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Cary Savas: Good afternoon, everyone. Welcome to Grid Dynamics Fourth Quarter 2025 Earnings Conference Call. I'm Cary Savas, Director of Branding and Communications. [Operator Instructions] Joining us on the call today are CEO, Leonard Livschitz; CFO, Anil Doradla; CTO, Eugene Steinberg, COO, Yury Gryzlov; and SVP, Head of Americas, Vasily Sizov. Following the prepared remarks, we will open the call to your questions. Please note that today's conference call is being recorded. Before we begin, I would like to remind everyone that today's discussion will contain forward-looking statements. This includes our business and financial outlook and the answers to some of your questions. Such statements are subject to the risks and uncertainty as described in the company's earnings release and other filings with the SEC. During this call, we will discuss certain non-GAAP measures of our performance. GAAP to non-GAAP financial reconciliations and supplemental financial information are provided in the earnings press release and the 8-K filed with the SEC. You can find all the information I just described in the Investor Relations section of our website. I'll now turn the call over to Leonard, our CEO. Leonard Livschitz: Thank you, Cary. Good afternoon, everyone, and thank you for joining us today. I'm delighted to share that Grid Dynamics closed 2025 with another landmark performance. In the fourth quarter, we beat Wall Street expectations on both revenue and EBITDA delivering record revenue of $106.2 million and a strong $13.7 million in non-GAAP EBITDA. Remarkably, we finished the full year with a record revenue of $411.8 million, which is 17.5% growth year-over-year. 2025 non-GAAP EBITDA was $53.8 million. In Q4, our top 3 customers included two global technology companies and the largest payment technology company. All of them are leaders in the AI space. Our performance is a result of our AI expertise, the strength of our accelerators and keen domain knowledge. In Q4, our AI revenue grew 9% over Q3 and now represents 25% of our overall revenue. For the full 2025, our AI revenue reached over $90 million, representing 30% year-over-year growth. In 2026, we anticipate continued AI revenue growth. There are three key factors driving our bullish outlook on AI. First, AI coding agents and automation, significant enterprises build versus buy calculus that were built at a lower cost. The shift aligns with Grid Dynamics core strengths in building solutions for Fortune 1000 companies, leveraging specialized talent and intellectual property. Second, our efforts with GAIN are resulting in a richer blend of outcome and output-based engagements. Crucially, these new engagements enable us to decouple pricing from effort. We have successfully deployed software platforms across multiple industry verticals. Our AI engagements now strategically combine the strength of our human capital with the value of our platform assets. The market reception for these software platforms has been strong, with customer demonstrating a clear willingness to pay. This positions us well to grow recurring revenue, deepen customer retention and extend the duration of our engagements. Grid Dynamics engagement structure will contribute to our 2026 margin expansion. Third, the speed of AI transformation is not uniform across industry verticals. While we continue to generate revenue from the retail and CPG verticals, we prioritize investments in the area of technology, financial services and manufacturing, where we see significant opportunities for customized auditable product-grade agentic AI platform. Let me talk about Grid Dynamics vertical strengths. Enterprise are learning that deploying AI at scale requires deep domain expertise. We cannot build an effective Agentic system for a production floor without understanding manufacturer. You cannot build one for a global permit network without understanding the compliance architecture. Such expertise is what we have been building vertical by vertical for nearly 2 decades. Now we're codifying it into platforms. Our Merchandising Experience Platform, MXP, brings our expertise to marketplaces and digital commerce. XTDB, our bitemporal Data Platform helps financial clients, specifically in capital markets with auditability and other compliance challenges. Platforms unlock IP-driven outcome-based engagements, and that's how Grid Dynamics moves from billing for effort to billing for value. Now let's talk about partnerships. Our partner influence revenue reached a significant milestone in 2025, exceeding 19% of our total revenue. So significant growth underscores our mission to keep Grid Dynamics at the forefront of modern enterprise infrastructure. We have strengthened our relationship with all hyperscalers through targeted investments in Agentic platform capabilities, earning specialized badges and building new joint solutions. Notably, in December, we signed a strategic collaboration agreement with AWS for data foundations in AI. Our premier partnership enables Grid Dynamics to receive funding from AWS to support AI enterprise initiatives. Our collaboration with NVIDIA on Omniverse based solutions is enabling us to deliver high fidelity industrial-grade digital twins that are essential for our physical AI expansion. In the fourth quarter, our vertical execution is best illustrated by several notable projects. Fintech transformation. We partner with a global financial leader to launch a proprietary generative AI agent supporting more than 10,000 financial advisers. This interactive experience replaces static policies with personalized guidance as is projected to increase productivity by about 20%. TMT Analytics. For a global technology enterprise, we modernized a legacy mobility application into a scalable analytics platform providing centralized visibility into global travel activity and spend. The platform has materially improved usability, increased feature velocity and reduced stakeholder coordination overhead. Dispute management. We developed a comprehensive dispute management solution for a leading financial services firm. By integrating Generative AI, the platform streamlines charge-back challenges, increasing win rate and reducing operational overhead. Financial governance. At a leading U.S.-based global bank, we're building a global agent runtime and AI orchestration platform, enabling business-focused agent to automate complex workforce starting with successful automation in internal compliance. We also deployed the AI-driven executive insight capabilities that provide leadership with consolidated global operational summaries. With that, let me turn the call over to Eugene Steinberg, our CTO, who will talk about our AI capabilities, how we are upskilling our engineering workforce and how we're using it to improve our internal operations. Eugene? Eugene Steinberg: Thank you, Leonard. Good afternoon, everyone. We are actively executing across three horizons. AI first engineering, Agentic Enterprise and Physical AI. In Q4, we shipped across all three, and these foundations position our AI business for 2026. Horizon 1, AI first engineering. Horizon 1 is the core of our current business. The engineering work that source the majority of our clients today. We are accelerating productivity across the organization through AI first native tooling and investing decisively in the continuous upskilling of our engineers. Enterprises are no longer debating the merits of adopting AI for software development. But rather how to do it without losing control of quality, security and institutional knowledge. It is in this context that we launched Rosetta, our AI native software development framework. Rosetta is part of our GAIN initiative and provides a governance layer for AI coding agents. Rosetta automates contract setup, enforces consistent workflows and manage his engineering knowledge at both the engineering and organization level. It operates within the client's own security perimeter and works across all major coding platforms. Developers get consistent project aware agent behavior from day 1. Engineering colleagues get centralized governance and visibility across the entire agent footprint. With Rosetta clients benefit from decades of institutional expertise seamlessly embedded in the way engineering workflows. We have several engagements underway and a scaling gain as the standard delivery backbone across all engagements in 2026. Grid Dynamics separations is client 0 for our AI solutions. Cerebra, our internally developed Agentic platform launched in Q3. It is built on Google AI stack, Gemini enterprise, ADK and A2A. Within Grid Dynamics, Cerebra is being used by our sales recruitment and knowledge management organizations, automating proposal development, technical prescreening and research at scale. Clients adopt faster than the platform has already been stress tested in production. As AI revenues ramp, we expect this model to drive both revenue growth and margin expansion. Horizon 2, Agentic Enterprise. Horizon 2 is where we are expanding and investing by leveraging our engineering debt to enterprise transformation at scale. The Agentic era is reshaping the economics of software delivery. AI native development tools are allowing the overall cost of building and deploying software, placing pressure on systems integration and configuration programs. At the same time, client expectations are rising. Programs previously too expensive or too slow to justify are becoming feasible. Enterprises are thinking bigger and moving faster taken on significantly larger mandates. That means moving away from SI-heavy engagements and toward a regional in-house engineering. That rotation plays directly to our strength. In the past decade, enterprises have increasingly became dependent on system integration, assembling Software-as-a-Service ecosystems, configuring cloud services, and stitching together vendors products. In the Agentic era, this changes fundamentally. Production deployments require bespoke engineering. Purpose-built agent workflows the main specific data and knowledge layers, distributed system and platform engineering. Grid Dynamics is well known for its engineering capabilities and proprietary IP at leading global enterprises. The agentic era rewards builders, and that is where we have invested. Our go-to-market runs two tracks. For Tier 1 enterprise clients, we architect and co-develop custom verticalized AI platforms built around the specific architecture, governance and compliance requirements. For Tier 2 mid-market clients, we integrate hyperscaler platforms with Grid Dynamics verticalized components on top, optimizing time to value and overall cost. Both tracks are expanding. We have also established a partnership with Temporal through the JumpStart program. This initiative positions us as a technology consultants for Temporal's customers. embedded in crucial architectural decisions from the outset. This partnership has generated multiple new engagements across financial services, enterprise software and industrial sectors. The proof points are concrete. A notable example is our work with one of the world's largest payment networks, where we are leading a broad Agentic AI program. We have developed a recurring service across 17 applications, a universal enterprise assistant with agent to agent communication and centralized governance and evaluation. Our efforts have led to an approximate 40% reduction in build time and 60% reduction in ongoing maintenance efforts. This platform deployed across 30,000 employees. The impact has been measurable. Specialized groups are seeing up to 15% productivity improvement, driven by faster information access and reduced manual research. As a leading global CPG company, we developed over 20 enterprise-ready AI agents through a unified agent factory platform. This delivered 15% productivity improvement across enterprise users. These deployments confirm a pattern we see consistently. Once AI capabilities move fully in production, clients realize approximately 15% productivity gains, tangible operating leverage at enterprise scale. We are leveraging our deep domain expertise to build vertical AI platforms, co-defining patterns in the structured productized offerings. Our initial solutions have real traction and are generating revenue with enterprise clients. MXP, our merchandising and product discovery platform illustrates its progression most clearly. It began as search engineering expertise, evolved into reusable accelerator. And in 2025, gross intel license revenue with a growing customer base across North America, Europe and Latin America. Its deployment for a leading European luxury retailer delivered a 7% total revenue uplift, and a 50% reduction in merchandising workload, while handling a 25% year-over-year surge in peak holiday traffic without disruption. XTDB is our platform designed for the financial industry, a bitemporal database built specifically for regulated financial environments. As financial institutions deploy AI agents, the regulators require full point and time reconstruction of any decision. Banks deploying agents for trade processing, compliance or investigations, need systems that can capture precise information related to trading activities. XTDB addresses that with full auditability across both business time and system time. The platform has been adopted in several global banks and in Q4, we shipped a significant new version extending its capabilities for multi-entity data mesh environments. It is this kind of deep infrastructure IP that differentiates our financial services practice from generic AI Consulting. Our engineers no longer arrive as individual contributors. The if backed by codified IP, Rosetta, MXP, XTDB and documented patterns from dozens of deployments. The client gets immediate expert deployment, not a learning curve. Horizon 3, Physical AI. Horizon 3 is our forward-looking investment in Physical AI, bringing the same AI engineering depth they apply in software to industrial and manufacturing environment. Our flagship platform here is Incarna, a software platform that supports the robotics industry. Incarna dramatically compresses with time required to program robots for complex manufacturing tasks, enabling robots to handle high variability physically demanding work that conventional automation cannot address. In partnership with Smart Ray, a leader in industrial 3D vision sensors we developed and deployed the Incarna AI model for robotic weld inspection. Weld inspection is demanding. Commodity requirements are stringent and variability in materials and geometry makes rule-based automation unreliable. The result, high inspection consistency, improved quality assurance and scalable automation in environments where precision is nonnegotiable. As a Fortune 10 manufacturer, we automated the conversion of CAD files to CNC machine instructions, a workflow that previously took 5 days now completes in hours, greater than 90% cycle time reduction, validated in production. We will have more to share as this program scale. As we look ahead, we will build on our foundations. We are rapidly and deliberately scaling towards a multi-industry AI-led business transformation. GAIN and Rosetta codify our engineering judgment, so its scales beyond individual engineers. MXP shows that our IP can generate revenue as software, not just as a service. XTDB gives us a technically differentiated entry into finance. Incarna, opens doors in manufacturing. And our Agentic practice is shifting from the bespoke delivery to structured vertical offerings where our accelerators compress time to value and our contracts increasingly capture outcomes. We are moving from labor scale growth to IP scale growth, and that transition defines our 2026 execution. With that, let me turn over to Anil. Anil Doradla: Thanks, Eugene. Good afternoon, everyone. We recorded fourth quarter revenues of $106.2 million, slightly above the midpoint of our guidance range of $105 million to $107 million. This represents a sequential growth rate of 1.9% and a year-over-year growth rate of 5.9%. There were 30 bps and 22 bps of FX headwinds on a sequential and year-over-year basis, respectively. Non-GAAP EBITDA was $13.7 million or 12.9% of revenue and was at the higher end of our $13 million to $14 million guidance range. In the fourth quarter, there was a negative impact from FX fluctuations on a year-over-year basis. We are exposed to a currency basket across Europe, Latin America and India. While we utilize both natural hedges and an active hedging program, the net year-over-year impact on our EBITDA was a headwind of approximately $1.5 million. On a sequential basis, there was a tailwind of approximately $160,000 to our EBITDA as the dollar strengthened relative to the British pound and euro. Looking at performance of our verticals. Retail remained our largest vertical, contributing 28.7% of total revenues in the fourth quarter of 2025. While revenues in this vertical increased by 5.3% on a sequential basis, there was a decline of 6.9% on a year-over-year basis. The sequential increase was broad-based across our retail customer base. TMT, our second largest vertical accounted for 28.3% of total revenues for the quarter. The vertical delivered strong results with growth of 5.3% on a sequential basis and a 27.5% increase on a year-over-year basis. The strong year-over-year growth was primarily driven by our top 2 technology customers. The finance vertical accounted for 22.9% of total revenues in the quarter, growing 5% on a year-over-year basis. This growth was primarily driven by increased demand from our large fintech customer and large banks. Turning to the remaining verticals. CPG and manufacturing represented 10.2% of our fourth quarter revenues. This vertical remains stable in absolute dollars sequentially but declined 4.3% on a year-over-year basis. The year-over-year decline was largely due to a decline at some of our automotive customers. And this was partially offset by our CPG customers. The other vertical contributed 7.3% of fourth quarter revenues. This remained flat on a dollar basis relative to the third quarter and grew by 8.4% on a year-over-year basis. The year-over-year growth was primarily from our meal kit client. And finally, health care and pharma contributed to 2.6% of our fourth quarter revenues. We ended the fourth quarter with a total headcount of 4,961 slightly down from 4,971 employees in the third quarter of 2025 and that from 4,730 in the fourth quarter of 2024. Although our total headcount was down on a sequential basis, our billable headcount increased meaningfully. We continue to rationalize our overall headcount as we align our skill sets and geographic mix. At the end of the fourth quarter of 2025, our total U.S. headcount was 357 or 7.2% of the company's total headcount versus 7.4% in the year ago quarter. Our non-U.S. headcount located in Europe, Americas and India was 4,604 or 92.8%. In the fourth quarter, revenues from our top 5 and top 10 customers were 39.7% and 58.5%, respectively, versus 35.6% and 55.8% in the same period a year ago, respectively. Moving to the income statement. Our GAAP gross profit during the quarter was $36.1 million or 34% compared to $34.7 million or 33.3% in the third quarter of 2025 and $37 million or 36.9% in the year ago quarter. On a non-GAAP basis, our gross profit was $36.6 million or 34.5% compared to $35.2 million or 33.8% in the third quarter of 2025 and $37.6 million or 37.5% in the year-ago quarter. On a year-over-year basis, the decline in gross margin was from a combination of FX headwinds and greater mix of U.K.-based headcount from our acquisition of JUXT. Non-GAAP EBITDA during the fourth quarter that excluded interest income expense, provision for income taxes, depreciation and amortization, stock-based compensation, restructuring, expenses related to geographic reorganization and transaction and other related costs was $13.7 million or 12.9% of revenues versus $12.7 million or 12.2% of revenues in the third quarter of 2025 and was down from $15.6 million or 15.6% in the year ago quarter. The sequential increase in EBITDA margin was from a combination of higher gross margins and FX tailwinds. On a year-over-year basis, the decline in EBITDA margins was largely due to a combination of lower gross margins and FX headwinds. Our GAAP net income in the fourth quarter was $0.3 million or breakeven per share based on a diluted share count of 86.4 million shares compared to the third quarter net income of $1.2 million or $0.01 per share based on a diluted share count of 85.8 million and net income of $4.5 million or $0.05 per share based on 83.8 million diluted shares in the year ago quarter. On a non-GAAP basis, in the fourth quarter, our non-GAAP net income was $8.7 million or $0.10 per share based on 86.4 million diluted shares compared to the third quarter non-GAAP net income of $8.2 million or $0.09 per share based on 85.8 million diluted shares and $10.3 million or $0.12 per share based on 83.8 million diluted shares in the year ago quarter. On December 31, 2025, our cash and cash equivalents totaled $341.1 million, up from $338.6 million on September 30, 2025. M&A continues to take priority in our capital allocation strategy. We're committed to augmenting our organic business with acquisitions that strategically enhanced our capabilities, geographic presence and industry verticals. Coming to the first quarter guidance, we expect revenues to be in the range of $103 million to $104 million. We expect our first quarter non-GAAP EBITDA to be in the range of $12 million to $13 million. For the first quarter of 2026, we expect our basic share count to be in the range of 85 million to 86 million and our diluted share count to be in the range of 87 million to 88 million. For the full year 2026, we are bullish in our outlook. We expect revenues to be in the range of $435 million to $465 million. That concludes my prepared remarks. We're now ready to take questions. Cary Savas: [Operator Instructions] The first question comes from Maggie Nolan of William Blair. Margaret Nolan: So you've had impressive growth in AI revenue and you're above $90 million for 2025. So I'm wondering if projects are moving into production at scale and then what is the nature of these projects? And how is the demand among customers? Leonard Livschitz: Thank you, Maggie. Thank you for kind words. Look, we extensively discussed in various forms what AI represents to Grid Dynamics and what is the opportunity for us going forward. Fundamentally, what makes a big difference for Grid Dynamics for 2026 on is that we're not only moving from the small development project to full scale implementation, but also we introduced our platforms, which has been noted during this particular time. And that kind of scales the confidence with the clients to give us more of the solutions where we represent our engineers combined with their own tools as a new way to building the solution faster and more affordable for the clients. Perhaps some words from Eugene. Eugene Steinberg: Yes. It's a great question. And there are two main zones, which are most exciting for me. One is AI-powered customer experience. The reason behind that is that this is the zone where the impact from source personalization, Agentic commerce is very obvious and memorable by our clients. And this is where clients see ROIs in weeks, not in months or years. And that allows us to expand those accounts very, very quickly based on this successes which we see in this domain. Second is enterprise AI platforms, not as visible as front end work or AI-powered customer experiences. But this is a foundational layer, which helps our companies to organize their data, build AI agent factories on top of this data and then go into developing business agents on top of those platforms. And what we see in our projects is as those platforms mature and go to production clients start to scale very, very quickly building AI agents, and we are helping them to develop the AI agents. And we are going from 1 to 10 to 20 of those specific customer facing, which will collect agents very, very quickly. So this expands our work and allows us to move very, very quickly. Margaret Nolan: Great. And then anything else you would comment on as you move into 2026, kind of how you expect the trend to evolve any way that you can maybe tie that back to the numbers or maybe some of your margin expansion goals you've mentioned. Leonard Livschitz: Yes. So we bombarded you, Maggie, with a bunch of names during this press release, right? So we were talking about merchandise experienced platform, we were talking about bitemporal database, we're talking about Incarna robotics AI platform, subsequent growth of the Rosetta, it's automation within GAIN model, the platform against Cerebra, which picks up our internal process, bringing Grid Dynamics as a client 0 for implementations. What is it all about? Those are not just buzzwords. It's just a way to understand for our clients that there may be a little bit more scarcity in the market of clarity what to do. But when you work with Grid Dynamics, we represent basically three key functions. First, we are domain consultants. So we understand what the customer problems are, and we are tailoring the solutions with that as a important contribution for Grid Dynamics as a mix between Grid Dynamics trained engineers, the standard tools and platform from the market and customized tools, which will bring based on our platform and development. The combination of three leads to a few things. First of all, it's a shorter time to implementation for our clients. And second, it moves away from our traditional talent material offering where we're putting together contribution based on the planned outcomes, which ultimately leads not only for them to gain momentum and have a better financial return but a high value add for the margin expansion for Grid Dynamics. Those are three elements. Cary Savas: The next question comes from Bryan Bergin of TD Cowen. Bryan Bergin: The first one I'll just get a high level. So just with everything that's going on in the market, services, software-based pressure, the whole kind of SaaS apocalypse fears that are out there. I want to kind of sanity check it with you first. Based on what you're seeing in your client conversations and what they're doing in contracting, what's your perspective as it relates to enterprises increasing their custom build preference versus buy the platform solutions. And if your clients are demonstrating a rising preference for custom builds, what are like the implications for your dynamics? Leonard Livschitz: Very good. So I will start, and then I'll have Vasily to give you a few examples because there's nothing better than to show what exactly happened. So from the high-level perspective, obviously, we recognize that there is a very strong expectation that the cost of implementation will go down. Then people start throwing some comments. There is a decline of SaaS software companies or offerings. There is a decline of IT services needs because everything is going to magically appear. Well, all these statements are not false. I mean there are more and more tools available in the market. But what's the custom part is, is that creation of the tools and solutions, having our internal platforms makes Grid Dynamics much more efficient to really customize solutions for the individual clients and tests. And the reason we're doing this because it's very nice from the high-level perspective to look at these all wonderful models, but it's experimentation going to production is quite pricy. And many of the clients are hesitant to throw a lot of money without a clear outcome. And that's where Grid Dynamics comes in with the combination of people, processes and tools. And that's how we believe that even though there is an overall look that overreaching look that there are potential some decline of the needs, the company will agree dynamic needs is actually growing, and I'll have Vasily to bring some examples. Vasily Sizov: Sure. Thank you for the question, Bryan. You are right on point, we definitely see increased demand of our custom-built software. And if in the past, the customers were looking into improvements or enhancing their core platforms, core applications right now, given the overall kind of cost of development is getting reduced by utilizing AI native environment and SDLC. Companies like Grid Dynamics definitely benefit from this trend by getting involved into implementations and rebuilding of the typically SaaS, I would say, applications as a custom built and more custom-tailored solutions for end customers, things like HR systems or travel dashboards and et cetera, which were traditionally outside the investment areas for the companies -- for the clients. Bryan Bergin: Okay. Okay. That's helpful. And then a follow-up. I'll kind of -- I want to dig in on the growth outlook for the year and unpack it a bit. Anil, you made a comment, you're bullish in your outlook. Just to clarify that comment, are you assuming anything meaningfully changes in the underlying demand backdrop to hit any of these targets? And help us just kind of bridge the 1Q performance here. Is there a billed day dynamics or anything seasonal in the first quarter as you think about that first quarter implied growth rate relative to what you're talking about for the year? Anil Doradla: Yes, Bryan. Q1 is a very simple story here. It's the seasonality and also in our time and materials business, T&M, there was fewer working days relative to Q4. So that's -- it's very simple. Now you're absolutely right. We are positive on how we're looking at the full year. There are two components of it. One is that some of the recent trends in our pipeline growth. Second thing is all the gentlemen that have spoken about on our AI trends, right? I'll let them build up on that. But where we are today, how we look at the year we feel more positive. And the final thing is that if you look at the range I provided, it's a little wider, right, relative to last year, we made it a little wider because we understand that during the course of the year, there's some positives, there's not so positive. So we kept it a healthy range. Leonard Livschitz: So let me be more specific, right? So I think Anil answered a very simple question about Q1, and it's a very substantial reduction of the working days. So it's not something like normally happens traditionally here. But there is a bullish outlook for very simple reason. The pace of adoption of AI solutions and AI applications by Grid Dynamics customers, clearly outpaces the decline of maybe a little bit more hedged retail business. It happens simultaneously and this is no secret because if you look at the rate of growth of our client verticals, you can see to notable changes. It's a tack and more important, the financial vertical, which goes