inc. disclaims any duty to update any forward-looking statements made in the presentation. In this call, Urban One, Inc. may also discuss some non-GAAP financial measures in talking about its performance. These measures will be reconciled to GAAP either during the course of this call or in the company's press release, which can be found on its website at https://www.urban1.com. A replay of the conference call will be available from 2:00 PM Eastern Time, 03/12/2026, until 11:59 PM Eastern Time, 03/19/2026. Callers may access the replay by calling 1807702030. International callers may dial direct 1609809909. The replay access code is 907-7729. Access to live audio and a replay of the conference will also be available on Urban One, Inc.’s corporate website at https://www.urban1.com. The replay will be made available on the website for seven days after the call. No other recordings or copies of this call are authorized or may be relied upon. I will now turn the call over to Alfred C. Liggins, Chief Executive Officer of Urban One, Inc., who is joined by Peter Thompson, Chief Financial Officer. Mr. Liggins, please go ahead. Alfred C. Liggins: Thank you very much, operator. Also joining us today are Chris Simpson, our General Counsel; Ken Wishart, our Chief Administrative Officer; and Jody Druer, who is CFO of our cable television unit, TV One and Clio. Thank you all very much for joining us for the fourth quarter results 2025 year-end conference call. As the press release has stated, we actually finished the year just inside our guidance at $56,700,000 of EBITDA. We had previously also given guidance for 2026 of $70,000,000 of EBITDA. We are just getting through first quarter bottom parts. We are going to wait until we get to the end of first quarter, into the conference call, to update any information on that. So we are holding that for the moment. Q1 started off a bit slower than what we had hoped. Current radio pacings are down about 5%, but we are still positive about a number of our operational changes that we have made and also political that is going to be coming in this year. We are also starting to see some significant improvements in our ratings at our cable television unit. A number of these factors are playing into our decision to hold on any sort of 2026 guidance update. We are very pleased that by the end of last year, we were able to do a significant capital market transaction where we repurchased a significant amount of our 2028 notes at a discount. We extended out our maturities in an exchange into 2031 and upsized our ABL credit facility. We put the company in a much more stabilized position in terms of its capital structure to allow us to continue to focus on delevering the business and to try to take advantage of any offensive opportunities, particularly as it relates to deregulation in the radio business. We feel very good about that, and we continue to maintain our focus on delevering, including that any transactions that we would look to do would be transactions that are also delevering. With that, I am going to turn it over to Peter, who is going to give you details on the numbers, and then we will open it up to Q&A. Peter Thompson: Thank you, Alfred. Consolidated net revenue for the three months ended 12/31/2025 was approximately $97,800,000, down 16.5% year-over-year. Net revenue for the radio broadcasting segment was $35,100,000, which was a decrease of 26.5% year-over-year. Excluding political, net revenue was down 10.1% year-over-year. According to Miller Kaplan, our local ad sales were down 19% against our markets that were down 12.6%, and our national ad sales were down 40.1% against the market that was down 29.2%. Our largest ad category for the quarter was services, which was up 0.1%, primarily due to legal services. Healthcare was up 3.5%, and financial was up 15.7%. All of the other major categories were down. Net revenue for the Reach Media segment was $13,800,000 in the fourth quarter, up 43.9% from the prior year, and adjusted EBITDA was approximately $900,000 for the quarter. The increase was primarily driven by an increase in event revenue due to the timing of the Fantastic Voyage Cruise, which was in fourth quarter 2025 compared to 2024, so there is a timing difference there, and the increased revenue and expense was offset by a decrease in political revenue and a decrease in network advertising revenue. Net revenues for the Digital segment were down 19.6% in the quarter at $14,700,000. The decline was driven by a decrease in direct revenue streams as a result of decreased DEI money, lower political, and lower client spending in general. Direct digital sales were down by $2,700,000 for the quarter. Adjusted EBITDA was $1,800,000 compared to $2,700,000 last year. We recognized approximately $34,900,000 of revenue from our cable television segment during the quarter, a decrease of 16.8%. Television advertising revenue was down 21.8%. Our prime delivery declined approximately 20% from the third quarter for persons 25–54. Cable TV affiliate revenue was down 9%, which was driven by subscriber churn, partially offset by an increase in subscriber rates and the launch of Now TV. Cable subscribers for TV One, as measured by Nielsen, finished the fourth quarter at 30,200,000 compared to 34,100,000 at the end of Q3. The decline is a result of the combination of churn and also a conversion of virtual MVPDs that has been sold as connected television and therefore pulled out of the Nielsen numbers. Clio TV had 33,000,000 Nielsen subscribers at the end of the period. Operating expenses, excluding depreciation, amortization, stock-based compensation, impairment, and goodwill and intangible assets, were approximately $90,200,000 for the three months, compared to approximately $91,100,000 for the comparable period in 2024. Our operating expenses in the period included $7,700,000 of debt refinancing costs, as well as $6,700,000 of expenses related to the Fantastic Voyage Cruise. Excluding those two items, operating expenses were actually down by approximately 17%. That was driven mainly by revenue-related variable expenses such as commissions, sales rep fees, traffic acquisition costs in Digital, as well as headcount and related third-party professional fees. Radio operating expenses were down 17.8%, or $5,700,000, driven primarily by a decrease in commissions and headcount-related expenses. Reach operating expenses were up 86.1% due to the timing of the Fantastic Voyage. Excluding the event expenses, expenses at Reach were down 12.1%, which was driven by talent and headcount-related expense reductions. Operating expenses in the Digital segment were down 18.5%, driven by the decrease in traffic acquisition costs, commissions, headcount-related savings, and video production costs. Operating expenses in the Cable Television segment were down 8.3%, driven by lower headcount costs, commission, bad debt, and a reduction in program development write-offs. Operating expenses in Corporate were up by approximately $4,000,000, driven by an increase in the debt refinancing costs that was recorded in Q4 of $7,700,000, offset by lower third-party legal and professional fees, software license fees, and other expense reductions at Corporate. Consolidated adjusted EBITDA was $15,600,000 for the fourth quarter, which was down 41.8%. Consolidated broadcast and digital operating income was $23,800,000, a decrease of 38.3%. On 12/18/2025, the company closed a private tender and exchange offer with the holders of the 2028 senior secured notes representing more than 97% of the aggregate principal amount outstanding. The company tendered for $185,000,000 in the 2028 notes at 60¢. We issued $60,600,000 aggregate principal amount of 10.5% first-lien senior secured notes due 2030, and we issued $291,000,000 aggregate principal amount of 7.625% second-lien secured notes due 2031. Following the transaction, $11,800,000 of the 2028 notes remained outstanding. We had to account for the transaction under the troubled debt restructuring rules, which means that we do not recognize the gain on the tender in P&L and instead we effectively capitalize that on the balance sheet as a premium, and that will have a knock-on effect in future periods of reducing the P&L interest expense, and the difference between the cash interest expense and the P&L interest expense will go to reduce the premium over time. Interest and investment income was approximately $400,000 in the fourth quarter compared to $1,100,000 last year. The decrease was due to lower cash balances in interest-bearing accounts. Interest expense decreased to approximately $8,700,000 in Q4, down from $7,500,000 last year, due to lower overall debt balances. The company made cash interest payments of approximately $13,400,000 in the quarter. During the first three quarters, the company repurchased $96,700,000 in its 2028 notes at an average price of 53.6% of par, bringing the balance to $487,800,000 as of September 30, and then the debt transaction in the fourth quarter further reduced the outstanding long-term debt balance to $363,400,000 at year-end. At the same time as the debt transaction happened, we drew down $10,000,000 from our new ABL credit facility, and in 2026 we paid the $10,000,000 draw on the ABL, and we also purchased an additional $4,300,000 in the 2028 notes at 51% of par, bringing the current outstanding total debt balance to $359,100,000. $55,300,000 of noncash impairment charges were recorded, and that was made up of $500,000 at Reach Media, $53,100,000 at Cable Television, and $1,700,000 within the Digital reporting unit. We recorded amortization expense of approximately $400 for the radio broadcast license and TV One trade name for the three months. Benefit from income taxes was approximately $9,200,000 for the fourth quarter. The company received cash income tax refunds in the amount of approximately $200,000. Capital expenditures were approximately $3,200,000 in the quarter and $10,400,000 for the year. Net loss was approximately $54,400,000, or $12.24 per share, compared to a net loss of $35,700,000, or $7.81 per share, for 2024. During the three months ended 12/31/2025, the company did not repurchase any shares of Class A common stock. We did repurchase 13,773 shares of Class D common stock for approximately $100,000 at an average price of $8.20 per share on a post-split basis. In January 2026, the company did a one-for-ten reverse stock split and thereby regained compliance with the Nasdaq listing requirements. As of 12/31/2025, the current outstanding debt balance was approximately $373,400,000, and ending unrestricted cash was $25,500,000, resulting in net debt of approximately $347,900,000, which compares to $56,700,000 of LTM reported adjusted EBITDA for a total net leverage ratio of 6.14x. With that, I will hand it back to Alfred to help you. Alfred C. Liggins: Operator, can we open the lines up for Q&A? Operator: We will now begin the question and answer session. To ask a question, press star then the number 1 on your telephone keypad. Again, for questions, please press star followed by the number 1. We will pause for just a moment to compile the Q&A roster. Once again, for questions, simply press star 1 on your telephone keypad. We have no questions at this time. Mr. Liggins, I will hand the call back to you. Alfred C. Liggins: Thank you very much. We appreciate your support, and as always, we are available offline to answer any questions that you may think of after the fact. Thank you very much, and we will see you next quarter. Operator: This will conclude today’s call. Thank you all for joining. You may now disconnect.

74天前Insight Analytics约5分钟阅读

SUNS 2025 Q4 财报电话会议

Operator: Good morning, and welcome to Sunrise Realty Trust, Inc. Fourth Quarter and Fiscal Year 2025 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session, and instructions will be given at that time. As a reminder, this call is being recorded. I will now turn the call over to Gabriel A. Katz, Chief Legal Officer. Please go ahead. Gabriel A. Katz: Good morning, and thank you all for joining Sunrise Realty Trust, Inc.’s earnings call for the quarter and fiscal year ended 12/31/2025. I am joined this morning by Leonard Mark Tannenbaum, our Executive Chairman, Brian Sedrish, Chief Executive Officer, and Brandon Hetzel, our Chief Financial Officer. Before we begin, I would like to note that this call is being recorded. Replay information is included in our 02/10/2026 press release and is posted on the Investor Relations portion of our website at sunriserealtytrust.com, along with our fourth quarter and fiscal year 2025 earnings release and investor presentation. Today’s conference call includes forward-looking statements and projections that reflect the company’s current views with respect to, among other things, market developments, our investment pipeline, anticipated portfolio yield, financial performance, and projections in 2026 and beyond. These statements are subject to inherent uncertainties in predicting future results. Please refer to Sunrise Realty Trust, Inc.’s most recent periodic filings with the SEC, including our Annual Report on Form 10-K filed earlier this morning, for certain conditions and significant factors that could cause actual results to differ materially from these forward-looking statements and projections. During today’s conference call, management will refer to non-GAAP financial measures, including distributable earnings. Please see our fourth quarter and fiscal year earnings release uploaded to our IR website for reconciliations of the non-GAAP financial measures with the most directly comparable GAAP measures. The format for today’s call is as follows. Len will provide a general business and markets overview. Next, Brian will cover our view on the state of the commercial real estate lending markets and discuss our existing portfolio. Then Brandon will provide an update on our financial position. After that, we will open the lines for Q&A. I will now turn the call over to our Executive Chairman, Leonard Mark Tannenbaum. Leonard Mark Tannenbaum: Thank you, Gabe. Good morning, and welcome to our fourth quarter and fiscal year 2025 earnings conference call. As we finished 2025 and turned to 2026, we remain focused on providing loans to sponsors of transitional real estate business plans, primarily in the Southern United States. Our portfolio construction remains similar to how we began the year, with a focus on residential loans, which are mainly senior secured and floating rate. From a broader real estate market perspective, 2025 also seemed to be a transition year. We saw limited transaction volume in early 2025, which gave way to improving conditions in the second half as the Federal Reserve’s rate easing cycle took hold. As a reminder, Sunrise Realty Trust, Inc. is an important part of the TCG real estate platform. The platform consists of a number of funds focused on sourcing, underwriting, and investing in commercial real estate loans. The affiliation with our platform provides Sunrise Realty Trust, Inc. with a scalable infrastructure, debt and equity capital markets expertise, and the ability to pursue larger transactions than it could currently pursue on its own. During the fiscal year ended 12/31/2025, the TCG real estate platform closed on $368 million of loans, of which Sunrise Realty Trust, Inc. committed $247 million and funded $224 million. Additionally, during the 2025 fiscal year, Sunrise Realty Trust, Inc. received $52 million of repayments. As of February 27, the TCG real estate platform has closed on $91 million in loans this year, with Sunrise Realty Trust, Inc. committing $62 million of that total. For the quarter ending 12/31/2025, Sunrise Realty Trust, Inc. generated distributable earnings of $0.27 per basic weighted average share of common stock. Earnings were impacted by the loan to Thompson Hotel in San Antonio, which we foreclosed on less than two weeks ago. In line with our policies, we placed the loan on nonaccrual during the fourth quarter, which reduced distributable earnings by approximately $0.03 per share. Had this loan been on accrual, distributable earnings would have been approximately $0.30 per share. Looking ahead, the Board of Directors has declared a $0.30 dividend per share for the quarter ended 03/31/2026. We remain focused on paying a dividend that is consistent with the earnings power of the business over the medium term. I am also pleased to announce that subsequent to the quarter end, we increased our revolving credit facility to $165 million with the addition of Customers Bank, who has committed $25 million. As a reminder, our revolving credit facility, originally established in November 2024, remains expandable to $200 million and carries an interest rate at 275 basis points over SOFR with a 2.63% floor. I will now turn the call over to Brian Sedrish to walk through our portfolio in more detail. Brian Sedrish: Thank you, Lenny. Good morning, everyone. Before turning to our current portfolio and pipeline, I wanted to take a minute to discuss what we are seeing generally in the commercial real estate market. Over the last year, we have observed a clear bifurcation emerge across the lending market between lenders that have largely worked through their problem loans and can remain on offense and those still constrained by legacy portfolio issues. Many lenders that are currently on offense remain focused on multifamily and industrial assets where spreads are tight and continue to compress. In these more commoditized segments, return targets are largely achieved through leverage and capital markets arbitrage rather than fundamental credit expertise. Our approach is differentiated. We focus on originating commercial mortgage loans for sponsors executing transitional business plans, situations that demand a more structured, bespoke solution. Our team’s depth of experience in prestabilization strategies and complex deal structures allows us to identify and underwrite opportunities that many lenders choose not to pursue. We believe these core competencies position us to capture the most compelling risk-adjusted opportunities in today’s market. Critically, our focus on structuring complexity and asset-level expertise enables us to generate superior unleveraged returns, reducing our reliance on financial leverage to meet target yields and providing a more durable foundation for performance across more market cycles. Turning to our portfolio. In 2025, Sunrise Realty Trust, Inc. closed on $56 million of commitments, which include approximately $26 million in a financing package comprised of two senior loans for Collection Suites, a small-bay industrial for-sale development consisting of two projects located in Doral and West Palm Beach, Florida, and a $30 million senior bridge loan for the financing of a seven-story Class A retail property in the Galleria section of Houston, Texas. From year-end through March 1, Sunrise Realty Trust, Inc. committed approximately $62 million to two loans originated by the TCG real estate platform. One was a $14 million commitment to a senior bridge loan for the acquisition of a premier ranch property in Southern Colorado, which has already been repaid, and the second is a $48 million B note to refinance a 15-property portfolio of Graduate by Hilton hotels. These investments reflect our broader strategy of partnering with top-tier sponsors who share our vision for creating and investing in high-quality real estate projects. Turning to our portfolio management efforts. On March 3, we took ownership of the Thompson Hotel in San Antonio. The 20-story mixed-use hotel and condominium consists of 162 hotel rooms and was delivered and opened in 2021. The property sits in a premier location in San Antonio along the Riverwalk and is viewed as a Class A hotel situated in one of the nation’s top 10 cities by population. Despite slower-than-expected hotel operations, we believe the hotel’s medium- to long-term prospects are attractive. Of note, the loan carries a personal guarantee from the borrower covering certain shortfalls, which we intend to pursue. Prior to and following the foreclosure event, numerous hospitality companies have reached out to us inquiring about the prospects of acquiring the asset. Over the next week, we intend to hire a premier broker to market the asset. We believe that the Sunrise Realty Trust, Inc. portfolio is well positioned from an interest rate perspective, as 97% of our current portfolio’s outstanding principal is floating rate with floors of, on a weighted average, 3.9%. Given these floors in place across our loan book, our credit line with an approximate floor of 2.6% presents a potential opportunity to expand Sunrise Realty Trust, Inc.’s net interest margin. I remain confident in the opportunity set ahead and look forward to capitalizing on the attractive opportunities currently in front of us. I will now turn the call over to Brandon Hetzel, our CFO. Brandon Hetzel: Thank you, Brian. For the quarter ended 12/31/2025, we generated net interest income of $5.2 million and distributable earnings of $3.5 million, or $0.27 per basic weighted average common share, and had GAAP net income of $1.6 million, or $0.12 per basic weighted average common share. For the full year ended 12/31/2025, we generated net interest income of $21.6 million and distributable earnings of $15.2 million, or $1.19 per basic weighted average common share, and had GAAP net income of $12.1 million, or $0.93 per basic weighted average common share. We believe that providing distributable earnings is helpful to shareholders in assessing the overall performance of Sunrise Realty Trust, Inc.’s business. Distributable earnings represents net income computed in accordance with GAAP, excluding non-cash items such as stock compensation expense, unrealized gains or losses, and the provision for current expected credit losses, also known as CECL. We ended 2025 with $420.7 million of current commitments and $305.5 million of principal outstanding spread across 16 loans. As of 02/27/2026, our portfolio, excluding the Thompson Hotel, consisted of $442.1 million of current commitments and $337.0 million of principal outstanding across 16 loans, with a weighted average portfolio yield to maturity of approximately 12%. I would also like to note that as of 12/31/2025, our CECL reserve was approximately $2.1 million, or 68 basis points, for our loans held at carrying value. As of 12/31/2025, we had total assets of $310.2 million and our total shareholders’ equity was $182.0 million, with a book value of $13.56 per share. As Len mentioned earlier, the Board of Directors has declared a $0.30 dividend per share for the quarter ended 03/31/2026. The dividend will be paid on 04/15/2026 to shareholders of record as of 03/31/2026. I will now turn it back over to the operator to start the Q&A. Operator: Thank you. We will now open for questions. To remove yourself from the queue, you may press 1-1 again. Our first question comes from the line of Timothy D’Agostino of B. Riley Securities. Your line is open, Timothy. Timothy D’Agostino: Yeah. Hi. Thank you for taking the question this morning. Regarding originations, the $62,000,000 you committed was in February. And given recent market volatility, uncertainty, disruption, however you want to characterize it, could you just talk us through how the investment opportunity and the market for you all looks given we are seeing the 10-year kind of tick back up. It would be great to just kind of understand how the market dynamics have changed throughout the course of 2026 so far. Thank you. Brian Sedrish: Yeah, sure. Thanks for the question. It is Brian. So, yeah, certainly, certainly the volatility in the market has created some ups and downs. We started the year in 2026 where what we saw, as I mentioned in some of the prepared remarks, a real dichotomy between the spreads on multifamily and industrial, in particular existing assets, continuing to tighten, I think largely led by price tightening in the senior market, the CLO market, the warehouse line market. That is really not an area, as you know, that we have been focused on. What that did is it created a bit more gap and an opportunity for us to see more of the types of transitional deals that we are focused on. And that definitely seemed to happen. You also seem to see a gap tighten between buyers and sellers, so there is more opportunity on new acquisitions. All that being said, the last couple weeks have definitely created more uncertainty. Rates, as you mentioned, going back up, really are creating a bit of a question mark as to whether or not an active deal makes sense or not. I expect that will continue. You know, we are in the business of finding where there are opportunities to take advantage of dislocation in the market. And I think that is where the opportunity will sit for the foreseeable future. I think that sort of volatility creates opportunities for us. But it is definitely, like everyone else, a bit of a wait and see to see how things settle out. Timothy D’Agostino: Thanks for taking the question this morning. Operator: Thank you. Our next question comes from the line of Gaurav Mehta of Alliance Global Partners. Your line is open, Gaurav. Gaurav Mehta: Yeah. Thanks. Good morning. Wanted to ask on the loan pipeline. I think in your deck, you show $652,000,000, which is lower than $1.7 billion in the last quarter. So does that reflect, I guess, comments about market volatility? And, I guess, what kind of dropped off that loan pipeline in the last, I guess, couple of months? Brian Sedrish: Sure. Thanks for the question. It is Brian again. Yeah. It does trail off the last question and answer. Definitely, there has been a differentiation in terms of pricing on the multifamily and industrial side, and we just have been more discerning. I mean, we have a focus on going after transactions that we think have long-term durability. Six-fifty is still, in our mind, a really strong pipeline, particularly in light of the amount of capital available for us to invest. And everyone has sort of just taken the view of let us focus on very highly actionable deals and remove those that create more noise and distraction for us. And, you know, I expect, as I am sure you have seen at a lot of the companies, you know, those things will come up and down in terms of the pipeline. But we thought we wanted to cull and reflect what we felt was a more focused area for us in the next couple months. Gaurav Mehta: Alright. That is helpful. Second question on the hospitality asset in San Antonio. Can you maybe provide some more color on why that asset foreclosed? Anything specific about that asset? Brian Sedrish: Yeah. Sure. So the Thompson in San Antonio, a really high-quality asset. Obviously, Thompson black flag, which is the highest flag. One hundred sixty-two keys. The asset — look, San Antonio has had a bunch of deliveries recently. There is a lot in that market, but there has been a bunch of deliveries. The asset was, from a pricing perspective, high, our loan interest rate. The asset has taken longer to ramp up. There have been some specific things as it relates to the management of that hotel. And ultimately, just taking longer, and the sponsor’s ability to continue to put dollars in became harder and harder. As we mentioned in the prepared remarks, we do have a series of personal guarantees, which we intend to pursue. But, ultimately, that was just the decision where until cash flow came back to be able to support the asset’s operations, which we do believe in the medium term is achievable, the sponsor just did not have the capability to continue to service the loan. I mean, just to add to that, it is a very high-quality asset. As I said, it was built very recently in 2021. I think from everyone that stays there, everyone you speak to, it is a high-quality asset. It is just, unfortunately, an issue with cost of capital right now and the fact that there have been some deliveries that are currently constraining cash flows. Gaurav Mehta: Alright. Thanks for that color. And then maybe lastly on the dividend, $0.30. It seems like it is higher than $0.27 earnings in 4Q. How should we expect, I guess, your target dividend coverage in respect to where the earnings are? Leonard Mark Tannenbaum: Look. Our goal — it is Len speaking — the goal is not to overpay our dividend. So I think the Board, looking forward, felt comfortable that we would get this covered over the course of the next six to twelve months in aggregate. Gaurav Mehta: Alright. Thank you. That is all I had. Brian Sedrish: Thank you very much. Operator: Thank you. Our next question comes from the line of Tyler Anton Batory of Oppenheimer. Please go ahead, Tyler. Tyler Anton Batory: Good morning. Thanks for taking my questions here. Just wanted to clean up a few items and to double click on the San Antonio asset — just help us think about the ideal resolution there, perhaps the timeline as well. And I just want to be clear. It sounds like this is a very asset-specific sort of issue and not reflective of anything that is going on broader in the portfolio, but just wanted to be sure that that is the case in your view. Leonard Mark Tannenbaum: Yeah. I think you saw this — this is Len speaking. I think you saw the asset was a 3. It was on our watch list. We sort of knew that this could happen. We were hoping it did not. You know, the resolution was clean, which was nice too, that it was a clean foreclosure. There was no delay to it. It was necessary, as there is additional value that could be gained depending on whether the flag is renewed or not. And so we are — our intention, I think Brian said that, is to hire a premier broker as soon as we could. That sounds like about a week from now. And market again, market the product. And we believe, you know, we are going to find a buyer for it. So this — you know, if this is around next quarter, we should ask a lot of questions about why. Tyler Anton Batory: Great. Thank you for that. And in terms of bumping up the East West Bank facility, $140 million to $165 million. I know there is potential to get that to $200 million. You know, is that something you are expecting in the next couple of quarters? And just kind of talk us through sources of capital here as we move through 2026? Leonard Mark Tannenbaum: So one thing that has been frustrating to me about the nonaccrual or the property is it comes out of our borrowing base. We proactively told our banks when we dealt with this, so we are not able to relever the asset, and that is one reason why earnings are a bit lower. Our availability is a bit lower. So as soon as we have resolved — what you are going to look for to sort of see, you know, re-momentum or additional momentum towards positive earnings and all that good stuff is this asset getting resolved. And because, as I think we pointed out — or maybe I skipped your last question — this really is the only asset that we are concerned about at this time, and you could see that we will move assets into category 3, 4, and 5 as we find more concern over assets. So this is really our only concerned asset. It is definitely an issue. We know we have to resolve it quickly. And that is going to do two things: one, put more money in to do more great deals; but also, two, expand our borrowing base. Tyler Anton Batory: Okay. I think the last one for me — hopefully tie a lot of this commentary together. When you reflect on 2025, when you look at 2026 so far, just kind of frame for us how capital deployment is really trending versus your plans, you know, a year, year and a half ago? You know, when you came public. I was just trying to get a reference point in terms of how things have gone the past couple of quarters versus what you were hoping or versus what you were expecting? Brian Sedrish: Sure. And those often diverge in terms of hope and expect. Look. I think largely I will say without question that the view and projections that we all make is really dependent in large part on the opportunity set and the evolving opportunity set. And it was clear there was significant opportunity from a spread basis to put out really interesting deals, which is really the whole premise of really starting the business back in 2023, 2024. There was a really good opportunity set. Then we saw spreads tighten, which was fine because our capital base, as you know, is not that significant, so we can be highly selective. Last year really reflected the fact that the markets tightened up, the opportunity set — rates did not drop as quickly, the opportunity set was a bit thinner than expected. We were able to get out some capital on what we thought was interesting deals. I think the most important thing is making sure we are not going after deals just to stretch. The end of ’25, really, things started to break a bit. There seemed to be definitely a tighter gap between buyer and seller’s bids, which meant more acquisitions, and certainly, as you know, that is highly correlated to the opportunity set for us — is just more acquisitions. Refinancing certainly happened. There seemed to be more of a capitulation on the refinancing side in terms of incumbent lenders wanting or forcing their borrowers. And then I would say, though, that things have been a bit more tumultuous right now, just given, back to an earlier question, the uncertainty in the markets, treasuries being where they are, which is — you know, cap rates are often correlated there. So I think there will be a bunch of volatility for the time being. I mean, largely in our type of business, as I mentioned in prepared remarks, we really are in more of the, you know, off-the-run interesting transactions. And I think those always create opportunities in times of uncertainty. There are several we are looking at now. And so I am hopeful that we are going to get through generally the macro issues — at least I hope so — in the near future. And, you know, that will create more opportunities. In the meantime, as I said, this volatility does create pretty interesting opportunities for guys like us. Tyler Anton Batory: A lot of good detail there, so appreciate the perspective. Thank you. Operator: Thank you. I will now turn the call back over to Brian Sedrish for closing remarks. Brian Sedrish: Well, thank you very much, all, for joining. We look forward to talking to you on our next quarterly conference call. Thank you. Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.