specifically into the fintech and capital markets, which is quite new and growing for us. So when we look at the total equation, the rate of growth and AI-related businesses. The contribution from our partnerships. Our improved performance in terms of the new type of agreements, fixed bids, performance base, other elements. And on the back side, some of the depreciation of more of traditional paged business, we've been there for years, we came up with bullish but conservative approach. And what's the conservative part of that? I think it's very important to understand. We've learned a little bit our lesson from 2025, right? I mean we actually believe we're going to be better than midpoint. But what it means for us? It means for us that in addition to all the facts, we need to understand the revenue dollars which are coming with the customers. And as the business grows, as you know very well, we also deploy our engineering talent across the globe, follow-the-sun strategy. And different regions have different price points and different elements of the business. So as we continue to scale our business, we want to make sure that early on, especially when we're introducing this a little bit variability of Q1, we do not get you guys question, are we safe or not? We are very safe. Cary Savas: The next question comes from Puneet Jain of JPMorgan. Puneet Jain: So given like the recent news flow around Entropic Claude, are you seeing like any changes in your client behavior, increased urgency among your clients to embrace AI? And second, I know like you talked about the GAIN framework. I know it's built on proprietary as well as third-party tools. So to -- like all these developments like the evolution of AI ecosystem. Does that raise the bar on what GAIN can do for your clients in terms of productivity savings? Leonard Livschitz: Very good. Let's start with, again, Vasily as the last time to give a little bit more of the multilayer approach. And then from the technology perspective, I think Eugene can comment as well. So, Vasily, please. Vasily Sizov: Yes. Maybe let me start with GAIN framework. So as you know, we announced it in the middle of 2025. And during the 6 months of 2025, we were rapidly developing this framework and running pilot implementations with our customers. As you heard in the prepared remarks, we implemented a series of software assets, which became now the part of this platform, which we are offering to our customers. So I would say in 2026, we see this will be the year of rapid adoption of the GAIN platform across our customers. And in fact, it became the de facto standard approach, which we use for the outcome and output-based engagements. Essentially decoupling billable headcount from the revenue growth. So we definitely see performance improvements. We transfer some of that to our customers, and some of that contributes to our improved profitability. Leonard Livschitz: Eugene? Eugene Steinberg: Yes. And when it comes to the actual improvements which we are seeing from Agentic coding systems and Claude and of course Entropic kind of others, of course, many of our customers are embracing it, and we are bringing those capabilities with them together with Rosetta, which is a layer on top of if. They are not competing with those Agentic Assistance on the foundation layer, but we are making them better, stronger and embed our own institutional knowledge in those systems with every engagement. And of course, impact of that very much depends on the actual nature of the project. So if you are going into greenfield POC kind of solution, your gains are immense, like 10, 15x compared to traditional ways because you are creating in an unconstrained environment doing whatever you want. If you are working in a brownfield project with still well-defined goals, technology modernization and migration, you still have a very strong improvement because the agents are tools. They are doing things much faster for you. And you see maybe 2, 3x improvements in the performance of the teams. However, when you are coming to the engagement and environments where the majority of the complexity is in the communication or orchestration. This has been -- it's much more challenging to realize the improvements from pure coding and creation of artifact. So it all varies very much depending on the portfolio of your solutions. Yury Gryzlov: Just quickly to add to what Eugene and Vasily mentioned, I think it's very important. We mentioned several times in our prepared remarks as well. I think this transition from T&M based approach to outcome-based and output based. That's -- it's very important to emphasize because this is definitely real. We see that a lot. It happened during the 2025 in transition to 2026. And we see that this year, we will see much more of those -- many more of those engagements going forward. And that's why, as Vasily and Eugene mentioned, our GAIN framework together with verticalized solutions and the platforms that we are leveraging that will be very, very important this year. Puneet Jain: Okay. Got it. And let me ask like follow-up to Bryan's question on the rest of the year beyond Q1. So based on our math, like it seems like the full year guidance at its midpoint implies like 5%, 5.5% sequential growth beyond Q1. So can you disaggregate that? Like what drives that growth like in terms of like whether it's like you talked about like earlier like the pipeline, billing days and all that. Can you talk about like what drives that 5%, 5.5% sequential growth beyond Q1 to get to the midpoint of full year numbers? Leonard Livschitz: Puneet, make a few comments and, of course, we'll have Anil to back it up with the numbers. As I mentioned to Bryan, we do very seriously to make sure that we are reasonable but conservative in our forecasting. Okay. The pipeline is very robust. And the pipeline which we have right now, not only robust, but it shows a great opportunity with AI-related products and projects across multiple verticals and multiple clients. There is always a seasonality, right? So Q2 is better than Q1, and Q3 is better Q2 and then Q4 may have some additional flows like what happens in Q4 last year and all the stuff. But we kind of disaggregate the seasonality and behavior from adoption of AI. And we look at our pipeline as it stands today. So there is a very little assumption, Puneet, that there is going to be some enormous number of white swans or some Hail Mary or something extraordinarily great happens during the course of the year. Obviously, not everything on our books today, but majority is and we have a very nice number of our own tools, accelerators and platforms, which are going to continue to roll out during the year. So to summarize it, we are not hoping for the numbers. We have a strong pipeline to AI-related projects, particularly in the technology and fintech space. There is a growth in manufacturing, which is cutting quite robustly as well. And we see that adoption, as again, Bryan asked before, of the custom-developed solution on a combination of the deployed engineers and train program and our internal tooling brings us much higher acceleration. So the same people, the same trade capacity of the people can have several terms on the execution during the year. That's kind of the high level, but very clear understanding what does that pipeline mean? But maybe Anil will back it up with some numbers. Anil Doradla: Yes. Look, I think the key thing is what Leonard said, right, we look at the revenues from a bottoms-up and a top down. And what we have as we go from '25 to '26 transition is this AI factor. And when we looked at that AI revenue kind of bottoms up, top down and look at the trajectory, I wish I could give a number, but it's a very healthy number as we go into '26. That is our foundation for our modeling in '26. Now when you look at the variations we said, right, we have this wider variation this year. We understand in the course of the year, things can happen. So as you go from the high end to the low end, we bake in some level of conservativeness with some of our clients, especially on the larger side, depending upon how we look at the business today. But again, this is top-down, bottoms-up with some conservativeness, but in '26, the fundamental difference is that we've got this AI trajectory and look at -- as Leonard pointed out, look at the fastest-growing segments, TMT and financial verticals. That's the key. Leonard Livschitz: So just again, to put another number, Puneet, because I think it's important. I'll give you a little bit of a prequel, right? So mathematically, it does look a little bit aggressive. But realistically, it's a very unusual quarter to report, right? It's the year-end. So we are in March. So you can suspect that we're probably know numbers in Q1 a little bit better than typically when we present our earnings data a few -- 2, 3 weeks earlier. So what happened is we see a healthy March. And the impact of this seasonality and less of the working days kind of behind us. So the rate of growth, which you see is based on the lower performance of the first, let's say, 2 months of the quarter. As I was joking, would be lovely to have a Q2 4 months then you can throw all these stuff in the first 2 months of the year, but really, really healthy quarter. So the rate of growth from March on is more, I would say, traditional, which makes us more comfortable with providing the guidance like we are. Cary Savas: The next questions come from Mayank Tandon of Needham. Mayank Tandon: Great. Anil, you gave guidance on EBITDA for the first quarter, but not for the full year. So I just wanted to check with you, should we expect the same sort of pattern as you mentioned on revenue growth in terms of margin expansion? And do you have any sort of framework on how to think about what the levers are for margins going forward? Anil Doradla: Yes. Thanks for that question, Mayank. So as you know, last quarter, we talked about margin expansion in 2026, right? Q4 to Q4, we talked about 300 bps. Within the company, there's several efforts right from internal productivity, right from geographic optimization, where we're working very diligently on our margin expansion. And that's largely driven by the change of our workforce over the last 3, 4 years, which you all know about. Along with that, we have investments too. Eugene is talking -- Eugene is doing some amazing work in a number of platforms he's rolling out on AI. So it's the balance between the two. So if you look at our trajectory, margin expansion, margin continuation is what we are modeling. As the revenue picks up, obviously, you have a little bit more positive leverage there on the EBITDA margins. But the cadence at which these things will play out, you will see in the course of the year, I just don't want to give that level of specificity at this point. But the trajectory should be moving upwards and in line with what we had promised last quarter. Leonard Livschitz: And of course, it's not constant currency situation. So you may want to comment. Anil Doradla: So the other important thing everyone should understand is that in '25 versus '24, there was a big headwind on FX. So if I look at the cost and revenue on a net basis, that was close to $8 million overall for me, year-to-year. If I look at the last day of '24 and compare it with what happened on '25. So we're working through that. That's another thing that we're working through. Leonard Livschitz: So to summarize it, I gave you guidance, direction of 3% improvement plus. It still stays. I hope we can do better than that. There's a lot of activities happening. But we're not going to pull the plug and show artificially some numbers related to less investment into Agentic AI or the Physical Robotics AI. These elements are vital for our business, but operational efficiency, the contract efficiency, which we discussed with AI and also distributing workforce more efficiently around the globe. All the three elements. But the driver is fundamentally AI efficiency. That's really the #1 of 3. And I think, Yury wanted to... Yury Gryzlov: Yes, I just wanted to comment on the same -- pretty much along the same lines as I mentioned, right, about fixed-price engagements, right, and outcome-based engagements. That's obviously come typically, with a higher margin. So that's why it's also -- it's part of this program as well. And this year, again, it will be quite substantial. Mayank Tandon: Got it. And then just very quickly, I wanted to ask about your comments around M&A, Anil. You mentioned that obviously, you have a really good balance sheet and you have the work just to go out and do acquisitions. Are you finding that with the recent market volatility, multiples have come down? Are expectations a little bit more realistic on some of the potential targets that you might have had in mind? Anil Doradla: Yes. Somehow the private companies, they received the memo a little later than the public companies. So the memo they finally got, but it took a little time. We are having a good pipeline. Look, we've said that, but I think the number of exclusivities that we have today is as high as it's ever been. It's not done until it's done. When it comes to valuation, things have come in, they're better than what it was 6 months or 10 months ago. But it's still back and forth. Again, Mayank, the most important thing, strategic focus, strategic fit to what we're doing, especially in the AI world that we're entering. That's our bar standards are very high, and we're just not going to buy because we have to buy. We're going to do it if it's strategically fitting. Leonard Livschitz: Yes. I think what Anil didn't tell you it is very obvious we're not buying revenue. This is very, very clear. The relationship we got into the exclusivity with several of the targets, they are very specific in their fashion to address two things. One is the technology components, which we need to add. And the second one is the knowledge of the verticals we would like to be strong with that. So it's not about one size fits all. It's not about just going -- swallowing a big company and report a great number, because usually, it doesn't happen like this. But it's a very specific technology plus verticals. And it seems as the message you mentioned coming from somebody who tells them, okay, now has attained their expectations, I think we're going to be in a better shape because last year, it wasn't satisfactory. Cary Savas: The next question comes from Logan Schuh of Jefferies. Logan Schuh: My question revolves around your discussion of kind of moving from labor scaled IP to -- or labor scaled growth to IP scaled growth and kind of the shift from time and materials to outcome based. I'm just wondering what kind of implications that have on your plans for hiring in 2026 and beyond? And then also, where do you think the business model evolves to over the longer term? I mean we have some competitors going all in on kind of subscription-based Agentic delivery, some different competitors saying, no, we don't see it fundamentally changing. I was just wondering where you guys kind of landed on that spectrum? Leonard Livschitz: Okay. So Logan, I will just say a couple of words, but I think this is a good question for a round table. It's almost like I feel like as a fire chat, not the earnings call because there are a lot of elements, which is a very loaded question because you're right, we're kind of the last of the group to kind of present our earnings results and you have -- you're full from everyone telling you something. So it will not be very difficult to tell you what we think. So look, the model has changed already. There is no way back and people who will consistently say that, A, nothing changed, or we're going to continue to build the large size of team and more people you have as merrier, will probably face some challenges, especially on the large size. Now I've been saying that for a long time, and it actually works for Grid Dynamics benefit. We're not only a technology-driven company and an innovation-driven company, we're a nimble company. Our size is fairly optimized. Obviously, there is a place for growth. But we're not having any managed services. We're not having some very low-end contracts. And some contracts which were not as progressive or technology contribution, migration all this fashion, they are falling off. And that's why you see this kind of changing of the orders in both ways. But where we see our model, and I hope Vasily will give you again a few examples, is that it's going to be a combination. So it's not the perishable goods of quality engineering. It's a combination of capabilities, trained people and the solutions we have in advance of customer needs, understanding their marketability. We continue to play our role with the partnerships. We understand deeply several key areas, and it can be expert in everything. You try to be expert in everything then you have a very kind of a shallow knowledge and you're going to struggle because you have to fill them all. The bots need to be a bit concentrated even though diversified. So where I see it's kind of a -- it's a middle ground. One thing which I give you, again, as my input may be a little bit different from others, but it kind of resonates with our clients very well. The definition of the senior engineer has changed. So traditionally, the word senior engineer means the person with many years of experience, they do less here. But today, the definition of the senior engineer means relevancy of the technology competence and a foundational acumen around their own DNA being the moderate age of AI technology. So the age limit changes, but what really changes is the depth of the knowledge of people. So the focus of Grid Dynamics will continue to be supporting the intelligence of internship programs. Grid Dynamics University Training, Grid Labs Training, combination that these fellows also contribute to building our tools, so then they can become much more productive with the clients. So summarizing my part is that somewhere in the middle ground, we're bringing the new era of the senior engineering the talent, combined with a tooling and a modern world of solving customer problems faster, more efficient and combining three elements: people, industry tools and our own platforms. And with that, Vasily, maybe you'll add some comments. Vasily Sizov: Yes, just a few comments. Imagine if the customer has a project, let's say, which is provided as a bid for fixed price. And you come and bid for that, let's say, with the pricing 25% to 35% lower than otherwise it would be delivered with a traditional workforce in the T&M manner, let's say, we're like just regular fixed price for the regular engineers. But actually, you have the productivity of 35% to 45% higher. So that's the clear path for improvement of the profitability, but how do you do that? You implement certain SDLC new processes on how you develop the software. You deploy a special team, which is very well trained, you introduce certain artifacts and assets, which would understand or would fit their vertical we are working in, also understand the coding policies, all the existing code base, et cetera, which would help developers to work to deliver higher productivity. And that's essentially like on the high-level GAIN model and what the path Grid Dynamics is going with. Essentially verticalized solution, high-performance teams, very well-educated engineers on the modern technology and delivering outcome and output based engagement. Logan Schuh: Great. That was very clear. And then I wanted to ask about the partnerships. I know they're -- 19% of revenues were partner influenced. I just wanted to kind of get a sense of how those partnerships have evolved over time, maybe how you see them evolving in the future? Leonard Livschitz: Okay. So the person who is responsible for partnerships, we will bring him in next time, it's a Rahul Bindlish and he will say we're looking okay. Who is going to say on our partnerships, right? Thank you for asking this question last because it's actually a very wide part of our growth. When a few years ago, we started talking about one partnership. We're basically exploring what it means to read the next. And starting with Google, it was great. I mean we have a great experience. We have a great partnership. We have a great positioning of understanding of the modern tools, collaboration. We have matured significantly ever since. So when we talk about the influence revenue, we're talking about our positioning where we not only contribute to the value of the clients which utilize solutions from our clients and solutions talk about cloud solutions or their modern, large language models or other features. But the elements associated how we are adding our layers, our technology know-how, our technology platforms on the top of their offering, which helps them to penetrate customers faster and helps us to understand earlier what their growth is going to be. Saying that, we also started to contribute more efficiently to their own developments, on their own products, which is very critical because that's how it drives our business, not only having our partners our vehicle for growth within industry, but is the growing clients themselves. So from there, we pretty much cover all the hyperscalers. And that's great because it means the customer has a value with Grid Dynamics to get a bespoke solution for the best fit for everyone. And this is good because ultimately, not every offering fits all, and we are very comfortable to be really good friends with the clients and fair partners with our major hyperscalers. On the top of it, we're adding more meaningful partnerships and perhaps Eugene can make one of the notable ones because I think it usually gives us a little bit more advantage to fill the gaps on the fast-growing AI implementation where the big guys allow a bit more flexibility for some specialized programs to step in. And since it's going to be probably the last time I speak where Eugene will wrap it up for you, I just want to say one thing which is important, I think, for everyone. It's going to be a good year. We believe in Grid Dynamics. We are having a strong and growing team and I really count on you guys believe in us as we do it ourselves. So thank you with that, and Eugene, please wrap it up. Eugene Steinberg: Yes. Thank you, and this is a great question. And indeed, we -- as Leonard said, we are helping many of our partners to build the value-add components and penetrate new customers and new industries. One notable example is, for example, our partnership with Temporal, which is our workflow management system at its core, very robust, very scalable and very powerful. And we apply this system at scale while building enterprise agentic AI platforms, which opened quite a lot of interesting opportunities for Temporal to grow into this sector, and we help them to go into major accounts together. And now we enjoy -- it's a good partnership as well. Cary Savas: Thank you, Logan. Ladies and gentlemen, this concludes the Q&A session for today. I will now pass it over to Leonard for closing comments. Leonard Livschitz: This quarter, we demonstrated that AI first transformation is delivering real measurable value. We continue to upskill our talent and embed AI driven efficiencies through platforms. By running our AI first operational models, we are proving the same value proposition we advocate for our clients. We entered the next phase of our journey with a clear road map, a future approved workforce and a steadfast commitment to deliver long-term value for our shareholders. Thank you, and we look forward to updating you on our continuous progress.
Operator: Ladies and gentlemen, hello, and welcome to the Bnode Fourth Quarter 2025 Analyst Conference Call. On today's call, we have Mr. Chris Peeters, CEO; and Mr. Philippe Dartienne, CFO. Please note, this call is being recorded. [Operator Instructions] I will now hand over to your host, Mr. Chris Peeters, CEO, to begin today's conference. Please go ahead, sir. Chris Peeters: Thank you, and good morning, ladies and gentlemen. Welcome to all of you, and thank you for joining us. Today, I will be presenting our fourth quarter and full year 2025 results as CEO of Bnode. With me, I have Philippe Dartienne, our CFO; as well as Antoine Lebecq from Investor Relations. We posted the materials on our website this morning. We will walk you through the presentation, and we'll then take your questions. As always, two questions each, would ensure everyone gets the chance to be addressed in the upcoming hour. Let's get to the highlights of the full year results, and Philippe will then walk you through our fourth quarter '25 results. On Page 3, you can see that Bnode, as we are now called, and I will come back to this in a few minutes, delivered results at the upper end of the EUR 150 million to EUR 180 million EBIT, guidance range that we set at the same time last year and progressively derisked quarter-after-quarter. Despite pressure on top line development, we delivered an EBIT of EUR 179.7 million, while at the same time, remaining fully committed to the transformation of our business. At bpost as anticipated, top line decreased by around EUR 90 million. Mail and Press revenues declined by approximately EUR 100 million, reflecting both the accelerating structural volume erosion and the base effect as 2024 still included 6 months of the Press concession. On the Parcel side, revenue increased slightly by around EUR 10 million as our volume growth was limited to 2%, notably impacted by the strikes actions we faced during the year. In response to these challenges, we progressed on important cost measures, particularly through operational reorganizations and a reduction of around 4% in FTEs. The full impact of these actions were mainly visible in the last 2 quarters of the year. EBIT came in at EUR 67 million, down 50% year-on-year. The decline was primarily concentrated in the first half, reflecting the scope impact of the Press concession, while performance roughly stabilized in the second half of the year. At Paxon, top line growth was primarily driven by the continued expansion of our European activities and even more significantly by the consolidation of Staci. This positive momentum was, however, largely offset by a 21% revenue decline at North America. As announced last year, Radial faced the departure of several major clients. Since then, we have been actively addressing this through a progressive reshaping of the customer portfolio towards the midsized segment. At the same time, we maintained a strong focus on productivity with Radial, once again, delivering substantial cost savings. Supported by the contribution from Staci, EBIT increased slightly by EUR 7 million year-on-year, reaching just under EUR 59 million. At Landmark Global, our U.S. business was as expected, impacted by tariff measures. Nevertheless, top line posted slight growth overall. This was supported by sustained activity in Canada and most importantly strong momentum in Asian volumes across all key destinations, including, of course, Belgium, which is particularly accretive from an EBIT standpoint. Combined with continued productivity gains, notably true or Transport Center of Excellence, this enabled us to increase EBIT to EUR 85 million. Let me make one final remark on our financial highlights. As you can see, on a reported basis, the group recorded a net loss of EUR 39 million, in line with the dividend policy reaffirmed at our Capital Markets Day in June. And with no change to that framework, the Board of Directors will recommend to the general meeting in May, not to distribute a dividend this year. This reported net loss is primarily explained by one-off costs recognized at Radial North America, Philippe will elaborate on this in a moment. But before handing over, I would like to briefly reflect on our key strategic priorities in 2025 and how they continue to shape our transformation journey. In 2025, our transformation gathered significant momentum across Bnode, delivering tangible results and reaffirming the strength of our strategic direction. We restructured and strengthened the Bnode Executive Committee with a new CEO for Paxon North America and Paxon Europe as well as the people's management committee, including Group CEO and four members of the Group Executive Committee to accelerate strategy execution and better address emerging challenges. We simplified the group brand architecture, moving from 31 brands to a clear 4-brand structure, bringing consistency and focus fully aligned with the group strategic repositioning. At bpost, we made the operating model shift accelerated the transformation of our Belgian operating model across multiple tracks, including bulk rounds, now fully operational in all sorting centers, centralized preparation of Mail rounds and the reorganization of 138 distribution offices to adapt the cost base to new volumes, among others, due to lower Press volumes. We also developed Out-of-Home at scale, expanded the locker network at record pace, reaching 2,500 bbox installations driving a 50% growth in locker volume in 2025. We also successfully launched Night Bbox Delivery, enabling time-critical deliveries before 7:00 a.m. with early phase pilots underway in the omnichannel segment. At the retail network, we strengthened the strategic relevance and commercial contribution of our retail network by expanding multiple partnerships in among others, telco, utilities and banking, while reinforcing our societal inclusion role. For Paxon, we continue to transition to mid-market client portfolio driven by the successful launch of Fast Track offering rapid and seamless integration with existing systems with 22 Fast Track clients onboarded, representing EUR 38 million of in-year revenue. We also successfully integrated Staci into our new Paxon organization. We established an integrated country structure across Staci, Radial Europe and Active Ants, paving the way for accelerated commercial development and we exceeded the initial cost synergies target with the 2026 target already secured. And for Landmark Global, we achieved strong progress in leveraging group-wide capabilities, notably through the introduction of a Transport Center of Excellence, realizing EUR 50 million of group-wide savings in 2025. Staci transport synergies, Last Mile group contracts, et cetera, are included in this. And in terms of market resilience, we demonstrated the ability to navigate an increasingly complex trade environment including rapidly involving trade tariffs, while maintaining operational stability and commercial momentum. I will now hand over to Philippe for the quarterly results, and I will then take the floor to share with you our strategic priorities for 2026 and the financial outlook. Philippe Dartienne: Thank you, Chris, and good morning to all. As you can see on the highlights on Page 5, our group