74天前Insight Analytics约5分钟阅读

USEA 2025 Q4 财报电话会议

Operator: Thank you for standing by. Ladies and gentlemen, and welcome to the United Maritime Corporation Conference Call for the Fourth Quarter and Year Ended December 31, 2025 financial results. We have with us Mr. Stamatios Tsantanis, Chairman and CEO, and Mr. Stavros Gyftakis, Chief Financial Officer of United Maritime Corporation. At this time, all participants are in a listen-only mode. If you would like to ask a question, please press 11 on your telephone keypad, and you will hear an automated message advising your hand is raised. Please be advised that this conference call is being recorded today, Thursday, March 12, 2026. The archived webcast of the conference call will soon be made available on the United Maritime Corporation website, https://www.unitedmaritime.gr, under the Investor Relations section. Many of the remarks today contain forward-looking statements based on current expectations. Actual results may differ materially from the results projected from those forward-looking statements. Additional information concerning factors that can cause the actual results to differ materially from those in the forward-looking statements is contained in the fourth quarter and year ended 12/31/2025 earnings release, which is available on the United Maritime Corporation website again, https://www.unitedmaritime.gr. I would now like to turn the conference over to one of your speakers today, the Chairman and CEO of the company, Mr. Stamatios Tsantanis. Please go ahead, sir. Stamatios Tsantanis: Hello, everybody. Welcome to United Maritime Corporation’s conference call to discuss our financial results for the fourth quarter and full year period ended 12/31/2025. During the fourth quarter, United Maritime Corporation generated net revenues of $6,600,000 and EBITDA of $1,500,000. More importantly, since our last update, we have executed a series of strategic initiatives aimed at enhancing the company's earnings profile, strengthening our balance sheet, and increasing our free cash flow generation capacity. In addition, we are pleased to declare our 13th consecutive quarterly dividend, a milestone that reflects our commitment for capital returns. Since initiating our dividend program in November 2022, United Maritime Corporation has declared cumulative cash dividends of approximately $1.84 per share. With stronger cash generation now secured through recently fleet employment, we are confident in our ability to sustain a competitive level of distributions while preserving the financial flexibility to pursue accretive growth opportunities. A central pillar of our 2025, 2026 strategy has been disciplined capital reallocation, divesting lower returning assets and redeploying proceeds into higher earning Capesize exposure. In early 2026, we agreed to sell the 2009-built Kamsarmax Cretan c for a net price of $14,700,000, generating approximately $6,000,000 in net cash proceeds after debt repayment. We also agreed to exit our investment in the offshore energy construction vessel, realizing proceeds of approximately €30,000,000, a profit of approximately €1,700,000, and a return on invested capital of approximately 15% in a very limited period of time. These two agreed sales combined are expected to release approximately $21,000,000 in net liquidity. Moving into the investment from now. In February, took delivery of the 2010 Capesize Dukeship under an eighteen-month verbal charter for a daily rate of $9,450. While the vessel will be earning an average fixed gross daily rate of approximately $29,300 through year end of 2026, providing immediate contracted cash flow visibility. In addition, we recently agreed to acquire the 2010-built scrubber-fitted Capesize Squareship from Synergy Maritime Holdings for approximately $29,500,000 with delivery in May 2026, financed through a combination of debt and internally generated liquidity, including the aforementioned sales. Similar to the dukeship, the daily earnings of the Squareship have also been converted to a rate of $28,250 until the 2026. The implied investment in the two Capesizes is approximately $62,000,000. Operationally, our fourth quarter TCE of $14,129 was in line with the same period of 2024, a solid result that reflects United Maritime Corporation’s transition to a pure Panamax fleet during the 2025. Fleet utilization remained high at 97.6% and OpEx daily of approximately $6,404 was well controlled. For the 2026, we anticipate a daily time charter equivalent of approximately $15,230 per day, with approximately 92% of available days already fixed, providing a meaningful degree of revenue certainty. Looking further ahead, the Panamax market is exhibiting solid fundamentals, while the addition of the Capesize's dukeship and squareship, both earning high fixed rates, meaningfully enhances earnings and cash flow visibility through the end of 2026. Our fourth quarter daily time charter equivalent reflects a resilient Panamax market despite the seasonal softness typically observed during this period. Market conditions have strengthened since the 2025, and the outlook for the coming quarters remains encouraging. Our balanced commercial strategy between index-linked exposure and fixed rates has allowed us to benefit from improving market conditions while maintaining reasonable earnings visibility for the coming quarters. Let me now turn to the drybulk market to provide some additional context around the industry environment. We have seen a very strong start in 2026 in both Capesizes and Panamax markets. Limited fleet growth combined with steadily expanding commodity demand has created a supportive market environment. Year to date, the Baltic Kamsarmax Index has averaged about $14,800, up from 9,600 during the same period of 2025. The Baltic Capesize Index has averaged about 23,000 in the first quarter quarter to date, compared to about 13,000 for the same period last year. That is almost double. In the Panamax market, we have seen strong growth in grain and minor bulk ton miles, while the decline in coal trade observed in early 2025 has moderated. The geopolitical crisis unfolding currently in the Middle East adds uncertainty in the global outlook. In the near term, we expect that the reduced cargo demand relating to Arabian Gulf may be offset by increasing coal trade flows if energy markets remain disrupted. Which they are. In addition, approximately 3% of the global Panamax fleet is currently in the Arabian Gulf, contributing to vessel supply inefficiencies and providing additional support to freight rates. Turning to the Capesize market, we continue to see strong ton mile growth driven by the iron ore and bauxite trade. The ramp up of Xinlandu iron ore project in Guinea beginning in 2026, together with increased output projections from Vale in Brazil, is expected to support long-term ton mile demand for Capesize vessels. Bauxite trade is also expanding, driven by strong global aluminum demand. Export volumes from Gimi have already grown by more than 10% during the first months of 2026. The supply side, the dry bulk order book remains low by historical standards, well below the fleet replacement needs. Continued uncertainty about future environmental regulations, and the priority placed by shipyards on higher profit margin vessels, like containers, gas carriers, and tankers, have prevented the large-scale speculative dry bulk ship ordering. As a result, the dry bulk plate continues to age. Vessels older than fifteen years represent more than 30% of the global fleet. In the Capesize sector in particular, by 2030, more than a quarter of the fleet will be older than twenty years old. That note, I would like to turn the call over to Stavros, an overview of our financial performance before returning with some concluding remarks. Tavro, please go ahead. Stavros Gyftakis: Thank you, Samati, and good morning, everyone. I will now review the key financial highlights for the fourth quarter and the full year ended 12/31/2025. Net revenue in the fourth quarter amounted to $6,600,000, reflecting a decline compared to the same period last year, primarily due to the reduction in our fleet and the softer Panamax market conditions. Adjusted EBITDA for the quarter amounted to $1,500,000, while we recorded a net loss of $3,800,000, reflecting both the challenging market environment and the impairment loss recognized on one of our vessels. For the full year, net revenue totaled $37,800,000, while adjusted EBITDA amounted to $12,900,000 and net loss reached $6,200,000. Overall, we view 2025 as a transitional year for the company, reflecting our efforts to optimize our fleet and position United Maritime Corporation for improved earnings generation. On the expense side, we successfully reduced daily operating expenses to approximately $6,300 per day, while also keeping our general and administrative expenses contained. Turning to our balance sheet, our cash position at year end stood at $14,600,000. In the near term, we expect some temporary fluctuations in our liquidity position, primarily related to the recently completed dry docking of the Nixie and advanced payment made for the acquisition of the duke ship. However, following the completion of the transactions discussed earlier by Stamatis, we expect our liquidity levels to normalize at approximately $2,000,000 per vessel, which we consider an appropriate level to support the company's operations and financial flexibility. Total assets amounted to $138,000,000, while stockholders' equity stood at $56,000,000, reflecting a solid capital base. Outstanding debt totaled approximately $65,000,000, corresponding to approximately $13,200,000 per vessel, which compares favorably with the average estimated market value of our fleet of approximately $20,000,000. LTV stands at approximately 65% reflecting our efforts to balance fleet optimization with a prudent financing strategy. In parallel, we entered into an $18,300,000 sale and lease transaction with Huarong Leasing to finance the $16,600,000 purchase option for the NEC. The financing bears an interest rate of three-month Term SOFR plus 1.95% per annum and amortizes over 60 monthly installments of $100,000. With respect to the dukeship, took delivery of the vessel in February under an eighteen-month verbal charter with a down payment of five and a half million. The daily purpose rate is $9,450 and United Maritime Corporation has a purchase obligation of $22,100,000 at the end of the bareboat period. At the same time, share index-linked charter has been converted to fixed for the balance of the year at a gross daily rate of approximately $29,300, enhancing our earnings visibility and cash flow stability. Regarding the upcoming Capesize additional fleet, the Squared ship, the agreed purchase price of $21,500,000 will be financed through a combination of debt and cash at hand, with the respective leverage ratio expected to be around 60%. In summary, the steps we have taken over the past several months have strengthened United Maritime Corporation’s financial position while enhancing our earnings visibility and cash flow generation. Combined with a disciplined capital allocation approach and improved market conditions, we believe the company is well positioned to generate meaningful free cash flow and continue delivering attractive return to shareholders. With that, I would now turn the call back to Samathis for his concluding remarks. Stamatios Tsantanis: Samathis, Thank you, Sabra. Are very proud of our progress so far, having built a quality fleet with strong prospects without resorting to any dilution of the shareholders that have supported us in our first capital raising transaction back in 2022. We have not made any other capital raising equity since then. Four years now. Since 2023, we have paid a total cash dividend exceeding $1.84 per share, which in fact is a very large portion of our current share price. Additionally, we have engaged in extensive share repurchases, which continue to be part of our capital returns options. United Maritime Corporation transformation in 2026 with profitable investments of approximately $60,000,000 62 following our divestments of about $21,000,000 are expected to produce meaningful returns on capital deriving from two Capesize vessels operating under highly profitable time charters as well as direct exposure to healthy Panamax rates. So meaningful returns on capital are further expected. On that note, I would like to turn the call back to the operator and we are open for any questions you may have. Operator, please take the call. Thank you. Operator: Thank you. As a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. We will now open for questions. We will now take the first question, from the line of Tate H. Sullivan from Maxim Group. Please go ahead. Tate H. Sullivan: Great. Thank you. Good day. Thank you for the timely update and given all the volatility we have seen on the oil prices and the rates, first, to start with the dividend, zero one zero I mean, that is about 5% of your current share price. Are you looking at how are you looking at it going forward? Are you going to pay out portion of the gains on ship transactions? Or can you remind us of your dividend policy how you are thinking of about it? Stamatios Tsantanis: Good morning, Tate. Thank you for the question. We are intending to set something like a formula like we have with Synergy. So it is more clear with investors what they expect to expect. It is always going to be generous. As you know, we have always been very genuine generous for shareholders. We have paid, about a dollar and 80¢ per share dividends since our inception a few years ago. We will continue doing that. As you can see, we are transforming the company now into a strong cash flow engine. To put it this way. And once we have that crystallized and demonstrated in our quarterly earnings, will set a formula that is gonna be more, clear for the investors to, to understand. Tate H. Sullivan: Okay. Thank you. And then second on the acquisition of the Squire ship, 29.5 Delivery May 26. Can you can you repeat the fixed rate that that you have? Was it was it 28,500? And and the strategy related to that, I mean, I think it is prudent with what we have seen, but, yeah, you you talk about when you lock that in? Stavros Gyftakis: Yeah. Thank you. Thank you, Tate. We have been coordinating with Synergy who is the commercial management of the ship to convert basically the index link time charter to fixed following the decision to acquire the ship. The levels are close to 28,000, a bit higher than that. And as discussed during the call, the strategy finance ship is to get leverage of around 60 to 65%, which would imply that the free cash flow of the vessel would be around 10 to 12,000 per day. Tate H. Sullivan: K. K. I will factor that in. And then on the market, and start you had some good comments. What was you linked coal trade flows to disruptions in the Strait Of Hormuz Can you walk through if I heard that correctly, can you walk through the implications for coal trade flows for the dry bulk market? Stamatios Tsantanis: Please? Well, yes. Of course. We expect that further discontinuation of LNG trade out of Qatar and the Persian Gulf. Will eventually lead to increase of coal trades because the world needs electrification. And you know, LNG and coal are two competing, let us say, raw materials in order to produce electricity. So we expect coal to become a very I am not going to say dominant, but an important commodity gem to produce electricity in certain areas of the world that are reliant on the Persian Gulf natural gas. It is not an immediate thing, but the more that things escalate in the area, the more we expect the countries with prudent how do you say, policies and huge infrastructure and industrial production. Like China, like Korea, like Japan to start thinking about, you know, increasing their code inventories in order to deal with increased electrification, needs. So that is kind of a natural result, which is gonna happen. And we expect to see that starting the more that the crisis prevails in that area. Tate H. Sullivan: K. And and a follow-up. Ed, did you mention a certain portion of the Capesize fleet in the Gulf area? Or were you referring to the total dry bulk fleet? Can you circle back to that comment? Stamatios Tsantanis: It is it is not it is not a really substantial number. I think that overall, in the general area, we have about 2% of the fleet, not inside the present Gulf, but in the overall area. It is not a supercritical point, but it really absorbs a lot of tonnage not only the Capesize, but also Panamaxes, Kamsarmaxes, and all that. So there is a portion of the fleet absorbed there. Or kind of stuck there, to put it in a in a better word. So, you know, we will see the effects of that as well soon in the market. Tate H. Sullivan: Okay. That is all for me, and thank you very much for the update. Stamatios Tsantanis: Thank you, Tate. Nice to hear from you. Tate H. Sullivan: Bye. Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

74天前Insight Analytics约5分钟阅读

GIII 2026 Q4 财报电话会议

Operator: Good day and thank you for standing by. Welcome to the G-III Apparel Group, Ltd. fourth quarter and full year fiscal 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Neal Nackman. Please go ahead, sir. Neal Nackman: Good morning and thank you for joining us. Before we begin, I would like to remind participants that certain statements made on today's call and in the Q&A session may constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not guaranteed, and actual results may differ materially from those expressed or implied in forward-looking statements. Important factors that could cause actual results of operations or the financial condition of the company to differ are discussed in the documents filed by the company with the SEC. The company undertakes no duty to update any forward-looking statements. In addition, during the call, we will refer to non-GAAP net income, non-GAAP net income per diluted share, and adjusted EBITDA, which are all non-GAAP financial measures. We have provided reconciliations of these non-GAAP financial measures to GAAP measures in our press release, which is also available on our website. I will now turn the call over to our Chairman and Chief Executive Officer, Morris Goldfarb. Morris Goldfarb: Thank you, Neil, and thank you everyone for joining us. Fiscal 2026 was a pivotal year for G-III Apparel Group, Ltd. I'm proud of the results our teams delivered and the meaningful progress we made advancing our long-term strategy despite a tough environment. As we transition out of our Calvin Klein and Tommy Hilfiger businesses, we accelerated the strategic transformation of our portfolio, unlocked new growth opportunities and strengthened the foundation of G-III Apparel Group, Ltd. The power and global recognition of our brands, combined with our disciplined operating model and strong balance sheet, enabled us to deliver compelling product and differentiated brand experiences despite a highly dynamic retail environment, including evolving tariff conditions and cost pressures. As we reshape the portfolio, we're sharpening our focus on a brand builder and long-term steward of both our owned and licensed brands. At the same time, we've made targeted investments in infrastructure, technology and talent to support the next phase of growth. In the fourth quarter, our underlying results were strong. Excluding the impact of the Saks bankruptcy, full year EPS would have exceeded the high end of our guidance. For the full year, our key owned brands, DKNY, Donna Karan, Karl Lagerfeld and Vilebrequin, collectively delivered mid-single-digit growth, helping offset the impact of the exited PVH licenses. These brands are growing with improving quality of revenue, higher full price sell-through and increasing global relevance, a clear validation of our strategic direction. With that, I'll now review our fourth quarter and full year fiscal 2026 results. Net sales were $771 million in the fourth quarter and $2.96 billion for the full year. Relative to guidance, sales were negatively impacted by approximately $20 million as we stopped shipments to Saks in December ahead of the bankruptcy filing. Strong margin for the fourth quarter and the full year was ahead of expectations, driven by higher full price selling and more balanced distribution with less penetration in the off-price channel. We're successfully establishing higher price points with our newer brands and seeing healthy consumer response, further supporting our margin expansion opportunity. Non-GAAP earnings per diluted share were $0.30 in the fourth quarter and $2.61 for the full year. In the fourth quarter, we took an approximate $17.5 million bad debt expense associated with the Saks bankruptcy, which negatively impacted earnings by $0.30. Turning to our balance sheet, our working capital remains in great shape. We exited the year with clean inventories down 4% year-over-year on lower units. We ended the year with more than $400 million in cash and over $900 million in total liquidity. This is after returning more than $50 million to shareholders through share repurchases and our new cash dividend. We remain in a strong financial position with ample flexibility to continue investing in our brands and infrastructure to support long-term growth. Turning to our strategic priorities. Over the past several years, we've been very clear about our strategy, simplifying our portfolio, leaning into our most powerful owned brands, and building a company with greater control and long-term growth potential. Fiscal 2026 was another important step in that journey. Capturing the long-term potential of our own brands is a top strategic priority. These brands are powerful, sustainable drivers of profitability, delivering higher margins and incremental licensing income. During the year, our own brands demonstrated strong consumer resonance, supported by compelling product, disciplined distribution, and effective marketing. We saw solid full price sell-throughs, healthy margins, and increased brand engagement. Our key own brands delivered mid-single-digit growth, accounting for close to 60% of revenue this year, up from roughly 50% last year. We're driving this growth through four key areas. First, product and consumer engagement. We continue to invest in brand-building initiatives through an always-on marketing strategy that leverages top-tier talent, elevated content, and targeted global activations to expand reach and drive conversion. Second, driving direct-to-consumer. We're focused on strengthening our digital business to boost traffic and conversion across owned and partner sites. Meanwhile, we're executing well on our retail segment turnaround initiatives in North America, optimizing the footprint to improve productivity and profitability. Third, international expansion. With just over 20% of fiscal 2026 net sales generated outside the United States, the opportunity remains significant. We're pursuing global expansion with discipline, prioritizing the right markets, partners, and infrastructure to ensure long-term sustainable growth. Fourth, category expansion through licensing. Our partners have helped us expand the lifestyle offerings into complementary categories that broaden our brand reach and deepen consumer connections. In return, G-III Apparel Group, Ltd. earns a highly accretive licensing income stream, the vast majority of which falls directly to our bottom line. We see significant opportunity to grow our brands through new licensing partners over time. I will now walk you through brand highlights from the year. Donna Karan continues to be one of our most powerful and new-to-market growth engines, delivering strong profitability supported by healthy AURs and sell-throughs. In fiscal 2026, the brand delivered approximately 40% growth, underscoring the strength of the relaunch and the momentum we're seeing across channels. Touching on a few highlights. In North America, we're expanding distribution of key wholesale accounts, supported by consistent sell-throughs that continue to build retailer confidence. We ended the year with approximately 1,900 points of sale, with an additional 400 expected for fall. Sales on donnakaran.com grew close to 170% this year, driven by more than 120% increase in traffic. Repeat customers represented close to 20% of sales, and we acquired nearly 100,000 new customers during the year. The brand continued to perform well on retailer sites, and we expect digital momentum to continue as we expand the lifestyle offerings online. Category diversification through licensing and product expansion is broadening the brand's reach. Donna Karan Weekend launched in November to strong reception, while licensed categories continue to perform well. The fragrance business grew approximately 20% this year, led by the continued strength of the Cashmere Mist franchise, which remained one of the top products in prestige fragrance. Our new jewelry line is off to a good start and will roll out in select department stores this spring. Our marketing investments are reinforcing the brand's authority and cultural relevance across key markets globally. This year, our campaigns have featured iconic empowered women like Kate Moss and Claudia Schiffer, who embody the brand and bring authenticity to the collection. At the same time, we've seen strong organic momentum with A-list celebrities choosing the brand, underscoring that it continues to capture how women want to dress today with confidence and effortless ease. Looking ahead, as we build on our success in North America, we remain focused on thoughtfully scaling across categories, doors, and geographies while protecting its premium positioning and strong brand equity. With increasing brand awareness and multiple growth levers still ahead, we expect strong growth in fiscal 2027 and remain highly confident in Donna Karan's long-term trajectory and a billion-dollar annual G-III Apparel Group, Ltd. net sales potential. Karl Lagerfeld delivered another exceptional year, growing high single digits. Brand heat was reinforced through our impactful marketing campaigns with Paris Hilton, strengthening consumer engagement at key touchpoints on a global scale. Building on that momentum, we're continuing our partnership with Paris for spring and summer this year. In North America, sales grew high teens for the year as we broadened the lifestyle assortment and expanded distribution across key accounts. Our footprint in the region grew to approximately 3,000 points of sale, with more than 300 new points of sale expected by fall. In our North American direct-to-consumer business, we continue to optimize the retail footprint and enhance digital. This year, the brand saw positive comp sales increases across stores and e-com, fueled by over 20% growth on karl.com. Internationally, the brand grew mid-single digits with expanding margins despite softer consumer trends in Europe. The Karl Lagerfeld Jeans line remained a primary growth driver, delivering 30% growth for the year, helping to engage a younger consumer. We're prioritizing productivity and improvements in our international operations to drive stronger profitability across channels. With more than 170 Karl Lagerfeld branded freestanding stores worldwide, we're thoughtfully expanding the global retail footprint. This year, 15 new stores were opened in key strategic markets, including Latin America and Mexico, through our partners, and we continue to target under-penetrated regions such as Asia-Pacific for future growth. Our licensing and hospitality business continues to reinforce Karl's position as a global lifestyle brand with aspirational relevance. This year, we signed licensing agreements for luxury brand residences in Portugal and the Middle East. In fiscal 2026, the brand generated approximately $630 million in reported net sales and over $1.7 billion in global retail sales. Looking ahead, we're focused on accelerating global expansion, scaling our digital business, and engaging a broader consumer through expanded lifestyle offerings and brand activations. These initiatives reinforce our confidence in the powerful growth runway for Karl Lagerfeld in capturing over $1 billion in G-III Apparel Group, Ltd.'s net sales opportunity long-term. Turning to DKNY, our strategy remains focused on investing in how and where the brand shows up with a clear emphasis on driving full-price sales. Over the last 12-24 months, we've taken a disciplined approach to elevating brand presentation, refining our distribution, and deepening engagement with a younger consumer. Our North American direct-to-consumer business improved with stores and dot-com delivering double-digit comp growth and higher productivity. Notably, sales on dkny.com increased approximately 40% for the year, reflecting strong consumer engagement with the collections. In North America we increased marketing spend and targeted activations resonated with our target audience, driving strong response to fashion and newness. Internationally, brand-building activations across key markets boosted visibility and fueled ready-to-wear growth led by jeans and handbags. DKNY delivered several standout brand moments. We launched two global campaigns, Spring 2025 with Lila Moss and Fall 2025 with Hailey Bieber, significantly elevating brand visibility and cultural relevance. Social engagement rose nearly 300% year-over-year, with fall campaign generating the strongest social performance in the brand's history. Hailey returns for spring 2026, supported by a global media plan. Our marketing-led storytelling translated into results. The Paula Commuter tote became our number one handbag collection for the year, supported by immersive pop-ups and experiential moments that brought the brand's New York City DNA to key markets. Broader high-impact brand moments, including a landmark Burj Khalifa projection in Dubai and 190-screen citywide digital takeover, further amplified visibility and brand heat. In fiscal 2026, DKNY delivered approximately $650 million in reported net sales and over $2.4 billion in global retail sales. As we look to next year, our focus centers on product newness, expanded lifestyle assortments, and scaling distribution across North America. Internationally, we're unlocking growth in Europe and China, where we recently onboarded a new licensing partner and will open a new Shanghai store this spring. We're also seeing opportunity in markets across Asia-Pacific and India through new partnerships. With disciplined execution and a clear strategic focus, we're confident in DKNY's billion-dollar G-III Apparel Group, Ltd. net sales opportunity. Vilebrequin, our status swimwear brand, delivered low single-digit sales growth despite a challenging European backdrop. Demand remained resilient among our aspirational cos-consumer, supported by strong global brand awareness and engagement. Growth was driven by higher AURs, reflecting the brand's pricing power, premium positioning, and continued demand for its luxury swimwear and lifestyle offering. Performance was led by strength in Europe, particularly in France and the Caribbean, along with continued momentum in digital. In hospitality, we're building on strong performance in Cannes and partner locations in Doha and Crete, with the addition of a fourth partner, a beach operation in Oman. A new rooftop restaurant in Miami is also set to open in the coming weeks. Looking ahead, our strategy remained focused on premium product with higher AURs, creative collaborations to drive global awareness, and hospitality-led distribution at a boutique placement in incremental brand builders. Vilebrequin continues to be a key player in our own portfolio as we unlock its long-term global potential. In addition to owned brands, licensed brands remain the core pillar of our strategy with an enhanced focus on contemporary fashion and sports lifestyle categories. These segments allow us to leverage our core competencies and capture incremental market share and sales. In fiscal 2026, our licensed brands generated mid-single-digit growth, excluding our PVH and other exited licensing businesses. Team Sports, led by Starter, continues to expand our reach within the licensed sports marketplace. This division serves the highly engaged sports fan and unlocks additional distribution across stadiums, sporting goods, and specialty retail, and strategic digital channels. With the addition of Converse, which we launched in the second half of the year and is already contributing to top-line sales, this portfolio represents more than $130 million in net sales in fiscal 2026, and we see a path to growth to $500 million over time. In contemporary fashion, we're building a portfolio that complements our own brands and strengthens our presence in modern lifestyle categories. BCBG, launched for fall 2025, is performing well alongside an increase in door counts this year. In January, we signed a new licensing agreement for French Connection to design and distribute women's and men's apparel and select accessories in North America. This addition enhances our contemporary offering and is expected to contribute revenue beginning this year. In terms of our Calvin Klein and Tommy Hilfiger licenses, we've continued to manage these businesses diligently as a license rolls off. In fiscal 2026, they represented approximately $830 million in revenue, and we expect them to generate approximately $360 million in fiscal 2027 before rolling off in fiscal 2028. Turning to our next priority of enhancing omni-channel, we're on track to return our North American retail segment to profitability in fiscal 2027. Through management changes, reduced store footprint, and better merchandising, we strengthened our execution and improved the brand presence. As a result, we further cut operating losses by more than 50% in fiscal 2026. Digital remained a key growth and profit driver. Sales on our own website grew over 30% this year, led by outsized growth on our donnakaran.com. This momentum reinforces the importance of the channel and our ability to meet consumers wherever they shop. Across our marketplace platforms, including Amazon and Zalando, we delivered strong bottom-line profitability and top-line performance for our go-forward businesses. This was fueled by advertising efficiencies and promotional discipline, driving stronger ROIs on reduced expenses. We'll continue to expand our brand's presence across platforms through new category launches and assortment extensions. At the same time, we're investing in data and AI capabilities, modernizing our enterprise systems, and enhancing digital content and consumer insights to drive higher engagements and conversions. Together, these efforts position us to scale profitably while delivering richer brand experiences across channels. In our cost structure, we remain actively focused on driving cost savings and efficiencies across the business, including optimizing our supply channel infrastructure. As we look forward to fiscal 2027 and the expected volume loss tied to the PVH license give backs, we're implementing further cost reduction to drive profit improvements over time. As we work to enhance productivity and profitability, this will free up resources to invest further in our highest priority growth initiatives. Thus far, we've identified $25 million of cost savings across supply chain, organizational structure, as well as discretionary expenses, and expect to achieve this on a run rate basis in fiscal 2028. We'll continue to evaluate our cost structure and seek additional areas where we can unlock savings to further align our go-forward model. Turning to our outlook. As we continue to transform the business, our outlook reflects an improving margin profile on lower revenues in the near term as the remaining PVH licenses roll off. We're focused on driving gross margin expansion, streamlining our cost structure, and operating with greater discipline to enhance profitability and efficiency. At the same time, we remain committed to growing our go-forward brands, generating healthy cash flow and maintaining a very strong balance sheet. As we enter fiscal 2027, we do so from a position of strength with brand momentum, expanding margins, and the flexibility to invest in both ourselves and in strategic opportunities. For the year, we expect net sales of approximately $2.71 billion, which reflects an approximate $470 million reduction in our expiring Calvin Klein and Tommy Hilfiger businesses. Meanwhile, our go-forward business is expected to grow high single digits driven by continued momentum of our own brands. non-GAAP diluted earnings per share for the year is expected to be between $2 and $2.10. In closing, I wanna thank our global teams for their continued hard work and dedication. Their execution, creativity and commitment are what drive our success. I'll now pass the call to Neil, who'll walk you through the financial results of the fourth quarter and full year as well as our fiscal 2027 outlook. Neal Nackman: Thank you, Morris. Net sales for the fourth quarter ended January 31, 2026 were $771 million, down 8% compared to $840 million in the same period last year. Relative to our guidance, sales results were negatively impacted by approximately $20 million as we stopped shipments to Saks in December ahead of the bankruptcy filing. Net sales of our wholesale segment were $737 million compared to $799 million in the previous year. We saw healthy increases in our owned brands and our go-forward license portfolio, offset by lower sales from our Calvin Klein and Tommy Hilfiger licensed businesses. Net sales of our retail segment were $63 million for the fourth quarter compared to net sales of $56 million in the previous year's fourth quarter. We achieved strong double-digit comp sales in Karl Lagerfeld Paris, DKNY and Donna Karan. Fourth quarter gross margins were 37% compared to 39.5% in the previous year, reflecting the negative impact of tariffs, which was the largest quarter impacted for the year, partially offset by a favorable mix shift toward more full price sales. The wholesale segment's gross margin percentage was 34.8% compared to 38.1% in the previous year's quarter. The gross margin percentage in our retail segment was 46.3% compared to 48.3% in the prior year's period. Non-GAAP SG&A expenses were $260 million in the fourth quarter compared to $244 million in the previous year's fourth quarter. The fourth quarter reflects a $17.5 million bad debt expense associated with the Saks bankruptcy, which drove our SG&A expenses to be higher than planned. Non-GAAP net income for the fourth quarter was $13 million, or $0.30 per diluted share, compared to $58 million or $1.20 per diluted share in the previous year's fourth quarter. Fourth quarter EPS reflects an approximate $0.30 impact from the Saks bankruptcy filing. Excluding this, our fourth quarter earnings would have been ahead of our internal expectations. Let us review the full fiscal year ended January 31, 2026. Net sales for the full year were $2.96 billion compared to $3.18 billion in the previous year. Net sales of our wholesale segment were $2.87 billion compared to $3.08 billion in the previous year. The decrease was driven primarily by the $254 million decline in our Calvin Klein and Tommy Hilfiger businesses, due largely to the exited licenses. These decreases were partially offset by growth of our go-forward owned and licensed brands, particularly our key owned brands, which grew mid-single digits for the year. Net sales of our retail segment were $186 million, up approximately 12% from last year's $166 million. The increase was driven by our owned digital business, particularly donnakaran.com. We also saw strong comparable store sales increases across our Karl Lagerfeld and DKNY retail stores. Gross margins for the full year were 39.4% compared to 40.8% in the previous year. The year-over-year margin decline reflects approximately $65 million of unmitigated impact from tariffs. While gross margins were down to last year, they actualized ahead of expectations, driven by a favorable mix shift toward more full price sales. Gross margins in the wholesale segment were 37.4% compared to 39.4% in the previous year. Gross margin in the retail segment were 50.1% compared to 50.4% in the prior year. Non-GAAP SG&A expenses for the year were $975 million or 33% of sales, compared to $968 million or 30.4% of sales in the previous year. The increase in SG&A as a percentage of sales was driven primarily by the unplanned increase in bad debt expense as a result of the Saks bankruptcy filing. In the second half of the year, we began to see the benefit of our efforts to optimize warehouse capacity and expect this improvement in efficiency to continue into fiscal 2027. We continue our tight review and control over expenses, and we're in line with our plan, excluding the Saks bad debt expense. We also continue to invest in infrastructure, technology and talent, as well as marketing to support long-term growth of our brands. Non-GAAP net income for the year was $116 million, or $2.61 per diluted share, compared to $204 million or $4.42 per diluted share in the previous year. Full year non-GAAP earnings per diluted share would have exceeded the high end of our guidance range, excluding the 30-cent impact from the Saks bad debt expense. Turning to the balance sheet. We strengthened our balance sheet and liquidity position, ending the year with $407 million in cash and more than $900 million in total liquidity, while returning over $50 million to shareholders through share repurchases and a new cash dividend. As a reminder, we initiated our first-ever dividend program in December of last year. Inventories remain in good shape, down 4% to $460 million from the previous year's $478 million, reflecting our disciplined approach to inventory management. Unit decreases are down high single digits compared to the prior year. Cost variances to the prior year reflect higher unit costs this year and as a result of the new tariffs. Our strong financial position and ability to generate cash provide us with ample optionality, and we remain committed to a balanced capital allocation framework. First and foremost, we will continue to invest in ourselves to organically grow our business for the long term. Second, we will pursue strategic opportunities, including acquisitions as well as new brand licenses. Third, we will continue to return capital to shareholders through opportunistic share repurchases and quarterly dividends. Turning to our outlook. For the full fiscal year 2027, we expect net sales of approximately $2.71 billion, down 8% to the prior year. This reflects $470 million of lost sales from Calvin Klein and Tommy Hilfiger products, partially offset by the growth of our go-forward portfolio, which we expect to grow high single digits. Non-GAAP net income for fiscal 2027 is expected to be between $88 million and $92 million, or between $2 and $2.10 per diluted share. This compares to non-GAAP net income of $116 million or $2.61 per diluted share for fiscal 2026. Full year adjusted EBITDA is expected to be between $158 million and $162 million, compared to $192 million in fiscal 2026. For the first quarter of fiscal 2027, we expect net sales of approximately $530 million compared to $584 million in the first quarter of fiscal 2026. We expect a net loss in the first quarter of between $13 million and $18 million or $0.30-$0.40 per share. This compares to non-GAAP net income of $8.4 million or $0.19 per diluted share for the first quarter of fiscal 2026. We are expecting increases in our gross margin percentage of approximately 150 basis points. Our SG&A will be impacted by a higher marketing spend due to timing and our spring marketing initiatives. Now let me discuss a few modeling points. First, on tariffs. Our guidance reflects tariff rates effective prior to the recent Supreme Court ruling and assumes the most recent 2025 IEPA trade policies. We have not anticipated any changes to tariff policy or refunds in our outlook. In terms of sales cadence, we expect the first half sales decline to be larger than the second half, which reflects several new brand licenses that we expect will scale toward the end of this year. On gross margins, we are expecting as much as 300 basis points of gross margin improvement for the year. Resulting in significantly higher gross margin percentage than where we have historically been. Margins will benefit from our tariff mitigation efforts as we lap the impact of tariffs in the second half of the year. Furthermore, margins will benefit from the shift in penetration toward our higher-margin own brands as the more significant portion of the PVH licenses roll off this year. In the first quarter, we expect less margin growth as compared to the balance of the year. As a reminder, our first quarter of last year was not impacted by last year's tariff increases. Regarding SG&A, we expect expense deleverage for the full year as our newer businesses scale and as we continue to invest in people, technology and marketing spend to support growth, while the top line is impacted by significant loss Calvin Klein and Tommy Hilfiger sales. We expect the largest amount of deleverage in the first quarter as a result of the timing of spring marketing initiatives and anticipate sequential improvement as we move through the year. Meanwhile, we have identified several cost savings initiatives that we expect will result in $25 million in run rate savings in fiscal 2028. We expect net interest income of approximately $2 million for the full year and estimate our tax rate to be 30%. We expect capital expenditures to be approximately $40 million. Lastly, we have not anticipated any potential share repurchases for the year in our guidance. Our business remains strongly cash generative, and despite our expectation for lower earnings versus fiscal 2026, we anticipate we will generate very healthy free cash flows for the year to further enhance our current strong financial position. That concludes my comments. I will now turn the call back to Morris for closing remarks. Morris Goldfarb: Thank you, Neal, and thank you all for joining us today. I'm incredibly proud of our team and the progress we're making as we build some of the best fashion brands in the world. I also wanna thank our partners and shareholders for their continued support as we continue to transform G-III Apparel Group, Ltd. and build value for the long term. Operator, we're now ready to take some questions. Operator: Thank you. As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment for our first question. Our first question will come from the line of Robert Drbul with BTIG, LLC. Your line is open. Please go ahead. Robert Drbul: Hi. Good morning. Morris Goldfarb: Morning, Bob. Robert Drbul: A couple questions, Morris. On the first one, in terms of, I guess, your visibility on your own brands for this year, in terms of the, you know, the way that retailers are, you know, ordering your wholesale partners, you know, sort of into the fall, I guess. They give great visibility into the spring now, but into the fall. Can you just talk us through how you see inventory levels, how you see the order books, you know, and really from like the own brand perspective? I think that would follow in terms of the marketing investments that you're making, you know, especially, you know, what's happening in that first quarter. Thanks. Morris Goldfarb: Thanks, Bob. Our own brands, as you heard in our presentation and, you know, possibly as you read, we did well last year. Last year, our businesses and our own brands grew high single digits, and the pressure on our company is really the exiting brands and not only the scale of the exiting brands, but also the margin retrieval as you exit brands. There's margin pressure that we didn't anticipate to be as strong as it was. The demand for an exiting brand with uncertainty as to what the future is with those brands put pressure on our ability to move product. We're really comfortable with our own brands. We're garnering additional space as we stated. One brand, you know, we're anticipating at least 400 more points of sale, and the other brand is 300. We're, you know, excited. Our order book anticipates it. Our inventory is very much in line. We're tempering the level of inventory as you have a conscious effort to change your distribution to, you know, more full price business. You're willing to take less risk on inventory levels in protecting some of your premier brands. You'll find in the future that our inventory levels will be more controlled with the conscious effort in bringing down our level of off-price selling. That said, you know, growth is coming from outside of the United States for the first time. We're not, you know, we're not fully penetrated in areas of the world that have high demand for the product. There's not a nickel's worth of product other than fragrance for Donna Karan. That brand will show its face throughout the world in the coming months. The marketing spend, as you touched, will be fairly aggressive to support, you know, our initiative of growing our own brands. We've done well with marketing. We've gotten awards from media publications for our efforts in Donna Karan and DKNY and Karl Lagerfeld as well, quite honestly. Our team challenged really for the first time, you know, the last 18 or 24 months is really the first time our marketing team has been aggressive on campaigns because of our need to grow our own brands. It's worked. It's worked incredibly well. They've achieved notoriety. They've achieved success for our company. Thank you to our marketing team. Robert Drbul: Thanks, Morris. I guess could I ask a follow-up, just a different question, but, can you guys give us an update on the Converse launch? You know, how that's going, you know, what you've learned and sort of the prospects for that this year? Thanks. Morris Goldfarb: We took on Converse. We had an old history with Nike. A little-known fact is that G-III had a studio that developed the Michael Jordan brand as it was coming to market. We had a partnership with Nike in the early 1990s, maybe it was 1995, and I don't recall the date. We continued to do a little bit of private label with them and through a partnership with the Haddads who do kids Converse. They have a great relationship with Nike. We're building the brand globally. Converse gave us the right to expand, you know, beyond North America, and you know, we read the same thing that you do. A little bit of uncertainty and softness maybe in the brand that really doesn't apply to us for the moment. Their strategy for the brand has not really come out yet. When I say theirs, I would go to Nike and ask what the strategy for the brand is because we're again sort of the servant to the licensor. Where Nike wants to take the brand is where we need to follow. You know, there are new accounts that we're opening every day. There is an appetite for the brand. It's an amazing brand, and hopefully you know Nike supports the growth of the brand. We're doing our part, you know. As we've shown, when we have control, you know, we're incredible. Where we have less control, we don't rule. We're guided by the licensor. It's hard to tell you where the brand goes. I could tell you where we could take it. If Nike supports it, you know, I think we have an incredible business. Robert Drbul: Great. Thank you very much, Morris. Operator: Thank you. Morris Goldfarb: Thank you. Thanks for your question, Bob. Operator: Thank you. One moment for our next question. Our next question comes from the line of Ashley Owens with KBCM. Your line is open. Please go ahead. Ashley Owens: Hi, guys. Thanks for taking my question. I just wanted to hit on acquisitions and licensing. As we enter 2026, how are you prioritizing acquisitions versus new licensing opportunities, particularly given the strength in balance sheet and ongoing shift towards these own brands? Morris Goldfarb: Victoria Apostolico, I'm not sure we prioritize. You know, we are looking for an amazing acquisition, and we are at the same time looking for amazing licenses. You know, our balance sheet supports our ability of funding a sizable acquisition, and our talent pool support and our balance sheet, again, supports our ability of managing through a great license. I'm not sure that there's an issue and we can do both, which is exactly what we're doing. We've licensed some amazing brands because that was the opportunity of the moment. The appropriate acquisition had not come up. You know, we've tucked into our competencies brands and businesses that we can manage easily. Ashley Owens: Okay, great. Thanks. You've spoken about category expansion and things such as fragrance, eyewear, home, hospitality. Which of these would you say is furthest along in becoming a meaningful revenue contributor? Morris Goldfarb: If we look at Karl Lagerfeld, you look at hospitality as a key driver in the last, I'd say the last 18 months, and Vilebrequin alongside of that. When you look at DKNY, it's more consumer driven, and we're signing global licenses where we've signed deals in Latin America. We have a new deal in China. We're expanding into India, and that's for a broad range of product. Some will be distributor-based, and some will be classification-based. The highlights for two of the brands are hospitality and DKNY. We're not seeing interest in DKNY as a hospitality or food and beverage provider, but very strong on the consumer side. Ashley Owens: Okay, great. Thank you. Morris Goldfarb: Thank you. Operator: Thank you. One moment for our next question. Our next question will come from the line of Mauricio Serna with UBS. Your line is open. Please go ahead. Mauricio Serna: Hello. Hi, this is Mauricio Serna from UBS. I think the registration got that confused. Just a couple of questions first. On Donna Karan, you know, great to see the strong growth in, you know, last fiscal year, up 40%. Maybe could you give us a sense of how big the business is right now? On the growth outlook, you know, the go-forward business being up high single digits, could you maybe break that down, like how much of that is coming from, you know, like, the key owned brands versus, you know, growth from the licenses that you've been launching over the last few years? Thank you. Morris Goldfarb: You know, your first question, the size of Donna Karan. We don't disclose, you know, the size of the business. I could tell you in 18 months of doing business, let's go back to when we started Calvin Klein, which grew to be $1.2 billion in sales. We're bigger and further along in 18 months of Donna Karan than we were with Calvin Klein. I would say we're very happy with the positioning. We're cautious on the distribution, and it's a very scalable business. It's not intended to be designer. It's not intended to be boutique. It's intended to, you know, fill the racks of department stores that we have our greatest competency in. We're gonna scale it. An added feature that we did not have with Calvin Klein is we have global rights to our own brands. There's an opportunity throughout the world to expand this brand. We're in the early stage. You're gonna see, you know, great percentage increases. We're at a point where the percentages do make a difference in the future. We're not talking about a $10 million initiative that grew 50%. Neal Nackman: Yeah. With respect to the second part of your question, we are seeing and anticipating high single digit growth in the key owned brands. When you look at the in, the total go-forward portfolio, we're also seeing good strong growth. That go-forward portfolio is gonna include the key owned brands. It's gonna include a few other owned brands that we have and then of course the licensed portfolio. We see in total high single digit growth from all of those pieces. Mauricio Serna: Great. Thanks, Neal. Thanks, Morris. Quick follow-up just on the commentary on gross margin. I think you mentioned 300 basis point expansion for the year. Just I think doing the math on that, I think it implies based on what you said on EBITDA or EBIT, like it implies SG&A dollars are gonna be up around 3%. Just wanna make sure that the math around that is correct. You know, if that's the case, if it's gonna be up around maybe 2%-3%, what are the drivers behind that SG&A dollar growth? Thank you. Neal Nackman: Yeah, Mauricio, I think you've got the math fairly close. The expansion in SG&A going forward is really primarily maintaining the talent pool that we have. We are gonna make some additional investments in our infrastructure. We've been on a path of increasing some of our spend on technology with all the new technology that's out there and just continuing to upgrade the systems that we use. It's really those three components that'll continue for us to have investment spend. Of course, you know, when you have such a large fall off the top line, it's hard to leverage that. It's certainly not prudent to leverage that in the near term. We will be looking to, as we mentioned on the call, cost savings initiatives. We've not built that into our plan for fiscal 2027. We expect that will roll in in fiscal 2028. Mauricio Serna: Understood. Thank you so much. Operator: Thank you. I would now like to hand the conference back over to Morris Goldfarb for any closing remarks. Morris Goldfarb: Thank you all for spending time with us and hearing our story, and we will talk to you next quarter. Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.

74天前Insight Analytics约5分钟阅读

ATLC 2025 Q4 财报电话会议

Operator: Good day, and thank you for standing by. Welcome to the Atlanticus Holdings Corporation Fourth Quarter 2025 Earnings Conference Call. At this time, participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message of buzz and your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Dan Mock of Atlanticus Holdings Corporation. Please go ahead. Dan Mock: Thank you, operator, and good afternoon, everyone. Atlanticus Holdings Corporation released results for the fourth quarter and full year 2025 ended December 31, 2025 this afternoon after market close. If you did not receive a copy of our earnings press release, you may obtain it from the investor relations section of our website at investors.atlanticus.com. We have also posted an updated investor presentation. With me on today's call are Jeff Howard, President and Chief Executive Officer, and Bill McKamey, Chief Financial Officer. This call is being webcast and will be archived on the investor relations section of our website. Today's discussion may contain forward-looking statements that reflect the company's current views with respect to, among other things, the benefits of the acquisition of Mercury, including expected synergies, and future financial and operating results. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those included in the forward-looking statement. Please review our earnings release and the risk factors discussed in our SEC filings. The forward-looking statements speak only as of the date on which they are made, and except to the extent required by federal securities laws, the company disclaims any obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made, or to reflect the occurrence of unanticipated events. In addition, during this call, we may refer to certain non-GAAP financial measures. Please refer to our earnings release and investor presentation for important disclosure regarding such measures, including reconciliations to the most comparable GAAP financial measures. I will now turn the call over to Jeff Howard. Jeff Howard: Thanks, Dan. And again, good afternoon, everyone, and welcome to Atlanticus Holdings Corporation's first public earnings call. To state the obvious, 2025 was a transformative year for our company. Not only did we deliver sustained above-market growth across our core businesses, but we also completed the acquisition of Mercury Financial, a transaction that meaningfully enhanced the scale, capabilities, and long-term earnings power of our company. With the Mercury acquisition, we effectively doubled the size of our balance sheet to $7.0 billion. We added more than 1.3 million customers that we serve, we deepened and strengthened our data analytics and product capabilities in the near-prime space. Most importantly, we added significant human resource talent. Strategically, this acquisition expands the markets we can serve and accelerates efficiencies gained from scale. It also provides us a $3.0 billion portfolio to optimize with our portfolio management expertise, expertise gained from our numerous portfolio acquisitions throughout our history. As a result, we anticipate significant long-term earnings accretion driven by disciplined portfolio management, cost savings, and incremental origination growth in the near-prime space. Integration of Mercury has progressed well ahead of plan. Our team has done an exceptional job in integrating the organization and bringing about the realization of the many value-creating opportunities that will be derived from the acquisition. Our first priority is portfolio management, undertaking actions to properly position the Mercury portfolio. Phase one of those actions has been completed and is performing better than modeled. Additional phases will continue throughout 2026. At the same time, we are already realizing meaningful operating cost efficiencies across the combined company. We expect these revenue enhancements and cost benefits to contribute increasingly to earnings growth in 2027 and 2028. During the quarter, we also acquired a $165.0 million retail credit portfolio from a competitor, further solidifying our leadership position in the second-look point-of-sale market. Turning to our financial performance, we once again delivered strong results in the fourth quarter and for the full year. For the fourth quarter, diluted earnings per share grew 23% year over year, and for the full year grew 25% over prior year. We also continue to deliver strong returns to our shareholders, return on average equity above 20%, even while maintaining more than $600.0 million of unrestricted cash at year end. While I have highlighted the Mercury acquisition, it was our historical business that drove results in 2025. Excluding Mercury, managed receivables increased 37% year over year. New account originations increased 73% to more than 2.2 million for the year, and were up 56% in the fourth quarter compared to the prior-year period. Purchase volume increased 54% for the quarter over last year and 32% for the year. Revenue increased 27% for the full year, and 35% in the fourth quarter year over year. As a result, we finished 2025 with record levels of receivables, record originations, and record accounts served while exceeding our earnings growth return on capital goals. On the consumer front, our data indicates that the consumers we serve remain stable. We are seeing consistent payment performance, steady purchase activity, and stable delinquency trends. While much has been made about a K-shaped economy, we continue to see rational consumer behavior. While purchasing decisions may be shifting, consumers are still maintaining their credit. For those newer to our story, we have seen through multiple cycles, the utility provided by our offerings is one of the most valuable financial tools in a consumer's wallet. As a result, when given time to adjust to the macro landscape, open-ended consumer credit products like ours show less variability during downturns. We see nothing today that suggests our consumers are not managing their finances prudently. On a different note, the competitive landscape remains robust, and we are seeing record solicitations in our space leading to some softening in response rates and marketing efficiency. Nonetheless, given our diversified product offerings, our broad consumer reach, and multiple origination channels, we are highly confident in our long-term positioning. As we look ahead, it serves us well to look at how far we have come. Five years ago, we had $1.1 billion in managed receivables. Today, we have $7.0 billion, a compounded annual growth rate of 45%. Five years ago, we had $560.0 million in revenue. In 2025, we generated just under $2.0 billion in revenue, a 28% annual growth rate. Our customers served have grown from 1.2 million to approximately 6.0 million, a 38% annual growth rate. Importantly, we achieved our return on equity targets of greater than 20% each year, even with the inflationary bubble in 2022 and 2023. Over the next five years, our long-term objectives remain unchanged. While the addition of Mercury naturally moderates our asset growth rate due to the larger base, we are targeting long-term earnings growth of 20% or more annually while delivering returns on average equity of 20% or greater. We have a talented and experienced team, scalable technology, a proven platform, and ample capital. We have a diversified product offering and marketing capability allowing us to meet customers where they are. We operate at scale in an underserved market where we offer highly valued services to consumers on fair terms. Consumers are experiencing modest but real wage growth, stable employment, and tax policies have been enacted that favor the middle class. We are well positioned to empower better financial outcomes for even more everyday Americans, and provide for durable, profitable growth and long-term value creation for our shareholders. I will now turn the call over to Bill McKamey. Bill McKamey: Awesome. Thanks, Jeff, and thanks, everybody, for joining us. I will begin my section with revenue. For the fourth quarter, total operating revenue and other income increased 107% year over year to $734.0 million. This growth was primarily driven by the acquisition of Mercury, continued expansion of our managed receivables, and increased merchant fee recognition associated with higher origination volume. Our fair value mark declined modestly as we onboarded the Mercury portfolio as well as added meaningful new receivables to our existing general purpose card asset. Newly originated and newly acquired receivables typically carry lower initial fair values because lifetime loss expectations are front loaded until the accounts season beyond peak charge-off periods. The Mercury receivables were initially recorded at fair values below our legacy general purpose credit portfolio, reflecting both mix and acquisition accounting. As these portfolios season and as product policy and pricing adjustments Jeff referenced earlier are implemented, we expect fair value marks to improve over time. Our year-over-year improvement in delinquency and charge-offs continued through the fourth quarter, and was amplified with the addition of the Mercury assets. We expect to see the positive impact of the current tax season on delinquencies and subsequent charge-offs. Interest expense increased consistent with receivable growth and higher funding costs. This reflected expanded warehouse capacity, term securitizations, and the issuance of senior notes to support our ongoing growth. Total operating expenses increased 67% year over year, primarily driven by increased servicing costs associated with portfolio growth, the addition of Mercury personnel and operating infrastructure, and higher marketing investment. As we integrate Mercury and scale the combined platform, we continue to identify and realize operating efficiencies. Net income attributable to common shareholders increased approximately 25% year over year to $32.8 million in the fourth quarter, or $1.75 per diluted share. We ended the year with ample capital, and continue to maintain substantial borrowing capacity across our warehouse facilities and term securitization platforms. Our funding model remains diversified across bank partners, term securitizations, and corporate debt markets. We believe we are well positioned to support continued receivable growth while maintaining disciplined return thresholds. For the quarter, we generated a return on average equity of approximately 22%. Our focus remains clear: empower the more than 5.0 million customers we serve by prudently deploying capital into at or above targeted return receivables, manage credit conservatively, and drive long-term earnings growth while maintaining balance sheet strength. In summary, the quarter reflects strong top-line growth, disciplined credit management, improving portfolio seasoning dynamics, and continued operating leverage as we scale the combined platform. I will now turn the call back to the operator for questions. Operator: Thank you. At this time, we will conduct the question-and-answer session. Please press star 11 on your telephone. The first question will come from Vincent Kaintic with BTIG. Your line is now open. Vincent Kaintic: Good afternoon. Thanks for taking my question and congratulations on your first earnings call. First, I wanted to talk about the integration in Mercury. It is nice to hear that it is moving ahead of schedule. Maybe if you can go into more detail where we are at, what has been achieved so far, and what is left to do. How long it might take. I thought in the press release, there was discussion about the product policy and pricing changes and I am sort of curious about what higher yields we should be expecting once all of that is said and done. Thank you. Jeff Howard: Yeah. Thank you, Vincent. I appreciate the question. As we said, the integration of Mercury is well ahead of plan. Fortunately, we had ample time to plan post-acquisition for that integration given the length of time we were in negotiation with our counterparty before that acquisition. But that integration entails a number of different things. One, as I mentioned earlier, was the repricing and repositioning of the portfolio. We started that process on day one, literally the closing of the transaction, and undertook a significant change in terms on the portfolio that was effective back in December. That was obviously a very accelerated timeline, and kudos to our team to really undertake what was a heavy lift to get that change in terms out in market. That change in terms entailed a lot of different actions across the portfolio. Again, we have done this seven or eight other times in our history. We have got a lot of experience in doing this, and we leveraged that experience as well as our more recent portfolio management actions undertaken in 2022 and 2023 to have a high degree of certainty in those actions. In some instances, we added fees. In some instances, we increased APRs. In some instances, we lowered APRs and increased credit lines. It really was a risk-segment-by-risk-segment undertaking across the entire portfolio to better position the portfolio for longer-term profitable balance build. That was effective, as I said, beginning in December. We have had a number of operational efficiencies that we are starting to realize. The integration of the two organizations with a system-of-record integration will be undertaken later this year. That will help align all of our systems, continue the cost savings, and help us further along the process of gaining the benefits of scale. In that process, we are getting the benefits from scale from many of our third-party service providers throughout the entire ecosystem of our business. We are starting to realize those efficiencies already. I think the entirety of our integration plan was around 18 months, so into 2027, we feel like we will have the integration pretty much under our belt. But the realization of a lot of that integration and synergy and portfolio repositioning will continue to accrue into 2027 and even 2028. The way that a lot of the change in terms is undertaken post-CARD Act is you can only affect new balances with new APRs, and so it takes some time for the older protected balances to run off and to be replaced with the newer, higher-yielding balances, which is why we see what I would consider a longer-tailed realization of a lot of this change in terms. Vincent Kaintic: Okay. Great. Thank you very much for that detail. Second part I wanted to talk about was the funding structure of Atlanticus Holdings Corporation. I think we have heard maybe some broader macro concerns about funding availability out there, such as with private credit and so forth. So if you could touch on that. And another thing we have seen amongst many of the fintechs out there is some fintechs exploring becoming a bank, and so I wanted to get your thoughts on that as part of your funding structure as well. Thank you. Jeff Howard: Yeah. Vincent, happy to address that. We have got great funding partners really all over the world and they remain very supportive. We continue to access the securitization market routinely and have seen no deterioration or widening of our spreads as we approach those markets. We have diversified funding sources that include banks and life insurance companies and sovereign wealth funds and lots of different pools of capital, including private credit. We have not seen any lack of enthusiasm when we go to market. We have done a number of things with the Mercury asset that we have acquired. I think we announced at least one of those in December. That was very well received. We have got good partners in the whole program, so we do not sense that there is any softening there or support for our business. We also tap the corporate debt markets and have other places where we source capital. I think we have almost $1.0 billion of committed and undrawn bank warehouse lines across the whole business. We have got good capital support for our growth. With regard to your question about a bank, we obviously observe others that are applying for bank acquisitions or seeking new charters. We are studying that ourselves, and that is an interesting element for the industry more broadly and something that we are considering. Operator: Thank you. The next question will come from Alex Howell with Stephens. Your line is open. Alex Howell: Hey, thanks for taking my question, and congrats on the quarter. Quick question, and some of this was touched on during the opening remarks. Curious also what you guys are thinking about, or how you are rather thinking about, this particular tax refund season and the implications to the portfolio and just growth of receivables over, I guess, the start of this new year. Jeff Howard: Yeah. Listen. Our expectation is that this is going to be a fairly robust tax season. We have not seen anything to dissuade us of that view up to this date. We obviously recognize a number of tax policies that were enacted that we believe will benefit our consumers, and we expect to see the paydown accordingly, which will obviously hurt balances a little bit and slow our growth in the quarter, not necessarily year over year, but certainly in sequential quarters. It also has the longer-term benefit of reducing delinquencies. We feel very good about the way our portfolio is positioned. Like I said, the data that we are seeing suggests that tax season is in line with expectations, and it will follow its normal seasonal trends is our expectation. In consumer behavior throughout the rest of the year, our consumers will typically pay down with their tax dollars and tax refunds, then reborrow over the course of the year and rebuild those balances through the use of our card throughout the remainder of the year. We do not expect anything different at this point. Alex Howell: Okay. If I could just also sneak another one in. In your filing, you guys talk about customer concentration. I am just curious if you could provide a little bit more context on a particular relationship with your largest partner and how that relationship has evolved, and what you are doing to manage concentration risk? Jeff Howard: Yeah. Thanks for the question, Alex. We have a number of, well, frankly, thousands of merchants that we work with within our retail point-of-sale channel. Some of them have bigger concentrations than others. Obviously, you see the table in our 10-K. We have not disclosed who those individual partners are, but I think the scale and the way that that has grown is reflective of how we approach that whole market. It is very technology driven. The integration with each of our merchant partners is very sophisticated, very API driven, and very mobile first. That really enables us to make great underwriting decisions in partnership with our account owner banks at the point of sale, and it gives us a lot of defensive moat in that operating structure. I would say all that as an example relates to how that relationship has scaled because for at least six or seven years, we have been adding great value to that partner, like we do with all our partners, and we have been winning more and more market share with them and others. That has been a good growth story for us. It is not a concern from our perspective from a concentration perspective, because that one partnership is a part of a bigger portfolio, which in turn is a part of a bigger balance sheet. We have good underwriting of the individual consumers that we support there, and good counterparty risk with that merchant as well. So not an area that we are concerned about. In fact, I think it is the continuation of our ongoing strategy for us to become more strategically important to fewer, more enterprise-level clients, so that we can get the full benefit of our custom solutions, our technology integrations, the breadth of underwriting, and create something that is really customized to each of those enterprise-level relationships. That is what you see as our portfolio has matured. Alex Howell: Alright. Thanks for taking my question, guys. I will hop back in the queue. Operator: Thank you. As a reminder, to ask a question, please press star 11 on your telephone. The next question will come from David Sharp with Citizens Capital Markets. Your line is open. Zach: Hi, everyone. Good afternoon. This is Zach on for David. Thanks for taking our questions. I wanted to dig in a little bit on the macro side of things. Obviously, there is a lot going on with oil prices right now. I want to see if we can get some more commentary on that, and also obviously, that is a large part of your average customer's budget. There were a lot of similar dynamics in 2022, and I want to see if it is a little bit too early to read into what is going on right now versus then, or if we can draw other parallels. Jeff Howard: Yeah. Great question. Thank you. We, like you, draw the same parallel to 2022. We are not forecasting or pretending that we know how to forecast what gas prices are going to do in the coming weeks or months. But we are watching it very, very closely and will react to any change in behavior that we see with our consumer just like we did in 2022. You may recall that we were very early to identify change in behavior coming out of tax season in April 2022 and changed pretty meaningfully our underwriting, our approach to market, our pricing strategy, our origination tempo, even our existing back-book pricing, and undertook a meaningful change in terms and repositioning of our own portfolio because of what we saw very early on based on our, at that point in time, 25 years’ worth of data aggregation to identify deviations from expected payment performance. When we saw that, we changed very, very quickly. That allowed us to continue to serve our customers in a way that we felt was representative of the risk and getting an appropriate return on that capital. As you look back at our financial performance, it still enabled us to hit our target return on capital of 20-plus percent. We feel we are in the same position today. Obviously, this inflation bubble might be more limited to gas prices, at least short term, than what we experienced in April and May and June 2022. But we are going to watch the data, and as soon as we see a change in behavior, we are going to react accordingly. We obviously have a pretty deep toolbox available to us and a lot of experience on how to make changes once we see changes in that behavior to respond to it appropriately. We feel like our portfolio is very well positioned to absorb that as well. We do not wait on changes in behavior to start pricing for that behavior. We have been doing this long enough to know that you have to price your asset for through-the-cycle performance, meaning in the good times you have to build some buffer for when there is some stress. We feel like we have done that and have been planning for events like this. When we actually observe it taking place, we will take further action based on tools that we have developed over our now 30 years of operating history. Zach: Got it. Thanks for the color. I wanted to also ask a little bit on the fair value mark to see if we can drill down a little bit and get a little bit more insight into it, particularly around the mix versus other impacts in the number. Bill McKamey: Yeah. Happy to talk about that. As I think I mentioned in my comments earlier, we took the mark down a little bit because the Mercury portfolio is a little different asset than the one that we had traditionally acquired or originated through our normal organic originations, and then we did a lot of organic originations in the third and fourth quarter too. As I mentioned in my comments earlier, newer receivables are new to their seasoning and their life cycle. We have a little bit more conservative—actually, we have a very conservative—approach to our fair value underwriting since we adopted fair value, and I think that is really what you see in this number. The number is some 60 basis points or so below where we were last quarter. It is really a very conservative approach to how we think about the asset itself. Then, as we also mentioned, as our improvements to the Mercury book and our continuing origination and tempo advances through 2026, we anticipate seeing that fair value mark improving. Zach: Got it. Thank you very much. Operator: Thank you. The next question will come from Hal Goach with B. Riley Securities. Hal Goach: Hey. Thank you. Thanks for the call. I have one question on integration costs and one on maybe a revenue question. You mentioned maybe an 18-month timeline to get everything on a similar system-of-record integration. From start to finish, what kind of overall dollar savings of being on a common system of record bring the company over the next year versus where we are at today? Jeff Howard: Yeah. Good question. We do not disclose the specifics of those synergies. But I think, as you saw when we announced the transaction, we anticipated somewhere between $2 and $4 a share in accretion on a go-forward basis. Suffice it to say, there are meaningful savings to be garnered from the full integration of two—close-to-scale platforms—and getting one significantly scaled platform in place. That extends well beyond just a system of record into servicing and marketing, internal cost, etc. We feel like there are a lot of levers for us to pull to continue to gain efficiencies through that scale and through that integration. Again, I would refer back to our initial transaction disclosures where we said we felt like we had $2 to $4 a share of accretion in 2027. Hal Goach: Okay. And the next question is, it sounds like you have a chance to reprice some customers. As you mentioned, the CARD Act and some protected balances are going to run off. What kind of increase in overall yield might that be for some of those accounts that might be able to be repriced a little higher or better unit economics if the balances do run off? What would that be? Jeff Howard: Yeah. Great question. As you can imagine, given the sophistication of our data and analytics and the experience we have in both near-prime and subprime, the impact varies widely depending on where you sit in the risk spectrum. It is hard to say at the portfolio level what that might mean. We have not disclosed that. But we felt like from day one, we could get 100 to 350 basis points of ROA improvement on this portfolio. Hal Goach: Okay. Okay. And I guess one follow-up. It relates to the tuck-in acquisition of the Vibe portfolio from Prague Holdings. That was a subscale kind of operation for Prague, and it was not that profitable. I was just curious what Atlanticus Holdings Corporation can do with its expertise in card programs to improve the unit economics of that program that was not very large. Jeff Howard: Yeah. Another good question. Thank you. One of the things that we did was buy it properly, and therefore, create a little bit more yield for the asset based on the purchase price. Two is our servicing costs are substantially less than the sellers’ just because of the scale that you referenced. Thirdly, we also have the opportunity to get more organic originations through the partnerships that we inherited at prices that we were then able to determine worked for us. We felt like the combination of those three things got us a return profile for that acquisition that we deemed attractive. Hal Goach: Alright. Terrific. Thank you very much. Operator: Thank you. The next question will come from Alex Howell with Stephens. Your line is open. Alex Howell: Hey again, guys. Quick question on the private-label receivables, the delinquency rates. You guys call out that you do not include certain receivables from the private-label card business. Just curious if you could help me understand the thinking behind that and, perhaps just for comparability’s sake, help me understand what the delinquency metrics might look like if they were included. Bill McKamey: Yeah. Happy to speak to that. We make that reference because some of our merchant relationships have support from the merchant with regards to asset performance. In some cases, the merchant will reimburse us for principal losses in that program. Because there is no loss experience, no expected loss experience, nor any actual loss experience with those particular receivables, we do not include them in those ratios. We are trying here to present what we think is an accurate description of how the assets are performing. Including those receivables here would be, I think, confusing with regards to how the asset is actually performing. So those assets we do not include in that table. I do not know how—we have not broken them out in terms of size or impact—so I do not know if I can directly answer your question with regards to what would they look like if they were included, but they would be different because there are no losses there. That is how we think about it. Operator: This does conclude today's question-and-answer session. I would now like to turn it back to Jeff Howard for closing remarks. Jeff Howard: Yeah. Thank you, and thank you all for your interest and support in our company. We are obviously very pleased with the quarter that we have posted and, obviously, the year as well. A lot took place in 2025 in terms of both organic opportunities and the transformational acquisition that we spent a good deal talking about. As much as there was to talk about in 2025, we are even more excited about what lies ahead and the opportunities for our business and the earnings power that we have created in this platform over the course of the last five years as we referenced in some of our prepared comments. We look forward to sharing the results of those opportunities in the coming quarters. So thank you all again, and thank you for your interest. We look forward to talking to you again in the next quarter. Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.