operating income for the fourth quarter came at EUR 1.242 billion, a decrease of EUR 93 million or 7% year-on-year. This performance reflects a combination of factors. As expected, we saw the impact of contract terminations at Radial U.S., which we already flagged earlier this year. This termination materialized through the quarter and drove a 20% revenue decline year-on-year on EUR 82 million, largely offsetting the 4% top line growth at Paxon Europe. In parallel, the 9.2% decline -- 9.2% decline in domestic Mail volume, excluding Press which was only partially compensated by close to 3% Parcel growth volume in Belgium. Note that Parcel volumes were impacted by several national strikes in October and November. In terms of cross-border activities, we also recorded higher Asian inbound volumes, which supported overall Parcel growth. Overall, while our top line remained under pressure, we continue to adapt our cost base effectively, sorry. As a result, group adjusted EBIT reached EUR 83 million, broadly in line with last year. This outcome reflects the positive effect of our reorganization measures and improve peak efficiency at bpost as well as margin actions at Paxon U.S. Before turning to the financial performance of our business units, let me highlight, as shown on Slide 6, that our group reported EBIT stands at EUR 10 million. Beyond the usual PPA adjustment, this mainly reflects the EUR 55 million one-off charges related to the real estate portfolio rationalization and technology stack simplification at Radial U.S., in line with maximize the core initiative presented to you at the Capital Market Day in June. Let's move now to the details of our three segments. I'm on Page 7. With the bpost segment previously Last Mile. We see that the revenue declined by EUR 70 million to EUR 574 million. Domestic Mail recorded around EUR 17 million decline in revenue, of which EUR 11 million stemmed from transactional and advertising mails and EUR 5 million from Press. Excluding Press, Mail volumes contracted by 9.2% in the quarter compared to 8.1% same quarter last year. The decline in Mail volumes had a negative revenue impact of around EUR 21 million and was partially offset only by half, through positive price and mix effect of plus 4.2% or roughly EUR 10 million. As a result, the Domestic Mail revenue were down 4.9% or EUR 11 million year-over-year. Note that on a full year basis, this Mail volume declined by 9.8% at the upper end of our guidance and was mitigated by a price/mix impact of plus 4.3%. Our Parcels revenue increased by EUR 3 million or plus 1.7% year-over-year, driven by volume growth of close to 3% and a slightly negative price/mix effect of 1.2% in the quarter. On the volume side, the reported 9.2% actually correspond to an average daily growth of plus 1.3% and include a shortfall of just under 1% due to national strike that took place in Belgium in October and November. Over the past months, and particularly during the peak, growth was mainly supported by strong performance of marketplaces, which also contribute to our negative price/mix impact of about 1.2%. For the full year, our average daily volume grew by 2.4% despite the negative impact of the fourth quarter strike and more importantly, the bpost strike in February during which a significant share of volume shifted temporarily to competitors. These disruptions resulted in our overall volume shortfall of a bit more than 1% for the year. Excluding this impact, our volume would have landed at the low end of our annual volume guidance. Revenue from our other activities, including Retail, Value Added Services and Personalize Logistics decreased by 3% year-over-year, notably with lower revenue from fine solutions partially offset by higher revenues at DynaGroup. Let's move to the P&L of bpost on Page 8. Including the higher intersegment revenue from inbound cross-border volumes handled in the domestic network, our total operating income was down by 2.3% or EUR 14 million. On the cost side, OpEx and D&A decreased by 2.7% or EUR 16 million, mainly driven by two effects: lower staffing with FTEs and interims down 5%, reflecting improved peak efficiency and lower volumes. The benefit from the ongoing reorganization of our distribution rounds and retail offices implemented over the previous quarters and which ultimately concluded in line with annual plan target despite delays accumulated until June due to strikes. And on the other hand, higher salary cost per FTE up plus 2% following March '25 salary indexation. In contrast with the first half of the year, when EBIT had contracted sharply by almost EUR 64 million year-on-year, mainly due to the end of the Press concession in June '24, we see now that despite the structural Mail decline, Parcel growth and the benefits of our organization are helping to mitigate EBIT erosion. EBIT decline was limited to EUR 3 million in the second half of the year and even showed a slight improvement in this fourth quarter. I would like to highlight that our peak efficiency improved not only versus last year, but for the first time ever also versus the full year run rate. Moving on to Paxon, previously, 3PL, on Page 9. In terms of Paxon revenues, two effects came into play. First one, at Paxon Europe, revenue remained broadly stable year-over-year, while we recorded around 4% growth this quarter across European businesses and geographies, with some activities even achieving high single-digit growth. We also felt the negative impact at Staci Americas, which is reported on the Paxon Europe, where a contract termination led to a significant revenue decline during the quarter. At Paxon North America, revenues decreased by EUR 82 million. At constant exchange rate, this represents a 20% decline, driven by revenue churn from contract termination announced in '24 and '25. Mid-single-digit negative same-store sale and partially offset by the in-year contribution of a bit less than EUR 30 million from new customers of which 60% relating to Radial, Fast-Track clients. As expected, despite seeing positive and encouraging seniors on that front, we continue to feel the impact of the churn announced in '24 and '25. We remain focused on executing our plans and we are confident that the ongoing stretch to core actions presented at the Capital Markets Day, expanding into, as Chris said it, new industries, client size and channel and strengthening our portfolio will deliver the intended benefits. Let's move to the P&L of Paxon on Slide 10. With this total operating income decreased by 14.4% or EUR 82 million, while operating expense and D&A decreased by 13.2% or EUR 69 million. The reduction was primarily in North America, driven by lower variable OpEx in line with revenue evolution at Radial U.S. and sustained variable contribution margin. As a result, adjusted EBIT decreased by EUR 13 million to EUR 33 million in the quarter. This was mainly due to the outgoing top line pressure at Radial U.S. and to some extent, at Staci Americas to temporary productivity issues and an IT incident. Note that Radial U.S. reached another record high margin during the peak season. And on a full year basis, Radial U.S. continued focus on productivity improvement delivered a 2% increase in variable contribution margin, equivalent to our cumulative benefits of EUR 16 million. Looking at our reported EBIT of minus EUR 35 million, this reflects the EUR 55 million one-off charge related to the real estate portfolio rationalization and the technology stack simplification, at Radial U.S. I've mentioned earlier in the call, this is being totally in line with "Maximize the Core" initiative presented at our Capital Markets Day in June. Moving on to Landmark Global, previously Cross-Border, on Page 11. Landmark Europe revenues increased by EUR 4 million or 4% year-over-year. This growth was driven by a solid volume increase from China across all major destinations, notably Belgium fueled by large Chinese platforms and U.S. Other European lanes continue to grow well with the exception of U.K. where adverse market conditions remain. At Landmark North America, we continue to face volume headwinds, while the broader tariff environment is weighing on existing business and delaying new opportunities. However, this was offset by strong domestic volume growth in Canada and a strong peak period resulting at North America level in a high single-digit percentage growth in revenue, equivalent to 0.5% increase or EUR 0.4 million increase in euro, when including the negative FX impact development. Overall, our Landmark Global operating income increased by roughly EUR 7 million or 3.9%. As shown on Page 12, OpEx and D&A increased at the same time by 3.1%, mainly reflecting higher transportation costs, driven by volume growth partially offset by lower rates on the new transport contracts. This links back to the Transport Center of Excellence that we presented at the Capital Markets Day. And from which we are now seeing tangible benefits across our various business units. Adjusted EBIT increased slightly to just under EUR 26 million. And the productivity gains across the board resulted in margin improvement compared to last year. Moving on to the Corporate segment on Page 13. Adjusted EBIT continued to improve as cost control measures on third-party and expand services as well as facility management initiatives helped offset higher payroll costs driven by additional FTEs in the March '25 salary indexation. This quarter also benefited from a one-off favorable impact from operational taxes. And as a result, our adjusted EBIT improved by EUR 7 million to minus EUR 2 million. Let's now move to the cash flow on Slide 14. The net cash inflow from the quarter amounted to EUR 35 million compared with EUR 118 million last year, mainly reflecting the variation in working capital and higher coupons on the bonds. Overall, the main items to highlight are the following: cash flow from operating activities before changing working capital stood at EUR 149 million, a decrease of EUR 11 million versus last year, mainly driven by lower EBITDA and lower corporate tax payment. Change in working capital and provisions amounted to EUR 57 million, the negative EUR 39 million variance year-on-year reflect the termination of the Press concession in June last year as well as some lower suppliers balances. The net cash outflow from investing activities totaled EUR 61 million, driven by CapEx for parcels, lockers and capacity expansion, our domestic fleet and international e-commerce logistics. Note that on a full year basis, CapEx amounted to EUR 147 million, below our initial guidance of EUR 180 million, reflecting disciplined spending behavior. This constitutes the main variation in our free cash flow and the net cash outflow from financing activities amounted to EUR 110 million, mainly reflecting higher lease liabilities payment and higher bond coupons linked to the EUR 1 billion bond issuance in November 2024. Chris, this brings us now to the strategic priorities of '26 and our financial outlook. Chris Peeters: Thank you, Philippe. As we move in 2026, the focus shifts from piloting to scaling. Accelerating what works, executing with discipline and embedding successes structurally. For bpost, that means that the operating model will further shift to accelerate the transition towards a 24/7 logistics company. This includes the structural embedding of efficiencies and flexibilization levers. For example, the dual density rounds or the delayed curve that we will do. At the Out-of-Home, we will further scale, expand the network coverage of 3,400 Bboxes installed and doubling the parcels delivered via lockers. We will continue to pilot and scale promising B2B services in omnichannels and for technicians. And also, we will negotiate an agreement for the Retail network with the Belgian state and entering into force as of January 2027. For Paxon in North America, we will leverage and scale the proven Fast Track solution to deepen our presence in the mid-market segment. And for Europe, we will capitalize on the integrated country structure to accelerate up and cross-selling, improving asset utilization and driving commercial growth. For Landmark Global, we will drive the full utilization of the Transport Center of Excellence, ensuring group-wide efficiencies and boosting profitable growth in a scale-driven market. And for the market, we will leverage our ability to navigate trade complexity to better support clients in managing cross-border complexity and evolving tariff dynamics. These strategic priorities lead me to our outlook for 2026. I'm on Page 16 now. We are engaged in a profound transformation of our group and the strategic shift we have initiated is a multi-year journey. 2026 will be another important step in that transition. At a high level, the continued acceleration of our international logistics activity is expected to be the main driver of EBIT growth at group level. At the same time, in our historical Belgian operation, we will remain focused on mitigating the structural mail decline, while further advancing our operational shift toward a more parcel-centric model. Overall, at group level, we are targeting an adjusted EBIT in the range of EUR 165 million to EUR 195 million for 2026. For Paxon, we expect total operating income to grow in the low to mid-single-digit range in 2026. While in Europe, we anticipate mid- to high single-digit growth, supported by continued commercial momentum and further leveraging of our integrated logistics capabilities. In North America, the ongoing portfolio shift towards the midsize segment, notably through our Fast Track initiatives should offset the impact of customer share. On profitability, we expect an EBIT margin increase from 3.5% in 2025 to between 6% and 8% in 2026. This uplift will be driven by the combined strength of our new regional setup, realization of cost synergies and continued real estate optimization. Then we turn to Landmark Global, where we are targeting a mid-single-digit top line growth for 2026. In Eurasia, momentum remained strong in our commercial activities, particularly driven by Asian volumes, while Postal volumes are expected to remain resilient. In North America, growth should be more moderate. Market overcapacity continues to intensify competition and the uncertainty surrounding tariff measures is creating limited visibility and implied pressures on flows to and from the U.S. across most lanes. In terms of profitability, the evolving business mix with a lower contribution from Postal and a higher share of commercial volumes is likely to weigh on margins leading to an expected EBIT margin in the range of 10% to 12%. Finally, regarding bpost, we anticipate a low single-digit decline in revenue in 2026. This mainly reflects three factors: first, Mail volumes are expected to decline in the mid-teens range, while this will be partly mitigated by a favorable price/mix effect of around 5%, 6%, structural volume erosion remained significant. As you observed in 2025, decline already accelerated, reaching around 10% at the upper end of our 8% to 10% guidance range. In 2026, we will also face the full impact of mandatory B2B e-invoicing in Belgium as well as the loss of certain advertising contracts. Second, on the Parcel side, volumes should grow in the mid- to high single-digit range, primarily driven by large customers. As a result, despite the usual price adjustments, the overall price/mix is expected to remain broadly stable. In addition, as discussed during our Capital Markets Day, we will see the full year revenue impact from the loss of the 679 banking contract which was retendered and transferred to BNP Paribas Fortis as of January 1. From a profitability perspective, this marks another year of revenue contraction, which will inevitably put pressure on margins. That said, we remain fully focused on aligning our cost base notably true, intensified distribution around reorganizations and further productivity gains. Altogether, this should translate into an EBIT margin of around 1% in 2026. We are now ready to take your questions. Again, two questions each, please, so that everyone gets the chance to be addressed during the session. Operator, please open the lines. Operator: [Operator Instructions] The next question comes from Michiel Declercq from KBC Securities. Michiel Declercq: I had some questions on the 3PL or the Paxon business. First on profitability, a bit lower than what you guided for, for the start of the year. I was just wondering, can you give a bit more color on the temporary productivity issues and the IT incident at Staci in the Americas? And maybe quantify this and maybe also looking at the margins of Staci, are we still in the 10% to 12% range there? That would be a bit my first question. Then secondly, would also be on the 3PL Europe, you guide for mid- to high single-digit growth in 2026. Looking at the fourth quarter, it was flat, you had, of course, a customer loss and some headwinds at Staci Americas. But I would expect this also to somewhat continue in 2027. So I'm just wondering where will this step up from a flat growth in the EU in Q4 to mid- to high single digits in '26 come from? Can you -- do you see some reassuring trends there? Or just a bit more color on that, please? Chris Peeters: Do you take the first? Philippe Dartienne: Yes. I'll take the first one. Thank you, Michiel, for the question. Very, very, very interesting question indeed. When it comes to Paxon profitability as a whole, we are impacted by -- mostly impacted by the loss of customers that we faced at -- from Radial, as we mentioned it. Despite the fact that they have been able to maintain the variable contribution margin, even a slight improvement year-over-year. Nevertheless, in absolute value, indeed, it weighed on the EBIT generation. When it comes to Paxon Europe, so the -- what I would say is that we have a profitability at the level of Paxon Europe so mostly from -- resulting from the acquisition of Staci. We always guided in the range of 10% to 12%. And in '25, we nearly reached the bottom end of the range. Why do I say nearly very close to, which is mainly explained by the fact that we had an IT incident in the U.S. that weighted on the profitability. Chris Peeters: And on the second question, so if you look at the Staci growth, you see indeed that there was a bit of a slowdown due to a combination of economic circumstances, mainly in France and the U.K. last year and also probably a focus, which was on the integration and the setup of the new structure. Now we have a team fully dedicated to developing the top line. And what we see there is that we have, especially around cross-sell and up-sell on these clients. And when we talk about cross-sell, it's both geographical, but also in other product ranges. And up-sell where we see that we expand our services within the same service line with those same clients, we see that we have an attractive pipeline on which we feel comfortable that, that growth is a feasible figure. Michiel Declercq: Okay. Clear. Maybe a quick follow-up, if I may. If I then plug in the guidance for the growth in the EU also for Paxon business, is it then fair to assume that growth in the U.S. or in North America, Radial North America will be flat? And if so, can you maybe give a bit more color on the phasing there? Chris Peeters: Yes. Indeed, growth in the U.S. will be flat. It's the effect of the historic client losses that we see to have a full impact. And obviously, if you see, although we see a ramp-up at the Fast Track side. These are substantially smaller clients, meaning that you need a lot of more onboarding to compensate for the loss of a large client. And so that effect of clients that were shared -- was already announced for the non-renewal of contracts that we will have the impact from gets compensated by new mid-market clients, but the one is balancing out the other. Philippe Dartienne: If you allow me to add one element, Chris, also what we are seeing in terms of evolution of same-store sales, so on existing customers, we are still believing that we will be in negative territories in '26 compared to '25. Chris Peeters: Which is again an effect of that historic portfolio of, let's say, older brands that are more in decline than the overall market. Operator: The next question comes from Frank Claassen from Degroof Petercam. Frank Claassen: Two questions, please. First of all, on the transfer of the 679 banking contract, could you help us how much revenue would that roughly be? That's my first question. And then second, on the corporate cost line, you indicate that it will go up some -- or will have the negative EUR 35 million delta in '26. That's quite a step-up. Could you elaborate what kind of investments or costs you're going to make on that corporate cost line? Chris Peeters: So on 679 -- thanks for the question, Frank. We'll -- we don't use to disclose individual contracts, neither the profitability. So we will not do it for the 679. But this being said, you know that the contribution of this contract was solid, very solid. So it's weighing on the profitability. When it comes to corporate, it's -- in fact, we are adding some resources very limited compared to the '25 situation. And those resources are geared towards supporting the transformation initiative. They are hosted at the level of corporate, but they benefit to the integrity of the group. So they are, in fact, also the natural evolution of the cost base, which -- because those corporate costs are mostly people-related costs. And we expect also to have, as we mentioned for BeNe Last Mile, we also expect to have a one step of inflation of 2% and that helps explaining the evolution of the corporate cost. Operator: The next question comes from Henk Slotboom from the IDEA! Henk Slotboom: Chris, Antoine and Philippe. A few questions about the bpost division. I'm a bit surprised about the Parcel growth you indicate for the current year. Last year, it was 2.9%. There was a 0.7% negative impact of the strikes you experienced. Now you're aiming for mid- to high single-digit growth. I assume you must have had a good start of the year. But at the same time, there are some things happening in the Middle East which could spur inflation again and weigh on consumer confidence. How do you look at that, Chris? Chris Peeters: So on the Parcel growth, I think the fact that you see in the terms of growth of last year, main mainly the effect of a little bit lower growth fix has to do with the strike impact of which we have two major events, one in the early part of the year with a quite significant impact. As you know, we had a couple of days of non-operation and a blocking of our sorting center that had quite an important impact in number of parcels. And while we could mitigate last minute to a large extent, the national strike against the government in the end period. Some of our clients took at that moment of time, whether it was late at already the batches to have some of those volumes deviated. And so there, you see two elements where you have some volume leakage as a result of the strike. That being said, if we look at the start of the year, well, as always, at the start of the year is a -- is not the most relevant period. But if we see in terms of client development and contract conversion, we are on a positive flow. And so we expect, in that perspective, a good year. If we look at the impact of what we see in Middle East. I think, there's very little, let's say, direct flow from us from that side with some Postal flows, but they're quite limited. 12 countries are blocked in terms of Postal flow, but that's a financially a very minor impact on our total volume. We don't see today a reduction on the Chinese flows. Obviously, I agree with you. If there is an impact on consumer behavior likely you will see some impact on the overall spend. Still, what we've seen in the last times when that was happening was that there was a further shift towards the products which are available within the e-commerce space. And so that is something where we don't expect that there will be a massive impact on the year. Henk Slotboom: Then on the Mail volume, Chris, we have a shock-wise decrease this year, partly because of the loss of some advertising clients and the introduction of e-invoicing in Belgium, especially the latter impact. Do you think that this will mitigate the decrease in Mail volumes as of 2027 when this has been absorbed? Chris Peeters: I don't understand the question, to be honest. Can you repeat the question? Henk Slotboom: Well, if this year was the introduction of e-invoicing, if I'm correct, in Belgium. So that means that you have a shock-wise decrease in volumes, paper invoices being replaced by electronic invoices. Normally, I assume that will lead to a lower contraction of transaction Mail volumes in the year thereafter, because there's less left. Chris Peeters: Yes. I mean, I can understand what you say. But overall, we don't count on that. I think that you've clearly seen that our strategy is now to move as fast as possible towards a parcel-centric operator, and so we want to become a logistical company. You see that, that Mail decline also if we look at comparable countries that were ahead of the curve have mostly had the Nordic countries are ahead of the curve. The Baltic states are also ahead of the curve in that perspective. You see that, that decline continues to be fairly steep also in the end phase of Mail. If you look at the Denmark case still until the last year, you saw a continued steep decline in the Mail business. We see the same happening in the other Nordic countries, which actually are already at a further progressed decline in Mail that we are. And so in our plans, we don't count on that difference anymore. We actually have -- are preparing ourselves for a continued accelerated decline in Mail. And obviously, what we will do as a consequence of that, start to prepare ourselves for the usual discussion, which will be -- we will have a new user as of the 1st of January '28. And so that preparation of discussion is happening now to ensure that our operating model can follow the reality of the volumes that we have to treat. Operator: [Operator Instructions] Ladies and gentlemen, there are no further questions. So I will hand it back to Chris to conclude today's conference. Thank you. Chris Peeters: We would like to thank everybody in the call for having taken the time to be with us and for your interesting questions. Please note that we will release our annual report 2025 on April 2nd. We look forward to staying in touch and Philippe will present you our first quarter results on May 6. Thank you very much and have a great day. Operator: Thanks for participating to the call. You may now disconnect.