74天前Insight Analytics约5分钟阅读

HGBL 2025 Q4 财报电话会议

Operator: Hello. And welcome, everyone, joining today's Heritage Global Inc. fourth quarter 2025 and year-end conference. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions in the question-and-answer session. Please note this call is being recorded. We are standing by should you need any assistance. It is now my pleasure to turn the meeting over to John Nesbett of IMS Investor Relations. Please go ahead. John Nesbett: Thank you, and good afternoon, everyone. Before we begin, I would like to remind everyone that this conference call contains forward-looking statements based on our current expectations and projections about future events and are subject to change based on various important factors. In light of these risks, uncertainties, and assumptions, you should not place undue reliance on these forward-looking statements, which speak only as of the date of this call. For more details on factors that could affect these expectations, please see our filings with the Securities and Exchange Commission. Now I would like to turn the call over to Heritage Global Inc.’s Chief Executive Officer, Mr. Ross Dove. Ross? Go ahead. Ross M. Dove: Thank you, John, and welcome, everyone, to the call. We are glad to have you. Just a few brief comments before I turn it over to Brian to drill down on the quarter and the year. 2025 is in our rearview mirror. It was a good profitable year with lots of transactions, but just no needle movers. Some years you want to never end, but there are years where saying goodbye feels more than ready. 2025 felt mostly like we were rode hard and put the bed wet. 2026 feels like a break-loose year is right here and right now. When that happens, it almost always follows with a period of larger transactions as companies and lenders do not hold back asset flows year after year; they ultimately break loose. What we are seeing now is not just new deals entering the pipeline more aggressively than before, but many, many of the carryover deals now starting to convert to transactions, which really bodes well for the start of 2026 and beyond. Our own internal growth drivers are completely in place now, and all the divisions we see expanding, and we are looking at more supply, more activity, and on that front, we are adding business personnel across the board. We recently moved into a brand-new shiny facility that we are very excited and proud about, and that opens up space in our warehouse capacity to increase auction activity, and it also opens up office space to where we have room to add the personnel in an integrated situation where we can really work together as a team. So that is very exciting for all of us. M&A remains a front burner, and we are aggressively looking at many, many opportunities. We are very proud and excited that we did complete the DebtX acquisition. We are now focused there on integrating the team with really optimistic goals that we did the right thing at the right time, and the CRE markets are under a lot of pressure to release loans in the marketplace and in their sweet spot. The goal for 2026 is to define it as the year of the needle mover. We are putting all our feet on the gas, and we believe everyone that had two feet on the brakes is getting ready to move, and we are getting ready to move with them. With that, I will turn it over to Brian, and I will add some additional comments afterwards. Have a great day. Operator: Brian? Brian J. Cobb: Thank you, Ross, and good afternoon, everyone. I will begin with a brief overview of our fourth quarter operating results before walking through our Industrial and Financial segment performance. Consolidated operating income was $800,000 in 2025 compared to $1,500,000 in 2024. It is worth noting that included in the 2025 fourth quarter was approximately $400,000 in expenses related to due diligence associated with our M&A efforts. Our Industrial Assets division reported operating income of approximately $1,100,000 in 2025 compared to approximately $800,000 in the prior-year quarter. Our Financial Assets division reported operating income of approximately $900,000 in 2025 compared to $1,900,000 in the prior-year quarter. Our Industrial Assets division had a solid quarter as the division continued to capitalize on key auction and liquidation opportunities. ALT delivered a strong close to the year, reporting operating income of $538,000 in 2025 compared to $276,000 in the prior-year period. We saw a high volume of asset transactions in the quarter, although many were smaller in scale, as companies continued to delay larger decisions amid ongoing economic uncertainty. Following the close of the quarter, we announced that HGP has opened its new San Diego facility, which consolidates HGP’s warehouse and operations and will serve as Heritage Global Inc.’s corporate headquarters. The new purpose-built facility was designed to accelerate growth, increase operating efficiency, provide the ability to add personnel and scale, and we are confident it is the right space and location for us to drive our next phase of growth. Our Financial Assets division maintained strong profitability in 2025, although we saw lower revenues from recurring clients in our NLEX segment reflecting fluctuations in the charge-off volumes. With that said, consumer loan delinquencies, such as credit card and auto, remain at elevated levels, and we ultimately expect those delinquencies to translate to increased charge-offs moving forward. Subsequent to the quarter, we announced our acquisition of substantially all of the assets of The Debt Exchange, a leading full-service commercial and residential real estate loan sale brokerage and advisory platform. The DebtX integration has gone very smoothly, and this addition further expands our capabilities and reach in our Financial Assets segment. We believe this acquisition will be accretive in calendar year 2026 with potential quarter-to-quarter variability. Moving forward, we remain focused on capitalizing on our pipeline of opportunities and driving continued profitability in the division. Additional consolidated financial results include the following: Revenue was $11,900,000 in 2025 compared to $10,800,000 in 2024. Adjusted EBITDA was $1,100,000 compared to $2,100,000 in the prior-year period. Net income was approximately $300,000, or $0.01 per diluted share, compared to a loss of approximately $200,000, or $0.01 per diluted share, in 2024. Fourth quarter 2025 net income was impacted by a non-cash tax allowance adjustment of $100,000 related to expiring net operating loss carryforwards, compared to a non-cash adjustment of $1,300,000 in 2024. Our balance sheet is strong with stockholders’ equity of $7,000,000 as of 12/31/2025, compared to $65,200,000 at 12/31/2024, with net working capital of $18,100,000. Our cash balance reflects a total of $20,500,000 as of 12/31/2025, and after removing amounts due to our clients, or payables to sellers on our balance sheet, our net available cash balance was $13,200,000. At 12/31/2025, approximately $18,900,000 of federal net operating loss carryforwards were unused and expired. We expect to utilize our remaining net operating loss carryforwards of approximately $15,500,000, and as such, we have removed the valuation allowance against our deferred tax assets. And lastly, we did not repurchase any shares in 2025 but intend to resume share repurchases moving forward. As a reminder, the company authorized a new share repurchase program on July 31 that authorizes the repurchase of up to $7,500,000 in common stock for the next three years. Ross, I will turn it back over to you. Ross M. Dove: Thanks. So just to add one thought: When I look at everything with kind of a CEO dashboard, one of the most important things I look at is the sentiment of our business development team, and they are all very pumped up. They are all very convinced they are going to have a great year this year, and I have talked to them individually one by one, and we enter very, very excited, closing out the first quarter, that we are in the right place at the right time and anxious to not just perform, but outperform for you. So thank you all for joining, and I am here, and Brian is here for any questions. And we are always easy to get ahold of. Thank you again. Operator: Thank you. If you would like to ask a question, press star 1 on your keypad. To leave the queue at any time, press star 2. Once again, press star 1 to ask a question. We will pause for just a moment to allow anyone a chance to join the queue. We will take our first question from Mark Nicholas Argento of Lake Street. Please go ahead. Your line is open. Mark Nicholas Argento: Congrats on the DebtX acquisition and sounds like things are starting to progress nicely there and in the overall business. But just getting in the weeds on the acquisition, when you say you expect it to be accretive, is that on a net income basis, adjusted EBITDA basis—you know, splitting hairs—but it would be helpful to at least better understand what accretive means. Ross M. Dove: Brian, I will let you handle that one. Brian J. Cobb: Yes. So we expect it to be accretive on an operating income basis as well as a net income basis. We have disclosed a couple of numbers just on the stand-alone DebtX 2025 result, which, as a reminder, was not a part of our consolidated results. They reported $800,000 in operating income in 2025, and even with adjustments that we will disclose in Q1 numbers for pro forma purposes, that number will still be accretive if they were to make that, and we expect them to do more. Mark Nicholas Argento: Got it. And I know you have mentioned some variability quarter to quarter, which is understandable. Is there any traditional seasonality to that business? Ross M. Dove: They generally have a very strong Q4, Mark. As you know, primarily, their business is driven by lenders, by banks more than by specialty lenders. Their primary client is banks. So there always seems to be, in the last 60 days, a desire to clean up, so to speak. So, generally, Q4 you would expect to be their big quarter—over 50% of their revenue. Mark Nicholas Argento: Got it. That is helpful. And then in terms of the broader macro, you touched on it a little bit. You are seeing default rates continue to work higher on the consumer. Obviously, a lot of the headlines recently have been in and around private credit. There seems to be some disruption there. Do you have any exposure to that part of the market? Does DebtX get any exposure there? How are you thinking about private credit and maybe that opportunity? Ross M. Dove: So there is a big opportunity right now. Obviously, the DebtX acquisition was tied to the problems in the CRE market and the amount of loans coming due that are struggling to get refinanced. A lot of those loans have transferred from the banks already to private credit, but there is still going to be a desire to take out the more struggling part of the portfolios. So we see growth kind of overall right now, and not just in CRE with DebtX, but there was a lot of holdback in NLEX. We had a very profitable year, but not close to our record year. We just did not see as aggressive movement from the sellers as we anticipated. So we think there is a pent-up amount of assets to come to market. Mark Nicholas Argento: Great. Well, I appreciate you answering questions. I will hop back in the queue. Ross M. Dove: Thank you, Mark. Operator: Thank you. To ask a question, you may press star 1 now. We will take our next question from George Sutton of Craig-Hallum. Please go ahead. Your line is open. Ross M. Dove: Hi, George. George Sutton: Good afternoon, guys. So, Ross, I am curious, as you talk about 2026 being the year of hopefully some larger transactions, and I know you have already signed a large oil and gas deal. Can you give us a picture of what you see relative to larger transactions and maybe a little sense on why we did not see it last year and why we would see it differently this year? Ross M. Dove: I am not going to be, like, the general economist and try to outsmart the marketplaces. I can only tell you from my front-row seat talking to clients, and from my front-row seat, there was a hesitation to make decisions. Just from a geopolitical standpoint, the going back and forth on the tariffs and many other macro issues—people were not sure exactly what they wanted to do. So I do not want to say that people do not have a lot of assets they wanted to sell, but it just appeared that, yes, they would chip away at the smaller sales, the stuff that was really obviously declared surplus, but on the larger transactions where maybe you have to replace the assets and you are worried about the availability, maybe you are not sure if you are going to expand or hold back, there was just a general sentiment that not just Heritage Global Inc. saw, but I think everybody watching the economy saw many, many companies in a wait-and-see. And in a wait-and-see, auctions are not your first move; they are a tertiary move once you have had the other plans in place. So we had a lot of people just say, call us back in a month, call us back in two months, call us back in three months. But the good news is we did not really lose our conversion rate; it is just that a lot of the transactions just did not happen that we thought were going to happen. So they are starting to come back now. That is why I say I feel positive. But I have never seen a year-after-year wait-and-see period where eventually people do not commit. So I feel good about 2026, George. George Sutton: Let me ask a little more specifically. You mentioned we are about to close out Q1. Are we starting to see the indications of these larger deals? And again, I will point to the oil and gas transaction—I think that was happening earlier in the year. Ross M. Dove: Yes, you are starting to see the signing of them. We are going to have a decent Q1 for sure on the Industrial side. When I say decent, some of them are of a larger nature. I am excited about the amount of auctions we are doing in Q1, so it looks good on the Industrial side. On the Financial side, it takes a little longer for the pickup in the curve. But, you know, all signs point to the amount of meetings they are having and that they are signing some new forward flows. So I think you will see that pick up as the year goes on, maybe a little bit slower than you will see the pickup in Industrial. But we are busy on all fronts, and it feels like when you start a year busy, it usually stays busy all year, George. It usually does not tail off. George Sutton: One small question for Brian on the specialty lending side. It normally is a positive every quarter, and it was modestly negative this quarter. What do you account for that delta? Brian J. Cobb: The main reason why we are kind of right around that breakeven point or slightly under is the lack of funding. We have always been only funding smaller loans on a self-funded basis without any partners and at a low level. So in order to maintain profitability, we have to be able to and be willing to put more dollars out to work with new borrowers in 2026. George Sutton: Gotcha. Okay. Thanks, guys. Ross M. Dove: Thank you, George. Operator: Thank you. At this time, there are no further questions in queue. I will now turn the meeting back to management for closing remarks. Ross M. Dove: Hi, it is Ross. Thank you all once again for joining. We really appreciate it. If any of you have other questions, please feel free to contact us at any time, and we are always open to chat. We always look forward to chatting, and we always look forward to talking and getting to know you. So feel free to reach out at any time. We are hoping for a dynamic year. We are putting all of our feet on the gas, like I said, and we are optimistic. So, hopefully, you are optimistic with us. We appreciate your joining. Have a great evening. Operator: Thank you. This brings us to the end of today’s meeting. We appreciate your time and participation. You may now disconnect.

74天前Insight Analytics约5分钟阅读

LQMT 2025 Q4 财报电话会议

Operator: Good afternoon. Welcome to the Liquidmetal Technologies, Inc. Fiscal Year 2025 Conference Call. My name is Michelle, and I will be your conference operator this afternoon. Joining us on today's call is Mr. Tony Chung, Liquidmetal Technologies, Inc.'s Chief Executive Officer. Before we proceed, I would like to provide the company's safe harbor statement with important cautions regarding forward-looking statements made during this call as follows. All statements made by management during this call that are not based on historical fact are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, but are not limited to, those made by Mr. Chung regarding the company's cash, revenue outlook, and technology development. While management has based any forward-looking statements made during the call on its current expectations, the information on which such expectations were based may change. These forward-looking statements rely on a number of assumptions concerning future events that are subject to a number of risks, uncertainties, and other factors, many of which are outside of the company's control, that could cause actual results to materially differ from such statements. Such risks, uncertainties, and other factors include, but are not necessarily limited to, those set forth under the Risk Factors in the company's Annual Report on Form 10-K for the year ended 12/31/2025. Accordingly, you should not place any reliance on forward-looking statements as a prediction of actual results. The company disclaims any intention and undertakes no obligation to update or revise any forward-looking statements. You are also urged to carefully review and consider the various disclosures in the company's Annual Report on Form 10-K for the year ended 12/31/2025, as well as other public filings with the SEC since such date. I would also like to remind everyone that this call will be available for replay starting later this evening via a link available in the Investor Relations section of the company's website at www.liquidmetals.com. I would now like to turn the call over to the company's Chief Executive Officer, Mr. Tony Chung. Sir, please go ahead. Tony Chung: Thank you, operator. And thank you to our investors for participating in today's call. As a reminder, please supplement the information provided during today's call with the financial statements and disclosures in our Form 10-K filed earlier today to get the latest full overview of our company operations. For today's call, I would like to provide more clarity on our company's pivotal events that occurred during 2025, especially as it relates to our Asia operation, and how these events tie into the overall future and vision for the company. If you have kept up with our press releases and blogs during 2025, we announced that our Chairman, Professor Lugee Li, was appointed as the head of our Asia operations and also announced our new manufacturing operations in Hangzhou, China. To illustrate the significance of these events, let me provide some historical perspective on our Chairman and how his involvement in amorphous alloys brought the technology to where it is today. Professor Li is a Chinese-born businessman, materials scientist, entrepreneur, and philanthropist, best known as the founder and former Chairman of Dongguan Eontec in China. Eontec is a manufacturing powerhouse which specializes in manufacturing advanced light alloy materials, including magnesium and aluminum, for the automotive industry. With his technical and academic foundation in materials and industrial design, Professor Li has been involved with research, industrialization of new materials, and precision manufacturing. He founded Eontec in 1993 and took the company public on the Shenzhen Exchange in 2012. Shortly thereafter, Professor Li became very interested in a revolutionary new material, amorphous alloys, and devoted a part of Eontec operations for the development and production of this intriguing new material. In 2014, he spun off a company from Eontec called Yeehaw Metal, which happens to be our current outsourced contract manufacturer, that was fully devoted to amorphous alloy manufacturing. While he was developing Yeehaw's manufacturing technology in China, Professor Li also set his sights on having a global presence for this new technology. In 2016, he took another major step towards control by taking a significant stake in Liquidmetal Technologies, Inc. to become our Chairman and to solidify his leadership in this industry. With his experience in advanced materials, precision die casting, and industrial transformation, he devoted himself fully to the development of amorphous alloy technology by, one, focusing on manufacturing technologies at Yeehaw; two, developing the worldwide amorphous alloy brand with Liquidmetal Technologies, Inc.; to complete the ecosystem for taking amorphous alloy technology to the masses. Since Professor Li's involvement with us, Liquidmetal Technologies, Inc.'s business model was to maintain our intellectual property, focus on sales, and outsource all manufacturing to Yeehaw. This model has served us well as it allowed us to conserve cash while allowing the manufacturing technology for amorphous alloys to mature and advance. While it is common knowledge that outsourcing manufacturing is an effective solution to allow expert manufacturers like Yeehaw to do what they do best and for companies like Liquidmetal Technologies, Inc. to focus on sales, the long-term drawback to this business model would be that the manufacturing advancements and know-how would be owned by the third-party manufacturer. You could say that we might face the same dilemma as America as a whole faces today, and that when we allow ourselves to utilize outsourced manufacturing overseas, we could end up losing our competitive edge. With the new opportunities in consumer products and physical AI, also known as humanoid robots, it is an optimal time for Liquidmetal Technologies, Inc. to itself advance amorphous alloy technology by venturing into our own manufacturing operations. As such, we are devoting our resources to creating new process know-how related to alloy, tooling design, injection molding conditions, post-processing steps, and other manufacturing processes for advancement. In that regard, we have developed and built our newly designed machine called Liquid Morphium that utilizes advanced injection molding technology. This new machine incorporates years of machine technology experience with a focus on part quality and cost reduction and will be part of the lineup for our new Hangzhou manufacturing plant. As a natural output of our R&D efforts on our Liquid Morphium platform and other advancements in manufacturing, we will develop new intellectual property all our own, which is why we announced recently that we have established a new IP holding company called Liquid Morphium LLC, all in the name of increasing the value of our company. Another benefit to manufacturing in-house is that we will have better cost control to allow for higher gross margin once scale is reached. We will also have the ability to price strategically for high-value applications. While capital expenditures will be higher upfront, unit economics will improve at scale for the long term, increasing the value of the company as a whole. One of the most vital aspects of making advancements in manufacturing is that our efforts will immediately attract established tier-one manufacturing companies that would want to partner with or invest into Liquidmetal Technologies, Inc. to further jointly develop amorphous alloy technology. As we devote more of our resources to R&D and technology advancements, Liquidmetal Technologies, Inc. ultimately increases its value by making it an attractive target for collaboration. This is a very significant component of our future success in that access to global customers will be significantly accelerated through collaborations with these tier-one manufacturing companies. In essence, we view manufacturing as a critical step in increasing the value of the company and broadening our appeal with other established manufacturing companies to better position the company for success. Our renewed focus on manufacturing makes sense overall, but many have asked how our in-house manufacturing venture will affect the relationship we have with Yeehaw Metal. In the short term, our relationship with Yeehaw will not change, and they will continue to be our outsourced contract manufacturer. For the long term, however, we view Yeehaw as a collaborator and an outsourcing partner. For amorphous alloy technology to be widely accepted as a viable solution for various applications, the market needs multiple sources of manufacturers to mitigate risks of relying on a single source. There are plenty of opportunities for both Liquidmetal Technologies, Inc., Yeehaw, and perhaps even other manufacturing companies to succeed together, whereby customers can order parts directly from either Yeehaw or Liquidmetal Technologies, Inc. We also envision outsourcing orders to each other to manage volume production. We note that Yeehaw has already achieved tier-one vendor status for a global mobile device company, as well as all the mobile device companies in China. To our benefit, we are currently working together to build out the supply chain even further and look forward to collaborating and building the amorphous alloy manufacturing ecosystem together. In summary, I view our new venture into manufacturing as a natural progression of our journey to make amorphous alloy technology available to the masses. Our focus on advancing manufacturing technology for quality parts and cost reduction will allow us to increase the value of our company by, one, developing an arsenal of new IP; two, reducing costs to attract well-established customers to adopt our technology; and three, fostering joint venture collaborations with tier-one manufacturing vendors who already have ties with global customers. Of course, we have Professor Li, who has divested his ownership and roles at Eontec and Yeehaw and is now free to fully devote himself to the success of Liquidmetal Technologies, Inc. He has a proven track record of building manufacturing operations from scratch and is proactively managing and operating our Hangzhou manufacturing plant through the mobilization of his network of collaborators, who were carefully cultivated during his tenure at Eontec. Looking into our future sales opportunities, we believe that there is unlimited potential. We have completed prototypes for one of the top-tier mobile device companies and are working towards designing production parts. We have made inroads into the medical device space with our current production orders. As announced in our recently updated website, we have highlighted the opportunities with foldable phone hinges and physical AI, and our foray into manufacturing will allow us to take full advantage of these opportunities ahead. Let us now switch gears and quickly go over the financial results for 2025. We ended 2025 with revenues of about $800,000 and a net loss of $2,400,000, with our EBITDA being about negative $1,800,000. We ended the year with about $20,000,000 of readily available liquid cash and investments. Our corporate office building has a market value that is more than double the current book value of $7,000,000, which may also be accessible for future operating needs if necessary. We are well positioned to fund our growth for the foreseeable future and have no going concern issues. In closing, we are in 2026. Our Hangzhou manufacturing plant buildout is progressing smoothly, and we hope to be fully operational toward 2026. We are aggressively pursuing sales opportunities in consumer products, physical AI, and the medical industry and working closely with tier-one manufacturers to transition their current products to Liquidmetal Technologies, Inc. applications. We will keep investors informed as these developments progress, and we look forward to announcing good news in the near future. Thank you for your time, and with the Lunar New Year upon us, I wish everyone good luck for 2026. I will now hand things over back to the operator. Operator: Thank you, Mr. Chung. At this time, this concludes today's call. You may now disconnect. Everyone, have a great day.

74天前Insight Analytics约5分钟阅读

OLLI 2025 Q4 财报电话会议

Operator: Good morning, and welcome to Ollie's Bargain Outlet Holdings, Inc. conference call to discuss financial results for the fourth quarter and fiscal year 2025. Please be advised that this call is being recorded and the reproduction of this call in whole or in part, is not permitted without the express written authorization of all these. I would now like to introduce our host for today's call, John Rouleau, Managing Director of Corporate Communications and Business Development for Olis. John, please go ahead. Unknown Executive: Good morning. Thank you, everybody. We appreciate your time and participation. Joining me on today's call from Ollie's are Eric van der Valk, President and Chief Executive Officer; and Robert Helm, Executive Vice President and Chief Financial Officer. Following their prepared remarks, we will open the call for questions. [Operator Instructions] Finally, let me remind you that certain comments made on today's call may constitute forward-looking statements, and these are made pursuant to and within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 as amended. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. Those risks and uncertainties are described in the company's earnings release and filings with the SEC, including the annual report on Form 10-K and the quarterly reports on Form 10-Q. Forward-looking statements made today are as of the date of this call, and the company does not undertake any obligation to update these statements. On today's call, the company will also be referring to certain non-GAAP financial measures Reconciliation of the most closely comparable GAAP financial measures to the non-GAAP financial measures are included in the company's earnings press release. With all of that said, it's now my pleasure to turn the call over to Eric. Eric van der Valk: Good morning, and thank you for joining us today. We had a strong fourth quarter to cap off an exceptional year. Both comparable store sales and earnings were ahead of our expectations and we delivered on all of our strategic objectives in 2025. We entered last year with a number of ambitious goals. Most notable of these was to accelerate our growth and capitalize on opportunities in the market including real estate, merchandise, customers and talent. All of this required considerable planning and execution, and our team delivered. We opened a record 86 stores last year which was significantly higher than our previous record of 50 stores. All stores were opened in the first 3 quarters, another first for us. We moved to a soft opening strategy which simplified the process and improved our execution. Our next goal was to enhance and drive growth in the Ollie's Army loyalty program. We added in Ollie's Army night in June, we made our Ollie's Days event exclusive to members only. We gave members advanced notice on special events, and we rolled out the Ollie's credit card. Our stores did an amazing job communicating the benefits and enrolling customers in the loyalty program. Great job team, your efforts paid off. The result was stronger customer acquisition growth the entire year. New memberships in our Ollie's Army loyalty program increased 23%, and our total customer file increased by more than 12%. On top of the accelerated membership growth, we are welcoming a wider breadth of customers, America loves a bargain. And as we grow from East to West, we are expanding our customer demographics. Our unprecedented deals simply cannot be beat, and we are clearly benefiting from consumers seeking value and trading down. It's not just trade down, however. We are also reaching a younger customer through digital marketing tactics. Finally, we are reinvesting in our stores and improving the customer shopping experience. All of this is driving an expanded customer base. Our next objective was to go after merchandise-related opportunities. Our mission is to sell good stuff cheap. We do this through a flexible off-price buying model that leverages our growing buying power across suppliers and manufacturers around the world. Our growing size and scale and continued consolidation in the retail industry has resulted in better access to merchandise, and our deal flow is off the charts. This gives us more control and flexibility in how we build our merchandise assortment. A good example of this were changes we made to the seasonal category. Seasonal Decor is an area that continues to grow in the marketplace, and there is a white space opportunity here. At the same time, Toys is an area that continues to evolve away from traditional to more interactive products. With this in mind, we increased our investments in seasonal decor and changed our approach to toys. These changes resonated with our customers and were big wins in the fourth quarter. Our last initiative was to continue reinvesting in our business to support future growth. We have strengthened our bench in many critical areas, including playing in allocation, marketing and new store development. We also increased our distribution center throughput through expansion and automation and we continue to improve our store and customer experience. Looking ahead, we will build on our momentum and progress in pursuing these initiatives in 2026. Our flywheel for growth starts with the opening of new stores and the availability of real estate continues to be strong. We are planning to open 75 stores this year, and these will be a mix of new and existing markets as we continue to expand contiguously. We recently celebrated entering our 35th state with the opening of our store in Austin, Minnesota. We celebrated the grand opening last week with a long line of enthusiastic customers that stretched down the side of the building. It was great to meet and talk to so many good people. Austin loves deals, and we are proud to be part of your community. Thank you, Austin and Minnesota, the birthplace of bargains has arrived with more stores coming soon. In addition to Minnesota, we will also be entering New Mexico later this year. With a total of 658 stores in 35 states, we are only at the halfway mark of our long-term goal of more than 1,300 stores. It's such an invigorating time to be with Ollie's with so much growth ahead of us. While new stores remain the quarterstone of our growth, we are also focused on driving comparable store sales through better execution, leveraging our growing size and scale and improving sales productivity. We touched on strengthening our product assortment. We are also seeing opportunities arise in areas such as real estate and talent. Would you combine this with the fact that we reinvested in the business every year because of our strong sales, profitability, cash generation and balance sheet, it feels like we have reached an inflection point. With these dynamics we are confident in our ability to continue executing the business and driving consistent results. Our growth and the continued consolidation of the retail sector is leading to more buying power and expanding our access to products. This gives us the ability to balance our value proposition with our margin profile and strengthen both over time. Based on the structural changes to our business, we feel a comp target of 2% and a gross margin target of 40.5% is sustainable and strikes the right balance between price and margin. We also believe that this stability and strong free cash flow now allows us to commit to returning higher levels of excess cash to shareholders through share repurchases. Combining 10% unit growth, 2% comp growth and a commitment to stepping up share repurchases, we are confident in delivering consistent mid-teens EPS growth while reinvesting back into the business to support profitable long-term growth and reach our target of 1,300 stores. In 2026, our focus will be on improving the in-store customer shopping experience, sharpening our dynamic marketing media mix model expanding our IT application development capabilities and further integrating technology and data analysis across the enterprise, including leveraging proven AI with appropriate solutions for our business model, growing our planning and allocation pension capabilities and increasing our distribution capacity by expanding our Texas and Illinois facilities and laying out plans for our fifth DC. There is so much potential to continue to develop and grow our business, but we are doing this in a calculated fashion, staying true to our business model, strong culture, and our new long-term growth algorithm. We are super proud of our achievements in fiscal 2025. We delivered against virtually every single metric and goal we set out for ourselves at the beginning of the year. But now that's behind us. We are focused on building on our success, seizing new opportunities, delivering another year of good stuff cheap to our customers and strong results for our shareholders. Let me wrap up by recognizing and thinking all of our dedicated associates and team members. Every one of you plays an important role in serving our loyal discount customers and fulfilling our mission, serving our communities by selling good stuff cheap is not just a tagline. It's our purpose, our passion and our reason for being. Thank you for everything you do. Now let me turn the call over to Rob. Robert Helm: Thanks, Eric, and good morning, everyone. We were very pleased with our fourth quarter results and the underlying trends in the business. Earnings were slightly ahead of our expectations, driven by solid comp growth, healthy margins and disciplined expense control. New stores and customer acquisition remain our 2 top priorities, and we continue to deliver on both of these. We opened a record 86 stores last year, an increase of more than 15% and membership growth in Ollie's Army remained strong, up more than 12% for the year to 17 million members. Now let me walk you through the P&L. Net sales increased 17% to $779 million, driven by new store openings and comparable store sales growth. Comparable store sales increased 3.6%, driven by an increase in both basket and transactions. Seasonal, consumables, hardware, stationery and sporting goods, were our top-performing categories. Our comp sales increase was above our expectations in the quarter, even more so when factoring in the impact of severe winter weather. Major storms around Black Friday weekend, the weekend of Ollie's Army Night, and the end of January caused a significant number of store closures and disruptions to the business. Given our store geography, we were particularly hard hit by the weather. While comp store sales were ahead of expectations, new store sales were slightly below our plan. This was a different trend than the rest of the year as our new stores outperformed expectations in the first 3 quarters. In hindsight, we underestimated the flattening of the reverse waterfall for the new stores in year 1 from the soft opening strategy. This proved to be more impactful in the fourth quarter than what we observed earlier in the year because of the higher engagement levels with our Ollie's Army members during the holiday season. The majority of our new stores be planned for this full year and the flattening of the reverse waterfall is something we continue to study. Gross margin of 39.9% was above plan for the quarter but approximately 80 basis points lower than last year which was largely due to planned investments in prices. SG&A expenses were well managed in the quarter. Excluding the $5 million of onetime expense related to the modification of equity awards for our Executive Chairman in last year's third quarter, SG&A expense as a percentage of net sales decreased 40 basis points to 24.2%. The decrease was primarily driven by the leverage of our fixed costs from the increase in comparable store sales and benefits from our optimization efforts and marketing. Preopening expenses decreased 53% to $2.3 million, driven by the earlier timing of new store openings this year versus last year. Moving down to the bottom line. Adjusted net income increased 16% to $85 million and adjusted earnings per share increased 17% to $1.39. Lastly, adjusted EBITDA increased 16% to $127 million, and adjusted EBITDA margin decreased 10 basis points to 16.3% for the quarter. Turning to the balance sheet. Our total cash and investments increased by more than 31% or $134 million to $563 million, and we had no meaningful long-term debt at the end of the quarter. We remain committed to maintaining a very strong balance sheet because of the credibility this gives us with our various partners across the industry. Inventories increased 18% year-over-year, primarily driven by our new store growth and strong deal flow. Capital expenditures were $18 million for the quarter, with the majority of the spending going towards the opening of new stores, the improvement of existing stores and, to a lesser degree, investments in our supply chain. We did pull some new stores forward in early 2026, which drove CapEx and preopening a little higher than our expectations. We bought back $34 million worth of our common stock in the quarter and $74 million for the full fiscal year. At year-end, we had $259 million remaining under our current share repurchase authorization. We are stepping up the buyback in 2026, and I will speak to this more in a moment. Lastly, let me run through the way we are thinking about the business and our initial outlook for fiscal year 2026. Let me start with tariffs. The tariff situation obviously remains very fluid, and the current lower levels could be temporary. Bigger picture, tariffs are just another form of disruption, and we benefit from disruption. Whatever happens, we would expect to mitigate any margin pressure from tariffs. Before running through our guidance for 2026, let me comment on how we are thinking about our new long-term growth algorithm that Eric quickly touched on. We operate a flexible and fluid business that generate stable returns and very strong cash flows. Our strong growth, along with the consolidation of retail gives us greater ability to scale and drive the business. With all of this, we feel confident in targeting annual comparable store sales growth of 2% and annual gross margin of 40.5% moving forward acknowledging that there will be some variability to comps and margin between the quarters based on deal flow, seasonality and a few other factors. The 40.5% annual gross margin target is our current baseline target. And our thought process is to reinvest anything over and above this back into our value proposition to our customers. Lastly, we are targeting to return approximately 50% of our free cash flow back to investors through share repurchases going forward. Our first and best use of cash is all -- is and will always be reinvesting into the business to support long-term growth. However, between our very strong balance sheet and stable cash generation, we are confident in committing to a higher level of share repurchases that benefits long-term EPS growth. Our initial guidance figures reflect these changes and are contained in the table in our earnings release posted this morning, and they include 75 new store openings, net sales of $2.985 billion to $3.013 billion, comparable store sales growth in the range of 2%, gross margin in the range of 40.5%, operating income of $339 million to $348 million and adjusted net income and adjusted net income per share of $270 million to $277 million, and $4.40 to $4.50, respectively. These estimates assume depreciation and amortization expenses of $63 million, inclusive of $15 million within cost of goods sold, preopening expenses of $22 million with the majority of this in the first half of the year, an annual effective tax rate of approximately 25%, which excludes the tax benefits related to stock-based compensation. The tax rate is slightly higher than 2025 due to higher levels of nondeductible compensation. Diluted weighted average shares outstanding of approximately $61.4 million, which includes a stepped-up share repurchase level of approximately $100 million. And finally, capital expenditures are expected to be in the range of $103 million to $113 million, which includes almost $20 million for the expansion of our Texas and Illinois distribution centers. Similar to last year, we expect our new store openings to again be front-end weighted with the majority of openings planned for the first half. In closing, let me also acknowledge and congratulate my fellow team members. While we continue to integrate technology into how we do things, we will always be a people-led business that relies on each and every team member to play their part. 2025 was a terrific year on all accounts. and I am excited about the opportunities that lie ahead for our team. Now let me turn the call back over to Eric. Eric van der Valk: Thanks, Rob. In closing, I'd like to share that we are well positioned and laser-focused on continuing to deliver profitable growth. We are committed to driving strong and consistent execution every hour of every day. We are proud of what we do in service of our customers. We are excited about the opportunities ahead. And last, but certainly not least, we are Ollie's. Operator, we are now ready for questions. Operator: [Operator Instructions] Our first question comes from the line of Peter Keith with Piper Sandler. Peter Keith: Thank you. Good morning, everyone. Interesting on algo change, certainly exciting from moving from the historic 1% to 2% comp annual target up to now 2%. So kind of subtle, but I would still say meaningful. Could you give us a thought process and why you're doing that now? And maybe, I guess, even what gives you the confidence you can sustain that going forward? Eric van der Valk: Sure. Peter, thanks for your question. We do believe we're at an inflection point with the accelerated growth last year and looking at $3 billion in sales for next year. Our growing size of scale is leading to better access to merchandise and deals. It's allowing us to steer our merchandise selection and our category mix much more deliberately than we were able to do in the past. Our flexible buying model allows us to get in and out of products and categories fluidly. So with more consistent access to incredible deals and the improvements we've made throughout the business on the organization, we feel like a 2% comp algo is sustainable. Operator: Our next question comes from the line of Chuck Grom with Gordon Haskett. Charles Grom: I'd read that chance, the 9.5%, I think, this morning, nice effort. My question is on sales productivity. You've noted changes being made to the size of certain assortments such as shrinking carpeting books and toys just now. Where are you guys in that journey and that in sales per square foot. I'm curious for your best stores where that productivity sits. And then last question would be in our field work, we've observed furniture in stores. Is that just a seasonal drop? Or are you guys leaning into that category more deeply? Eric van der Valk: Thanks, Chuck. Appreciate it. I think I was at 1.0 on the [indiscernible] it's all right. You could be a 9.5. Room or improvement. We like that, yes. That's right. In terms of space productivity, we are thinking about space productivity differently now than we have in the past. We first consider where we provide the best values in the most relevant merchandise categories where we can chase a closeout pipeline. So I would stress the fluidity, the flexibility of our business in the category mix is sometimes a following of the closeout pipeline. But our growing size and scale gives us better access to deals, which I said earlier, results in -- it's resulting in more long-term partnerships with the vendor community and more partnerships with the better community. The more expansive access to the merchandise is putting us to the driver seat in steering categories and assortments. We've also been on a journey thinking about this, how we value store space, how we drive higher space productivity within the box for multiple years at this point, beginning with some of the learnings that we took away from our remodel program several years ago, and it's resulted in our confidence to accelerate some investments in the business and to steer categories in a more deliberate way. We're also making investments, as I mentioned on the call, in planning allocation and stores to further seize these opportunities. Furniture is a great example. I'm glad you brought it up of a category that we've looked at, where there's tremendous white space in the market as a result of retail consolidation. So I throw out there, Big Lots, Value City, American Freight are good examples of retail consolidation that's happened sublet recently and it's opened up white space and what I would characterize as the deep discount furniture business with kind of opening price point. Living room furniture is kind of what we're going after with our opportunistic buy model, we are well positioned to chase the business and move in and out of categories. We begin testing expanded furniture last year, actually late last year in some stores, and we like the results of the test. We were looking forward at what we believe to be an outsized tax refund season it sees what we thought would be a unique opportunity to introduce the business in a very big way in almost every store at the same time as the tax refunds were coming in. But to answer your question about is this transitory? Is it deal? Are we driving it now? And what does it mean for the future? We're early innings at this, we're about 7 weeks or so into the introduction of the business. President's Day weekend was the kind of the grand introduction of it. We do believe it has a place in our stores long term. and we're going to stay at the business. It may not be every store, but it's probably most stores or at least more than half of the stores. This being said, the most challenging decisions that we make here are what not to buy, whether that's deals or categories. So those challenging decisions we have to make that we have made for about half the stores is that we're going to exit the wall to wall carpet business, which is relatively unproductive. And we like what we're seeing at furniture. We believe that's an adequate replacement and that we'll get more sales productivity out of furniture versus wall to wall carpet in, again, more than half of our stores. So again, early read, we like what we see. I wouldn't speak today about -- you quoted the $130 sales per square foot about what the road map looks like around that. At this point, we have strategies around category mix management. that will drive improved selling productivity. We're not making a specific commitment to what that looks like in future years today. Operator: Our next question comes from the line of Matthew Boss with JPMorgan. Matthew Boss: So Eric, on the inflection point that you cited to kick off the call. So 2 questions. First, could you elaborate on the comp strength relative to plan that you saw in November and December? How best to quantify the weather impact on the fourth quarter? And have you seen any change in comp momentum so far in the first quarter relative to the 3 to 4 comps that you delivered in the fourth quarter? And Rob, separately, I guess, could you just elaborate on the performance that you're seeing in your new stores relative to plan and just expectations for productivity that you embedded in the guide for this year relative to 2025? Robert Helm: This is Rob, I think I'll take all of that. So the comps at Q4, we were pleased with the comp results. It was driven by both increases in transactions and baskets -- it was back at led with basket taking 2/3 of it and transactions a third. The monthly cadence traded in a pretty tight range. We were pleased with the holiday season. We had a very nice holiday season. In January, our exit rate would have been the strongest comp of the quarter had it not been for the winter storm impact, which was very significant, where we had hundreds of stores closed for a number of days in that last week of the quarter. And momentum is spilled over into Q1. We're pleased with where we're positioned. We feel like we can deliver on our guidance. Our deal flow is amazing, and our assortment for the spring season is incredible. From a new store perspective, I think it's important to put all of it into context. First, the majority of our stores [ be ] planned for the full year. So we're very pleased with that result. Second, the new stores were impacted actually disproportionately from the comp stores during that last week of the quarter because of geographies. So that was also a piece. But in terms of trend and what we're seeing, what we saw in Q4 was the timing dynamic, which related to our soft opening strategy, which flat in the early sales curve, but it improved execution of these stores. This improved execution helped us open the stores earlier and really helped us step up from the historical cadence from 50 stores to 86 stores this last year. We knew this would impact the maturity curve in some way. But what we feel that it does is we feel that it impacts the shape of the curve, but not the long-term productivity, profitability or opportunity in any of these stores over the longer term. In terms of what we've embedded in guidance, we've considered this performance in the fourth quarter into our guidance, into our new store productivity. way that the Street calculates new store productivity is slightly higher this year versus last year because of the step-up in the 86 stores coming into the store base. But we're comfortable with our guidance, and we feel that we're in a good position to deliver. Operator: Our next question comes from Steven Shemesh with RBC Capital Markets. Steven Shemesh: Great. I appreciate you taking the -- there are obviously a lot of consumer cross currents at the moment. If we think about an evolving tariff landscape inflation may be picking up a bit on your tax refunds as you alluded to and now the Middle East situation impacting gas prices and consumer confidence. Anything you can share on the overall state of the consumer and kind of what you're seeing from a consumer behavior standpoint. And a related question, I mean, I think there's always an ongoing debate about closeout availability, you somewhat alluded to this in your response to an earlier question, but maybe just a state of the union there as well of you're confident in maintaining a high degree of quality in stores, especially as you ramp up store growth. Eric van der Valk: Sure. Thanks, Steve. Thanks for your questions. In terms of the state of the consumer, consumers are seeking value and we're here for them. The strength we're seeing in trade down has continued with our upper income cohorts. It's there's momentum there in trade down. The lower income -- the lowest of our cohorts a little bit weak, the trade down is more than offsetting the weakness in the lower income cohorts. We're also seeing strength in consumables, which is an indication of where the consumer's mind set is it's continuing to be a very strong business for us. The deal flow is lining up very, very nicely, which is a good segue into deal flow with the consumer demand consumables for us. Deal flow for us, it's off the charts. With the consolidation of retail that's taking place, definitely outsized consolidation in retail over the past year. We are seeing deal flow in just about every category that's off the charts. And again, I mentioned consumables, but that's definitely been a strong pipeline for us in consumables. So we're extreme value retailer. We're comfortable with where we are from a price gap standpoint very competitively positioned. So we're in good shape. Operator: Our next question comes from Steven Zaccone with Citi. Steven Zaccone: I wanted to ask about the real estate environment. Just help us understand how you're balancing new store growth versing investing in some of these initiatives to drive higher store productivity. And then this year calls for 75 new stores, which is slightly above 10% unit growth, should we expect this unit growth above 10% to continue for a couple of years. Robert Helm: Thanks, Steve. It's Rob. I'll take that question. The real estate environment remains strong, and availability is very good. 2025 was actually one of the biggest years of store closures that we've seen over the last 10. But we're focused on building a long-term durable business model that compounds earnings growth year after year. We feel that the best way to do this now is by balancing our new store growth with other initiatives to improve the in-store shopping experience across the remainder of our fleet. But touching on the go forward, we think that 10% unit growth is probably the right way to think about it. beyond 2026. 2025 and 2026 were really above algo because of the outsized consolidation of stores that we've seen in the last 12 to say, 24 months. Operator: Our next question comes from the line of Kate McShane with Goldman Sachs. Katharine McShane: Is there a way to quantify the comp growth of Ollie membership versus what is coming from new store growth. And we were wondering if the Ollie Army demographic is changing in line with what you're seeing just in the stores. Robert Helm: I'll take the first part, and then I'll hand it off to Eric for the second part. We haven't separated that out in the past historically. We think about Ollie's Army as a single metric. And we're looking to grow it through new stores predominantly. But what I would say is all vintages continue to comp on Ollie's Army store growth. And it's an important goal that we set for our store teams in communicating the benefits out to our customers each and every day. Eric van der Valk: Yes. I mean we're very pleased overall with the Ollie's Army performance on the quarter and on the year in terms of the growth, the excitement that our customers have around the program, the enhancements of the program, the conversion that our stores have driven with the customers, the new customers that are coming in to make them part of the Army to make them part of our loyal bargainauts, Ollie's family. So that's -- we're firing on all cylinders as it concerns Ollie's Army. Operator: Our next question comes from Anthony Chukumba with Loop Capital Markets. Anthony Chukumba: Congrats on a strong 2025 I was interested in the seasonal business in the fourth quarter, specifically, how much of that strength was close out as opposed to some of the direct source stuff that you did, particularly in terms of decorations and also gifts? Eric van der Valk: Sure. The seasonal business typically is more non closeout, more source, more production goods. Last year, we did see a fairly healthy pipeline of closeout goods of ex inhibitory that was out there as a result of retail consolidation with manufacturers and product that was left behind from retailers that are out of business that was in transit, et cetera. So it was a combination. I'm not going to quote the percentage on it, but it was actually a fairly healthy combination of closeouts that is somewhat unusual for that business. Gift is the same to the extent we don't usually get into specific deals on this call, but we did have outsized gift-related deals. A year ago, we were up against that were closeout related. Some of what we bought was closed out and so what we bought was production, and we had a very strong gift business this year. So we were able to comp our business that was a little bit more closeout driven in '24, with a little bit less closeout-driven product in '25, and we were very proud of our value proposition, our price gaps on that product. It does speak to the evolution of our business as we continue to grow, being maybe more like an off-pricer with close out is the most important driver of our value prop. And that's how we see our business as we move forward, especially as we continue to grow in size and scale. Operator: Our next question comes from the line of Simeon Gutman with Morgan Stanley. Simeon Gutman: Good job in '25. If you take the sort of this newer financial algo compared to previous, so two, it's a little bit higher than what you were comfortable underwriting. Gross margin is certainly higher. Can you just tell us then what happens on the other side of it? Are you saying that margin grows at a faster rate to an EPS grows faster? Or is there something inhibiting higher SG&A? I'm sorry if I missed that piece, but I'm trying to put on the before and after together. Robert Helm: This is Rob, Simeon. I'll take that question. We're not thinking about margin growth necessarily differently under the algo. What we're moving from is the 1% to 2% which shows the confidence that we have based on this inflection point based on our size and scale. Margin, we're thinking as the current baseline target. We're thinking not to exceed 40.5% in the short term. We think that this is the right balance between price and margin at the moment. And if we have the opportunity to exceed, we would reinvest that back into customer loyalty to drive additional market share at this moment. From an SG&A perspective, as the 2% comp, we would expect for 10 basis points of leverage, which is built into our guidance. And then EPS will grow in the mid-teens on the bottom line. And that will be supplemented by share repurchases, but that's not -- that's not how we're getting there. We're getting there through the core strength of the algo throughout the P&L. Eric van der Valk: Yes, Simeon, I just want to stress the point on margin about reinvesting in price. Nothing has changed here. We reinvested price, 40.5% is the new 40. Period. Operator: Our next question comes from Scott Ciccarelli with Truist. Joshua Young: This is Josh Young on for Scott. So how much benefit do you think you're capturing at this stage for big lots? And could we see sales slow in the back half as you cycle those orphan sales that you were able to capture? Robert Helm: This is Rob. I'll take that one. The stores that have overlapped the the former big loss locations, whether they closed never came back or they closed and reopened under the variety of wholesalers umbrella, are some of the strongest locations in our fleet over the past year. But similar to COVID, when we were talking about 2-year, 3-year, 4-year comstack, big losses in the rearview mirror and what they were is not coming back. We will continue to benefit from their absence in real estate, in access to product and sourcing and talent, all while continuing to wear share of wallet with our incredible deals and bargains -- but our model has always thrived on the long-term consolidation of retail and Big Lots is no different. Operator: Our next question comes from the line of Jeremy Hamblin with Craig-Hallum Capital Group. Jeremy Hamblin: And I'll add my congratulations on the really strong year. I wanted to ask about dark grant, which you saw impact in 2025. What was the total dark rent in '25? And if you have some dark rent that you're expecting in 2026, what would that amount be? And then also, you talked about returning capital to shareholders maybe in a little bit bigger way. You've got over $0.5 billion in cash and generated about $300 million of operating cash flow in '25. Would you think about stepping up like the share repurchase plan to a $300 million, $400 million level? Just something that given the cash flow that you generate and current balance and strong balance sheet. Just curious if that's under consideration. Robert Helm: Sure. This is Rob. I'll take those questions. Dark rent expense was $5 million for the Big Lots locations in 2025. Not all of this was incremental. And typically, our organic locations incur some level as dark rent. It's typically in the range of a month or so as we merchandise the store. We do have more normalized assumptions included within preopenness last year. But as you do the math, I think the piece that you're trying to solve for is our investment in improving the shopping experience and the remodel program, which we have now added back into 2026 has included our guidance numbers. So that's on the preopening side. On the buyback side, the way we're thinking about buybacks is it's a supplement to our algo. It's not a substitute for earnings growth. We're very comfortable with the commitment of returning 50% of our free cash flow generation back to the shareholders. The $100 million, we believe, is a conservative target. If we are able to generate higher levels of operating cash flow, we'll aim to stick to that 50% return of free cash flow. We're not looking to do a short-term pop. We're looking for steady compounding earnings growth over time. Operator: We have a question from Edward Kelly with Wells Fargo. Edward Kelly: Nice quarter. On the marketing side, I was hoping that you could touch on maybe some of the changes in the marketing strategy, and you mentioned optimization. And then related to this on the flyer, any shifts on the flyer that we should be thinking about this year or other special promotions for '26? Eric van der Valk: I love that you asked flyer questions and count offers and flyers as well. On the marketing question, before I get into flyers, we continue to optimize our marketing through our dynamic media mix model. It allows us to reallocate spend towards higher-return channels and it's more fluid in terms of timing. This has been a journey, multiyear journey at this point as we reduce our reliance on what I call the inevitable reduction of print media. It's been in decline for many, many years, continues to be a decline. It's really not about spending more, it's about using data to be more precise and more efficient. We've already seen the result of some of that work over the past 6 months, as you can see from a reduction of marketing spend over the last 6 months. Again, it's not about reducing, it's about a more efficient spend. We also have meaningfully reduced our print spend over time, a little ahead of the decline of the print media that's available to purchase, which is where all the reduction is coming from. The approach gives us much more flexibility, as I touched on. Digital is much more flexible, which helps facilitate responding to deal flow, seasonality. Customer engagement is much more fluid and flexible, it's a near real time and we can stay very disciplined on expense control. In terms of your flyer-related questions. We -- so we -- our history here is that flyers are big events in the material over the quarter. We're not thinking of it that way anymore. And I am not going to talk about changes to flyer timing going forward. I get a little bit concerned with our growing size and scale and approaching $3 billion in sales next year with, Uncle Ben from Spider-Man, "with great power comes great responsibility". And we have great buying power in the closeout business. And I'd rather not project to the vendor community and to our competitors out there, what we're doing with flyers or what we're doing with managing our mix on a go-forward basis, et cetera. So we're committed to the 2% algo period every quarter. So that's how we're looking at it. So that is the answer to your flyer question. Operator: Thank you. And ladies and gentlemen, this will conclude our conference for today. Thank you for participating. You may now disconnect.