Operator: Good morning, everyone. Welcome to Maple Leaf Foods Fourth Quarter and Full Year 2025 Financial Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Omar Javed, Vice President of Investor Relations at Maple Leaf Foods. Please go ahead, Mr. Javed. Omar Javed: Thank you, and good morning, everyone. Before we begin, I would like to remind you that statements made on today's call may constitute forward-looking information, and our future results may differ materially from what we discuss. Please refer to our fourth quarter and full year 2025 MD&A and financial statements and other information on our website for a broader description of operations and risk factors that could affect the company's performance. We've also uploaded our fourth quarter and full year 2025 investor presentation to our website. As always, the Investor Relations team will be available after the call for any follow-up questions you may have. With that, I'll turn the call over to our President and CEO, Curtis Frank. Curtis Frank: Okay. Thank you, Omar, and good morning, everyone. Thank you for being with us here on our call today. Joining me this morning is our Chief Financial Officer, David Smales. After my opening remarks, Dave will walk through our financial results in a bit more detail. And then I'll come back to close the call. And of course, we will open the line to your questions. Before we begin, I want to take a moment to express my gratitude to all of our stakeholders for their continued support throughout our transformational journey. I also want to thank and acknowledge the Maple Leaf team for their dedication to delivering on our strategic blueprint with nothing short of excellence. The headline for today is that we have reached a clear inflection point. The heavy investment phase is behind us. We are now firmly in a delivery and return phase where our team is executing with focus, with discipline, and with care. We delivered a strong fourth quarter that capped off a year of significant financial progress in 2025. We delivered on our commitments, and we have strengthened the business in meaningful and durable ways. Most importantly, we are now seeing the tangible benefits of our transformation into a purpose-driven, protein-centric, and brand-led CPG company following the Canada Packers spin-off. Strong execution, brand leadership and the returns from our strategic investments are driving sustained growth, margin expansion, improving consistency and are positioning us for long-term value creation. We entered 2026 with operational momentum, a strong and healthy balance sheet and a sharper strategic focus. Our identity and our priorities are clearer than ever. Now let's begin today with unpacking our fourth quarter performance, a quarter of continued momentum in top line growth and growing adjusted EBITDA. We are executing against our 5 core growth platforms, which have proven resilient through difficult market conditions, leveraging our leadership in Sustainable Meats, investing in our portfolio of leading brands to grow consumer demand and loyalty, accelerating the pace of impactful innovation, expanding our geographic reach into the U.S. markets, and embedding Maple Leaf's unique and differentiated capabilities into our customer strategies. As a result, sales were $991 million in Q4, up 8.1% year-over-year, outpacing North American CPG and our competitive peer set. Performance in Q4 showed strength across both of our operating units. Prepared Foods grew 6.1%, driven by pricing and improved mix. We increased our Canadian branded market share in the quarter and branded volumes grew a clear sign of competitive strength. Poultry sales grew 13.1% in the quarter, driven by improved channel mix and volume growth across both retail and foodservice. Value-added poultry remains a structural growth engine with London Poultry, enabling sustainable mix improvements, and our Sustainable Meats business performed strongly including double-digit growth in our Prime Raised Without Antibiotics brand, helping us to expand our branded market share in the fresh poultry category this past quarter. Turning to profitability. Adjusted EBITDA was $117.3 million, up 8.3% with a margin of 11.8%, in line with last year, and an improvement sequentially from 11.1% in Q3. Input cost inflation in Prepared Foods remained elevated as we had anticipated. And while pricing actions have not yet fully recovered the inflation experienced by year-end, the path forward is clear, and our team is focused on executing the actions within our control. We implemented an inflation-based pass-through price increase in mid- to late February, which we expect will support the delivery of our outlook for this year. Apart from our financial performance, we also successfully navigated a major transformation. The spin-off of our pork operations into Canada Packers at the start of Q4 was 1 of the most significant portfolio transformations in our company's history. With this separation now complete, Maple Leaf Foods now operates as a protein-focused CPG with a clear vision to be the most sustainable protein company on earth. Our ongoing relationship with Canada Packers including a 16% ownership stake and an evergreen supply agreement securing high-quality, sustainably raised pork is functioning as designed. The focus gained through this separation allows us to concentrate resources on what we do best, build love and trust, innovate with discipline and operate an efficient, resilient supply chain at scale. Turning to the full year. While 2025 was certainly not without its challenges, we are pleased with the meaningful progress we delivered against our commitments. First, we committed to and delivered strong revenue growth. Sales were $3.9 billion for the full year, up 7.7%, reflecting industry-leading performance driven by our proven growth platforms, leading in Sustainable Meats, brand investment, innovation, U.S. expansion, deeper customer integration and continued support from structural demand for protein. We launched more than 50 impactful innovations, including 2 new brands: Musafir and Mighty Protein, both of which are tracking to plan. Our brand presence extended beyond the shelf, including the Look for the Leaf campaign, our partnership with Schneiders and the Toronto Blue Jays and our latest Team Canada Olympic program, which I will return to shortly. Second, we had committed to and delivered adjusted EBITDA growth and expanded our structural margin. Here too, we showed significant progress in 2025. Adjusted EBITDA was $476 million, up 21% and adjusted EBITDA margins expanded 140 basis points to 12.2%. We delivered $83 million of EBITDA growth through improved mix, operating efficiency, capital project benefits and our Fuel for Growth initiatives. Third, we are committed to strengthening the balance sheet. We reduced leverage to 2.1x at year-end, firmly within our investment-grade range while maintaining discipline in capital expenditures. This balance sheet strength enabled enhanced shareholder returns. We increased the annual dividend by 9%, repurchased approximately 700,000 shares under the NCIB, and paid a $0.60 per share dividend, totaling approximately $75 million. That special dividend marked a clear transition from deleveraging to a balanced investor-friendly focused capital allocation strategy, supporting both growth investment and shareholder returns. To put a fine point on it, disciplined execution defined 2025 and that same discipline will guide us through 2026. Our priorities for 2026 are clear. First, to continue to scale the core business, driving sustainable volume and revenue growth through our proven growth platforms; second, to expand our structural margins, growing profit faster than sales through mix improvement, productivity and structural cost reduction as well as pricing to recover the inflationary impacts we felt in the back half of 2025; and third, to continue to demonstrate smart and disciplined capital allocation, acting as prudent stewards of capital and prioritizing long-term value creation. In January, we provided our 2026 outlook, reflecting confidence in sustaining our operational momentum and strategic focus. To recap, our 2026 outlook is as follows: We expect mid-single-digit revenue growth from 2025. We expect adjusted EBITDA of approximately $520 million to $540 million, driven by revenue growth and margin improvement. We expect to maintain leverage below 3x, supported by strong free cash flow and prudent capital allocation. We expect capital investments of approximately $160 million to $180 million, focused on maintenance and productivity. We expect annual dividend growth of approximately 10% based on an increase in the quarterly dividend from $0.19 to $0.21 per share marking the 11th consecutive year of an annual dividend increase, and we intend to file a notice of intention with the TSX to renew the NCIB in Q1 of 2026. All to say, we remain highly optimistic about our future and at our Investor Day next week on March 10, we will provide deeper insight into our strategic blueprint, our execution playbook and showcase the strength of our leadership team that will drive long-term value creation across our business. Before I conclude, I want to come back to the Team Canada Olympic partnership, which embodied our spirit of competition. As Team Canada's official protein partner, which started last month at Milano Cortina, for the 2026 Olympic Winter Games, and we'll continue through the Los Angeles 2028 Olympic Summer Games. We are aligning our protein brands with the foundation of everyday performance, whether the day starts at work, at school or in training. The program is showcasing Maple Leaf, Maple Leaf Prime, Maple Leaf Natural Selections and Maple Leaf Mighty Protein in partnerships with Team Canada athletes serving as yet another example of strengthening our consumer connection at scale, while connecting the Maple Leaf brand to moments where Canadians come together. With that, I will now turn the call over to Dave to walk you through some additional financial context. Dave? David Smales: Thank you, Curtis, and good morning, everyone. Today, I'll comment on results for the fourth quarter and the full year before turning to the balance sheet and outlook for 2026. Overall, the key financial takeaway from 2025 is that achieving another year of profitable growth and strong free cash flow led to a further reduction in balance sheet leverage to well within our targeted range, and in turn, gives us the flexibility to increase the return on capital to shareholders. Turning to our results. Sales in the fourth quarter were $991 million, an increase of 8.1% compared to last year. This exceptional level of growth was driven by both Poultry and Prepared Foods, which grew by 13.1% and 6.1%, respectively. In Poultry, sales increased compared to the same quarter a year ago due to improved channel mix with growth in both retail and foodservice volume as well as pricing impacts. Prepared Foods sales growth was driven by a combination of inflationary pricing taken earlier in the year, along with improved product mix in the quarter. For the full year, sales were $3.91 billion, an increase of 7.7% over 2024. Prepared Foods and Poultry both contributed to this increase, driven by similar factors to those that drove our fourth quarter sales performance. Adjusted EBITDA of $117 million in the quarter increased by 8% versus the fourth quarter of last year, with an adjusted EBITDA margin of 11.8%, which was in line with last year. Increased profitability was primarily driven by favorable Poultry mix tied to retail and foodservice volume growth as well as improved operating efficiencies. These improvements were partially offset by input cost inflation in Prepared Foods, which was a headwind to further margin expansion, although sequentially, adjusted EBITDA margin improved 70 basis points from the third quarter. We have implemented pass-through price increases in the first quarter of 2026 to recover the impacts of inflation. For the full year, adjusted EBITDA increased by 21% to $476 million, representing an adjusted EBITDA margin of 12.2%, an increase of 140 basis points over 2024. Full year profitability improved in both Poultry and Prepared Foods, driven by similar factors to the fourth quarter, but also included a full year of benefits from the investments in London Poultry and Bacon Centre of Excellence. SG&A increased by $3 million in the fourth quarter over the prior year, mainly driven by the impact of variable compensation. For the full year, SG&A was up by $6 million with the impact of higher variable compensation and advertising and promotional expenses, partially offset by a high level of consulting fees that were incurred in 2024. Earnings were $391.2 million for the quarter or $3.14 per basic share compared to earnings of $53.5 million or $0.43 per basic share last year. The increase in earnings for the quarter was driven by strong operating performance and also includes the impact of 3 significant onetime items; a gain from the spin-off of the company's pork operations, a noncash impairment charge related to plant protein intangible assets, and a noncash settlement gain on a pension annuity purchase. After removing the impact of the noncash fair value changes in derivative contracts, start-up and restructuring costs, items included in other expense that are not representative of ongoing operations, and the impact of the 3 onetime items just noted, adjusted earnings represented $0.32 per share for the quarter compared to $0.18 per share in the fourth quarter of 2024. Earnings for the full year were $541.6 million or $4.36 per basic share compared to earnings of $96.6 million or $0.79 per basic share in 2024. Full year adjusted earnings were $1.09 per share compared to $0.15 per share in 2024. Capital expenditures totaled $126 million for the year compared to $94 million in 2024. The increase was mainly due to increased spend on maintenance projects. Looking ahead to 2026, we expect capital investments in the range of $160 million to $180 million, with spend focused on maintenance and productivity enhancement initiatives. Free cash flow generation remains strong with $70 million of free cash flow generated in the quarter and $318 million generated in fiscal 2025. This strong free cash flow generation was reflected on the balance sheet, which along with the repayment of $389 million of debt upon closing of the Canada Packers spin-off on October 1, resulted in net debt ending the year down by $521 million versus a year ago to $995 million. This is down nearly 50% from a peak level of $1.8 billion during our large capital project investment phase. In line with our stated capital allocation priorities, our leverage ratio remains well within an investment-grade range with a net debt to trailing 12 months adjusted EBITDA ratio of 2.1x at the end of the quarter, in line with 2x at the end of the third quarter and down from 2.7x a year ago. With strong free cash flow generation and an investment-grade balance sheet, we now have the flexibility to take a more balanced approach to capital allocation with 2025 seeing an increasing return of capital to shareholders through payment of a fourth quarter special cash dividend of $75 million or $0.60 per share, executing on our NCIB to repurchase approximately 0.7 million shares, and increasing our annual dividend at the start of 2025 by approximately 9%, and a further 10% for 2026. Our 2026 guidance reflects confidence in the growth potential of the business, and we expect to deliver mid-single-digit revenue growth and adjusted EBITDA in the range of $520 million to $540 million. I'll now turn the call back to Curtis. Curtis Frank: Okay. Thanks, Dave. Let me step back for a moment. Over the past several years, we have made significant investments to transform Maple Leaf Foods, investing more than $2 billion in world-class assets, strengthening our brands, simplifying the portfolio and building a more resilient operating model. That heavy investment phase is complete. And today, we are harvesting the benefits. We are a more focused protein CPG company with structurally stronger margins, materially lower leverage and consistent free cash flow generation. In 2025, we expanded margins by 140 basis points, reduced net debt by over $500 million and transitioned from a period of balance sheet deleveraging to balanced capital return. That's not a cyclical improvement. That's a structural one. And as we look to 2026, the strategic blueprint is clear: scale the core, expand our margins, and allocate capital with discipline. We entered this year with momentum, financial flexibility and a sharper strategic focus more so than any point in recent memory. The team is executing, and we are confident in our ability to deliver sustained profitable growth and long-term shareholder value creation. Operator, with that, we can now open the line to questions, please. Operator: [Operator Instructions] Your first question comes from Luke Hannan with Canaccord Genuity. Luke Hannan: I wanted to unpack if we could, the Poultry performance during the quarter. So you put up very strong results there, top line growth there in Q3. That seems to have extended now into Q4 as well. So I'm just curious to find out what the key drivers were, if those have changed at all? And maybe a little bit more specifically, if the volume growth was felt a little bit more in retail versus foodservice? Curtis Frank: Okay. Great. Luke, thanks for your question. Yes, we had a very solid quarter again in the Poultry business. Revenues were up just over 13%. And really, that's quite in line with a very solid full year. I think we're up a little over 10% from a revenue perspective in the Poultry business over the course of the full year. I would describe that as the real value of London shining through. And practically, that allows us to take increased allocations from supply management and get them into more and more value-added sales -- convert them into more and more value-added sales. Within Q4, our retail volume, to your point, was up significantly on the volume side, a little over 10% actually. So that was positive. It was led by our Prime Raised Without Antibiotics brand and our Mina halal brand. So we had a very positive quarter from a retail perspective. And foodservice also grew volume in the double-digit range as well. So the ability to get more value-added poultry into more value-added channels was certainly a positive for our quarter on the Poultry side. We also grew our branded market share, I think, around 1.7 share points in the quarter, which was positive as well. So it was a good strong quarter, but also a great year in the Poultry business, and we expect to be able to sustain that and carry that forward into next year as well. Luke Hannan: That's great. And then for my follow-up here, you did touch on the pricing actions that you took in mid-February. Have you seen any volumetric response to those price increases that's outside of what you would have expected from the consumer? And then also at this point, are the price increases that you intended to pass through, have those fully been implemented at this point? Curtis Frank: Yes, we've passed through the pricing in and around mid-February. So we'll get a partial impact of that within the quarter here. A little early, Luke, to determine the volume response. We're only 3, 4 weeks into the execution mode here. So I think it would be a little bit early to draw any conclusions on the volume side. I haven't seen anything abnormal to be clear. But I just think it's a little bit soon from a consumer perspective in terms of getting a view of the response to the pricing that's in the market today. Operator: Your next question comes from Irene Nattel with RBC Capital Markets. Irene Nattel: Curtis, I was wondering if you could expand a little bit on what you're seeing, more broadly speaking, in terms of consumer behavior, seeing sort of the premium end of your product mix seeing volume gains. So what are you seeing across the portfolio? And where are you seeing sort of the most pressure points and the greatest upside? Curtis Frank: Yes. Thanks, Irene. I continue to describe -- I use this word frequently, the consumer environment is quite stable. That doesn't mean it's certainly not optimized and the consumer continues to be under pretty significant stress. I mean there's even events unfolding in real time in the world that I think have the potential to add even more stress or different stress from the consumer side. So I'm cautiously optimistic, but I think stability can also be a good thing. We are seeing more of a flight to value from a consumer perspective than we have seen in previous years. Again, that environment is stable. They're buying more certainly on promotion. So we have to be really sharp from a revenue management point of view in terms of optimizing our offer to the consumer. I think protein has proven to be pretty resilient inside of that, Irene. And I really like the combination of how our growth strategies, whether it be U.S. Sustainable Meats, the work we're doing in our brands, bringing new brands to market, aligning to our customer strategies. We don't necessarily -- and we're not perfect in any every one of those in any given quarter. But the way that our growth strategies are working in combination, I think, has proven to be pretty effective for us over the course of the last year. And if you look at our outlook for 2026, we do expect that to continue as well. So I think the headline consumer-wise would be stable, still under material stress, looking for value and a lot of shopping on promotion, and we're finding ways within protein to meet their needs today. Irene Nattel: That's great. And then you just mentioned the new brands. What has been the consumer response to the brands that you recently launched? Curtis Frank: Yes, it's been positive. I mean one of the things we're proud of inside of the company is the ability to incubate and build brands over the course of time. If you think about Greenfield Natural Meat Company is a great example. What we did in our halal business with our Mina brand is a great example. And now these 2 new brand launches in Musafir and Mighty Protein . And Mighty Protein in particular, is going really well, maybe a little bit running ahead of what we would have planned. So that's been really positive in terms of the response. Musafir probably on track to what we would have expected early on. But in brand building, Irene, as you know, this is very early innings. The products haven't been in market all that long, certainly not a full year yet. And they're helpful to our results, but we should be cautious on the materiality of that help. But they are one of the many reasons that we believe we can deliver the outlook we have for next year, which is somewhere in the mid-single-digit revenue growth arena. Operator: Your next question comes from John Zamparo. John Zamparo: I wanted to ask about promo spending, and it sounds like Maple Leaf is generating a healthy return on these investments. So I wonder how you expect that to evolve in '26? And are there any products or categories where this has seen outsized investments and anything worth noting in terms of seasonality for this year? Curtis Frank: I don't think anything abnormal in terms of seasonality outside of what you would have seen in historical years. So I think a more normalized environment there. If your question, John, is around more promotional intensity? From that perspective, I mean, we have seen early on, as we passed through inflation last year, Poultry and Sustainable Meats in particular was affected quite significantly. And we've seen a good recovery there, modest. Again, I don't think we're optimized. But the fact that we're growing our Prime Raised Without Antibiotics market share, which is the premium branded player in the Poultry category, I think, is a good sign of, again, stability in the category. So I like that that's materializing. I always say that we operate at the premium end of our category for sure, and we've built that premiumness into our business over the course of time. But we don't operate in premium categories necessarily. We offer good value to the consumer. And when you think about categories like poultry, which is a great example of consumer staple, I think that's given us a lot of resiliency. So similar comments to what I shared earlier, we're seeing lots of resiliency in our portfolio, and we're not yet optimized in terms of the consumer environment. And we're hopeful or optimistic that over the course of time, that will provide some level of help, but unclear exactly how and when that will unfold. John Zamparo: Okay. That's helpful. And then on the plant side of the business, has there been any evolution on the thinking behind this, particularly in light of the recent write-down? Does management feel it needs to be in this category still? And is there anything you could say about EBITDA generation or margins in that category? Curtis Frank: Yes. We're going to -- I'll let Dave offer a couple of comments if he's got anything extra to share, but we're going to unpack that a little bit more next week at our Investor Day. So I think hold tight on that answer to that question, because I do think there's a longer-term story to be shared around plant protein. But the punchline is, we continue to be of the view that there's a pathway to profitable growth. We should always keep in mind that it's less than 5% of the revenue in the enterprise today. And I, at this stage, view it more as an upside opportunity than anything else, because we have stability in the earnings profile of the business today. And we have upside potential in terms of reaching, call it, portfolio average margins in the Plant Protein business, which I'm very confident that we have a pathway to deliver, and we'll share some more details around that next week. Dave, anything you would add or anything I missed in that? David Smales: No, I don't think so other than we see it as a very relevant long-term category within the broader demand for healthy protein. And so nothing's changed in terms of our view of the relevance of the plant protein business to our overall portfolio. Operator: Your next question comes from Mark Petrie. Mark Petrie: Just a couple of follow-ups, I guess, on topics you've covered already. But clearly, mix is helping you guys. I know it's moved around and you've been able to leverage London Poultry specifically. But where would you say you are in the evolution of mix and the specific levers you have at your disposal to try and move that in your favor? And how should we think about mix as an impact in 2026? Curtis Frank: Well, the outcome in mix was a positive one inside of the core. It was kind of the core driver of our revenue growth. So it's been very positive. We still think we have room in 2026. And again, you see that in our outlook in terms of what we've provided in terms of the revenue growth and the EBITDA margin expansion for next year, and mix will play certainly a role in that as well. I talked earlier about the Poultry benefits, which we're quite pleased with. But I would also note, in Q4, I think an important part of our story is the fact that our branded volumes in Prepared Foods grew in the 4% to 5% range. So when you get a volume growth of 4% to 5% inside of a quarter in our core brands, that's very positive to our mix. And again, proof that our brands have proven to be resilient in the most difficult market conditions here. So I view mix as a positive driver in the near term, and I think there's more to play out looking forward as well, Mark, particularly as the consumer environment continues to normalize here to a certain extent. Mark Petrie: Yes. Fair enough. Okay. And then on the last call, you sort of went through some of the tools that you have available to you as you try to sort of manage volatility in pricing and costs following the spin-off. I'm not sure if you're able to, but is there an update on those? And I guess, specifically, your price mechanisms and your approach to hedging were 2 that were sort of in the works, I guess, so to speak. I'm curious if there's an update on those? Curtis Frank: Yes. Nothing material. Again, Dave can add any color to this, that might be helpful. Nothing material. I mean those instruments, physical hedges, financial hedges, pricing mechanisms, the utilization of inventory, meaning physical hedge are things we constantly review for optimization, I think, would probably be the right way to describe it. In our business, there's no silver bullet for managing risk, but the combination of those tools can be helpful in stabilizing earnings to the best of our ability. I mean we don't give quarterly guidance for a very specific reason, which is we expect some level of normal CPG food change quarter-to-quarter in our margin structure, and we try our best with those instruments to smooth the outcomes the best we can. But again, there's no silver bullet. We've been reviewing them from day 1 or before day 1 of the separation, and we'll continue to do that moving forward. But Dave, is there anything you'd add? David Smales: No, I think the key comment was there's no silver bullet or step change. It's just a question of ongoing optimization of our approach and things we can do to offset in the short term. But we'll still be operating in an environment where there's time lags in terms of passing on pricing. But everything we can do in and around that is what we're focused on. And it's something that won't change going forward in terms of our focus, but don't expect an ability for us to come and say we've taken all volatility out of the business and you'll never see any change in margin from quarter-to-quarter that isn't ultimately realistic, but we'll continue to work away at managing any variance in input costs, et cetera, as much as we can in the short term. Operator: Your next question comes from Vishal Shreedhar with National Bank. Vishal Shreedhar: Related to the margins, my understanding was that there could have been some sequential pressure on margins quarter-over-quarter [Audio Gap] quite resilient. I want your perspective on that. Is there some fuel from growth initiatives helping? Or is that just that quarter-to-quarter volatility that you referred to? Curtis Frank: Vishal, sorry, you cut out a little bit there in your question. Were you asking about from Q3 to Q4, the kind of change in margin and whether it was in line with what we would have expected? Vishal Shreedhar: Correct. It appeared to be a bit more resilient than I would have anticipated given the commodity pressure which I anticipated. Curtis Frank: Yes. Well, we saw -- I think the big thing is, you saw a seasonal decline in input costs, seasonal, Q3 to Q4. That's quite normal in our business. I wouldn't say it's perfect, but quite normal to see a seasonal decline, but still elevated year-over-year. So really important to put that in context. Seasonal decline in raw material input costs, meat costs predominantly, but still elevated year-over-year, which drives the need for the pricing change we've made. The big story, though, was the mix improvement year-over-year, and that's where the positive resiliency came from. What I commented on in the Poultry business earlier, more retail and foodservice sales and the 4% to 5% branded volume growth in the Prepared Meats side. Those were really a positive and mitigated some of those challenges. That, along with the work we put in place in our Fuel for Growth kind of cost playbook initiatives, those 2 things were positive. The inflationary environment was a headwind. And all in all, we made a decent sequential improvement quarter-over-quarter. Vishal Shreedhar: Okay. And looking at your 2026 outlook, you talked about some of your branded volumes growing in kind of mid-single digits, and you're expecting that kind of revenue growth, but you've also taken pricing. So is the takeaway that you expect the volume growth to slow through 2026 and pricing to be the majority driver of revenue? Curtis Frank: Well, pricing will play a role. I don't think I can break it out perfectly, but I expect a positive contribution next year from price for certain, because we'll be advancing our pricing early in the year from volume, maybe to a lesser -- 4% or 5% volumetric growth in a quarter is positive, but I don't know that, that's the sustainable long-term view that you should take. And I think that's running maybe a little bit hot from an overall portfolio perspective. And I also expect mix to be positive again next year. So I think we can think about it as a relatively balanced combination of mix of volume and a price-led growth for 2026. Vishal Shreedhar: Okay. And I just wanted to get your take on industry growth currently, not necessarily MFI growth, but industry growth in the categories that you participate in versus the longer term. This increased demand for protein from consumers, are you seeing that play out in the industry? And is that a factor that you'd anticipate as well to benefit your 2026? Can you give us some context around how strong that demand is? Curtis Frank: Yes. I can. Yes. Thanks, Vishal. On the revenue side, the consumer packaged goods revenues in North America are growing depending whether it's Canada or the U.S., but they're in the 2% to 3% range in North American consumer packaged goods broadly as an industry. If you narrow that down to poultry, and we track -- the best way I could describe that to you is in peer comps, there are 4 we track really closely. And that's probably running a little bit maybe around double that rate, 4%, 5%. So 2% to 3% CPG, 4% to 5% in our protein peers. And then our revenue in the last 12 months running at 7.7%, so ahead of that. So protein outgrowing CPG, Maple Leaf outgrowing protein, I think, would be the headline. Operator: Your next question comes from Etienne Ricard. Etienne Ricard: You've talked multiple times about expanding your reach in the U.S. market with, I believe, about a dozen products on the shelves currently. How have you been able to gain traction in this market? And would you say it will be easier to move from a dozen products to, let's say, 20? Curtis Frank: Well, that's what I always tell my commercial team. I always describe it as getting the first 12 in a new market is an incredible feat, very, very difficult. You need to have a meaningful point of difference to enter a new market. We have that in our Sustainable Meats business. I need to establish a trust and credibility with customers. That's everything from relationships to supply chain and so on. So those are foundational. But once you have the first 12, at least in theory, it's easier to scale from 12 to 20 than it is from 0 to 12. So we have those relationships in place. We have the platform in the U.S. We've got a great team of people on the ground in Chicago, an office and innovation center, a portfolio of great products in both meat and plant protein. So I'm confident in our ability over the next few years. And again, we'll be talking about this next week at our Investor Day in our ability to continue to scale up our U.S. platform at a reasonable pace that will contribute to long-term growth in the company. Etienne Ricard: Okay. Looking forward to it. And just to circle back on the new products that you've introduced recently, how long does it typically take for these to reach profitability levels that are similar to company average? Curtis Frank: It depends. There isn't a golden rule in that area. And it depends on things like -- some are accretive from day 1, some take a little longer. The marketing investment plays a role in that. The manufacturing footprint plays a role in that, internal, external scalability of volumes, all those factors. So I don't think there's a golden rule. But certainly, we would expect, within the first 12 months or so, for the innovations to be running at portfolio average or accretive margins to the balance of the portfolio. Operator: [Operator Instructions] Your next question comes from Michael Van Aelst. Michael Van Aelst: I might have missed it earlier, but I was impressed by the double-digit growth in RWA Prime on the poultry side. But it kind of conflicts with your comments on the stressed consumer. So can you kind of explain what you think is happening with the consumer when it comes to RWA Prime? Because we know that consumers traded down and away from that when the stress started to increase. What are you doing to get it to come back? Curtis Frank: Yes. We're seeing a real bifurcation in the market. I mean it started to show up first in the U.S. data, and it's finding its way in the Canadian market as well to a certain extent. But when we say the consumer is under stress, and I believe that's true, and we definitely see that in our business, Mike, there are places where we've shown more resiliency than others. Poultry is a great example of that. I mean it's the most consumed protein. It's the fastest-growing meat protein. It's a staple in the consumer diet. And I think largely consumers care about the offering that they're putting into their bodies. And what we offer in our Prime Raised Without Antibiotics portfolio is a strong proposition. Our market share in branded poultry is nearly -- it's 15x to 20x, Mike, our next branded competitor, 15x to 20x. So we have a market positioning that I think is admirable, and we've been able to capitalize on that. So it's not something we take for granted. We work hard to earn that right in the Poultry business. But at the same time, it is one pocket of really great news in a tough consumer environment. Michael Van Aelst: Yes, that's interesting. And then on your price increases, I know you said you implemented them mid-February roughly. I don't know if that was a little delayed from original expectations by a few weeks or not. But can you just talk about whether you were able to get the full price increase you were expecting given how much the retailers have been pushing back on suppliers in general? Curtis Frank: Yes. I mean I'm not going to comment on any specific customer relationship. I don't think that's appropriate. But at the end of the day, yes, we implemented our pricing in the quarter. And how much of that sticks, I think, will be more consumer. The stickiness of that pricing will be more about optimizing the offer to the consumer than anything else, and balancing price mix and volume here looking forward. And again, I said it earlier, 2 or 3 weeks later isn't the time to evaluate the consumer response. It's too soon, 2, 3, 4 weeks. But we'll see how that unfolds here in the coming months. It's normal, as you know, in our business, Mike, you've been around our story for a long time to see some consumer response in the near term following pricing to volume. That's a normative bit of a drop-off in volume following pricing. A little period of time goes, you get the volume and the market share back. I think we've had a pretty -- you continue to use the word resilient response in the last 24 months, but we're being mindful of and watching closely what the volumetric response is. And I do expect some period of adjustment like there normally is, but we'll see how that plays out here in the next little while. Michael Van Aelst: Does the volume growth that you talked about for brand volumes of 4% to 5%, poultry volumes strong, does that give you any maybe confidence that you might be a little bit more resilient to a volume reaction this time or at least a negative volume reaction to the price increase? Curtis Frank: It could be. I hope that's the case, but we'll watch it very closely. I think we'll watch it very closely. And I hope that's the case. Operator: Your next question comes from Mark Petrie. Mark Petrie: I want to follow up, and I understand there are constraints on your ability to buy back stock as a result of the spin-off and the shareholder agreement. But just in terms of setting expectations, how should investors think about the targeted pace of buybacks for 2026? Curtis Frank: David, do you want to do it? David Smales: Yes. So our intention is to renew the NCIB looking forward over the next 12 months, and to be active with the NCIB. We'll talk a little bit more next week about capital allocation priorities and where the NCIB fits into that. But we expect to be active in buying back shares over the next 12 months. Mark Petrie: Can we look at the activity in Q4 as an appropriate sort of run rate level? David Smales: Yes. I don't want to set expectations that this is going to be a consistent run rate based on any one particular quarter. As I said, we'll talk a little bit more about it next week, but we have been active. We still think the share price is fundamentally not reflecting the underlying value of the business. And that's why we'll continue to be active -- within the constraints you noted in your question, we'll continue to be active in buying back shares. Operator: Your next question comes from Irene Nattel. Irene Nattel: I just wanted to follow up on the comment you made earlier on in the call, Curtis. On the Poultry side, you said that the investments in London Poultry have allowed you to take increased allocations from supply management and convert them to more value-added sales. And I'm wondering how easy or not it is to do that, and what we should be expecting on that front as we move through '26 and beyond? Curtis Frank: Well, the big benefit or one of the big benefits, Irene, that London Poultry gave us, as you know, we consolidated 4 plants into one. And the previous network didn't have the capacity or the capabilities. In some cases, it was maybe wet chilled chicken versus air chilled chicken, different format, didn't have the capacity or the capabilities to convert all of our raw material into a premium air-chilled chicken. And London increased the capacity to process chicken into more tray pack, so retail tray pack out of industrial, out of the low-margin industrial channel and into the higher-margin tray pack retail channel, more value-added sales. So we see stronger consumer demand for poultry. Poultry demand is growing. Allocations for poultry that are set through supply management are growing in response to that higher demand. And our ability to take those higher allocations and get them into a value-added tray is secured by London Poultry. And that makes us, I think, distinctive and unique in the marketplace. From a competitive position, I think it's a structural competitive advantage to be able to do that. And it's one of the reasons, again, why we had such a strong year, and we think we'll have a solid year in 2026 as well. Irene Nattel: I appreciate that. But to clarify, and I apologize if I don't know this already, but if there's an increase in the allocation from the supply management, can you take larger than your pro rata share of that increase in allocation? Curtis Frank: No, no. No. So then it's just a question of whether or not every participant can take that higher allocation and process it into the highest value areas that they would prefer to, and we can. Irene Nattel: Okay. So you can do what you want with the increased allocation, but you can't take more than your pro rata share? Curtis Frank: Roughly correct. Yes. Operator: There are no further questions at this time. I will now turn the call over to Mr. Frank for closing remarks. Curtis Frank: Okay. Great. Thank you, everyone, for joining us today. We had certainly what we view as a strong Q4 that capped off a year of material progress in 2025. Our sales grew at 7.7%, our adjusted EBITDA at 21% and our margin by 140 basis points to 12.2%. So it was a year that I think our people and our stakeholders can be pleased with and proud of. That said, our work is not yet done, and our 2026 outlook certainly reflects that, another material step forward in executing our strategic blueprint. And of course, we have our Investor Day next week. So I put in a plug that I hope all of you will be joining us and where we aim to unpack our strategic blueprint of the future. So looking forward to the discussion next week, and thank you very much for joining us here today. Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Bank Hapoalim Fourth Quarter and Full Year 2025 Results Conference Call webinar. For your convenience, this call will be accompanied by a PowerPoint presentation. May we suggest, if you have not yet done so, that you access the presentation on the bank's website, www.bankhapoalim.com, by clicking on financial information on the homepage and then click on the annual report presentation. [Operator Instructions] As a reminder, this conference is being recorded March 5, 2026. With us on the line today are Mr. Yadin Antebi, CEO of Bank Hapoalim; Mr. Ram Gev, CFO; Mr. Victor Bahar, Chief Economist; and Ms. Tamar Koblenz, Head of Investor Relations. I would like to remind everyone that forward-looking statements for the respective company's business, financial condition and results of its operations are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated. Such forward-looking statements include, but are not limited to, product demand, pricing, market acceptance, changing economic conditions, risks in product and technology development, and the effect of the company's accounting policies as well as certain other risk factors, which are detailed from time to time in the company's filings with the various securities authorities. In the event of the siren in Israel, we will pause briefly and resume the call as soon as possible. Mr. Antebi, would you like to begin? Yadin Antebi: Thank you. Good afternoon, and thank you for joining us for our review of the bank's 2025 results. We are publishing our financial statements and holding this call at a time when the geopolitical environment in the Middle East and around the world is undergoing material change. We continue to witness Israel's unique resilience and its ability to adapt rapidly. Throughout its history, Israel has consistently emerged stronger from periods of adversity. And we believe that after the current conflict, the economy is positioned to regain strength and to continue to grow. With this environment, Bank Hapoalim will continue to play a meaningful role in supporting the recovery and growth of the economy. Let us now turn to the results. We ended 2025 with very strong results. Net profit of ILS 9.8 billion, return on equity of 15.9%, loan growth of 13.4%. These results reflect the disciplined execution of our strategy, which I will touch on shortly. Alongside these strong financial results, this was a year of significant activity across the bank. We addressed a number of innovative and impactful initiatives, including growth across all business segments. The introduction of 2-year financial targets, the distribution of bank shares to our customers under the Bank of Israel outlined, the launch of an AI bot that supported the share distribution process, a new marketing strategy of proactive banking and a major step forward in the development of Bit, our payment app. All these efforts led us to deliver results that exceeded the targets we published a year ago. Net profit of ILS 9.4 billion excluding income of insurance versus a target of ILS 8.5 billion to ILS 9.5 billion. Return on equity of 15.3% excluding net income versus a target of 14% to 15%. Credit growth of 13.4% compared with a target of 7%, dividend payout of 50% for the year, or 53% for the moment the Bank of Israel permitted to distribute more versus a target of at least 50%. Looking ahead, it is clear that the macroeconomic environment has changed compared with a year ago, when we published our targets for '25 and '26. GDP growth assumptions have improved, but market implied interest rate and inflation are lower for the next 2 years than they were a year ago. Nevertheless, most of the updated 2-year targets we are publishing today are higher than the previous ones. For '26 to '27, we expect net profit of ILS 9 billion to ILS 10 billion, return on equity of 14% to 15%, accelerated loan growth of 8% to 9% and a higher payout ratio of 50% to 60%. It is important to note that towards the end of the year, we will begin the relocation to the new Poalim Center building. As part of this transition, we intend -- initiated steps to realize and enhance our own real estate assets. Accordingly, starting in 2027, we expect to recognize pretax gains of between ILS 800 million to ILS 900 million, which we have reflected in the updated targets. Regarding special tax on banks, our assumptions reflect an impact similar to that of the past 2 years. I would like to briefly review the progress we have made in executing the strategic focus areas we approved about a year ago. As a reminder, our strategic focus are -- areas are sales growth, leadership in service and fairness, Bit as an innovation engine, operational and efficiency, GenAI and data. In our retail activity, the focus is on strengthening sales capabilities across all channels, branches, call centers and digital. To support this, the division underwent an organizational restructuring designed to enhance sales effectiveness and customer service. We adopt a proactive service model and introduce new service standpoints. Naturally, many of these processes intersect with technology and here, too, we made a substantial leap forward with the implementation of an AI bot as a foundation for future automation. In mortgages, we made a major improvement in SLA, which also helped us improve pricing. Here as well, we are already seeing results, including an increase in our marginal market share. In corporate banking, our goal is to accelerate growth with maintaining excess portfolio quality and healthy margins. One of our key achievements this year was a significant reduction in the end-to-end credit approval process, benefiting both our customers and our growth objectives. We also enhanced our digital offering for corporate clients, and today we provide fully digital end-to-end services. In our capital markets activity, we are the #1 player in Israel, both the country's largest brokerage and as leading trading. Poalim Equity, our real asset investments arm, continued to grow at an average pace of about ILS 1 billion per year. This year, it also recorded substantial realizations resulting in strong profitability. Bit is a success story I am extremely proud of. With 3.5 million active customers and an annual P2P transaction volume of ILS 30 billion, notably, 2/3 of our Bit customers conduct their primary banking activity with other banks, representing a major growth opportunity for us. Over the past year, Bit reached an important milestone with the launch of new products and services that generate revenue and/or reduce costs. We intend to continue expanding our offering to provide Bit users with solutions that simplify and enhance their financial management. We are already a highly efficient bank with a cost-income ratio of below 35%, but we still see room for further improvement. We have a retirement program under which about 10% of our workforce will retire by 2028. In addition, we are making significant efforts to reduce other operating expenses. These are not. There are no shortcuts here, just virtuous management. We are already seeing solid results with a nearly 8% reduction in other expenses this year. Alongside this potential I described, I would like to highlight several strengths as we enter 2026. We have accumulated the largest credit loss reserves in the sector, which I believe will decline in a more stable geopolitical and economic environment. We have the highest financial margin in the industry, reflecting profitability-oriented growth, and disciplined balance sheet management. We hold significant gains in the available for sale portfolio, while competitors carry losses. And as noted, we intend to sell our real estate assets, similar to steps already taken by peers, and recognized pretax gains of ILS 800 million to ILS 900 million starting 2027. Today, nearly every bank or company speaks about GenAI and data. We're not only talking, we have made substantial progress in this area. Our goal is to expand the use of capabilities to support operational and business processes, reduce SLA and more. One of our successful use cases is Danit, our AI bot, which handled thousands of customer calls during the share distribution campaign we conducted. The bot handled the most calls and completed the process end-to-end. Before I hand over to Ram to review the quarterly and annual results, I would like to reiterate our targets for '26 and '27. Net profit of ILS 9 billion to ILS 10 billion, return on equity of 14% to 15%, accelerated loan growth of 8% to 9% and higher payout ratio of 50% to 60%. Thank you, and Ram, please go ahead. Ram Gev: Thank you, Yadin, and good afternoon to everyone on the call. I'm happy to walk through the bank's fourth quarter and full year 2025 results in the next few minutes, and discuss the key drivers behind what we consider an exceptional year for the bank. A year marked by a high return on equity, nearly ILS 10 billion in net profit, strong business momentum and all supported by excellent capital strength and high-quality credit metrics. Let's dive into the numbers and start with Slide 20, where we are showing the continuous growth in profitability. This morning, we reported a 15.9% return on equity for the full year with net profit of ILS 9.8 billion and an EPS of ILS 7.43. Adjusted for the ILS 380 million income we recorded from insurance reimbursement in the third quarter, ROE is 15.3% and the net profit is ILS 9.4 billion, both comfortably above our financial targets. The fourth quarter profitability was impacted by a negative CPI and a onetime ILS 200 million provision made in respect of the labor dispute. As a result, the reported ROE of 13% for the quarter does not fully reflect the bank's underlying profitability. Next, let's talk about our credit book. We continued to deliver strong and high-quality growth throughout the year. In 2025, total credit increased by 13.4%, of which 4.9% in the last quarter, to a balance of more than ILS 500 billion. Another important key quality of our portfolio is its diversification across segments. This is a key parameter not only from a growth and risk balancing perspective, but also because it gives a greater flexibility to be selective in how we grow, and to allocate growth to areas where we see stronger profitability profile. And indeed, growth was recorded across all segments in 2025 and in various economic sectors. This is a reflection of our ability as a leading bank to translate the strength of the remarkable Israeli economy into growth in our activity. Corporate credit grew 25.8%. Commercial credit, essentially middle market businesses, grew 11.3%, and retail activity, consumer mortgages and small businesses grew roughly 7% to 12%. The next slide, Slide 23, presents our financing income. The consistent growth trend in our financing income and margins reflects 2 key factors. Increased business activity combined with government bond portfolio repositioning. As a reminder, as part of this process, we realized losses on legacy securities, mostly in 2024, and we invested in higher-yield and longer-duration assets. This resulted in 9.6% growth in total financing income and a slight increase in the financial margin. This was achieved despite the lower contribution from the CPI and ongoing competitive pressure on margins and unlike all our peers. On the right-hand side, we show the income from regular financing activity excluding the CPI, which is consistently growing, and further highlights the aforementioned key strengths. In this slide, we take a quarterly view of financing income. The volatility of the CPI resulted in a gap of over ILS 650 million between the fourth and third quarters. This is the reason for the decrease in income from regular financing activity and margins. Here as well, we show the income from regular financing activity excluding the CPI which due to the growth in activity continued to grow nicely. On fees, the positive trend continues across various types of fees. So our business activity continues to expand. Total fees grew 11.3% in 2025 driven by most fee types such as securities conversion differences and account management fees. The increase in credit card fees is mainly attributed to one-off revenues received from the international card organizations. Let's move to present our disciplined cost management. The takeaway here is that even alongside the impressive growth in our activity, total expenses are down, or if we adjust for one-off, total expenses remained flat year-on-year. Looking at the cost-income ratio in both presented years, there were one-offs. In 2024, we provisioned for an early retirement plan of almost ILS 600 million. And on the other hand, 2025 income included the insurance reimbursement. So if we look at the adjusted figures, the cost-income ratio is down to the mid- to low 30s. This is among the lowest efficiency ratios globally. In the fourth quarter, expenses increased due to several nonrecurring items, primarily the provision related to labor dispute at the bank. Just to give you some color, we are currently working on structural changes to the bank's employment framework, changes that will yield benefits for many years to come. While no agreements have been finalized yet, we have recognized a provision in anticipation for future settlement. On Slide 27, our productivity ratios, which have been improving over time, both income per employee and credit per employee support the positive jaws effect. Moving on to discuss provision for credit losses and the quality of our book on Slides 28 and 29. Provision for credit losses amounted to ILS 421 million or 0.31% of our credit book, driven completely by collective allowance and net automatic charge-offs. The increase in the collective allowance reflects our prudent approach and is due to the growth of the credit portfolio and the continued uncertainty in the economic environment. Individual provision, however, saw income due to recoveries. It's important to highlight that this prudent approach places us in the strongest position entering 2026 relative to peers with high reserve levels and the highest reserve ratio across a range of scenarios. On credit quality metrics, on the left-hand side, we see the NPLs continue to drop, now at 0.48%, while the NPL coverage ratio continued to rise to more than triple the NPLs as we continue to increase the collective allowance. On the right-hand side, the allowance to loans ratio remained high at 1.72% and over 95% of the total allowance is collective. In the next slide, the bank has the largest retail deposit base in the sector, which provides a significant competitive advantage. Our deposit base continued to grow in 2025, 3.2% in the last 12 months. Retail deposits decreased this year but still represent 54% of total deposits. Liquidity ratios, LCR and NSFR, continue to be well above the minimum requirement. Now let's move to present our capital position, which continues to benefit from strong organic generation capabilities, leading to 11.2% growth in the last year. The CET1 capital measure was 11.98%. And you can see in the waterfall graph, the contribution of our strong profitability, and to a lesser extent, the positive OCI allowing for substantial growth in activity as well as substantial profit distribution to our shareholders. On dividends, our strong capital position allowed us to increase our profit distribution where in addition to the 50% payout, we declared a distribution of additional ILS 200 million. This sums up to 60% distribution for the fourth quarter, 48% by cash dividend, ILS 0.79 per share, and the rest through share buybacks. So for 2025, total shareholder distribution amounted to 50% of net profit, consistent with our financial target, driven by a ILS 4.1 billion cash dividend, reflecting a 4.6% yield and ILS 4.9 billion total distribution. Before we move to briefly discuss macroeconomics, I'm moving to Slide 33 for a quick update on our expected real estate asset sale. As you know, and as some of you have noticed when passing by, we are currently constructing the bank's next headquarters building in Tel Aviv called Poalim Center. Beyond the financial significance of this move, which will allow us to further align our organizational culture with our future plans, including by bringing all headquarters employees together under one roof, rather than being scattered across several buildings as we are today. The planned relocation will start at the end of this year, and we expect to sell existing properties from 2027 onwards. As this event is approaching, and we are already progressing with the betterment of assets and sale processes, we have provided disclosure in the financial statements regarding initial estimates for the expected profit from the sale of our main properties, estimated at ILS 800 million to ILS 900 million before tax. Let's now talk briefly about macro situation in Israel. While each military conflict is unique, past episodes offer a useful framework for assessing the current operations economic impact. We expect a temporary slowdown in activity broadly similar to the second quarter of 2025 contraction and dependent mainly on the operations duration followed by a partial rebound. The economy entered the year with solid momentum and assuming the operation remains short, GDP growth is still expected to exceed 4% this year. As shown on right-hand chart, the shekel has strengthened as markets view geopolitical risk as moderating, supported by another strong year in high tech, including several large acquisitions. Headline inflation has eased to 1.8% year-on-year, partly due to currency operation. Our base case assumes low persistent inflationary impacts from the current operation, keeping near-term inflation contained. The policy rate has been cut to 4% with inflation expectations well anchored, and market pricing implies roughly three additional cuts by year end. So to summarize, 2025 saw very strong performance across all metrics, well above our financial targets. Return on equity was 15.9% or 15.3% adjusted for the income from insurance. Financing income and margins continue to be strong, driven by the growth in activity and asset rollover. The strong growth in credit of 13.4% during 2025 was broad-based across all segments and economic sectors. This was achieved with no compromise on the quality of the book as reflected in the NPL ratio of only 0.48%, and allowance to NPL ratio of 310%. In the fourth quarter, we declared on a 50% distribution plus ILS 200 million from existing capital services. So the overall payout ratio in 2025 was 50%. And then lastly, we introduced updated financial targets for 2026 and 2027. ILS 9 billion to ILS 10 billion net profit, ROE target remains 14% to 15%, credit growth target base increased to 8% to 9%, and profit distribution of 50% to 60%. To conclude, we are proud of the strong performance this year and of the clear, ambitious targets we have set for the next 2 years. We are well positioned to continue delivering substantial plan. We will now be happy to take your questions. So back to you, operator. Operator: [Operator Instructions] The first question is from David Kaplan. David Kaplan: I have first couple of questions on the bank's sensitivity to interest rates. You have those tables that you gave at the beginning of the report. And I'd like you to help us understand a little bit why is it that the 1% change in the interest rate has a greater impact on the equity of the bank than it does on the P&L. Start with that. Yadin Antebi: I'm not sure I understood the question, David. I can repeat. We give -- we, of course, disclosed our interest rate sensitivity. It's around ILS 800 million. As you refer to the equity side? David Kaplan: I'm talking about the table that's on Page 90 of the report where you talk about an increase or a decrease in the interest rate by 1%, and the impact it would have on the equity of the bank after tax, right? And it's about ILS 1 billion, whether it's up or down. But on the table that's just above that on the same page, you -- where you go through the income statement, the impact is much smaller or much different. And so how does that work through the P&L of the bank? And why do we see a greater impact on the income than we do on the -- sorry, on the equity that we do on the income of the bank. Yadin Antebi: The important figure here is the ILS 800 million, David. That's the full influence the bank's top line and the income. We probably have disclosure on the capital as well, but it's not -- I don't think it's a material disclosure. David Kaplan: Okay. I guess maybe the second question I have is on -- you mentioned in your presentation and in fact, it's true that you managed to maintain first of all a higher NIM in 2025 than in 2024, which given the interest rate environment was already surprising given the -- what we see the trends we've seen in other banks in the market here. What is it about your mix of business that allows you to do that? Yadin Antebi: It's not -- I think it's not the mix of the business, but it's the discipline of the organization and the emphasis that we put on spreads. There are areas that spreads are going down, of course, but we put a lot of value not only growing the business, but also pricing both the deposit side and the credit side was the right measures. Of course, we have a lot of competition around. And we have to deal with that as well. But pricing is very important from our point of view, both deposit and credit side. Ram Gev: Maybe if I add to what Yadin said. Well, the main factors on the NIM, globally and here in Israel as well are the interest rate environment, inflation environment and the margins. So what is important to us is to be with the highest NIM in the industry. And you can see that we are well positioned entering 2026 relative to our peers in our NIM. And we want to keep -- to be in that situation to hold the highest NIM in the