74天前Insight Analytics约5分钟阅读

DKS 2025 Q4 财报电话会议

Operator: Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome you to the DICK'S Sporting Goods, Inc. Fourth Quarter and full year 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press star then the number one on your telephone keypad. And if you'd like to withdraw your question, again, star one. I would now like to turn the conference over to Nathaniel Gilch, Vice President of Investor Relations. Nate, the floor is yours. Good morning, everyone. Nathaniel Gilch: And thank you for joining us to discuss our fourth quarter and full year 2025 results. On today's call will be Edward Stack, our Executive Chairman; Lauren Hobart, our President and Chief Executive Officer; and Navdeep Gupta, our Chief Financial Officer. A playback of today's call will be archived on our Investor Relations website located at investors.dicks.com for approximately 12 months. As a reminder, we will be making forward-looking statements which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. Any such statements should be considered in conjunction with cautionary statements in our earnings release and risk factor discussions in our filings with the SEC, including our last annual report on Form 10-K, as well as cautionary statements made during this call. We assume no obligation to update any of these forward-looking statements or information. Please refer to our Investor Relations website to find the reconciliation of our non-GAAP financial measures referenced in today's call. And finally, a couple of admin items. First, a quick reminder on our comparable sales reporting. Foot Locker will be included in our comp calculations beginning in Q4 2026, which will mark the start of their 14th full month of operations post acquisition. And second, for future scheduling purposes, we are tentatively planning to publish our first quarter 2026 earnings results on 05/27/2026. I will now turn the call over to Edward Stack. Edward Stack: Thanks, Nate. Morning, everyone. As we shared this morning, we closed the year with another strong quarter for the DICK'S business, delivering comps over 3% and double-digit non-GAAP EPS growth. Our team's execution and our ability to consistently deliver a differentiated, on-trend product assortment and best-in-class omnichannel athlete experience continue to produce strong results and market share gains. We believe these fundamentals position the DICK'S business for long-term profitable growth. Now I would like to turn to the transformational opportunity we have with Foot Locker, where we continue to make significant progress in strengthening the business. We have now owned Foot Locker for about six months, and I will tell you, our excitement and our conviction in the long-term opportunity here continue to grow. We have moved quickly to test and learn in North America through what we call our Fast Break initiative. This is the evolution of the 11-store pilot we discussed last quarter. While it is still early, we are very encouraged by what we are seeing. During Q4, our Fast Break stores drove very strong positive comps, actually meaningfully exceeding the DICK'S business, while also delivering strong gross margin improvement. The improvement is coming from the basics: clearer storytelling, better presentation, and a more focused assortment where we removed roughly 30% of the styles on the shoe wall that were unproductive and eliminated the run-on sentence that we have been talking about that was not showing the customer what product was important. Based on the strength of the pilot results, we have already expanded Fast Break to an additional 10 stores in LA before the NBA All-Star Game, and we are very pleased with the strong early performance. Now looking ahead, we are excited to rapidly scale Fast Break by back-to-school 2026. As discussed last quarter, our first priority was to clean out the garage, starting with addressing unproductive inventory. The team moved quickly and decisively to get this done, and we are pleased to report that the inventory cleanup is now essentially complete. That work drove the fourth quarter profitability results we told you to expect. As part of this process, we also leveraged DICK'S value chain to efficiently clear product. We are also pleased that Q4 sales came in better than expected. We believe that Foot Locker's inventory is now well positioned. With this heavy lift behind us, we are set up to play offense and deliver the inflection point we expect to see in this business starting with back-to-school. Another key part of cleaning out the garage is our review of the global Foot Locker business store fleet. We continue to assess underperforming locations, but we anticipate our closure list is now much smaller than we initially estimated. We have identified opportunities to reposition and improve profitability in a meaningful number of stores, informed in large part by the success we are seeing in our Fast Break locations. Importantly, one of the many things that gives us great confidence in the future of the Foot Locker business is what we are seeing from our brand partners. They are leaning in, aligned with our vision, and eager to support a thriving, growing Foot Locker. You can see that already in moments like our NBA All-Star activation with Nike, Jordan, Adidas, and others, where we partnered closely to bring a series of sought-after launches that drove exceptional sell-throughs. We also had NBA talent appearances and community experiences for the Foot Locker consumer throughout LA. Our team executed exceptionally well, and together with the support of our brand partners, we drove sales that meaningfully eclipsed last year's event. At DICK'S, we have built an industry-leading business by focusing on product, performance, innovation, and customer loyalty, always with a long-term view. We are applying that same proven playbook to the Foot Locker business and making the choices we believe will create the most long-term value for our shareholders. For 2026, we expect Foot Locker to deliver growth and comp sales of between 1% to 3% and operating income in the range of $100,000,000 to $150,000,000. We continue to anticipate an inflection point for both sales and profitability beginning with the back-to-school season. In closing, we remain very confident that DICK'S and Foot Locker are stronger together. This combination gives us more scale, deeper relationships with the most important brands in our industry, access to consumers we did not reach before, and a global footprint. For Foot Locker, the benefits of our combination come through in very real ways. Brands matter. Product matters. Execution matters. And people matter. When those things come together, we believe Foot Locker will be restored to its rightful place in the industry. Before I turn it over to Lauren, I want to thank our more than 100,000 teammates across the globe for their commitment and their execution every day. I will now turn the call over to Lauren Hobart. Lauren Hobart: Thank you, Ed, and good morning, everyone. I want to emphasize Ed's comments and recognize the incredible work of our teams across our entire company who contributed to our success throughout this past year. I am so proud of what we achieved together in 2025. Looking specifically at the DICK'S business, our teammates' passion, their commitment to our athletes, and a relentless focus on execution powered another strong quarter and holiday season and a terrific year overall. Their hard work continues to bring our four strategic pillars to life: a compelling omnichannel athlete experience, a differentiated on-trend product assortment, a deep engagement with the DICK'S brand, and the strength of our teammates and our culture. These pillars remain the foundation of our success and guide our strong performance. For the full year, we are very pleased to have delivered record sales of $14,100,000,000 for the DICK'S business. Our comps increased 4.5% and exceeded the high end of our expectations, driven by growth in average ticket and transactions as we continue to gain market share. We drove gross margin expansion and achieved double-digit operating margin of 11.1%. We delivered non-GAAP EPS of $14.58, also above the high end of our outlook and up from $14.50 in 2024. Our fourth quarter marked a strong finish to the year for the business. Our Q4 comps increased 3.1%, building on last year's 6.6% increase and delivering a two-year comp stack of nearly 10%. We saw more athletes purchase from us, and they spent more each trip compared to the prior year. Our Q4 gross margin expansion accelerated sequentially and we drove operating margin of 11%, and non-GAAP EPS of $4.05, both well ahead of last year. Today, the intersection of sport and culture has never been stronger, and excitement continues to build. This momentum kicked off with the expanded college football playoffs, record-breaking interest in women's sports, and a strong Team USA performance in the recent Winter Olympics. And with most of the 2026 World Cup matches on US soil this June and July, the 2028 Summer Olympics in LA on the horizon, and the Ryder Cup returning to the US in 2029, we are entering one of the most compelling multiyear periods for sport in this country's history. Our athletes are energized. They are investing in the products and experiences that fuel their passion. And DICK'S sits squarely at the center of that intersection. With this position of strength, we entered 2026 with tremendous conviction in the opportunity ahead, and our priorities for the DICK'S business are clear. We continue to drive growth across our key categories. This is fueled by the powerful relationships that we have with our national brand partners, the energy from new and emerging brands, and the continued momentum of our vertical brands. We are also continuing to reposition and elevate our real estate and store portfolio through House of Sport and Fieldhouse. Now five years into this journey, our conviction in these innovative concepts has never been stronger. House of Sport and Fieldhouse have redefined the athlete experience, strengthened our relationships with existing brand partners, opened doors to new partnerships, and delivered strong financial performance. This past year, we made tremendous progress on this front. We opened 16 new House of Sport locations, ending the year with 35 locations nationwide, and also opened 15 new Fieldhouse locations, bringing the total to 42 across the country. We are really excited to see the impact of scaling these powerful concepts. Looking ahead, landlord interest remains extremely strong, giving us access to some of the best retail locations in the country. In 2026, we plan to open approximately 14 House of Sport locations and approximately 22 Fieldhouse locations. In addition, our focus on serving athletes is very strong, and we are really accelerating our work here. Our common purpose is to make sure that athletes feel confident and excited before, during, and after they engage with our team, our products, and our experience. We are creating more consistency across channels in how we help our athletes find the right solutions. Whether they are using better search and reviews online, tapping into new digital tools in the store or in the app, or working directly with our teammates, their experience is becoming more personalized and more connected. In our stores, we are evolving our service and selling culture. We are putting a bigger emphasis on relationship building and giving teammates better training and tools. And while this is very much an ongoing journey, the feedback has been incredibly encouraging. Lastly, as part of our broader digital strategy, we are harnessing the power of our athlete data and continue to be enthusiastic about the long-term opportunities we see with GameChanger and the DICK'S Media Network. With all this in mind, for 2026, we expect to drive continued comp growth, strategic expansion of our square footage, and strong profitability for the DICK'S business. We anticipate our comp sales to be in the range of 2% to 4%, which at the midpoint represents a 7.5% two-year comp stack. We expect operating margins for the DICK'S business to be approximately 11.1% at the midpoint. At the high end of our expectations, we expect to drive approximately 10 basis points of operating margin expansion on a non-GAAP basis. At the consolidated company level, we expect full-year non-GAAP earnings per diluted share in the range of $13.50 to $14.50. In closing, we are entering 2026 with powerful momentum in the DICK'S business, and our focus here is unwavering. The opportunity ahead for DICK'S remains tremendous, and we are firmly positioned to capture it. With that, I will now turn the call over to Navdeep Gupta to share more detail on our financial results and our 2026 outlook. Navdeep, over to you. Navdeep Gupta: Thank you, Lauren, and good morning, everyone. To start, I want to echo Ed and Lauren's excitement as we enter 2026 with real strength and momentum. Now let us begin with some highlights for full year 2025 results. Consolidated net sales increased 28.1% to $17,220,000,000, driven by a $3,110,000,000 sales contribution from a partial year of owning the Foot Locker business and a 4.5% comp increase for the DICK'S business as we continue to gain market share. These strong comps were driven by a 4.2% increase in average ticket and a 0.3% increase in transactions. On a two-year and a three-year stack basis, comps for the DICK'S business increased 9.7% and 12.3%, respectively. Consolidated non-GAAP operating income was $1,520,000,000, or 8.81% of net sales, compared to $1,500,000,000, or 11.14% of net sales last year. This includes operating income of $1,570,000,000, or 11.12% of net sales for the DICK'S business, driven by strong comps and gross margin expansion, and a $52,200,000 operating loss from a partial year of owning the Foot Locker business. Consolidated non-GAAP earnings per diluted share were $13.20, which included just over 20 weeks of results for the Foot Locker business and a diluted share count of 85,100,000. Looking specifically at the DICK'S business, we delivered non-GAAP earnings per diluted share of $14.58 based on the share count of 81,200,000, which excludes the dilutive effect of the shares issued in connection to the acquisition of Foot Locker. That exceeded the high end of our guidance and is up 3.8% from our earnings per diluted share of $14.05 last year. Now moving to our results for Q4. Consolidated Q4 net sales increased 59.9% to $6,230,000,000, driven by a $2,180,000,000 sales contribution from the newly acquired Foot Locker business and a 3.1% comp increase for the DICK'S business. These strong Q4 comps were on top of last year's 6.6% comp and were driven by a 4.4% increase in average ticket, partially offset by a 1.3% decline in transactions. On a two-year and a three-year stack basis, comps for the DICK'S business increased 9.7% and 12.6%, respectively. In terms of the category performance, we saw broad-based strength across our three primary categories of footwear, apparel, and hardlines. For reference, pro forma comp sales for the Foot Locker business in Q4 decreased 3.4%. On a non-GAAP basis, consolidated gross profit for the fourth quarter was $1,990,000,000, or 31.93% of net sales, down 303 basis points from last year. For the DICK'S business, gross margin expansion accelerated sequentially, increasing 67 basis points, driven entirely by higher merchandise margin. Notably, the year-over-year decline in consolidated gross margin was driven entirely by the mix impact from the Foot Locker business. On a GAAP basis, in connection with cleaning out the garage, our actions to optimize Foot Locker's inventory that align with our go-forward vision unfavorably impacted gross profit by $218,000,000. This was in line with our expectations. On a non-GAAP basis, consolidated SG&A expenses for the fourth quarter increased 60.5%, or $579,200,000, to $1,540,000,000, and deleveraged nine basis points compared to last year's non-GAAP results. $549,500,000 of this consolidated increase was driven by the Foot Locker business. For the DICK'S business, SG&A expense dollars increased 3.1% and leveraged 22 basis points. Consolidated non-GAAP operating income for the fourth quarter was $438,600,000, or 7.04% of net sales, compared to $393,000,000, or 10.09% of net sales last year. For the DICK'S business, operating income was $444,500,000, or 10.97% of net sales. This quarter's consolidated results included a $5,900,000 operating loss from the Foot Locker business, which was in line with our expectations. Moving down the P&L, consolidated non-GAAP income tax expense was $114,800,000 at a rate of 26.8%. This was favorable to our expectations largely due to the mix of earnings across jurisdictions resulting from investments we are making in Foot Locker's EMEA business to improve its future profitability. In total, we delivered consolidated non-GAAP earnings per diluted share of $3.45 for the quarter. These results included non-GAAP earnings per diluted share of $4.05 for the DICK'S business, based on the share count of 81,200,000, which excluded the dilutive effect of the shares issued in connection with the Foot Locker acquisition. This is up 11.9% from earnings per diluted share of $3.62 for Q4 last year. At the consolidated level, the DICK'S business results were partially offset by the contribution from the Foot Locker business, which includes a $0.44 negative impact from higher share count due to the acquisition and a $0.16 negative impact from Foot Locker operations. On a GAAP basis, our earnings per diluted share were $1.41. This includes $235,500,000 of pretax Foot Locker acquisition-related costs and a $13,400,000 pretax asset write-down. For additional details, you can refer to the non-GAAP reconciliation tables from our press release that we issued this morning. Now looking to our balance sheet, we ended the year with approximately $1,350,000,000 of cash and cash equivalents and no borrowings on our $2,000,000,000 unsecured credit facility. We ended the year with approximately $4,910,000,000 of inventory, which includes the Foot Locker business, and represents a 47% increase compared to last year. For the DICK'S business, inventory levels increased 1% compared to last year. We believe our inventory is well positioned to continue to fuel our sales momentum, which we expect to carry into 2026. Turning to fourth quarter capital allocation. Net capital expenditures were $302,000,000 and we paid $108,000,000 in quarterly dividends. We also repurchased 218,000 shares of our stock for $43,000,000 at an average price of $199.51. Before I move to our outlook, I want to address a few key expectations surrounding the Foot Locker acquisition. First, as we discussed last quarter, our immediate priority has been to clean out the garage and optimize the inventory assortment and store portfolio of the Foot Locker business. As part of these actions and broader merger and integration work, we previously estimated and continue to expect total pretax charges of $507,150,000,000. During 2025, we recognized $390,000,000 of these charges. The remaining pretax charges will be incurred over 2026 and the medium term as we complete this work. Approximately $150,000,000 of these remaining charges are expected in 2026 and are excluded from today's non-GAAP EPS outlook. Second, we remain confident in achieving the previously announced $100,000,000 to $125,000,000 of cost synergies over the medium term, primarily from procurement and direct sourcing efficiencies. A portion of these synergy benefits are expected in 2026, which have been reflected in our outlook. Now moving to our outlook for full year 2026. Our guidance reflects continued strength and momentum of the DICK'S business and the turnaround efforts underway at Foot Locker, all within the context of the dynamic geopolitical and macroeconomic environment. Beginning with the DICK'S business in 2026, total sales are expected to be in the range of $14,500,000,000 to $14,700,000,000, and as Lauren mentioned, we anticipate comp sales growth of the DICK'S business in the range of 2% to 4%. From a pacing standpoint, we expect slightly higher comps in the first half, driven in large part by the timing of the World Cup. Preopening expenses are expected to be approximately $90,000,000 for the full year. We expect operating margin for the DICK'S business to be approximately 11.1% at the midpoint. And at the high end of our expectations, we expect to drive approximately 10 basis points of operating margin expansion on a non-GAAP basis. From a pacing standpoint, we expect operating margins for the DICK'S business to decline in the first half and expand in the second half due to the timing of the planned investments and synergy savings. Now turning to the Foot Locker business in 2026. As Ed discussed, we remain confident in the value creation of this business. Total sales are expected to be in the range of $7,600,000,000 to $7,700,000,000. Pro forma comp sales for the Foot Locker business are expected to be in the range of 1% to 3%. We expect operating income for the Foot Locker business to be in the range of $100,000,000 to $150,000,000. And from a pacing standpoint, we expect operating income performance to be back-half weighted as the pro forma comps and gross margins start to strengthen from back-to-school onwards. At the consolidated company level, we expect full-year non-GAAP operating income in the range of $1,680,000,000 to $1,810,000,000 and non-GAAP earnings per diluted share in the range of $13.50 to $14.50. Our earnings guidance is based on approximately 91,000,000 average diluted shares outstanding, which includes the dilutive impact of 9,600,000 shares issued in connection with the Foot Locker acquisition. We anticipate a consolidated company effective tax rate of approximately 25.5% for the full year. We expect interest expense of approximately $70,000,000 and interest income to be in the range of $20,000,000 to $25,000,000. I will now discuss our capital allocation priorities. For 2026, our capital allocation plan includes net capital expenditures of approximately $1,500,000,000. Starting with the DICK'S business, as we continue to reposition our real estate and store portfolio, our investments will be concentrated in store growth, relocations, and improvements in our existing stores, plus some ongoing investments in technology and supply chain. As Lauren noted, we are very excited to open approximately 14 House of Sport locations and approximately 22 DICK'S Fieldhouse locations in 2026. In addition, we plan to begin construction on approximately 18 House of Sport locations that are expected to open in 2027. House of Sport and DICK'S Fieldhouse remain two of our most powerful and long-term growth drivers, and we will continue expanding these formats with discipline. In 2026, we are also excited to grow the footprint of our 15 Golf Galaxy Performance Center locations. Now turning to the Foot Locker business. Capital expenditures in 2026 will be focused on reenergizing our store fleet, including the rapid expansion of our Fast Break initiative. We also remain committed to returning significant capital to our shareholders through our quarterly dividend and opportunistic share repurchases. Today, we announced a 3% increase in our quarterly dividend to an annualized payout of $5.00 per share, or $1.25 on a quarterly basis. This marks the twelfth consecutive year that our shareholders have benefited from a dividend increase. Our 2026 plan includes our expectation for share repurchases to offset normal-course dilution, the effect of which is included in our EPS guidance. In closing, we enter 2026 with powerful momentum in the DICK'S business and a clear path to improve performance at Foot Locker. We remain focused on execution, committed to creating durable value, and confident in the year ahead. This concludes our prepared remarks. Thank you for your interest in DICK'S Sporting Goods, Inc. Operator, you may now open the line for questions. Operator: Thank you. We will now begin the question and answer session. We kindly ask that you limit yourself to one question and one follow-up. Any additional questions, please re-queue. Your first question comes from the line of Brian Nagel with Oppenheimer. Please go ahead. Brian Nagel: Hi. Good morning. Congratulations on a nice quarter. Nice progress here. Again, I want to ask you maybe a two-part question, with both parts focused on core DICK'S business. So first, if you look at the guidance you laid out for sales growth for DICK'S, it is very solid, above the current public Street forecast. I guess the question I had there is, and you talked about this a little bit, maybe elaborate further, what is giving you that confidence in the underlying momentum? And then the follow-up question also on DICK'S. When you look at the fourth quarter, not to be too nitpicky here, but obviously a very solid quarter, there was a modest deceleration within sales growth of the core DICK'S business from what we saw in the third quarter. Maybe you can discuss what was behind that. Lauren Hobart: Thanks, Brian. I appreciate the question. We had a fantastic quarter in Q4. We are really proud of the quarter we just put up. We had a 3.1% comp growth and, importantly, we were on top of the prior year 6.6% comp. So on a two-year stack basis, we actually exceeded our internal expectations. We were close to 10%. So it was a really strong quarter from a comp standpoint. We also expanded gross margin and operating margin in the business. So overall, really proud of how the team navigated through Q4. But I think why that gives me confidence as we look to the future is that the momentum in our business remains incredibly strong. And in this past Q4, we saw growth across all of our key categories: footwear, apparel, hardlines. And we are finding that consumers are doing very, very well. So we have seen growth across all income demographics. We have not seen trade down. And we are finding that when a consumer sees something that is new, or innovative, or technically impactful, it is resonating with them, and they are coming. We think that is only going to continue as we look to the year and the incredible excitement around sport and the influence it has on culture as we head into the World Cup coming up—well, March Madness and then the World Cup. So we are really, really confident. The two-year stack going forward is a 7.5% comp, so 2% to 4% on top of our 4.5%. And we are really thrilled with the momentum we have to deliver that. Brian Nagel: Thanks, Lauren. I appreciate all the color. Operator: Your next question comes from the line of Adrienne Yih with Barclays. Please go ahead. Adrienne Yih: Good morning, and I will add my congratulations. Very well done. Great way to end the year and start the new one. Thank you. It sounds like there is a lot of exciting work underway at Foot Locker to reposition the business for its turn in 2026. On top of that, the Q4 results came in better than you saw, particularly sales, and margins were in line. So my question centers around the cleaning out of the garage, which you expressed last quarter as your top priority. It sounds like inventory is nice and clean. How would you characterize where you are? Is there more work to do? And how many stores will be in this Fast Break that you can touch this year? And then I will have a follow-up. Thank you. Edward Stack: Thanks, Adrienne. I can tell you that the team across the globe did a great job to clean out the garage. There was a lot of excess inventory there, inventory that was not very productive. Like we said in the Fast Break stores, we took out roughly 30% of the SKUs and kind of fixed that run-on sentence that was the Foot Locker shoe wall. The team across the globe—North America, Europe, Asia—really got behind this whole clean out the garage objective and did that. To be honest with you, that work is done. That is behind us. We cleaned out the garage with markdowns in the stores and moved product through the Foot Locker stores and the Champs stores. We also utilized—I think this is one of the benefits of the acquisition between DICK'S and Foot Locker—we actually utilized the DICK'S value chain of Going, Going, Gone to clean out a lot of that inventory. We were able to recover a higher cash amount by putting it through the DICK'S value chain than if we sent that out through a jobber, and we are really well positioned. This inventory of Foot Locker is probably cleaner than it has ever been. And that should bode well for our margins and our sales going forward, returning this chain to growth with a comp of 1% to 3%. We should have margin expansion here. We are confident of that. So all in all, to clean out the garage, the team did a great job, and we are done. Adrienne Yih: Fantastic. Follow-up, Lauren. As you look at the innovation pipeline throughout 2026, particularly in technical running and performance basketball, are you seeing a meaningful shift back toward iconic must-have products from your biggest traditional partners, or should we expect growth still to be driven by the addition and growth of new, smaller niche brands? Thank you. Lauren Hobart: Yes. Thanks, Adrienne. We are seeing growth across the board. We are seeing great growth from our strategic partners, and we are very excited about things like running footwear, the innovation that we are seeing, the new Run Construct from Nike doing very well, and across the board running is really doing well. Signature basketball is also doing really, really well. And that is true, of course, of DICK'S and Foot Locker. With DICK'S, we are particularly excited about the excitement around women's sports, and Sabrina and A'ja have done so well, and then we look forward and Caitlin coming is going to be a lot of excitement. Team sports are also driving incredible buzz in a way that it used to be footwear launches that used to drive this kind of excitement. We are seeing that in team sports and all aspects of our business. And so between new and emerging brands, we are adding through the House of Sport partnerships with really exciting brands. We have Gymshark, where we are their first US wholesale partner, and a lot of brands who have come in through the House of Sport who are now widening into Fieldhouse locations and then even beyond to the entire DICK'S format. So I would say what is great about the growth is it is across the board in all categories, and it is also across the board between our strategic partners, our emerging partners, and our vertical brands. Edward Stack: If I could just add on to that, as Lauren said, Nike is doing very well. We are really pleased with them. Adidas, and we are leaning into the World Cup with Adidas, and we think the World Cup is going to be great. And with Fanatics, we have really partnered on the collectibles and the card side of the business, the trading card business. We will have collectible shops in all House of Sport stores going forward, bringing those into some of the Fieldhouse concepts. So this whole idea of collectibles and trading card business, which we have not been in before, will certainly be accretive to our sales number. Operator: Your next question comes from the line of Simeon Gutman with Morgan Stanley. Please go ahead. Simeon Gutman: Hey, good morning, everyone. So the business is performing solidly. If we step back, call it three months ago, I would have suggested or thought that the core business margin might be a little stronger given some of the House of Sport penetration and the continued gross margin gains. And then Foot Locker, I would expect a little bit more EBIT to get to that accretion number. Curious how you react to all of that. Is that fair? And is that different versus the way you see it? Edward Stack: Let me jump in on the Foot Locker piece first, Simeon. We could have guided Foot Locker to be higher if we had based it on our original projections. But what has happened is we have gone through this Fast Break process. We have got the original 11 Fast Break stores. We added 10 Fast Break stores in LA around the All-Star Game. We have got a couple of Fast Break stores in Europe right now. And what we found is some of those underperforming stores that are losing money or just marginally profitable right now—based on what we are seeing we can do from a Fast Break standpoint and renovating these stores—we can make these stores very profitable. So we are closing fewer stores than we had originally anticipated. If we had decided to close those stores, Foot Locker could have been a bit more profitable in Q1 and Q2. It is going to take us a little time to get these Fast Break stores done and get to all of them that we want to get to. But we will get to probably 250 of these stores by back-to-school. It is a herculean effort, but we are really confident that we can do that. So the reason the Foot Locker outlook is where it is right now is because Fast Break, and the optimism we have for Foot Locker, is even greater than it was originally because some of these marginally profitable or money-losing stores, if we feed them the right inventory, we can make them profitable. We think that is the right thing to do on a longer-term basis. Navdeep Gupta: I will just build on quickly. The guidance that we provide always balances the optimism and the confidence that we have against the overall macroeconomic and geopolitical situation. As you can see, it is very dynamic, and so that was another thing that we factored into our guidance. Quickly touching on your gross margin expansion in Q4, we were very happy with the results we posted here. And like Lauren said, 3.1% comp on top of a 6.6% comp, in a quarter that is typically very promotional. We were very happy with the 67 basis points of margin expansion we posted here in Q4. And keep in mind, this 67 basis points of margin expansion all came from merchandising margin. So our merchants and the inventory management team did a phenomenal job to finish the year strong from a clean inventory and driving top-line momentum as well as gross margin expansion. Edward Stack: And I think, Simeon, also, it was more promotional out there than we had anticipated, and I think the team did a fabulous job managing our margin rates and the profitability of the business and the operating margins in an environment that was as promotional as it was. Simeon Gutman: That is helpful. And just to clarify, I guess when I meant the margin, I was actually looking more towards 2026, like the full year. I think the fourth quarter was quite solid. But the follow-up is first half or second half. I do not know if you would share what you have thought about for World Cup, if there is an explicit top-line impact? And then are some of the investment spending related to core? Or is there some spend even ahead of World Cup where your margin ends up ramping more in the second half than the first half? Navdeep Gupta: Yes. So, Simeon, in what we gave in my prepared comments today is that we expect the comps to be slightly higher in the DICK'S business in the first half because of the World Cup benefit. We did not explicitly guide to the exact number associated with it, but that is what was assumed in our guidance that we have shared. And then we expect the operating margins to decline in the first half due to two big reasons. One, we are making appropriate levels of investments in the business to continue to position the business for the long term. And second, the synergy benefits that we are looking at will be more back-half weighted, and so that is the other benefit that kicks in more in the second half than in the first half. Operator: Your next question comes from the line of Kate McShane with Goldman Sachs. Please go ahead. Kate McShane: Hi. Good morning. Thanks for taking our question. We wanted to ask about GameChanger and retail media. I know you mentioned it in the prepared comments a little bit, but we wondered if there was any way you could talk about any new initiatives maybe with either business, and then just in terms of what we can expect from margin contribution from that this year. Lauren Hobart: Thanks, Kate. GameChanger and DMN are both really important, powerful new assets that we have in our portfolio. I will start with GameChanger. As you know, GameChanger is the market leader in the multibillion-dollar tech sports space, and it continues to drive really strong comps—nearly 40% CAGR—and strong profitability. It is a SaaS system, and it continues to drive strength and profit. So you can look at it that way and say GameChanger is fantastic. But then when you step out and look at the impact that GameChanger and DICK'S can have together—the fact that we can be embedded in youth sports lives at the moment when they are preparing and playing—we can be involved with parents and grandparents. We can have kids get their stats and their highlight reels. It just makes us really embedded in youth sport culture. The other thing, and it is related to your second part of your question, is that from a DICK'S Media Network standpoint, GameChanger is unique in the marketplace where it has live sports in a way that really nobody else can provide. And so it is a big asset for our DICK'S Media Network, and it is appealing to our brand partners as well as to our non-endemic partners who want to be a part of youth sports. In terms of newness, we did just unleash a bunch of features in GameChanger. For those of you who watch, the video quality is high definition—really incredible, really crisp, really clear. And we are going to continue to launch. We have coaches’ tools that we just launched. And with DMN, the tech team has done an amazing job really building automation so we can attribute sales to our partners’ investment. So all in all, really exciting parts of the business. Navdeep Gupta: And, Kate, I will just build on what Lauren said. The underlying drivers of the gross margin that we have talked about for some time now continue to remain in place in terms of the product that we have access to—not only just in 2026, but what we see in the pipeline—the work that our vertical brands team is doing as well as GameChanger and DMN. These are still the inherent drivers of the gross margin confidence that we have for 2026. We are balancing that in 2026 against the exciting opening of the sixth distribution center in 2026, so that is contemplated in our guidance expectation. Operator: Your next question comes from the line of Christopher Horvers with JPMorgan. Please go ahead. Christopher Horvers: Thanks. Good morning. My first question for you, Ed, is what did you learn from Foot Locker and this 11-store test? Can you talk about how applicable the changes are to the rest of the chain? The 11 stores, were they more city center locations like Times Square versus suburban-based mall locations that people tend to associate with Foot Locker? What was the receptivity to running and brands like Hoka and On to that core Foot Locker customer relative to basketball? In the 200 locations that you are targeting by back-to-school, what is the commonality among these locations relative to the 11-store test that you targeted, and then the much larger chain? Edward Stack: Thanks, Chris. The 11-store test was really a broad-based test. We did some more urban stores. We did suburban stores. We pulled some high-volume stores. We obviously pulled some lower-volume stores, which is why we are not closing as many stores as we anticipated. So it was really a broad-based test on that original 11. The 10 in LA would be more urban stores that we have done. What was common to them is we put a common merchandise presentation theme across all of these banners, which really was to take out a lot of the unproductive inventory that was sitting on the wall that the consumer did not want, cleared up the wall. As I have used the phrase, the footwear wall was a run-on sentence. So we took that run-on sentence down, took roughly 30% of the choices out of the store, relaid out the wall with the key product, so the consumer can walk in and see what is important—whether it is an Air Force 1 in color, whether it is a new New Balance launch, whatever it might be. We have the ability to clearly communicate to the consumer what is new and what is the high-heat product. And when we did that, these comps have been extremely strong—strong enough that this is the game plan that we are going to roll out. Roughly 250 stores by back-to-school. Those 250 stores, again, will be a cross-section of stores. They will be urban stores. They will be suburban stores. They will be some mall stores. And we will take a look at this on a store-by-store basis, and it will be a great cross-section of the business again. We are also going to be doing this in Europe. We have a couple in Europe, and we are very pleased with the results we are seeing in Europe. We will be rolling out the Fast Break stores in Europe, and the 250 includes the US and Europe. If you think about it, we are pretty conservative. If we were not highly confident that this Fast Break concept would be highly successful, we would not be rolling out 250 of them by back-to-school. That should give everybody confidence that we have a game plan here and we have proven that it will work. Christopher Horvers: Thank you. That is very helpful. And then I guess a two-part follow-up. Traffic is always a red flag in retail, and it did turn negative in the core DICK'S business in the fourth quarter. I get the two-year stack math, but your ASP or your ticket is going to get harder as the year progresses. Presumably, there was some inflation from tariffs as well. So how should we think about looking at that traffic number going forward? As you think about running that two-year stack, how applicable are traffic headwinds earlier versus traffic rebounding later and ticket moderating? Lauren Hobart: Thanks, Chris. The transactions in Q4—again, on a two-year stack basis, if you look, they were positive. If you look at the full year, they were positive. We were up against such a strong comp from the year before that I think you have to take that into consideration. We have been driving strong basket and AUR, and that just speaks to our differentiated product assortment, really not due to inflation. It is due to the fact that we are increasingly getting access and allocation to really great products that are resonating with people. Looking ahead, our guidance projects 2% to 4% comps on top of the 4.5%. So we are not concerned about traffic or transactions. Operator: Your next question comes from the line of Paul Lejuez with Citi. Please go ahead. Paul Lejuez: Curious on synergies, if you expect that number that you shared to grow past the medium term. Also curious how you are thinking about what is the medium term. And then second, kind of related perhaps, on Foot Locker. That business used to achieve $700,000,000 of operating income if you look prior to 2020—$700 million plus. I am curious how much progress you think you can make towards that level and over what period? Navdeep Gupta: Paul, thanks for the question. Let me start with synergies. We have reiterated today that we continue to expect $100,000,000 to $125,000,000 over the medium term, and we continue to remain very confident. As you can imagine, we are six months into this transaction. We are working cross-functionally across both organizations, and the level of detail that the teams have created is fantastic. So as we learn more, we will definitely share if there are any updated expectations. As of today, we will reiterate the outlook that I had shared. In terms of what medium term means, there is a portion that is definitely in 2026 for the synergies that has been included in the guidance, and I would say the medium term would be maybe a couple of years after that. In terms of the $700,000,000 of operating income for Foot Locker, I think it is a little bit too early to be able to give a long-term outlook, but we feel really confident in what Ed talked about—the momentum that we have built, the focus that we have in returning this business to growth from the 1% to 3% comp that we have guided and returning this business back to profitability. So six months in, we are really enthusiastic about the underlying momentum as well as the team that is driving these results. We will share more in due course of time about the longer-term outlook. Operator: Your next question comes from the line of Mike Baker with D.A. Davidson. Please go ahead. Michael Baker: Great. Thanks. Just on the Fast Break and improvement in Foot Locker and the profit trends, just a little more color on the pace throughout the year. Do we expect them to be negative in the first quarter and second quarter until the back-to-school improvement kicks in? Just wondering on the expectations of how Foot Locker progresses throughout the year. Navdeep Gupta: Mike, I will say that we expect both the sales and profitability to be back-half weighted. As you can imagine, we said that the real inflection in this business will come from when we are able to source the buys effectively the way we wanted. That happens from the back-to-school timeframe. And as Ed referenced, the Fast Break stores being in position will also be during the back-to-school timeframe. So we expect comps to be back-half weighted, and we expect the profitability also to be second-half weighted. Keep in mind on profitability, we also will have the benefit of the synergies that will kick in into 2026. Michael Baker: Makes sense. Thanks. If I could completely switch gears for a follow-up—so maybe not really a follow-up—talk to us about agentic AI or how you are dealing with that. Do you think there has been any impact? Do you feel like you are well suited in that kind of environment? Just curious your view on how that works. Lauren Hobart: Thanks, Mike. We are absolutely looking into all aspects of artificial intelligence, including agentic. I think there are two opportunities in the way our teams are looking at it. There is the opportunity to make our teammates more efficient and to remove a lot of manual work. Examples of that: we have some MarTech technology that we are building that can remove a lot of the manual work that they are doing. We are using AI right now in terms of store labor forecasting. We have a new AI-enabled tool in our app, and we are able to make more custom recommendations. So across the board, inventory management and making sure regional relevancy is happening is all factored with artificial intelligence. However, if you look to the future and you look at agentic, I think the biggest unlock in terms of our athlete experience is for us to really lean into what we call our common purpose and find ways to bring the power of our expertise and all of our opinion and knowledge that we have of sports and enable that to be available to people as they are working in the new world. We are working on that. More to come, but that is a big focus—to take all of our data, all of our knowledge, our teammates’ learnings over the years and make that available for consumers. So more to come. Operator: Your next question comes from the line of Joseph Civello with Truist. Please go ahead. Joseph Civello: Hey, guys. Thanks so much for taking my questions here. I have one on the DICK'S Media Network. Can you talk about the opportunities to sort of expand that to Foot Locker and what that timeline might look like, even though I know it is probably longer dated? Lauren Hobart: It is a little premature. As you know, we are maniacally focused at the DICK'S business on the DICK'S business and the Foot Locker business maniacally focused on the Foot Locker business. Certainly, there are long-term opportunities here, but we are each executing our plays right now. Joseph Civello: Got it. And maybe just a quick sort of mechanical question. You mentioned using the DICK'S Going, Going, Gone to clean out the garage. Can you talk about how that impacts the financials for each segment? Edward Stack: It actually helps. It gets rid of older, unproductive inventory, so it brings cash into the business, and it cleans up the store. We have done this on the DICK'S side, and we will expect to do it on the Foot Locker side. Cleaning up the store gives more room and space to be able to feature those newer products, the newer styles, that we can sell at basically full price. So it is very helpful to the margins. It is helpful to the sales, and it is helpful to the cash flow of the business. Joseph Civello: Got it. And is that contemplated in the synergies? Navdeep Gupta: That is not contemplated in the synergies. Our focus on synergies, like I said in my prepared remarks, is focused around the merchandising actions—primarily negotiations—as well as non-merch synergy negotiations. Operator: We have time for one more question. And that question comes from the line of Cristina Fernandez with Telsey Advisory Group. Please go ahead. Cristina Fernandez: Hi. Good morning. I had a couple of questions on the Foot Locker business. The negative 3.4% pro forma comp relative to the guidance for down mid- to high-single-digit—can you talk about what led to the better result? And then I also wanted to see if you could give a little bit more color on Foot Locker about the regions. I assume North America outperformed Europe. And whether the Fast Break merchandising test included work on some of the other banners like Champs or Kids Foot Locker, or those are just purely on the Foot Locker store fleet. Thanks. Edward Stack: The better performance at negative 3.4% versus what we had guided to was really a result of the Stripers and the team at Foot Locker really getting behind the whole idea of cleaning out the garage. They really wanted to clean out the garage. They wanted to get rid of that old inventory. They wanted to get the new product in. And they worked tirelessly to get rid of that product, and that helped drive better sales. We came in right in line from a margin rate standpoint. From a Foot Locker standpoint, by performance by region—North America and Europe—there was not a huge difference between how the two regions performed. I think that going forward, right now the US is a little bit ahead of Europe, but that is because we did more of the Fast Break stores in the US than we did in Europe. Europe is not very far behind. We are going to get Europe turned around also. We are pretty excited about what is going on in Europe. We brought in Matthew Barnes from Aldi to run this business. He has made some changes to his team. We have got a terrific team in Europe, and we could not be more confident in Matthew and his leadership to turn the whole international business around. Operator: I would now like to turn the conference back over to Lauren Hobart, President and CEO, for closing comments. Lauren Hobart: Thank you all for your interest in DICK'S and in Foot Locker, and we will look forward to seeing you next time. To all our teammates and Stripers and Blue Shirts listening, thank you for all of your hard work. See you next quarter. Operator: Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation and you may now disconnect.