industry. Obviously, the impact of changes in the interest rate is -- will affect everyone. But like Yadin mentioned, discipline on pricing and what we did when we repositioned our -- part of our securities portfolio when we sold it in 2025 and extended duration enable us to maintain relatively stable NIM during this year compared to 2025, and that's positioned us more favorably looking at the future. David Kaplan: Okay. And then just one last question on the financial targets that you gave for '26 and '27. Presumably, you're taking into account there the market expectations for inflation and for interest rates. At any point, do you look at it from your internal projections for those things? Or do you always look at it from a market perspective? That's the first question. And second of all, if something were to change drastically and expectations were to see rates or inflation, the expectations for rates or inflation change significantly, would you update your targets? Yadin Antebi: Yes. Thank you, David, for that. We spent a lot of time last time on March before we published our '25 and '26 results. And we have different ideas and discussions internally, what will be the right figures to publish. What we decided last time and we were consistent with last year's decision is we don't want to play around any goals or projections of interest rates or inflation because that will make your life much harder in analyzing our profitability. So what we decided was just to take market pricing for both inflation and Bank of Israel interest rate because we're very sensitive to that, as you, of course, know. So moving those numbers and taking other figures will make our projections and our targets seem like not eligible enough. Regarding the second part of your question, we don't intend to update on every move of the interest rate. And you can see that we just discussed the sensitivity. There are many metrics that move around, not only interest rates, we feel comfortable with the guidance and the targets that we have published for these 2 years. David Kaplan: Okay. Great. Sorry. I actually do have just one more question. I was looking at the tables towards the back of the report, the volumes versus pricing. And in this current year, volume had a much greater impact on the change in net interest income than did pricing. And I guess that partly had to do with the lower-than-expected inflation, I guess, over the course of the year. But in comparing it to the change in volume and pricing in the previous year, where there was a much greater split, can you talk a little bit about how you managed to generate so much income simply off of the volume growth? Yadin Antebi: The book is growing and the balance sheet is growing. So we're making, of course, more profit on a larger balance sheet. And we're balancing it or we're mitigating or we're trying to mitigate where we have pressure from the market in terms of pricing. So that will be like our normal course of handing the bank, the business. David Kaplan: Okay. And what was the impact here though, from inflation? Or was it a minimal? Yadin Antebi: Can you ask that again, please? David Kaplan: What was the impact of inflation on the change in pricing here when I look at that table? Or is it not really an effect. Yadin Antebi: The change in pricing? David Kaplan: How do -- how did the CPI affect the change in income within pricing? Yadin Antebi: No. Inflation more or less doesn't change pricing. Okay. You're talking about pricing of the credit spreads? David Kaplan: We can take this offline and discuss it later. Operator: The next question is from [ Jan ] Benning. Canberk Benning: Just one on the cost-to-income ratio. So both the adjusted and the stated cost-to-income ratio came down quite -- I think, quite significantly from last year. I'm just wondering if, going forward, you have a specific cost-to-income ratio in mind. I know you haven't published anything, but I'm just trying to think -- obviously, cost efficiency is an important objective for you. And I'm just trying to, one, think about how far you think that cost-to-income ratio can come down. And whether -- sort of a secondary question to that is whether any artificial intelligence initiatives you are implementing across the bank can support both the revenue line and also bring costs down. Yadin Antebi: Thank you, Jan, for that. Yes, of course, we have an internal cost-to-income target or ratio that we follow both for '26 and '27. We follow and we have a lot of work. I talked about it in my part, and Ram also talked about it. Operational efficiency is a major issue internally. We put a lot of effort to make sure that we're continuing on the right path of making the bank more efficient than it is today. You know we discussed in previous meetings the efficiency program that we have and the reduction of the number of employees. We believe AI, and I talked about that as well, will have a major impact on the bank, okay, in terms of the call centers, in terms of the people that write code here. We have a very large technology division, hundreds of people that write code. So this is something that will dramatically affect AI the way we write code here. We do have different AI initiatives internally also within writing code, for example. But I'm very open at this stage. None at this stage has gone down to the bottom line of the P&L in terms of reducing expenses up to 2025. Looking forward, I'm sure that we will have dramatic changes that will implement -- will be implemented both in the call centers, both in writing software, changing the way we operate in terms of SLA regarding how fast we reach our clients. So these will all go down to our cost base. Last part of your question, you asked about the technology expenses. Yes, they are high. We're taking the best engineers in Israel. I think we discussed at the time that we got in the guy that ran the tech division of Playtika. He is running today since I think March 2025, the IT division within the bank, building internally new people, new ways of writing software, going faster to market, using AI better, different metrics and know-how that he knew and grew up actually from the gaming industry, which is a very, very sensitive industry in terms of AI and technology. So going back to your question, yes, these will all be impacted on the P&L of the bank looking forward. Canberk Benning: That makes a lot of sense. And then my second question is just looking at the credit growth target that you've got. So you've got 8% to 9% across '26 and '27. I'm just wondering is there any specific areas of the credit book that you're looking to grow? And any areas that you're looking to gain market share and whether that's greater market share in the retail segment or in corporate? Just some color on that would be useful. Yadin Antebi: Just like 2025, we're a very large bank in Israel, more or less 25%, 30% market share depending on the different areas that we bank with. So we will sell credit all around, whether it be retail or small businesses or middle market companies or large corporates, it will be on different sectors. It will be on infrastructure in Israel. It will be on real estate, it will be with hotels. So we're all around. There's no specific sector that I think we will say this is where we want to grow because we're very strong on all sectors. Operator: The next question is from David Taranto. David Taranto: This is David Taranto with Bank of America. The first question is a follow-up to my colleague's question on efficiency. Could you please elaborate a bit on your existing efficiency plan? Is the program tracking in line with your initial expectations in terms of pace, headcount reduction and cost savings? Or should we expect any change to the timing, or magnitude of the planned savings? Yadin Antebi: David, congratulations for your first call with us, and thank you again for covering the banks in Israel. Cost program, as we said in our December '24 financial statements, it's a 770 employee reduction done through 4 years, starting 2025. We started to implement it. Our full savings will be realized 2028. We disclosed that figure of ILS 300 million. There is -- there are conflicts internally in terms of our internal union. They didn't like the plan too much. So we do have discussions. Discussions have started. They are not concluded yet. We will -- I believe we will meet our 770 program on time. David Taranto: Okay. And the second question is on the asset quality. Your coverage ratios are extremely high and most of the provisioning remains collective. And can you break down how much of the collective allowance reflects managed macro overlay versus what comes purely from credit models? And what would trigger you to release any excess overlays this year? Yadin Antebi: Yes. Thank you, David, for this question as well. This is something we were very different in 2025 compared with our peers. We thought that 2025 is a year that we should be very conservative in terms of provisions. Even though you will not see within our books any material specific losses, we thought it would be right to be conservative and to continue to accumulate more credit provisions. We did that through the year and also Q4 2025. Looking forward, we think -- and I mentioned that when I talked about entering '26 and '27, we think that this is one of our key strengths looking forward because if we were right -- if we are right and Israel is going on the right track in terms of the geopolitical situation, in terms of the growth of the economy, in terms of things going back to normal in Israel, we have high reserves that we hope we will be able to release. But this is looking forward, and will be managed, of course, during '26 and '27. Ram Gev: David, if I can add to what Yadin said and elaborate. So we implement the CECL methodology on provisioning on credit losses. And overall, we run, let's say, 3 scenarios. So -- and we weigh those 3 scenarios into a combination. We have a baseline scenario of pessimistic and optimistic. By the way, the reality is better than the optimistic scenario actually. So it's hard to separate the elements that you mentioned because the actual figures are a combination of these 3 scenarios. Adding to that, some qualitative elements that we put to reflect uncertainty. But I think you can get a figure to -- what you asked, if you look at our coverage ratio standing at 1.72% and compare it, let's say, to our peers, you'll see that we have, let's say, roughly 30 basis points up to the average. So that reflects -- roughly reflects our conservative approach, hopefully, to meet the positive and optimistic scenario. David Taranto: That's clear. And 2 more, please. The first one on the expected pretax real estate gains, should we assume standard corporate income tax on these proceeds? And will the regulator allow you -- allow this profit to flow into the regular payout calculation? Or should we expect it to be treated separately in terms of payout? Ram Gev: Yes. Usually, it's the regular, but we may have from time to time some losses to offset from that. We don't know exactly what will be the final outcome for that. That's the reason why we disclosed the -- let's say, the before tax estimates. Obviously, if we will have some losses to deduct from that, then it doesn't matter whether it's included in the tax, let's say, the super tax or no. But if there won't be any, let's say, deductible losses, then generally speaking, it's included in the super tax as well. David Taranto: Okay. And the last one is on the AFS book. You have a strong unrealized gain position in your AFS book. And if the rates continue to come down, this position should build up further. Can you give us more color on the portfolio structure, in particular, what share of the AFS book is in fixed rate securities and how sensitive the unrealized gains are to, let's say, 50 bps lower yields? Ram Gev: We have a disclosure on our book we can direct you later on, on the sensitivity for 1% change on our fair value and equity. The overall effect, but part of it is from the AFS is the overall effect is about ILS 1 billion, but the available for sale is only part of it. So I can direct you to our disclosure on that on Page 19 in our statements. Operator: The next question is from Chris Reimer. What is driving your confidence around the increased loan growth target? And given potential for further leveraging of technology, do you see a case for further year-on-year decline in expenses? Yadin Antebi: Thank you for that. We feel strength of the market, and that's why we thought it would be right to increase our credit target -- credit growth target. We saw the strength of the market '24 and then in '25. We see the pipeline of the different projects that we're handling both infrastructure and others. We -- even before the Iran war now, the growth in Israel and the projections were very high. And after the war once it ends, we're sure that Israel is going to be in a new era in terms of the geopolitical environment. So that gives us a lot of comfort regarding the credit growth. The second part of the question in terms of the technology, I think I answered this before. Yes, we're spending a lot of money on IT and technology. But we also see that in different areas, the IT costs may go down because of different infrastructure that will be used here through AI, for example. This is not for the -- as I said, not right for '25. But looking forward, this might be material. We're trying to manage both costs or actually 3 different costs, the employees' cost, the technology cost and all our other costs. Operator: The next question is from Valentina Stoykova of Barclays. Given ongoing lion's war, I was wondering whether you could briefly outline the best and worst-case stress scenarios for Hapoalim and the key macro assumptions used. Where do you see your COR in a worst-case scenario? And also, should we think about the upcoming Tier 2 callable option? And as a follow-up, could you outline the main risks you see to delivering on the ROE target? Yadin Antebi: Great. Thank you for that. Good question. Actually, I believe that whatever happens, Israel is going to get out of this war dramatically stronger than what -- from the position we were 10 days ago. And that is mainly because the whole geopolitical here may change -- environment may change. It goes back to the fact that a very aggressive country is already in a different position. It goes down to different agreements with our Arab neighbors that we've been talking for years about extending, for example, the Abraham Accords. So this might happen as well. So whatever happens, I think Israel is going to be a much stronger country and a much stronger economy looking forward. And that, of course, reflects on the bank. The 2 -- you asked about the 2, the best-case scenario and the worst-case scenario and maybe I'll think out loud. The best-case scenario will be a very short war, just like the 12 days war, ending with a new regime in Iran and having Abraham Accords with all the Arab countries around, including Iran. That's like the best-case scenario. The worst-case scenario is a long war that is taking a long time. I don't think that will happen, but it might happen. And that will, of course, influence government and businesses in Israel and deficit. I don't think this option is really relevant. But if you're looking for something which is extreme, that may happen. Reflecting on the ROE can change on the different scenarios. But personally, I'm very optimistic because I think that like the essence of the Mediterranean is really changing day by day over the last week. Ram Gev: Yes. And to add to what Yadin said, Valentina, you asked about the cost of risk and the effect. So we have a disclosure in Page 81 of the financial report. Like I mentioned before, while calculating the collective allowance, we are using different scenarios, pessimistic base scenario and optimistic, and we are creating some combination of that. So we have disclosure there if we work only by the pessimistic scenario, what will be the additional effect on the provision. And if we work only according to the optimistic scenario, what will be the decrease in the provision. So you have full disclosure there. And like I mentioned before, what we saw after 2025 in the first campaign with Iran is actually that the reality was better even than the optimistic scenarios that we ran. Operator: There are no further questions at this time. This concludes the Bank Hapoalim Fourth Quarter and Full Year 2025 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.
Operator: Thank you for standing by. My name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter 2026 Cooper Companies Earnings Conference Call. [Operator Instructions] It is now my pleasure to turn the call over to Kim Duncan, Vice President of Investor Relations and Risk Management. Please go ahead. Kim Duncan: Good afternoon, and welcome to Cooper Companies' First Quarter 2026 Earnings Conference Call. During today's call, we will discuss the results and guidance included in the earnings release and then use the remaining time for questions. Our presenters on today's call are Al White, President and Chief Executive Officer; and Brian Andrews, Chief Financial Officer and Treasurer. Before we begin, I'd like to remind you that this conference call will contain forward-looking statements, including statements relating to revenues, EPS, cash flows, interest, FX and tax rates, tariffs and other financial guidance and expectations, strategic and operational initiatives, market conditions and trends, and product launches and demand. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise and are subject to risks and uncertainties. Events that could cause our actual results and future actions of the company to differ materially from those described in forward-looking statements are set forth under the caption Forward-Looking Statements in today's earnings release and are described in our SEC filings, including Cooper's Form 10-K and Form 10-Q filings, all of which are available on our website at coopercos.com. Also, as a reminder, the non-GAAP financial information we will provide on this call is provided as a supplement to our GAAP information. We encourage you to consider our results under GAAP as well as non-GAAP and refer to the reconciliations provided in our earnings release, which is available on the Investor Relations section of our website under quarterly materials. Should you have any additional questions following the call, please e-mail ir@cooperco.com. And now I'll turn the call over to Al for his opening remarks. Albert White: Thank you, Kim, and welcome, everyone. We're pleased to report a strong start to the fiscal year, highlighted by product launches, outstanding profitability and robust cash flow. These results reflect our disciplined execution combined with the significant synergies we're realizing from last year's reorganization. For today's call, I'll begin with an update on the 3 key strategic priorities we outlined in December and then move to Q1 results and guidance. First, we remain focused on delivering consistent market share gains for CooperVision. In calendar 2025, we gained share for an 18th consecutive year, and we enter 2026 with the intention of doing so once again. In our first fiscal quarter, we made meaningful progress with the global rollout of our premium MyDay daily silicone hydrogel portfolio, growing branded sales and executing on private label contracts. Regionally, the Americas and EMEA strengthened and have excellent commercial momentum. Japan weighed on our Asia Pac results, but we're executing on product launches and investing to restore growth in the region. We're also incredibly excited about the early adoption of our MyDay MiSight launches in EMEA and MiSight in Japan. At CooperSurgical, we're encouraged by improving trends in our fertility business and look forward to positive momentum continuing. Second, our commitment to delivering strong earnings and free cash flow through operational excellence was clearly evident this quarter. The organizational changes and IT implementations we completed last year are generating meaningful synergies, providing us with the opportunity to invest in sales and marketing initiatives while still delivering outstanding financial performance. Q1 earnings exceeded the top end of our guidance range, and those earnings translated into a healthy $159 million in free cash flow. Given our strong start to the year, we're raising guidance for both earnings and free cash flow. Third, we continue to maintain a disciplined approach to capital allocation. We've entered a multiyear period of consistent earnings and free cash flow growth, and we're deploying capital to high-return opportunities. This starts with prioritizing internal investments that drive revenue growth, which we did this past quarter by increasing sales and marketing spend at CooperVision and CooperSurgical in support of product launches and key strategic initiatives across both businesses. We also repurchased $92 million in stock during the quarter, reinforcing our commitment to consistent share repurchases as a core part of our long-term strategy to drive shareholder value. And the remainder of our cash was used to reduce debt. Before reviewing the quarterly details, I want to address the strategic review we announced in December. We understand there is strong investor interest in this process. While we're not in a position to provide an update today given where we are in the process, the review is progressing as planned with active engagement from our Board and advisers. We will communicate outcomes if we have something definitive to share or when the process is complete. In the meantime, our Board and management remain highly focused on maximizing long-term shareholder value. This includes driving organic growth by winning new contracts and strengthening customer relationships, delivering strong earnings and cash flow by leveraging our infrastructure and deploying a consistent capital allocation strategy that includes share buybacks and debt paydown. With that, let's move to the Q1 results. Consolidated revenues were $1.024 billion, up 6.2% or up 2.9% organically. CooperVision reported revenue of $695 million, up 7.6% or up 3.3% organically. And CooperSurgical delivered revenue of $329 million, up 3.3% or up 2.2% organically. Operating margins improved meaningfully, and non-GAAP earnings grew 20% to $1.10. For CooperVision, on an organic basis, torics and multifocals grew 6% and spheres grew 1%. Daily silicone hydrogel lenses grew 7%, led by double-digit growth in MyDay, while clariti was up slightly. Biofinity and Avaira grew a combined 3%, and MiSight continued its strong growth, up 23%. Regionally, the Americas grew 6%, led by strength in daily silicone hydrogel lenses; and EMEA grew 4%, strengthening our #1 market position in that region. Asia Pac declined 4% as execution on new product launches was more than offset by softness in Japan, primarily tied to lower-margin older hydrogel products. To accelerate APAC performance, we've upgraded several leadership roles, increased marketing investments and are ramping up our new regional distribution center, which is already enhancing customer service with faster fulfillment. We've also recently launched MyDay toric in Taiwan, MiSight in Japan, MyDay MiSight in Australia and New Zealand, and we're increasing regional availability of MyDay multifocal and MyDay toric expanded range. We also have private label launches underway in multiple markets; and in Japan, we'll be launching the full clariti family later this year with the addition of both the toric and multifocal providing a competitively priced full family silicone hydrogel upgrade path for the large base of hydrogel wearers in that market. While we expect Asia Pac to remain down in Q2 due to declining legacy hydrogel sales, we are confident the region will return to growth in fiscal Q3 given all of our launch activity. Turning to products. Our daily silicone hydrogel portfolio continues to perform well, with MyDay leading the way through expanding customer partnerships, broader availability and ongoing launches. Our premium priced offerings delivered its strongest performance led by MyDay multifocal, Energys and torics all growing over 15%. Particular strength was seen with MyDay multifocal as its rollout continues to gain momentum. Our premium MyDay Energys also posted strong growth driven by its innovative digital boost technology designed to provide maximum comfort in today's heavy digital world. This product will be launched shortly in Europe, and we look forward to the boost that will provide in that region. MyDay toric, which offers the broadest SKU range in the category and is powered by the same leading toric design in our Biofinity toric, continued delivering exceptional growth. We also closed additional MyDay key customer contracts and private label partnerships this past quarter across all 3 regions. For the clariti product family, it grew modestly, led by the ongoing launch of our new multifocal in the Americas. This multifocal has the same next-generation optical design as MyDay, meaning an easy-fit lens with consistent performance across different lighting conditions, distances and patient profiles. So we expect strong performance as we launch across EMEA and APAC later this year. Turning to myopia control. MiSight grew 23% to $28 million. Momentum is building with our latest innovation, MyDay MiSight, launching in EMEA in January to an extremely positive reception, thanks to the combination of proven myopia control efficacy and the all-day comfort of a premium silicone hydrogel lens. We also launched MiSight in Japan in February and are seeing a similar enthusiastic response. Japan is one of the world's most significant vision care market; and with an estimated 77% of elementary school children being myopic, it represents a substantial opportunity for MiSight. We're supporting these launches with our most comprehensive professional engagement programs to date, highlighted by major conference engagement, high-impact regional launch events, extensive KOL education and media initiatives reaching tens of thousands of eye care professionals. These efforts are driving very strong clinician activation rates, reinforcing our confidence that our early momentum will continue as MyDay MiSight expands in EMEA across Asia Pac and into Canada. MiSight remains the only FDA-approved contact lens for myopia control and the first and only lens approved for myopia control in both Japan and China. We're also continuing to invest heavy in myopia control R&D and have several exciting breakthrough innovations underway, which further supports our confidence in MiSight's ability to deliver consistent long-term robust growth. To conclude our CooperVision, let me highlight our performance relative to the market. This is calendar quarter data, so apples-to-apples with our competitors. In calendar Q4, we grew 10% and the market grew 6%. For the full calendar year 2025, this translated into 6% CooperVision growth versus the market at 5%, marking our 18th consecutive year of market share gains. Turning to CooperSurgical. We delivered quarterly revenue of $329 million, up 3% or up 2.2% organically. Fertility revenues were $127 million, up 3% organically. Growth was driven by strong global genomics performance, supported by continued commercial and operational execution across product launches, new clinical wins and expansions within existing accounts. We also saw solid results in consumables led by media, ZyMot, our sperm separation device that helps optimize fertility procedures; and Witness, our automated lab tracking system. These gains were partially offset by softness in the Middle East and lower equipment installations. Importantly, we are now seeing early but clear signs of recovery in the fertility market. As we move through the first quarter, results steadily improved, supported by solid execution on contract wins and new product launches as well as strengthening underlying market trends. This momentum positions us well for continued improvement through the remainder of the year, though developments in the Middle East, where we hold a leading market position, remain a source of uncertainty. For the fertility market overall, the product and services segments that we operate in had delivered strong growth for many years before slowing in late 2024. While several factors contributed to the deceleration, the industry is now recovering, driven by renewed clinic interest in adopting new technologies along with improving cycles in the U.S. and several European countries. Although a rapid rebound is unlikely, we anticipate steady improvement as we annualize last year's pressures and underlying activity normalizes. Moving to office and surgical. Sales were $202 million, up 2% organically. Medical devices grew 6%, driven by strong performance in our surgical OB/GYN portfolio led by our uterine manipulators and related products, and continued momentum in our specialty surgical products, including our innovative single-use lighted, cordless surgical retractors. This was partially offset by softness in some legacy medical devices and Paragard declining 7%, which was expected against a difficult comp tied primarily to last year's launch of the new single-hand inserter. To conclude, I want to recognize and thank our Cooper team for their dedication to operational excellence. Investing in sales and marketing to drive organic growth while maintaining disciplined cost control and continuing to build a streamlined and technologically efficient company is no easy task, so thank you to the entire team. And with that, I'll turn the call over to Brian. Brian Andrews: Thank you, Al, and good afternoon, everyone. Most of my commentary will be on a non-GAAP basis, so please refer to today's earnings release for a reconciliation of GAAP to non-GAAP results. For our first fiscal quarter, consolidated revenue was $1.024 billion, up 6.2% year-over-year and up 2.9% organically. Gross margin was 68.1%, exceeding expectations driven primarily by a lighter mix of low-margin Asia Pac revenue at CooperVision. Excluding the impact of tariffs, gross margin would have been essentially flat. Operating expenses rose only modestly and improved as a percentage of sales, declining from 43.6% to 41.2% year-over-year, reflecting the benefits of the reorganization executed in fiscal Q4 of last year. These efficiencies stem from the structural changes we've made as we transition to a smaller, more efficient organization that leverages technology including AI to automate work and optimize shared services. The impact of these efforts was particularly evident at CooperSurgical, where expenses decreased year-over-year. Operating income increased a healthy 13.9%, resulting in a 26.9% margin. Interest expense was $22.4 million, and the effective tax