74天前Insight Analytics约5分钟阅读

MNTK 2025 Q4 财报电话会议

Operator: Good day, everyone, and thank you for participating in today's conference call. I would like to turn the call over to Mr. John Ciroli as he provides some important cautions regarding forward-looking statements and non-GAAP financial measures contained in the earnings materials made on this call. John, please go ahead. John Ciroli: Thank you, and good day, everyone. Welcome to Montauk Renewables Earnings Conference Call to review the full year 2025 financial and operating results and development. I'm John Ciroli, Chief Legal Officer and Secretary of Montauk. Joining me today are Sean McClain, Montauk's President and Chief Executive Officer, to discuss business developments and Kevin Van Asdalan, Chief Financial Officer, to discuss our full year 2025 financial and operating results. At this time, I would like to direct your attention to our forward-looking disclosure statement. During this call, certain comments we make constitute forward-looking statements and as such, involve a number of assumptions, risks and uncertainties that could cause the company's actual results or performance to differ materially from those expressed in or implied by such forward-looking statements. These risk factors and uncertainties are further detailed in Montauk Renewables' SEC filings. Our remarks today may also include non-GAAP financial measures. We present EBITDA and adjusted EBITDA metrics because we believe the measures assist investors in analyzing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. These non-GAAP financial measures are not prepared in accordance with the generally accepted accounting principles. Additional details regarding these non-GAAP financial measures, including reconciliations to the most direct comparable GAAP financial measures can be found in our slide presentation and in our full year 2025 earnings press release issued and filed March 11, 2026, which is available on our website at ir.montaukrenewables.com. After our remarks, we will open the call to questions from analysts. We ask that you please keep to one question to accommodate as many questions as possible. And with that, I will turn the call over to Sean. Sean McClain: Thank you, John. Good day, everyone, and thank you for joining our call. I am pleased to report that despite the sale of one of our RNG facilities in 2024, we achieved growth in our 2025 RNG production. During 2025, our Pico project received its final tranche of increased contractual feedstock. Processed through our expanded digestion capacity, inlet feedstock averaged approximately 458,000 gallons per day, 17% in excess of our contractual minimum. Given these higher inlet averages, we are currently evaluating additional development expansion opportunities to ensure the beneficial processing of all available feedstock volumes. 2025 RNG production from our expanded redesigned facility was approximately 31.8% higher when compared to the previous year. To maximize the economic benefit from our increased production and from future development opportunities, we have negotiated the termination of the earn-out obligation related to the acquisition of the Pico facility. During 2025, we successfully completed the construction and commissioning of our second RNG processing facility at the Apex landfill. Though we continue to have excess available capacity with the second facility commissioned as the landfill host increases its waste intake, we produced approximately 7.8% more RNG in 2025 as compared to the previous year. Our GreenWave Energy Partners joint venture continues to address the limited capacity of RNG utilization for transportation by offering third-party RNG volumes access to exclusive, unique and proprietary transportation pathways. During 2025, GreenWave matched available dispensing capacity with available third-party RNG volumes, separated RINs and distributed RINs to the partners of GreenWave. Through our ownership percentage of GreenWave, we received 706,000 RINs and recorded income of $1.5 million during 2025. In September 2025, a joint motion was filed with the North Carolina Utilities Commission by various entities seeking to modify and delay certain aspects of the Clean Energy Portfolio Standards, specifically the portfolio standards relating to Swine RECs. In October 2025, Montauk filed response comments to the joint motion with the NCUC requesting that they grant modifications or delays only to individual power suppliers that have demonstrated need require power suppliers that have not achieved 100% compliance in 2025 to apply any cumulatively acquired swine RECs to the suppliers' unsatisfied 2025 pro rata obligation and modify the swine REC set aside for 2026 and beyond to match the requirement originally set by North Carolina in 2018. In January 2026, the NCUC denied the request for waivers and determined that the parties must use banked RECs to meet 2025 compliance targets with the ability to use soar RECs to fill any of the compliance shortage. Additionally, the compliance obligations for those utilities filing the September 2025 joint motion continue to increase through 2029. We are pleased to report that we have begun the commissioning of our Turkey, North Carolina facility. At first phase capacity, we anticipate the ability to process feedstock from approximately 400,000 to 450,000 hog spaces, which equates to approximately 35,000 tons of annual waste collection. We have entered into long-term agreements with over 40 separate farming locations to provide access to waste in support of our expected processing needs of our first phase of the project. We continue to install collection equipment at these separate farms to access the waste and intend to contract with additional farms to secure feedback sources for future expansion. We currently expect the first phase capital investment to be approximately $200 million and expect our production and revenue generation activities to commence in April 2026. In advance of our commercial operations, feedstock collection has begun with transportation to our facility for pelletization and storage. We are also pleased to announce that during March 2026, we completed a $200 million senior credit facility with HASI. This new facility restructures our existing debt, enables the completion of the first phase of our Turkey, North Carolina project and provides for future growth initiatives. Also during March 2026, we successfully negotiated a 5-year gas rights extension for our Raeger RNG facility. And with that, I will turn the call over to Kevin. Kevin Van Asdalan: Thank you, Sean. I will be discussing our full year 2025 financial and operating results. Please refer to our earnings press release and the supplemental slides that have been posted to our website for additional information. Our profitability is highly dependent on the market price of environmental attributes, including the market price for RINs. As we self-market a significant portion of our RINs, a decision not to commit to transfer available RINs during a period will impact our revenue and operating profit. We have entered into commitments to transfer all RINs from 2025 RNG production, which generated RINs that were separated in 2026. In 2026, we have transferred approximately 3.9 million RINs from the 2025 compliance year at an average realized price of approximately $2.41. Additionally, we have entered into commitments to transfer approximately 2.5 million RINs generated and available for sale from our 2026 RNG production at an average realized price of approximately $2.42. Total revenues in 2025 were $176.4 million, flat compared to $175.7 million in 2024. There was an increase in the number of RINs we self-marketed during 2025 due to a decision not to commit 6.8 million RINs in the fourth quarter of 2024. The 2025 average realized RIN price of $2.33 decreased approximately 29% compared to $3.28 in 2024. Natural gas index price increased approximately 51.1% during 2025, moving from $2.27 in 2024 to $3.43 in 2025. Total general and administrative expenses were $31.7 million for 2025, a decrease of $4.6 million or 12.5% compared to $36.3 million in 2024. Employee-related costs, including stock-based compensation were $18.4 million in 2025, a decrease of $4.7 million or 20.5% compared to $23.1 million in 2024. The decrease was primarily related to the accelerated vesting of certain restricted share awards as the result of the termination of employee in 2024 and other stock vesting time lines. Also, our corporate insurance fees decreased approximately $0.8 million or 15.4% in 2025 compared to 2024. Related to our investment in our joint venture, GreenWave, we have contributed $4 million in 2025. With our ownership of 51%, we account for this joint venture as an equity method investment. Related to the RIN separation services provided to third-party RNG producers, GreenWave records noncash related revenues from these separation activities. During 2025, GreenWave distributed approximately 706,000 RINs to us as a result of these activities. We sold these RINs and included approximately $1.6 million in our revenues in 2025. Additionally, when distributed, we recorded the fair value of these RINs as RIN inventory were approximately $1.7 million. Finally, from our ownership of GreenWave, we recorded $1.5 million as noncash income from our share of the results of GreenWave. We do not include within our operating highlights table the RINs, revenue from distributed RINs or the cost of the RIN inventory as we present in our operating highlights table various business metrics for the results of our core operations. Turning to our segment operating metrics. I'll begin by reviewing our Renewable Natural Gas segment. We reported growth in production in 2025, even after considering our 2024 fourth quarter sale of our Southern facility, which produced 85,000 MMBtu in 2024. We produced approximately 5.6 million MMBtu of RNG during 2025 compared to 5.6 million in 2024. Our Rumpke facility produced 218,000 MMBtu more in 2025 compared to 2024 as a result of increased volumes of feedstock gas. Our McCarty facility produced 76,000 MMBtu less in 2025 compared to 2024. Decrease is related to the landfill host wellfield bifurcation and changes to the wellfield collection system. Revenues from the Renewable Natural Gas segment in 2025 were $155.7 million, a decrease of $2.3 million or 1.4% compared to $158 million in 2024. Average commodity pricing for natural gas for 2025 was 51.1% higher than the prior year. During 2025, we self-marketed approximately 44.1 million RINs, representing a 7.5 million increase or 20.5% compared to 36.6 million in 2024. The increase was primarily related to market conditions as a decision -- and a decision to not self-market 6.8 million RINs generated and available for sale in the fourth quarter of 2024. Average realized pricing on RIN sales during 2025 was $2.33 as compared to $3.28 in 2024, a decrease of approximately 29%. This compares to the average D3 RIN index price for 2025 of $2.34 being approximately 24.9% lower than the average D3 RIN index price in 2024 of $3.12. At December 31, 2025, we had approximately 354,000 MMBtu available for RIN generation, 190,000 RINs generated and unseparated and no RINs generated and unsold. At December 31, 2024, we had approximately 291,000 MMBtu available for RIN generation and had approximately 6.8 million RINs generated and unsold. We have entered into commitments and transferred all of our RINs related to our 2025 RNG production. Operating and maintenance expenses for our RNG facilities in 2025 were $59.1 million, an increase of $5.7 million or 10.7% compared to $53.4 million in 2024. Our Apex facility operating and maintenance expenses increased approximately $2.3 million, primarily driven by increased utility expense, the timing of maintenance related to gas processing equipment, increased media change-outs and disposal costs as well as a wellfield operational enhancement program. Our Atascocita facility operating and maintenance expenses increased approximately $1.5 million, primarily driven by gas processing equipment maintenance, a wellfield operational enhancement program, media change-outs and utility expense. Our Rumpke facility operating and maintenance expenses increased approximately $1.3 million as a result of a wellfield operational enhancement program and increased utility expense. Our Raeger facility operating and maintenance expenses increased approximately $0.9 million as a result of a wellfield operational enhancement program and increased media change-outs and disposal costs. We also recorded approximately $3.4 million in environmental attribute expense related to the cost of RINs distributed from GreenWave and the costs related to dispensing associated with our RNG being dispensed through exclusive unique and proprietary transportation pathways, which are not included within our operating metrics table. There were no such environmental attribute expenses incurred during 2024 included with our operating and maintenance expenses for our RNG facilities. We produced 177,000 megawatt hours in renewable electricity in 2025, a decrease of approximately 9,000 megawatt hours or 4.8% compared to 186,000 megawatt hours in 2024. Our security facility produced 6,000 megawatt hours less in 2025 compared to 2024 as a result of us ceasing operations in connection with the first quarter of 2024 sale of the gas rights back to the landfill host. Our Bowerman facility produced approximately 2,000 fewer megawatt hours in 2025 compared to 2024, primarily related to the planned preventative engine maintenance that was completed in 2025. Revenues from renewable electricity facilities in 2025 were $17.2 million, a decrease of $0.6 million or 2.9% compared to $17.8 million in 2024. The decrease was primarily driven by the decrease in our security facility production volumes. Operating and maintenance expenses for our Renewable Electricity facilities in 2025 were $14.7 million, an increase of $1.9 million or 15.3% compared to $12.8 million in 2024. The primary driver of the increase were operating and maintenance expenses related to the Montauk Ag Renewables development project, which increased approximately $1.7 million as a result of the noncapitalizable costs. We calculated and recorded impairment losses of $3.2 million for 2025, an increase of $1.6 million compared to $1.6 million for 2024. The impairment losses in 2025 primarily relate to our Blue Granite development project for which the local utility is no longer accepting RNG into its distribution system. We continue to have the payment for the gas rights agreement award recorded for this RNG site, but we have paused development activities while we review alternatives for the site. The impairment losses in 2024 primarily related to the remaining book value of assets at the security facility, various RNG equipment that was deemed obsolete for current operations and RNG assets that were impacted under initial start-up testing for one of our REG construction work in process sites. We did not record any impairments related to our assessment of future cash flows. Other expenses in 2025 were $3.3 million, a decrease of $0.6 million or 15.4% compared to $3.9 million in 2024. The primary driver of the decrease was decreased interest expense of $0.5 million. In 2025, we recorded $1.5 million in income related to our joint venture investment in GreenWave. In 2024, we recorded proceeds of $1 million from the sale of our gas rights ahead of the fuel supply agreement expiration of our security facility. Operating profit in 2025 was $0.9 million, a decrease of $15.2 million compared to $16.1 million in 2024. RNG operating profit for 2025 was $38.2 million, a decrease of $17.8 million or 31.9% compared to $56 million in 2024. Renewable electricity generation operating loss for 2025 was $4.8 million, an increase of $2 million or 72.5% compared to $2.8 million in 2024. Turning to the balance sheet. At December 31, 2025, $44 million was outstanding under our term loan and $85 million was outstanding under our revolving credit facility. As we reported in our 2025 10-K, we completed a refinancing of our existing debt with a new lender on March 9, 2026. Under applicable accounting guidance, as we have the ability and intent to refinance our debt, we have classified $2.7 million as current debt and $126 million as noncurrent debt as of December 31, 2025. Our new senior credit facility consists of up to $200 million in senior indebtedness, of which $155 million is outstanding as of March 11, 2026. These proceeds were used to repay all outstanding debt of the company at the date of closing. Subject to various requirements as defined in the underlying agreement, the company expects to have an additional $25 million in proceeds drawn upon the conclusion of an engineering review over its Montauk Ag Renewables acquisition, our Turkey, North Carolina project. Also subject to various requirements as defined in the underlying agreement, the company expects the final proceeds to be dispensed at the commissioning and operation of its Montauk Ag Renewables Ag acquisition. Our new senior credit facility includes similar covenants as our old syndication, but our total net leverage ratio has increased to 4:1 from 3:1. This affords us the flexibility to continue our growth, and we expect our new lender to assist us with securing additional project-based financing for our in-progress development projects or new projects. The new senior credit facility has a 24-month availability period during which we only have to make quarterly interest payments. After the availability period, we will be subject to quarterly principal payments equal to 1.25% of the total outstanding principal balance. The facility has a fixed interest rate of 10.25% and matures in 2031. As of March 11, 2026, we had approximately $155 million outstanding under the new senior credit facility. New senior credit facility is subject to customary financial covenants and customary event of default as defined in the underlying agreement. Related to our Pico facility earn-out, we settled the earn-out obligation in December 2025, resulting in a payment of $4 million. We previously paid in July 2025 $0.2 million under this arrangement. As Sean mentioned, the settlement and termination of this earn-out will benefit us from continued improvement in growth at this facility. This is recorded through our RNG segment royalty expense. During 2025, our capital expenditures were approximately $116.5 million, of which $81 million was for Montauk Ag Renewables, $8.7 million was for the Rumpke RNG relocation project and $7.7 million was for the second Apex facility. For 2024, our capital expenditures were approximately $62.3 million, of which $27.8 million was for Montauk Ag Renewables, $12.6 million was for the second Apex facility and $8.8 million was for the Bowerman RNG project. For 2025, we expect our nondevelopment 2026 capital expenditures to range between $20 million and $25 million. The increase in our 2026 nondevelopment capital expenditures relate to our original equipment manufacturer required life cycle expenditures on our engines at our Bowerman Electric facility. We expect the original equipment manufacturer required life cycle expenditures to continue through 2027. Additionally, we currently estimate that our existing 2026 development capital expenditures could range between $100 million and $150 million. As of December 31, 2025, we had cash and cash equivalents of approximately $23.8 million and accounts and other receivables of approximately $9.2 million. We do not believe we have any collectibility issues within our receivables balance. Adjusted EBITDA for 2025 was $35.6 million, a decrease of $7 million or 16.5% compared to $42.6 million for 2024. EBITDA for 2025 was $32.3 million, a decrease of $8.7 million or 21.2% compared to EBITDA of $41 million in 2024. Net income for 2025 was $1.7 million, a decrease of $8 million or 84.5% compared to $9.7 million in 2024. Related to our old credit agreement, which was refinanced on March 9, 2026, on December 31, 2025, we entered into the sixth amendment to the agreement with Comerica Bank and certain other financial institutions. Under the old Amended Credit Agreement, we were required to maintain a total net leverage ratio of not more than 3.5:1 as of December 31, 2025. As of December 31, 2025, we were in compliance with all financial covenants related to the old credit agreement, which we refinanced on March 9, 2026. With that, I'll now turn the call back over to Sean. Sean McClain: Thank you, Kevin. In closing, while we don't provide guidance as to our internal expectations on the market price of environmental attributes, including the market price of D3 RINs, we would like to provide our 2026 outlook. It's important to note that our guidance ranges include internal assumptions that may or may not align with current market trends. We expect our RNG production volumes to range between 5.8 million and 6.1 million MMBtu and corresponding RNG revenues to range between $175 million and $190 million. We expect renewable electricity production volumes to range between 195,000 and 207,000 megawatt hours and corresponding renewable electricity revenues to range between $35 million and $41 million. Included within our Renewable Electricity segment are our expectations of production and revenues related to the Turkey, North Carolina development project. And with that, we will pause for any questions from analysts. Operator: [Operator Instructions] And our first question will be coming from the line of Betty Zhang of Scotiabank. Y. Zhang: Would you be able to discuss what's built into your 2026 RNG production outlook? Specifically, where is the growth coming from? And are you expecting to see any additional volumes from the 15-liter engines? Kevin Van Asdalan: Thanks, Betty, for the question. Generally, across our portfolio, we're seeing increases across all of our RNG sites related to our expectations of landfill improvements in our existing wellfield automation initiatives. And it's a portfolio increase. It's an increase across all the sites of our portfolio. Sean McClain: Betty indicated in our spend for 2025, there were a number of projects that we took on regarding nonlinear maintenance activities, wellfield investments, commissioning of facilities that when you look on a full year basis, the majority of the growth that you get year-over-year is the full year realization of those initiatives that are not only already complete and paid for, but are also already starting to show benefits as you get into the Q4 period of 2025. Operator: And our next question will be coming from the line of Tim Moore Clear Street. Timothy Michael Moore: I appreciate it and great job closing out the fourth quarter. I'm attempting to just triangulate your adjusted EBITDA potential growth. I know you don't specifically guide on it, but do you think it could grow at twice the percentage rate of revenue growth? Because you are lapping a lot of those CapEx, operating maintenance, preventative maintenance, wellfield enhancements, engines. And then you're going to have the RECs inflow from North Carolina and then -- if D3 pricing hangs in there. Just kind of trying to triangulate maybe how much of that one-off operating kind of preventative maintenance CapEx won't be repeated at the same amount this year? Kevin Van Asdalan: Thanks, Tim. Obviously, we provide guidance expectations around production and revenues for our 2 main operating segments. We don't provide external guidance around EBITDA. With the commissioning of our North Carolina Turkey project in the second quarter of this year, next -- beginning next month, there will be a significant uplift in EBITDA coming from that location. And we do -- while we do have wellfield enhancement initiatives that were started in 2025 at some of our sites that will continue through 2026, there's always that timing and consistency of nonlinear spend that as items roll off in 2025 and aren't replicated in 2026, there will be some new spend in 2026 that wasn't in 2025. However, I did want to highlight that though with the increase in our nondevelopment capital expenditures, specifically at our Bowerman location, it's a 0 hour of all the engines and an entire capital expense as opposed to operating expenses related to normal original equipment manufacturer recommended expenses that won't be incurred in 2026. Sean McClain: I think, Tim, if I understand the question, definitively, you'll see an uptick in cash flows because a number of the initiatives that you're hearing that are nonlinear are capitalized as opposed to embedded in your G&A and your operating expense. The areas that are expensed, both from OpEx and administrative costs, the areas that you would see things disproportionate as you head into this year, EBITDA was artificially suppressed in '25 because you had a mismatch between noncapitalizable costs that were in your Turkey, North Carolina development, but you didn't have any corresponding production in revenue. The other piece of it is there were a number that we called out throughout the year, a number of non-repeated noncash, primarily stock-based compensation adjustments that went through your administrative line associated with a number of employee matters that are not going to repeat themselves in 2026. Significant enough that you would see that disproportionate pickup in EBITDA. Operator: [Operator Instructions] Our next question will be coming from the line of Ryan Pfingst of B. Riley Securities. Ryan Pfingst: I wanted to ask a follow-up on guidance. For RNG revenues, does the $15 million range primarily reflect potential RIN price outcomes? Or are there other initiatives on the production side or elsewhere that could drive you towards the higher end of that range? Kevin Van Asdalan: Yes. Thanks for the question. At the beginning of the year, we're trying to cover off various expectations, not just from our production. But to your point, a potential range of RIN pricing. While we're not -- while we won't have a 2025 RIN hangover as we've already committed and transferred our vintage 2025 RINs and we're moving into 2026 commitments, we would anticipate potentially an elongated 2026 period that there's 2025 settlement of RINs from last year given the shutdown that occurred in the federal government last year. So we're trying to manage outcomes of our production ranges as well as though the RIN prices held steady over the last handful of months for either '25 vintage RINs or '26 vintage RINs, we're trying to accommodate a wide range of RIN pricing sitting here with the vast majority of our 2026 RIN availability not yet committed at pricing. Operator: And I would now like to turn the call back to Sean for closing remarks. Sean McClain: Thank you all for the questions, and thank you all for taking the time to join us on the conference call today. We look forward to speaking with you throughout 2026. Operator: And this concludes today's program. 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74天前Insight Analytics约5分钟阅读

SNDL 2025 Q4 财报电话会议

Operator: Good morning, and welcome to SNDL Inc. fourth quarter 2025 Financial Results Conference Call. This morning, SNDL Inc. issued a press release announcing their financial results for 2025 ended on 12/31/2025. This press release is available on the company's website at sndl.com and filed on EDGAR and SEDAR as well. The webcast replay of the conference call will also be available on the sndl.com site. SNDL Inc. has also posted a supplemental investor presentation, in addition to the conference call presentation we will be reviewing today, on its sndl.com website. Presenting on this morning's call, we have Zachary George, Chief Executive Officer, and Alberto Paredero-Quiros, Chief Financial Officer. Before we start, I would like to remind investors that certain matters discussed in today's conference call or answers that may be given to questions could constitute forward-looking statements. Actual results could differ materially from those anticipated. Risk factors that could affect results are detailed in the company's financial reports and other filings that are made available on SEDAR and EDGAR. Additionally, all financial figures mentioned are in Canadian dollars unless otherwise indicated. We will now make prepared remarks, and then we will move on to analyst questions. I would now like to turn the call over to Zachary George. Please go ahead. Zachary George: Welcome to SNDL Inc.'s Q4 and full year 2025 Financial and Operational Results Conference Call. 2025 marked another step forward in our performance, with multiple new records achieved throughout the year, including record full year net revenue, gross profit, adjusted operating income, and free cash flow. Beginning with free cash flow, our most important KPI for assessing financial health, we are pleased to report that following our first year of positive annual free cash flow in 2024, we more than doubled this result in 2025, reaching $18,000,000. This was achieved through continued operational improvements and disciplined working capital management. Our cannabis business continued to grow, expanding revenue year over year during the last 16 consecutive quarters. While we have seen a market slowdown during 2025, both our Retail and Operations segments continued to gain market share, showcasing the strength of our vertical model. We would also like to highlight that for the first time in our history, we achieved positive full year adjusted operating income, supported by a strong contribution in the fourth quarter. This result underscores our financial discipline and continued traction in delivering operational efficiencies and productivity initiatives, including synergies from the Indiva acquisition. As a reminder, the only adjustments to operating income in 2025 relate to restructuring costs associated with the integration of Endiva and the corporate restructuring program, which is currently in its third and final phase. Delivering consistent year-on-year financial progress remains a priority alongside continuing to build a strong foundation for long-term profitable growth and shareholder returns. Few companies in our industry are positioned to leverage a balance sheet of this strength with no debt and over $250,000,000 in unrestricted cash at the end of 2025, enabling disciplined capital deployment across both organic and inorganic opportunities. In this regard, in 2025, we increased capital expenditures by nearly 50% compared to 2024, with the majority of the investment directed towards new store openings across our cannabis and liquor retail segments. As announced in January, we also completed the first stage of the acquisition of Cost Cannabis retail stores from One Centimeters, incorporating five locations in Alberta and Saskatchewan. We continue to maintain a strong pipeline of initiatives focused on simplification and strategic focus. For example, we are days away from completing a full consolidation of our ERP systems, which is expected to unlock significant opportunities to further optimize our processes and enhance our analytical capabilities. We continue to leverage the share repurchase program approved by our board, and since 2024, we have repurchased a total of 15,100,000 shares, including 4,300,000 shares acquired over the last 90 days. We are also encouraged by the continued momentum toward U.S. cannabis rescheduling as well as the progress toward completion of the restructurings of our Parallel and SkyMent investments, with only a limited number of remaining requirements outstanding. I will now turn the call over to Alberto Paredero-Quiros for more insight on our fourth quarter and full year financial performance. Thank you, Zachary. I want to remind everyone that the amounts discussed today are denominated in Canadian dollars unless otherwise stated. Certain figures referred to during this call are non-GAAP and non-IFRS measures. Alberto Paredero-Quiros: Definitions of these measures, please refer to SNDL Inc.'s Management Discussion and Analysis document. Our fourth quarter financial results demonstrate strong profitability improvements despite softness at the top line. Net revenue of $252,000,000 represents a 2% year-over-year decline, driven by market contractions in both liquor and cannabis retail, particularly liquor retail, partially offset by market share gains across both retail segments. Gross profit of $70,200,000 marked a new absolute quarterly record, increasing by $1,400,000 or 2.1% year over year despite the decline in revenue. A strong margin expansion across both retail segments translated to a 110 basis point increase in gross margin, reaching a new quarterly record of 27.8%. This strong gross margin performance, combined with efficiency improvements across retail and corporate SG&A, resulted in a record quarterly adjusted operating income of $12,800,000, and adjusted operating income of $11,800,000 also represents a new quarterly high. This performance reflects a significant improvement versus the prior year, driven not only by the absence of the $65,700,000 sunscreen adjustment recorded one year ago, but also by meaningful underlying operational margin improvements. Free cash flow of over $10,000,000 in the quarter was another solid result, although slightly lower than the prior year due to differences in the timing of working capital buildup for the holiday season, as well as increased capital expenditures and inventory investments to support new store openings. Our full year financial results demonstrate meaningful year-over-year progress and new records across all key metrics. Net revenue of $946,000,000 represents growth of 2.8%, supported by 11% growth from our combined cannabis segments, partially offset by a 2.8% decline in liquor. Importantly, all of our segments gained market share during the year. This revenue growth, combined with a 120 basis point increase in gross margin, translated to gross profit growth of 7.6% compared to the prior year. Improved promotional execution, mix management, and productivity initiatives were the key drivers of this gross margin expansion. This continuous improvement mindset also enabled us to reduce G&A spending, as in-store efficiency gains and a well-executed corporate restructuring program more than offset cost inflation and the impact of new store openings. As a result, both adjusted and unadjusted operating income reached new highs, with full year adjusted operating income achieving breakeven for the first time in our history. We are also pleased to report free cash flow of $18,000,000 for the year, more than doubling the result achieved in the prior year. Our historical quarterly performance demonstrates a clear upward trend in profitability and a strong multiyear compound annual growth rate. While quarterly operating income and free cash flow will continue to be influenced by seasonality and volatility, we remain committed to sustaining the upward trajectory with a focus on long-term value creation. We have seen market declines across both the liquor and cannabis segments. While declines in liquor have been a multiyear trend, the slowdown observed in cannabis during 2025, which ultimately resulted in a market decline in the fourth quarter, represents a newer development. We intend to address these headwinds through disciplined execution and a balanced approach to both organic and inorganic investment. In particular, as the cannabis industry matures and growth rates moderate, less efficient operators are likely to face increased pressure, creating a favorable condition for industry consolidation. We believe we are well positioned to capitalize on these opportunities. Looking more closely at segment level contributions across our key financial KPIs, we can see these dynamics clearly unfolding. Net revenue reflects the market headwinds impacting both the Liquor and Cannabis segments, particularly in the fourth quarter. On a full year basis, however, growth in the Cannabis Retail and Cannabis Operations more than offset the declines experienced in Liquor. Despite revenue pressure, our Liquor segment was able to offset declines through productivity improvements, allowing it to maintain or expand gross profit. At the same time, our Cannabis segment contributed to gross profit growth at a faster pace than net revenue, particularly over the full year. Adjusted operating income reflects solid contributions from our Cannabis Retail segment, while results from Liquor and Cannabis Operations were more muted. In the context of ongoing market declines, maintaining or expanding adjusted operating income in Liquor represents a strong performance. Cannabis Operations was impacted by costs associated with the volume ramp up at our affordable cultivation facility undertaken to support international growth. The Investment segment saw significant year-over-year improvement, primarily due to the absence of unfavorable valuation adjustments recorded in the prior year. The Corporate segment also delivered strong contributions to bottom line profitability, supported by the cost reductions from the restructuring program initiated in 2024. The $7,500,000 contribution in the fourth quarter reflects both the benefit of these cost reductions and a $3,200,000 from share-based compensation, as a decline in our share price during the fourth quarter partially offset the increase recorded in the third quarter. Once again, both our fourth quarter and full year free cash flow results stand out as key highlights. In the fourth quarter, while we did not achieve a new record, free cash flow levels remained strong. Compared to the prior year, we benefited from higher earnings, reflecting improved P&L performance. This was offset by inventory and capital expenditure investments in newer store openings, as reflected in the working capital and other components of page seven, respectively. On a full year basis, the benefits from improved earnings and strong working capital management more than offset the investments made to support new store openings. On the following page, we can see the seasonality effects in our free cash flow generation. The first part of the year is typically impacted by lower revenue levels and working capital build ups, while the second half of the year benefits from the opposite dynamic. And supported by a particularly strong second half, we more than doubled free cash flow compared to the prior year. When reviewing each commercial segment individually, starting with Liquor, we can see that both the fourth quarter and the full year were impacted by market-driven headwinds affecting net revenues. These declines, approximately 3% in both periods on a rounded basis, were primarily driven by broader market conditions. In this context, our team was able to gain market share, supported by the strong performance of our Wine and Beyond banner and continued growth in our private label offerings, both of which deliver positive results. Improvements in pricing, promotional execution, and mix management were the key drivers behind the gross margin expansion of 120 basis points in the fourth quarter and 70 basis points for the full year, reaching 26% and 25.9%, respectively. Q4 gross profit of $38,700,000 and a full year gross margin of 25.9% both represent new records for the segment. This margin expansion, together with additional efficiency improvement in in-store operations, translated to an increased $1,700,000 or 5% in full year operating income. In the fourth quarter, operating income was close to flat year over year, reflecting the absorption of ramp up costs associated with the two new Wine and Beyond stores that opened in November. Cannabis Retail delivered strong results in 2025 despite the market slowdown experienced in the second half of the year. Fourth quarter revenue was essentially flat year over year. However, supported by a 190 basis point improvement in gross margin and continued efficiency gains in the store operations, operating income reached $8,000,000, representing a 33% increase compared to the same period last year. Full year results reflect a new revenue record of $330,000,000, representing 6% growth supported by 3.9% same-store sales growth and new store openings. Gross profit of $86,100,000 was also a new record, as was the gross margin of 26.1%, which expanded 80 basis points year over year. Similar to the Liquor segment, Cannabis Retail benefited from improved promotional execution and mix management. Operating income of over $30,000,000 was driven by margin expansion and overhead optimization, more than doubling compared to 2024. Following a material step up in 2024, Cannabis Operations experienced greater volatility during 2025. As we began to lap the inclusion of the Enviva acquisition in the baseline starting in 2024, net revenue in 2025 was flat year over year. Gross profit, gross margin, and operating income declined compared to the prior year, reflecting ongoing stabilization efforts related to the volume ramp up and infrastructure improvements at our at the world cultivation facility. For the full year, the segment delivered record net revenue of $144,700,000, representing growth of 32%, supported by the Indeed acquisition and continued growth in international sales. Gross profit of $32,900,000 and a gross margin of 22.8% were also new for the year records for the segment. We continue to see opportunities to further expand margins to increase the scale and additional productivity initiatives. Adjusted operating income of $2,500,000 declined modestly year over year, primarily due to under-absorbed overhead investments. While Cannabis Operations remains the smallest and most volatile of our three commercial segments, we see significant opportunities to enhance our capabilities and footprint, positioning the segment as an increasingly important driver of long-term value creation for SNDL Inc. Over to you, Zachary, for additional comments related to our strategic priorities. Zachary George: Let's now turn to the progress we have made recently against our three strategic priorities: growth, profitability, and people. Starting with growth, each of our cannabis and liquor retail segments gained 20 basis points of market share year over year. Cannabis Retail achieved this through strong execution, new store openings, and conversions to our successful Value Buds banner. Liquor Retail also demonstrated solid execution in a challenging environment, supported by private label growth and the resilience of our Wine and Beyond banner. As previously mentioned, we increased our capital expenditures and working capital investments to support the opening of three additional cannabis stores and two new One and Beyond locations in the fourth quarter. Our Cannabis Operations segment also contributed meaningfully, delivering 32% full year revenue growth, driven primarily by our leadership in edibles following the acquisition of Endeavor as well as continued growth in international sales. Profitability is a strategic priority where we made substantial progress not only throughout full year 2025, but also in the fourth quarter, as demonstrated by nearly $13,000,000 in adjusted operating income and $10,000,000 in free cash flow delivered in Q4. The previously highlighted improvements in gross margin were a key driver of this performance. Alongside our continued focus on G&A optimization. In this regard, our Retail segments delivered full year combined efficiency improvements of $7,100,000 in G&A reductions, and our corporate restructuring program has already surpassed the committed $20,000,000 in annualized savings, even ahead of the implementation of the third and final phase of the initiative. Last but not least, under our people strategic priority, we initiated our annual performance-to-pay process in the fourth quarter, designed to reward employee performance based on both overall business results and individual contributions. We also delivered merit increases ahead of the holiday season across our facilities and retail teams, ensuring market competitiveness and reinforcing a consistent and transparent compensation approach. In addition, we completed our second annual employee engagement survey, gathering valuable insights from across the organization to further enhance our employee value proposition. Building on these insights, we expanded our employee engagement initiatives to include mental and physical well-being as well as diversity, equity, and inclusion, reinforcing our commitment to a safe, inclusive, and supportive workplace. Before concluding this presentation, we would like to share how we monitor our performance relative to our peer group, as we remain focused on delivering superior performance and shareholder returns. Looking at the most recent trailing four quarters reported by this group, and normalizing for equivalent definitions, we can see that SNDL Inc. has climbed the ranks and has positioned itself firmly within the top tier in terms of profitability on an absolute basis. We believe that this progress, combined with the many opportunities ahead of us and our best-in-class balance sheet and significant cash position, creates a compelling investment case. Once again, I would like to thank our entire team for their contributions and our shareholders for their continued trust and support. I am proud of what our team accomplished in 2025, and I am confident in our ability to unlock additional value in the years ahead. With that, I will now turn the call back to the operator for the analyst Q&A session. Alberto Paredero-Quiros: Thank you. Operator: We will now open for questions. Please press star then 11 to ask a question and wait for your name to be announced. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then 11 again. One moment for questions. Our first question comes from Frederico Gomes with ATB Core Mark Capital Markets. You may proceed. Frederico Gomes: Hi. Good morning. Thanks for taking my questions. First question on the cannabis retail segment, same-store sales decline that we saw this quarter and your comment about the market slowdown in the second half. Can you talk more about what is behind that slowdown? Is it related to competitive pressures at retail, overall macro conditions, or maybe just the natural state of the Canadian market becoming more mature at this point? Thank you. Alberto Paredero-Quiros: Hi, Frederico. Good morning. Thank you for your question. Yes. So we have noticed, particularly in the last two months of the quarter, so the months of November and December, absolute declines in the market. We attribute that to multiple factors. Certainly, there is an element of saturation in retail doors across most provinces, particularly where we have the biggest footprint, like Alberta. But in Ontario as well, we are starting to see that dynamic playing out. There are different dynamics as well in terms of what we are lapping and what the industry is lapping from heavy, aggressive promotional period in the prior year. In 2024 and 2025, we are seeing pretty healthy growth rates based on more aggressive price competition. Obviously, we are lapping that, and we believe that not only ourselves, but many other retailers in the industry that are focused a little bit more on profitability and mix improvements, we see margin expansions, but we are seeing as well some reduction in traffic and top line. There is as well a certain dynamic of some doors starting to shut down. We were getting to a dynamic with a lot of independents or some independents reaching their five-year rent commitments, and they are realizing that this is a competitive task and competitive marketplace. Some of the larger operators are starting to build that scale, and it is difficult to compete against those, and as a result of that, as I said, the market in certain areas is starting to shrink, or some doors are starting to shut down. The industry is consolidating as well. So that is another element, not necessarily impacting the market, but clearly the dynamics in the industry. But in general, we think that it is, as I said, saturation in the market and price points. Frederico Gomes: Thank you very much for that. Second question, still on the cannabis retail segment, specifically on M&A. So first, when do you expect the acquisition of the One Centimeters stores in Ontario to close? And in regards to your comment about the industry consolidating, do you expect your growth in cannabis retail to be mainly driven by organic new store openings, or are you more focused on the M&A side and acquiring some of these struggling players? Thank you. Zachary George: Good morning, Frederico. It is Zachary George. Thanks for the question. And this dovetails nicely from your prior question as well. Just in terms of the One Centimeters acquisition, remaining stores in Ontario, we are just finalizing our review with the AGCO. So we expect to, at the latest, report back to shareholders in Q2 on that timing, but it should be resolved shortly. And, just in line with the deceleration of same-store sales growth that we are seeing across the space with almost every major player, if you think about this cyclically, this is exactly the time when operators start to lift their heads up and look for other ways to create value. So we do expect intense focus on consolidation in the space. And I think that would apply to performing independents that may want to monetize their positions, but would also apply to both medium and even the largest portfolios in the Canadian marketplace. If I could just in terms of organic growth, we have we have a pretty active pipeline, you know, double digit count of that are under review in multiple provinces. And we have a very attractive stand-up cost for the opening of new doors. So we are looking at this from multiple perspectives and not relying on M&A outcomes to drive future growth. Frederico Gomes: Thank you. Appreciate that. If I could just ask one final question. Could you just remind us about the status of your EU GMP certification and maybe comment about the international growth outlook for this year compared to 2025 as you expand that capacity? Thank you. Zachary George: Yes. We are waiting for the last visit to our site. It has been a long process that has required some patience, but we expect at this point to have the certification complete sometime over the summer. There has been some change in the administration in Germany that has impacted as well. And in terms of our international business, we saw decent growth off a very, very small base in terms of 2025 versus 2024. And we are in the process of developing relationships and building strong partnerships, but it is still early days. So we do expect material growth, but, again, it is a very small part of the business today. That is a top three priority in terms of future capital deployment as well. Frederico Gomes: Thank you. I will hop back in the queue. Operator: Thank you. Our next question comes from Aaron Thomas Grey with Alliance Global Partners. You may proceed. Aaron Grey: Hi. Thanks for the questions. Maybe touching on retail but in terms of liquor here. Obviously, you still have some challenges within the broader category outside of yourselves, but some highlights for you guys. You guys did have one quarter during the fiscal year of year-over-year growth, you know, return to declines made the past two, you guys are continuing to open up stores as well. So maybe just given your outlook, given you are still making investments in liquor, there are some structural challenges. As you look into 2026, how are you seeing the broader liquor retail? Do you think it is in position to start to stabilize on a year-over-year basis? Thank you. Alberto Paredero-Quiros: Thank you, Aaron, for the question. So, yes, actually, throughout the year, as you saw in the first quarter, we have reported growth in 2025 that was driven primarily by the shift of Easter compared to the prior year. So on a normalized basis, we have seen a pretty consistent roundabout 3% revenue decline and about 4% to 5% market decline in the category. It is very hard to predict where that is going to go. The first part or the first couple of months of 2026, we are seeing similar declines in the market. At the same time, there are a couple of areas within our portfolio that are showing very good strength, and this is where we are focusing our investment. Particularly, if you look at our Wine and Beyond banner, despite the market declines, mid single digits, we are seeing that banner growing healthy. It is a very different business model compared to the rest of the independent network. Just make a convenience business. Ours is a larger scale format, significantly different type of offerings, much broader portfolio base. That resonates very well with consumers, and that is why, as a result of that clear differentiation and unique offering that we have, we are seeing positive growth. It is still in the low single digits, but it is growth rates in the market, and as I said, we see a competitive advantage in that front, and that is where we are deploying the capital, both from a CapEx perspective opening the doors, but as well the inventory associated with those store openings. And then we have as well our private label. One clear dynamic that we are starting to observe as well is the loss in purchasing power. It is making consumers more price-conscious, and they are looking for products that offer very good price points with good qualities as well. We have been expanding our private label offerings that continue to gain penetration. It has been already several years of increases in market share from our private label offering, and that is an area where we are still building additional relationships with producers, and we are expecting to continue making investments and expanding our portfolio on that front because, as I said, that is what is right now resonating with the consumers, and we are seeing the stronger demand. And that part of the portfolio as well is growing in relative terms to the rest of the business, and in absolute terms as well. So that is where we are focusing. We believe that we still have opportunities to manage elements of growth within our portfolio despite the fact that the market we still anticipate to decline in the low to mid single digits for the next several quarters. Aaron Grey: Okay. Great. Appreciate that color. That is helpful. Second question for me just on some of your U.S. exposure, particularly with SunStream. Just if you could provide us an update in terms of some potential outcomes, as we hopefully come to some resolutions either with Parallel or Skymet here in 2026. I know in the past, you have talked about potential changes you might need to be made to best optimize some of the U.S. assets. So, in terms of how you are looking at SunStream, the U.S. assets, and how to best optimize those in 2026, as hopefully we come to some resolutions there. Thanks. Zachary George: Absolutely, Aaron. Thank you for the question. So, the portfolio has been simplified quite significantly. It is really three positions. In the case of cannabis, I think you have been following the liquidation of that portfolio. We have seen a return of capital recently as that position gets monetized and capital repatriated. And then the two larger positions of interest would be in Parallel and SkyMint. Parallel is going through a foreclosure process in the state of Florida, and SkyMint is in receivership in Michigan. For almost the entirety of 2025, the foreclosure process related to Parallel was delayed because of litigation that was in place. There was a key settlement to that litigation in December, and so we think there is now a path to resolve that foreclosure, and we will likely see it sometime in Q2 or just after. So we are finally heading towards a resolution here after a multiyear process. Again, the reason behind these delays and the inefficiencies really comes down to the lack of access to the federal bankruptcy courts in the United States. And so once you are relegated to these other insolvency proceedings at the state level, they are much less predictable, and the adjudication can provide unique outcomes. So we are pleased that we will actually land this plane, so to speak, in 2026. But it has been a frustrating process, and we are eager to have it wrapped up. Aaron Grey: Okay. Great. Appreciate the color then. I will go ahead and jump back to the Operator: Thank you. This concludes the question and answer session. I would now like to turn the conference back over to Zachary George for any closing remarks. Zachary George: Thank you, and thanks for joining our call today. We look forward to updating you in the near future. Have a great day. Thank you. This concludes today's conference call. Operator: You may disconnect your lines. Thank you for participating, and have a pleasant day.

74天前Insight Analytics约5分钟阅读