rate was 15.1%. Non-GAAP EPS grew 20% to $1.10 with roughly 197 million average shares outstanding. Free cash flow was very strong at $159 million with CapEx of $102 million. We deployed this cash by repurchasing 1.1 million shares of stock for $92 million, making the final $50 million payment related to our 2023 Cook acquisition and applying the remaining balance towards reducing net debt to $2.4 billion. Lastly, in February, we addressed our $1.5 billion term loan maturing in December 2026 by amending and extending $950 million for another 5 years to February 2031. The remaining $550 million will be repaid in December 2026 when it matures using our strong free cash flow and ample revolver capacity. Moving to full year fiscal 2026 guidance. Our revenue expectations are essentially unchanged with consolidated revenues of roughly $4.3 billion to $4.35 billion, reflecting organic growth of roughly 4.5% to 5.5%. CooperVision revenue is expected to be in the range of $2.9 billion to $2.93 billion, up 4.5% to 5.5% organically. And CooperSurgical is expected to be in the range of $1.4 billion to $1.41 billion, up 4% to 5% organically. For earnings, we're raising guidance to $4.58 to $4.66, reflecting our Q1 beat and stronger expected operational performance. Regarding tariffs, our estimate of approximately $24 million remains the same for the year. Our expectations on interest expense and tax remain unchanged with interest expense around $85 million and the effective tax rate between 15% and 16%. Turning to cash flow. Our cash conversion rate continues to improve, and we're increasing our fiscal 2026 free cash flow outlook to $600 million to $625 million. For fiscal '26 through 2028, we continue to expect to generate more than $2.2 billion of free cash flow, driven by higher operating profits, improving working capital performance and lower CapEx. From a capital deployment standpoint, our priorities remain unchanged. We're investing in growth and innovation, repurchasing shares and reducing debt. To conclude, I'm proud of the operational excellence we're seeing across the organization. We're optimizing and leveraging prior investments in numerous areas, including IT, distribution, HR and finance; and we're increasingly applying AI-enabled tools to streamline areas such as marketing, planning, forecasting and support functions. Our reorganization efforts are delivering meaningful synergies, and the results are evident. Looking ahead, we have additional opportunities to further optimize the way we work. With our multiyear CapEx cycle winding down, our manufacturing teams are now evaluating ways to capitalize on the next-generation production improvements developed over the past several years. Early planning is underway, and while this work will take time, the results have the potential to be material. In the meantime, we'll continue driving efficiencies by leveraging technology while consistently investing in initiatives to support sustainable organic growth. And with that, I will turn the call over to the operator for questions. Operator: [Operator Instructions] Our first question comes from the line of Jeff Johnson with Baird. Jeffrey Johnson: I guess the first question, let me just kind of back out and go more higher level. Al, I mean, you reported a 10% calendar 4Q number. I think over the last 3 quarters, you've been about 3%, 3.5% for CVI. So one, can you reconcile that 10% number versus the last few quarters at 3%? What's different in the number you're citing there versus what we see in your CVI organic growth results? And then one follow-up question. Albert White: Sure. I knew we were going to get that one. It's literally just a matter of months and shipment of products. So we had, had a weak November and December of 2024, and we had a really strong January of 2025. So just when you comped against that, the way that the shipments worked, it resulted in a really strong calendar Q4 for us. Jeffrey Johnson: Fair enough. And I guess, again, maybe I'll go even further out, and apologies for the feedback. But you've been talking about kind of getting back to market growth, above market growth at least as you report CVI. How is that plan going so far? Maybe update us on the MyDay -- clariti to MyDay transition. Just in general, it still feels like your results are maybe lagging the market here a little bit relative to some of your peers. So how do you feel like you're doing in kind of getting back up and into above market over the next couple of quarters? Albert White: Great question, Jeff. I'll break that up a couple of different ways. I mean if I look at the Americas, we're doing well. The U.S. had a good quarter. We're gaining a lot of traction. We've got product launches and a lot of activity. The team is doing a fantastic job. So I would say we're in good shape with the Americas. When I look at EMEA, again, in good shape there. We took a step forward this quarter against last one, but we've won a number of contracts there. We have a number of product launches going on. I would say our -- we have better visibility for that market right now to improving sales. So I feel pretty good about the momentum that we have in the Americas and the momentum that we have in EMEA right now associated with MyDay and clariti, frankly. And then I go to Asia Pac as kind of the third one. And the results there, right, have been a little tough for us. And that's the area that we need to get figured out and get back to kind of our old traditional growth rates, and we'll be in fantastic shape. As I mentioned, we're doing a lot of stuff to drive growth in Asia Pac. We did see success kind of in a number of areas where we've had problems. We stabilized when it comes to a lot of the e-commerce stuff that we talked about. We stabilized the China business. We had a changeover of some personnel, a number of leadership positions. So we're in good shape in a number of countries. The one that we kind of have left right now is Japan, and I can target that down to like Japan, older hydrogel products where some of our competitors are taking some share. We have not caved on price or anything along those lines. So I think we're going to continue to have a little bit of pressure in Japan with traditional hydrogels, again, in the next quarter because I think that the region will probably be down because of it. But then all of that success, the stuff that I'm talking about, all those product launches in Asia Pac, the success of executing on those private label contracts, all of that kind of stuff, the transition point on that happens in Q3, and you're going to have Asia Pac growing again. So another one where, I would say, we had a number of points over the last year and just a lot better, a lot clearer visibility right now on where those challenges are and where the successes are going to come from. So I think fiscal Q2 ends up being a step-up certainly from this quarter. And then as I've said all along, we'll be back to rolling in Q3 and Q4. Operator: And from Wells Fargo, our next question comes from the line of Larry Biegelsen. Larry Biegelsen: That was a new pronunciation. Al, we heard your comments about the Middle East and IVF. Maybe you could just level set us on what your exposure is there? And how you're thinking the war might impact your business? And I have one follow-up. Albert White: Sure. Yes, to put some numbers around that, kind of, for us, on a consolidated basis, the Middle East is about 2% of our sales. A lot of it is distributor. And obviously, the Middle East is a very large region, so it won't have that much of an impact on us other than it could impact fertility because there's a decent amount of fertility business. We're #1 in that region. We've good strength there. So it's just a matter of us being able to get products there. I mean women are obviously still going through fertility treatment and so forth there. We have to be able to get product in. So if that situation extends for a period of time, it will be more challenging for us. Even with that, we're still -- we have a lot of good momentum in fertility, and I think we'll still improve quarter-over-quarter. But that's kind of the one question mark. Otherwise, I'd even be more bullish on fertility. Larry Biegelsen: And Brian, the margins were really strong in Q1. Just remind us how we should think about the phasing for the year, how you're thinking about -- I guess the tariffs, you said no change. But in light of the recent Supreme Court ruling, if that stood, would there be upside on tariffs? Brian Andrews: Sure, Larry. I'll start with the second part of your question, at least as it relates to tariffs. We've assumed $24 million in the year. That's what we assumed as of the last guidance. We're going to sit tight. Obviously, we capitalize and release the impact of tariffs 4 months later, so any change to tariff rules or guidelines or whatever takes effect won't impact us until later in the year. But a 10% tariff makes very little impact. It's pretty similar to the $24 million, so I'd assume that. If it goes up to 15%, that could be somewhere upwards of like $4 million. But for now, we're just -- the 10% is what it is, and that's what we factored in the guidance. As it relates to operating margins, yes, I mean, it's the same story that we've been talking about from exiting last quarter. We're getting really durable savings from the synergies and the elimination of fixed costs from the reorganization that we talked about in Q4. We're leveraging prior investment activity, and we're being really disciplined. We're scrutinizing all nonrevenue-generating expenses, particularly the back office, and we're investing in sales and marketing. So the drop-through in operating margins was good in Q1, and I would expect you're going to continue to see stronger operating performance, which is why, frankly, we raised our guidance $0.13 at the bottom end and $0.10 at the midpoint based on stronger operating performance. But I'm not going to get into gating at this moment. Operator: And from Piper Sandler, our next question comes from the line of Jason Bednar. Jason Bednar: Actually want to pick up on the line of question that Jeff had, but as far as the competitive landscape as it stands today and your share position, maybe talk about, Al, new fit activity across the quarter. Just what are you seeing in the data when you look at your performance versus peers, if you can break it down dailies versus monthlies? Albert White: Sure. If I look at new fit activities, it probably hasn't really changed that much. At the end of the day, we're taking wearers, so the fit activity continues to put us in a good position. Now you have a whole lot of other variables that go into it, I would say. But if I narrowed down to just new fit activity, whether it's dailies or FRPs, we are taking wearers in both of those as we did this past quarter. So I feel good about that as kind of continuing to be a good indicator of the future. Jason Bednar: All right. And then as a follow-up, it really seems like industry pricing dynamics have calmed down, at least relative to where we were last year. It sounds like the latest round of increases here the last few months are sticking, it should be good for all the players out there. How are you thinking about future list price increases and managing these discussions with wholesalers and docs? Especially if I think back, we went through multiple increases in the past few years, usually like 2 increases a year, do you think the market can absorb more than 1 price increase a year without negatively affecting demand here going forward? Albert White: Yes, well, I do because of the technology that's coming out. I mean, as an industry, we're launching new products, really innovative products. We have some great ones ourselves. I mean there's nothing more innovative in the contact lens industry today than MyDay MiSight that's launching out there. But the multifocals that we're launching are great products. Energys is a great product. I know some of our competitors have some products out there that they're launching at good price points. So consumers are willing to pay for that high quality, and contact lenses are not particularly expensive at the end of the day. So the positive pricing that you're picking up on, on your comment is true. I'm happy about or I feel positive about pricing in the marketplace right now. The only region I put a little caveat on that is still in Asia Pac. There's definitely markets in Asia Pac where there's some pretty competitive pricing out there. But yes, generally speaking, I'd say pricing is positive right now, and it's appropriate given the technologies that are rolling into the marketplace. Operator: And from Stifel, our next question comes from the line of Jon Block. Jonathan Block: Al, the CVI number, I think I heard you at 3.3% precisely. It was a bit below expectations, even the bottom end of the midpoint. Like you gave that guidance, call it, first or second week in December. So maybe just talk to us -- again, it was slightly below. But what deviated from expectations relative to when you gave it? And it would seem to suggest that maybe January was a little bit weaker than you expect. So can you give us any color on how things trended into February? And yes, sorry for the awful feedback. Albert White: Yes. No, you're right, Jon, because we were looking at Asia Pac being essentially flat for the quarter, kind of similar to what we did in Q4, and that would have meant CooperVision consolidated growth would have been like 4.3%, something like that. And you're right, it was 3.3%. So that delta was very specific and very targeted, if you will, to what happened in Japan on those legacy products. I mean we started seeing it some in December, and then we definitely saw that activity in January. So that's what happened. That's where it picked up. I thought that, frankly, the momentum we have with all the product launches and activity and everything would overcome that. But yes, that was a decent hit for us as we rolled through December and January. You're right. And that's why I said I think Asia Pac will probably be down one more quarter before all the positive energy that we have kind of overwhelms that, if you will. Jonathan Block: Okay. Fair enough. And second one, and I apologize in advance for sort of the boring question. But Brian, when I look at the add backs in the quarter, almost half of the add backs were from -- like a hit from natural causes in litigation, which is just a little uncommon. It didn't seem to be the case in the prior quarter. So any color on what you can give around the add backs if you can elaborate a bit? Brian Andrews: Jon, I think you're talking about just in the other category where we break out -- I think it was $6.7 million was related to other legal-related matters. I mean our stance is not typically to talk about what legal matters are going on. We obviously have insurance for a number of things, but there are some things that we don't have insurance on, where we're defending ourselves or -- we've got some legal-related matters that show up. So it was a little bit higher this quarter, but not too atypical from years past. Operator: From Jefferies, our next question is from Young Li. Young Li: Great. I guess to start, I was wondering if you could talk a little bit about there's an update on sort of how the supply dynamics have impacted your ability to win new contracts in the quarter. Albert White: Supply dynamics? Kim Duncan: Impacted your ability to win. Albert White: For supply, you're probably referencing some of the MyDay capacity. We don't have those issues anymore. So I would say that when it comes to supply constraints, manufacturing or supply constraints or logistic challenges, I am very happy to say those are in the rearview window now. We don't have those challenges anymore, so that's not impacting us. Young Li: Apologies for the sound quality. I don't think you heard the question fully. But I was just wondering if you were able to win more new contracts this quarter just given the improvement in supply. Albert White: I got you. The answer to that is yes. Yes, we did win a number of new contracts. As a matter of fact, we won them in all 3 regions, and they were definitely MyDay related. So we won a bunch kind of last year and as we were exiting last year, but we've continued to expand relationships and partnerships and win additional MyDay business. So yes, we have. Young Li: Okay. Great. Very helpful. And then I guess to follow up, I wanted to get a little bit of color and update on Paragard. It's a high-margin business, although we know about the volume, pricing dynamics. Are there any incremental updates on the competitive front just given the potential for impact on the profitability side? Albert White: I would say no updates. As far as I'm aware of, that licensing agreement that you referenced on the competitive side has not closed, so I don't have any updates or any details on any of that. I think for us, Paragard was minus 7% for the quarter. We're still expecting that to be flat to up a little bit for this fiscal year. And then we'll see how that plays. If that deal actually does happen, and then we'll give some color on their launch plans and so forth. But right now, I don't want to speculate on any of that. Operator: And from Barclays, our next question is coming from the line of Matt Miksic. Matthew Miksic: I hope this is coming through okay. But one question just following up on the market. There was some kind of unusual trajectory during last year in terms of the market dynamics. Based on your best guess and what you saw, I guess, during and exiting Q4 on a calendar basis, do you think that's improving now? Do you think we're stable? Any further color on what the ups and downs were from last year? And then I have one follow-up. Albert White: I think I would say we're at least stable, if not improving a little bit. We did have, as a contact lens industry, a softer year last year, but it's at least stable. The reason I say improving, as I sit here thinking about it on the top of my head, right, is because of pricing that somebody asked about earlier. I'm trying to look at the market and say, hey about 1% is going to come from price, about 1% will come from wearers, and then you'll have all the other stuff, the shift to dailies and so forth that's happening that will drive it. That 1% that's coming from price, I would certainly stand by that, and it could be potentially a little bit better than that. So I do think the market is well positioned for a decent year. That would be like a rebound of what it was years ago, but it's going to be a better year, I think, in 2025 than it was in 2024. Matthew Miksic: Got it. And then just a follow-up on some of the dynamics that are driving growth rate next quarter and the quarter after. You mentioned Japan is down in this quarter, improving by the third fiscal quarter, I think. How should we think about the impact of some of these private label engagements that you announced and mentioned that you were able to close some more? When do those -- or did you notice those coming in this year? Do they just kind of filter in and support sustainable growth? I mean how to think about it because it just seemed like there was quite a number of them that you signed, and I'm just wondering if that's something we're going to notice as we get into the middle and back half of this year. Albert White: Good question. And yes, we are executing on those private label contracts and a number of branded contracts that we won. And you will see those as we progress through the year. They got masked this quarter because of what happened in Japan as I was saying. Otherwise, we would have been kind of 4.3% somewhere, 4.4% somewhere around there. But we are executing and doing well on those contracts. So the way I see it playing out is we continue to execute on those contracts, and we have good visibility on that. That's going to result in a better Q2. But as I've said all along, it's going to be Q3 and Q4 is when all those contracts and those launches really start coming together for us. So I just think that we kind of have 1 more quarter behind us of some of the challenges that we were dealing with, and we have 1 more quarter here in the quarter that we're in, where we have some residual challenges in Asia Pac still putting up a step in the right direction in Q4. But then we get back to kind of the CooperVision of old and the more consistent solid revenue growth rates in Q3 moving forward. Operator: Our next question comes from Bank of America from the line of Travis Steed. Travis Steed: I guess the first question I have is on kind of Q2 revenue, kind of where you want the Street to shake out and kind of the cadence for revenue growth for total company and CooperVision and CooperSurgical. We heard the comments on Japan. I don't know if there's any other dynamics that you'd point to that we should model for Q2. Albert White: Well, I think if I look at it that way, I'd say we'll probably have another good quarter I would expect in the Americas. I would expect EMEA to be a little bit better. than it was this quarter. And Asia Pac is the question mark to me. It will be down a little bit in total. So I would assume that the Q2 results are a little bit better than what we did here. I would look at surgical pretty similar. Fertility should be a little bit better even with some Middle East risk out there. And the rest of that business is coming along fairly well. So I would think CooperSurgical will post a little bit better sequential quarter than what they did in Q1. Travis Steed: On the second question, I wanted to ask on the strategic review. When do you expect that to be complete? What's the goal for the outcome? Anything else you could kind of say on the strategic review would be helpful. Albert White: Sure. There's really not much else I can add on that. I mean we announced that we were doing that kind of formally, if you will, beginning of December, went through the holidays and so forth. And we're very active on it right now with our advisers and the Board and so forth. So I don't want to comment or say anything right now. It probably wouldn't be appropriate to go into any details until we get some concrete information. So I'll hold off on that one but certainly provide updates when we can. Operator: Our next question comes from Mizuho Group from the line of Anthony Petrone. Anthony Petrone: Maybe one on private label and then one on MyDay MiSight. So on private label, I don't know if you can share this, Al and/or Brian, but what was the percent of private label exiting last fiscal year? And with the addition of these new private label contracts, where can that increase to? And is that margin neutral? Is it a margin drag? Or can it be accretive to margins? I have a one quick follow-up on MiSight. Albert White: So our private label was running for quite a while about 1/3 of our revenues. It's a little bit higher than that. We don't break out specific numbers. It's a little bit higher than that, and it's still kind of trending along there. We actually had a pretty good quarter with branded sales, and we're seeing a little bit more success now winning some contracts and business around branded sales. So I wouldn't highlight too much with respect to that one. Margin-wise, we have a tendency to look at things at an operating margin level, and I know the operating margin on those are fairly similar. So from that perspective, it doesn't make too big of a difference. It could make a little difference on gross margins. Those contracts come through. They'll put a little pressure on gross margins probably as we move to the back half of the year. Anthony Petrone: And then on MyDay MiSight Japan, maybe can you size that in terms of the number of target practices you're going after? Like how many sites are you looking to penetrate? And what is the market size and dollar for MiSight in Japan? Albert White: So just to be clear on that one, like the product that got launched in Japan was just MiSight, the regular MiSight because it took us like 3 years to get regulatory approval on that. So MyDay MiSight is in multiple European countries right now. We just launched it in like Australia, New Zealand, South Africa I think, but Japan is the kind of the traditional, if you will, MiSight. As I mentioned on the call, it's like 77% of kids are myopic, so there's still a big opportunity there. It's really hard to gauge the size of that market and to put numbers out associated with it. But I will say we are super aggressive there right now, and I'm crazy happy to say that the product is being received really well. That's an ophthalmology market rather than an optometrist. So you have a marketplace of doctors who look at clinical data and they understand clinical data. And when you have that kind of combination of a lot of myopic kids and professionals who understand clinical data, a product like MiSight is going to do really well there. So I think that -- I talked about 20% to 25% growth from MiSight this year. We did 23%. And I would certainly be comfortable saying 20% to 25% again or higher based on the success that we're seeing early indications on MyDay MiSight and MiSight in Japan. Operator: Our next question comes from the line of BNP Paribas from the line of Navann Ty. Navann Ty Dietschi: One on CooperVision, if you could discuss MiSight, again, solid performance in light of the Stellest entering the market. And my second question is on the CooperSurgical. Your fertility pure-play peer had supportive market comments. So what are you seeing in IVF cycles across the U.S., EMEA and APAC? Albert White: Sure. I'll touch on the first one, which was the Stellest activity here in the U.S. That is going to turn out to be a positive for us. There is a lot more interest in myopia control, pediatric myopia issues, and the education that's coming because of Stellest, and the attention that the optical community is now putting on myopia control is quite a bit more than it was when it was just us pushing it. So there's going to be some push and pull from that because obviously younger kids are going to move into glasses much quicker. But when you look at, especially 11 and 12 year olds who are in sports or any activities or anything else concerned about their looks or whatever, like we're seeing an increasing amount of fit activity when it comes to kids in that 10 to 12 age in the U.S. market. So I think at the end of the day, that's going to be a positive for us long term. And I even think, this year, it's not going to be detrimental to us where I thought that it might be at one point. So I'm happy that product's in the market. I'm happy with what they're doing, and I'm happy with the promotional activity that's out there educating the marketplace. On the fertility side of things, yes, as I mentioned, I think the risk of the downside that was there and kind of that market continuing to trend down, I would take that off the table because we are seeing positives in the fertility industry now. We're seeing improving IVF cycles in the U.S. We're seeing improving IVF cycles in some of the European countries. We're seeing fertility clinics starting to look at upgrades and so forth as new technology comes out, new equipment comes out. So I would say that we're going to continue to see the fertility industry get a little bit better. I don't see like a fast, huge ramp-up or something like that. But I would say the downside has kind of taken off the table, and I would say, stabilization to improvement is what we're seeing right now. Operator: From William Blair, our next question comes from the line of Steven Lichtman. Steven Lichtman: Al, you mentioned reinvestment in myopia control and it sounds like on the R&D side. Can you talk about the opportunities you see to build on the MiSight platform from an innovation perspective? And then I have a quick follow-up on free cash flow. Albert White: Sure. There's some really exciting stuff there. I mean, one is that we need to get a MyDay MiSight toric out into the marketplace. That is one of the products that the optical community really wants. So we're doing a lot of work on that right now. That's a positive. We have kind of like a MiSight 2, if you will, that we're working on to even get better efficacy. We've also got some really cool exciting stuff when you look at like combinations with atropine and so forth that are -- that have the potential to really, really help kids that are not reacting to kind of regular or traditional treatment. So yes, you're right. We're spending a decent amount of money in R&D on MiSight or myopia control in general, and we're going to continue to spend that because this is a great market. I mean we have opportunity to have that product continuing to grow a solid 20% plus for like years and years and years and years. So yes, we're investing in that pretty decently. Steven Lichtman: Great. And Brian, the upside you're seeing on free cash flow this year and the raised guidance, is that coming from higher operating margin, better working capital management, maybe all the above? What's exceeding your initial expectations heading into the fiscal year? Brian Andrews: Yes, thanks for the question. Really, all of the above, we're seeing stronger operating performance, and I touched on that earlier. But we're collecting better. We're building inventory more smartly. I guess, smartly, that's a word. But we're building inventory in a more efficient manner. And FX is helping a little bit, but it's really just a combination of the operating performance and better working capital. Obviously, the lower CapEx helps, too. Operator: Our next question comes from the line of Joanne Wuensch from Citibank. Joanne Wuensch: I was fascinated to hear how my last name was going to get pronounced. A fundamental one and a bigger picture one, please. Foreign exchange, what are you dialing in with all of the shifting U.S. dollar given the macro environment? And then my second question, I'll just put it on right up front. How are you thinking about CSI revenue improving throughout the year? What are the drivers or levers that we can pull on that one or we can see you pull? Albert White: I'll answer the second one, and I'll let Brian answer the first one. So on the CSI side of things, we'll have like Paragard, which is down 7%, will finish the year kind of flat to up a little bit. So I think Q2 will be another year because -- or another quarter because of the comp where it will probably be down a little bit, but then we'll have a good like back half of the year with that product. When I think about like the medical devices, boy, our specialty surgical team is killer. Those guys are -- just do a fantastic job. So I think we'll continue to have strength there. And then as I was mentioning on fertility, just better visibility, more comfort in that, that market is at least stabilized and arguably trending up, is going to put some improving growth rates on that. So I think Q2 is better. I think, frankly, Q3 is better than Q2 for CooperSurgical, so just kind of progressing along with improvement, probably somewhat similar to Vision, where the best quarter will be the Q3, Q4. Brian Andrews: So I'll take the FX question. As we were exiting last week, we were sitting to more favorable relative to last guidance on FX, but obviously, with the Middle East conflict, the dollar strengthened. And so as we thought about and as we set the guidance ranges for this earnings call, we took out the revenue ranges by $6 million of Vision and $1 million of Surgical, reflecting FX. But really, we kept the rates pretty similar to the rates from last earnings call. It's a little bit conservative. So really, we're looking at a headwind -- sorry, a tailwind to revenues of roughly 1% and also a tailwind to EPS of roughly 1%, so very, very similar to the last call. Operator: Our next question comes from JPMorgan from the line of Robbie Marcus. Robert Marcus: Two for me. First, Al, wanted to get your thoughts. First quarter organic growth missed on CVI guide and overall, and it sounds like second quarter will still be maybe a little weaker than original expectations due to Asia Pac. You talked about third and fourth quarter and a lot of the private label driving fourth quarter, and you didn't flow that all through in the original guidance. How are you thinking about sort of the conservatism of the guide now with the slower start to the year? And does the slower start maybe take some of the upside off the table as you left the guidance the same? Albert White: I would characterize that, honestly, the exact same because where we had that softness in Japan that I talked about, I mean, I can pinpoint that softness and talk about what happened there. And we have good, good visibility around what happened and how we're correcting that, but we have more strength in the Americas and more strength in EMEA than I would have said back in December. So I mean, I'd net that out and say, yes, we came in below our range and where we wanted to come in, in fiscal Q1. But I would say that Americas, stronger than when we gave that guidance in December. EMEA's stronger than when we gave that guidance in December. Asia Pac, probably pretty similar to where we gave that guidance because of a net positive of contract execution and product launches and wins offset by kind of the negative of the stuff I talked about. So net-net, I would put the odds of us being able to post a good year and so forth and success in the back half pretty similar to what we had in December. Robert Marcus: Great. I wanted to go back to the question on the Paragard competitor. I realize deal hasn't closed yet and you're not ready to talk about the competitiveness here. But I'm guessing that wasn't included in the guidance. So did you include any competitive threats like that in the guidance for the year? I guess that's the question as we think about it. Albert White: So when we gave initial guidance, I can't remember. I thought I mentioned it on the December call. But when we gave the initial guidance, we assumed a negative impact because of the competitive launch and that it would happen at the end of this year. It's probably more likely that we will not have a negative impact, meaning that was a little conservative. But we'll see. I don't know. I mean, that thing hasn't closed, and we're in March already of our year. So we're working obviously well into our year at this point in time. So we'll see. But to confirm, yes, we had included that in the initial guidance of assuming kind of flat to up just a little bit. Operator: From KeyBanc Capital Markets, our next question is from Brett Fishbin. Brett Fishbin: Hopefully, there's not too much feedback. Just wanted to circle back on the 1Q operating margin performance, which I think you noted in the press release was better than expected and obviously is a top priority this year. I was just hoping you could unpack a little bit in terms of what went better than you thought and why you were able to call the operating margins as exceeding expectations this quarter. Albert White: All the financial details of course. A big part of that was just good solid execution. I mean we did all that work in Q4, and we knew the team was going to do a good job with it and they have. Like organizationally, we've just done a really nice job. I would kind of highlight AI, and I hate to sound like one more person talking about it. But the reality is that our organization has embraced it. And this isn't our organization like all of a sudden right now getting on and training and everyone's going to train on it and so forth. Our organization embraced it last summer. And we started implementing that stuff as we were going through the year, and we're seeing positives come out of that type of work. The technology advancements at Cooper are fantastic. I'm super happy. And we have a lot more to do. This isn't a 1-quarter thing. So we saw some of it certainly in Q4. We're seeing those improvements in Q1, and we're going to continue to see the use of technology and AI advancements be a positive to us on our operating margins as we move through this year. Brian Andrews: I guess not much to add to what Al just said. I mean we talked about, in Q4, we grew OpEx. It was basically flat year-over-year. And then here again in Q1, OpEx was roughly flat year-over-year. So there's a lot that we're doing to drive synergies and efficiencies, leveraging prior investment activity, and we're just really being very disciplined about fixed costs in the back office. And so we want to leverage IT. We're doing that much, much more than ever before, as Al talked about. And this is just great operational execution. Al talked about it and I talked about it in our prepared remarks, and I expect that to continue through the year. Brett Fishbin: Great. And then most of my questions were asked. Maybe I'll just ask one more on some of the new product launches. You mentioned several incremental launches that are really phased throughout this year, including MiSight in Japan, MyDay MiSight in Europe and in Asia, Energys, the toric multifocal. Are there 1 or 2 of these that you would call out as maybe the most exciting to you in terms of like just what they can do for company growth over the next year or 2 as they ramp? Albert White: You could kind of hear my excitement on MyDay in Japan and MyDay MiSight. I mean I still believe that there is a fantastic market out there in pediatric optometry in treating kids' myopia progression. And we've had that product. We got to a little slower start than I would have liked on that, and China has turned out to be pretty small in the grand scheme of things. But the rest of the world is gaining traction and doing well. And MiSight is back, and it is doing well. And with MyDay MiSight and the products that we have and the stuff in R&D and so forth, it's going to continue to do well for a number of years. So I'm really excited about that. On the MyDay side, it's execution. I mean that's what it is. Like I said, we got full product availability last summer. We finally got out there. We're executing a contract win, branded, private label. We're getting product launches done. All that stuff probably takes a little bit longer than you wanted to take, but it's execution, and that's what we're doing right now. Operator: Next question comes from Nephron Research of Chris Pasquale. Christopher Pasquale: And that was excellent pronunciation on that one. You nailed it. I had a couple of questions. One on fertility. You talked about improving cycles in the U.S. and Europe. You didn't mention China, which I think was a big piece of the weakness last year. So what are you seeing in that market? And are you still confident that it can bounce back to where it was historically? Albert White: I highlighted kind of the Americas and Europe, but Asia Pac and China, in particular, is still continuing to be not the greatest market in the world. It's not. I wouldn't say it's getting worse, but it's not. We're not seeing the improvements that we are in other markets around the world. Christopher Pasquale: Okay. And then just on the capital allocation front, your debt leverage ratio is lower now than it's been in a few years. It's going to go down even further when you repay that portion of the term loan. As you think about your priorities and the pace of buybacks, is there a target leverage ratio that you think is appropriate for the business that would dictate kind of how quickly you go? You've still got, I think, close to $1 billion in authorization available. Albert White: Well, share buybacks are a high priority of ours right now given where our stock is trading. So I would envision us to continue to do share buybacks. And depending upon what happens with the stock price over -- after this and the next quarter and so forth, especially with our belief and our visibility in the back half of the year, I think you could see us get quite a bit more aggressive on stock buybacks. Operator: From Redburn, our next question comes from the line of Issie Kirby. Issie Kirby: You made an interesting comment at the end around looking at sort of next-generation manufacturing and production. Obviously appreciate it's early, but would love any more color around that. Do you think this puts you really ahead of your peers in terms of manufacturing capabilities? And then is this factored in, I guess, to the CapEx and free cash flow guidance over the next few years? Albert White: Are just world class. I mean, are best in class. They've been spending a lot of time and energy, especially in CooperVision over the last number of years, expanding facilities, starting new lines up and so forth. To be able to now take a breather and work with our great R&D team to look at next-generation work in deploying that and optimizing our infrastructure and so forth, like there's a lot of exciting stuff that we can do there. It takes time, but there's a lot of exciting stuff that we can do there as our CapEx comes down. And I think I'll turn it to Brian because I think that's all factored in on how he looked at free cash flow. Brian Andrews: Yes, certainly. I mean we have a 3-year, 5-year, 10-year view on things. And so when we gave the free cash flow commentary and we reiterated again today over $2.2 billion, that factors that in. But we've talked about, over the years, as we're building, building, building to support more supply and capacity, it's hard for us to work on continuous improvement in these optimization things. And now we've got a breather, and we can do that. But there's lots of great ideas and lots of opportunities to drive success into the future. Issie Kirby: Right. And then just really quickly, if I may, on SightGlass and the FDA approval. Any updates there? I know it seems to be performing well with Essilor in Asia. So I would just love to hear thoughts on SightGlass. Albert White: Yes. It's performing well in Asia. You're exactly right. We still love that product, and it's doing really well in Asia and a number of other markets around the world. So we love it, and we think it's going to do fantastic long term. No update though on an FDA approval. Operator: Our final question comes from Goldman Sachs from the line of David Roman. David Roman: I'll keep it to one here given where we are in the time of the call. I think in your prepared remarks, you talked about some of the specifics you were seeing on OpEx efficiency, and I think you called out operating expense declines in CSI, which I know we'll see when the Q comes out here. But can you maybe just help us think through how you are reflecting on some of the G&A savings that you're realizing here from the restructuring you announced last year, to what extent you're contemplating reinvesting that and whether that is showing up in the P&L now? And then in a scenario you did go down a path of reinvestment, where would you be looking to deploy those resources? Albert White: I mean we are doing that. We're doing that already. I was talking about how aggressively we're doing that certainly on the MiSight side of things, and we certainly saw that in Q1. That's just putting dollars back into sales and marketing. That's where it's going, so leverage G&A, put dollars into sales and marketing, and we're getting enough savings through all of our work that we're able to do those reinvestments and still put up stronger than -- earnings than people were expecting. So that combination has kind of come together very, very nicely for us. Operator: With no further questions in queue, I will turn the call back over to Al White for closing remarks. Albert White: Great. Thank you, operator, and thank you, everyone, for taking the time on today's call. We look forward to talking to everybody in 3 months and continuing to make progress and having a good call then. So thank you, and have a good night. Operator: Thank you again for joining us today. This does conclude today's conference call. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the Atos Group FY 2025 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Philippe Salle, Group Chairman and CEO. Please go ahead. Philippe Salle: Hello. Good morning, everybody. Thank you for joining us for this call of the full year results of 2025. I'm here in the room with Jacques-Francois, the CFO; and Florin, our CTO, because we're going to talk also a lot about technology. And of course, we're going to talk about the future of the company. So the agenda of today is 4 topics. The first one is the 2025, let's say, business and strategic highlight that I will manage. Then Florin will take the floor to have a tech update. And today, we are announcing 2 things with the launch of Atos sify and launch of our agentic studios. Then I will come back on operational and financial results with Jacques-Francois. We're going to have together this section. And then I will finish by the outlook, and then we'll take Q&A. So let's start with the first part, and I'm going to go on Page 6. So 2025 was the year for me of the reset. Remember that I want to have 3 phases, I would say, in the turnaround of the company, reset, rebound, acceleration. So '25 is a reset and '26 is the rebound. In 2025, first, we have a very good financial improvement with clear signs of recovery, we'll see that. Second, a significant progress, of course, of our Genesis plan. And the third is that we have a positive business momentum and a commercial, I would say, traction. If we go on Page 7, the key numbers of the company, first in terms of top line, the revenues at EUR 8 billion, EUR 8,001 million to be really clear, so above the target that we have set during the Q3 the last call, in fact. Operating margin, EUR 351 million, it's 4.4%. Just for information, that's the best margin we have for the last 5 years. And I think I'm very pleased to say that we have doubled the margin versus last year with a decrease in top line of minus 14%. And remember that we have guided EUR 340 million at the beginning of '25. Net change in cash, it's minus EUR 326 million, although we have accelerated, I would say, Genesis, and we paid in fact, EUR [ 250 ] million roughly of exit cost and it's better, of course, than our guidance that we say that it will be EUR 350 million or below. And then the liquidity, and we published this already in Jan is EUR 1.7 billion. So it's far above, of course, I would say, the covenant that we have in our debt package that is EUR 650 million. So we have ample cash to finish the Genesis plan. And in fact, this year, we'll be already cash flow positive and the debt, in fact, will go down. Now if we go on Page 8, you can see the inflection point in terms of revenues. So the fourth quarter and that's the figures we have published, in fact, in Jan was around minus 9%. So you can see, I would say, quarter-by-quarter that we had, in fact, a deceleration or, let's say, less momentum, I would say, better momentum in terms of revenue decrease. And then you can see also the number between Atos and Eviden and the organic growth that we have, which is around minus 9% in Q4. In terms of the OEM for the EBIT, the pro forma of '24 for the information we hold are that -- we have sold in '24 and at a constant exchange rate is EUR 1.72. So you can see that we have more than doubled the margin and the margin was beyond 2% in '24 and in terms of '25 is at 4.4%. And in terms of cash flow, the net change in cash was roughly minus EUR 700 million in '24, and we have roughly minus EUR 300 million in '25. If we go to Page 9, you can see also that the backlog -- the book-to-bill has also improved in the course of '25 at 94% for H2. And the total book-to-bill, in fact, for '25 was 89% versus 82% in '24. Now if we go to Genesis on Page 10, remember exactly, I would say, the plan that we have sketched in May '25 with the 7 pillar. This is, I would say, exactly what we have shown, in fact, in May. And I will now -- if I go on Page 11, a little bit deep dive on what we have done. So on the first pillar, we have reviewed the top 100 accounts, and it has, I would say, produced EUR 1 billion plus of opportunities. Remember that during the CMD, I have said that the number of business line per account was around 1.4, and we want to push it, of course, to 2 or above, I would say, that level. And then we have also in terms of growth streamlined, I would say, the processes and also with, I would say, a better organization in terms of sales with salespeople in the different geo than in [indiscernible]. In terms of HR, so we have reviewed the bonus framework. We have launched our LTI plan with a share plan for the top 200, and we have started also to have a leadership culture. And this year, we're going to push very hard on the AI culture. In terms of country reviews, so we have roughly 10 countries that are exited or in inactive. Remember that we want to go probably above around, let's say, 40 countries. We have also sold 7 countries in Latin America and also in Nordics, which is Norway and Finland. And this year, we want to continue to probably, let's say, close or inactive around 20 countries. In terms of portfolio review, first, we have sketched, I would say, the different branding. So you have Atos Group, which is the holding. And under Atos Group, you have 3 brands. Atos, of course, service, let's say, company, Eviden product and software and Atos Amplify, the new name that we are launching today for the consulting arm. So we have 6 -- in Atos, 6 business lines and 6 geos. And with Eviden after the disposal of the high-computing, we have 3 product lines. In terms of PM and GM, so in terms of project margin and gross margin, so that's the way we look at our P&L internally, you have revenues, project margin, gross margin. And then EBIT margin. So we have, I would say, a plan, remember that we are looking at EUR 650 million of savings, and we have already achieved 88% of it, EUR 350 million roughly are in the P&L in fact of '25. And EUR 200 million more to come in the course of '26. We have increased the reliability ratio by 3x. We are now above 80%. We have also continue, I would say, to push the offshoring. And as you can see, we have also a different, I would say, actions on the reduction of the -- It's just switching, I would say, a bench people. We prefer, of course, to use I would utilize people on the bench and of course. Just for information, very important, the discipline also on the new contracts we have signed. Remember that we want to have a margin of 25% to 26% in the future. And in fact, if you look at without the black contracts, we are already at that level. And on average last year, we have signed roughly all the contracts on the book-to-bill and for the EUR 8 billion plus -- EUR 7 billion is around 24%, which is roughly 2.5% above what we have done in the course of '24. And it's very important to understand that we could have probably a better book-to-bill in the course of '25, but the idea was really to protect the margin, and I prefer to say no for some tender, then I would say, to have, let's say, more revenues and less margin in the future. Pillar 6 is the cost review, it's the G&A. So we have done a lot of things there for your information, we reduced the G&A by roughly 26%. Remember that the target we have in G&A is 5%, and we are close to 6%. So we still have 1 point to gain in the course of this year and next year. And then in terms of cash for the Pillar #7, the DSO is at target. We have reduced over by 13%, reduced all the, in fact, by roughly 27%. And we have managed quite very well, I would say the CapEx, and we felt good, we are roughly at EUR 100 million plus. Just on the bottom, you see also that we have completely reviewed the target operating model and also the government has been satisfied. Now if we go on Page 12, today, we are launching, as I said, 2 things. I'm going to talk on Amplify and then we're going to talk on the Agentic Studio with Florin. So Amplify, that's the consulting arm or body, I would say, of Atos, still the brand of Atos because it's very linked to the services that we provide with Atos. And the idea is that we're going to refocus Amplify on AI. The idea for us, it's a door opener, in fact, in artificial intelligence that will help us after that, of course, to push the studio that we are going to. In terms of workforce on Page 13, we are now at 63,000. So you can see the hiring, the levers and also the restructuring we have done. And if you want to see without Latin America and without view, we are close to 57,000 people. That's the number of staff that we're going to have after the divestment. Last, on Page 14, that's the order book. So we have roughly -- we have the key numbers. As you can see, the renewal rate, in fact, is 92%. It's not bad. I want to have a little bit more this year. And in fact, in this year for the large accounts, what we call the large bit over EUR 30 million per year, we estimate that we're going to win most of them or all of them, in fact, a number of strategic deals 19. It was 10 in fact in '24. And there is a good traction in fact, in cloud, cyber and data AI where the business line we are pushing more than the rest. You can see, I would say, different names on the, I would say, extension or win. And for Siemens, of course, we continue to work with them. We're going to do probably EUR 250 million, in fact, the course of '26. Last on Page 15, just to also recognize that we also continue, I would say, to be recognized as a sustainability in the IT sector, it's very important. So we have won or renewed, I would say, some award in terms of sustainability, you can see it on the left and then many business awards from the analysts that we continue to have in the course of '25. I go quite fast, in fact, because I think it's very important that we spend some time on the technology today because there have been a lot of buzz on AI and probably a completely crazy movement for me on the share price in a different company as -- and we estimate in fact that for us, we are very well placed in AI. And in fact, we don't do BPO that is probably, I would say, the business that is going to be attacked for me by Agentic. And definitely, I think that there is a big opportunity for us, in fact, with AI going forward. So with this, I'll give the floor to Florin, who is in the room with us, and he's going to talk about you about, I would say, the AI and the agentic we're going to launch this year, in fact, today. Florin Rotar: Thank you so much, Philippe. Good morning, everybody. Thank you for joining us. Delighted to be here. So what I suggest we do for the next few minutes is for me to walk you through the way that we see the market developing in general in the space of technology, and I will double-click on AI, of course. And I will share with you how we are planning on attacking and delivering this very exciting space. So I'm sure you're well familiar with the fact that global AI spending is booming, a lot of increase in AI infrastructure, AI services, AI software, AI cyber. And we genuinely and truly believe that Atos is very well placed to win in all of those areas. We do have some very strong moats. So the background and the history of Atos, as you all know, is to work and help our clients in highly regulated environments where security is a top concern, where sovereignty is increasingly becoming a priority, where the IT landscape is very complex and where a lot of the systems are truly life and death and are genuinely mission-critical. And what we see happening is that in all of those environments, there is a flywheel convergence happening between sovereignty, AI and cyber. And the fact that we have this decades-long managed services relationships with the clients, the fact that we have really deep know-how of their environment of their data has truly enabled us to progress very fast into packaging those into agentic AI as a service offerings, and I'll cover this in more detail. As you know, the technology space is quite complex right now. It's evolving super fast. There are daily announcements front and left, right and center. And our clients are really hungry for a level of clarity and assurance. And I think we play a very important role as if I'm allowed to use the word Switzerland of governance. The ones which are able to provide secure cross-platform neutral agentic AI. And we're doing this through a very exciting set of partnership with the big players, but also through a set of unique partnerships with AI native and sovereign start-ups. So let me double-click on all of this into more detail. So if we go on the next slide, what you'll see is the 3 big bets for Atos going forward. We believe these 3 pillars are going to be substantial drivers of growth for us in 2026 and beyond. The first one is mission-critical agentic AI. This type of agentic AI is fairly different to the type of AI that is most commonly mentioned in media. When you're doing agentic AI in really complex regulated environment with high level of governance, requirements around sovereignty, reliability, security and responsibility, the type of technology and the type of services is fairly different. We're also seeing digital sovereignty be super important for our clients. And actually, this is the case in North America, in Europe and international markets as well. And what we're doing is that we have embedded digital sovereignty as a core design principle across all of our portfolio. And last but not least, cybersecurity, of course, continues to be a high area of focus. Developments in AI are, of course, helping us to deliver cybersecurity services in a better, faster and more efficient way. But AI actually, of course, also opens up new attack surfaces and new potential vulnerabilities. So what we see happening is that there is this flywheel of self-reinforcement powers between AI, sovereignty and cyber. And we believe we have the right to be winners in all of these 3 areas. So sovereignty, of course, requires security controls to be able to be fully enabled. Sovereignty is, by definition, more complex than non-sovereign solutions, and therefore, AI can play a role to make them more affordable and more innovative. As I mentioned, AI has a huge impact on security. There is a quest to secure AI, but also to use AI to drive more security solutions. So you will hear us going forward really focusing and doubling down on these 3 areas. And what I would like to do is to double-click into each and every single one of those to give you a flavor of what we're doing, the success we've seen so far, what we see happening in the marketplace and to give you a glimpse into the future. So if we go to the next slide, Slide 19, we are very excited to have 4 Atos sovereign agentic studios come out of stealth mode in U.K., in U.S., France and Germany. This will serve the local markets based on their needs, the focus industries, their requirements, and they're all built for truly mission-critical production from day 1 with extraordinarily high focus on the topics which make AI adoption at scale more difficult in most organizations, which is governance, sovereignty, reliability, security and responsibility. So the reason we're launching the studios is that we see that our client spend is converging services and technology budgets into a unified value pool. This value pool and the size of those budgets are increasing, of course. But they're also a very high demand for measurable value generation at scale. Everybody is sick and tired of pilots and proof of concepts and prototypes. Organizations really want to make sure that they have AI, which is secure, which is reliable, which adds business value at scale. And the main challenges in this space is governance and orchestration. And this is where we believe that Atos is an absolute key power player. And then we're actually also seeing sovereignty emerge for AI as a very high priority. So our clients are very happy to use closed black box models for the typical back-office functions, which are important, but which are not differentiated. But they actually are increasingly becoming wary of developing their own brains, so to say, so they own their future, and they have full control of their data, the controls and the intelligence, which they're building. So we are very excited to announce a unique partnership with one of the absolute leaders in foundational models for agentic enterprise, which is [indiscernible]. And this will allow us to deploy and develop sovereign solutions in Europe, in North America, in international markets. And this will help and is helping already our clients to harness the full power of AI on their terms and without compromise. We're, of course, also working with the major market leaders here such as Google Cloud, SAP, IBM, AWS, Microsoft. As a little anecdote, we've just received Frontier partner status with Microsoft given the fact that we're one of the leading organizations leading the path around AI and innovation. But we're also working with this really interesting set of AI native start-ups, which allow us to add unique value across the entire value chain of AI. So we're using KYP, which stands for Know your Potential to help our clients mine and redesign processes and to really understand the business case and the value generated with AI on a very specific and data-driven manner. We are working with the likes of EMA and [ NAN ] as to create and orchestrate and manage the digital AI employees, the agents. We're working with AI to really be able to measure and value the highly, how should I put this, movable cost of AI consumption and to have the causality and the correlation to value. And we're working with clarity around helping our clients drive this continuous change. And we're using all of this technology for our own back office and front office transformation as well. So I know I've used a lot of words here, a lot of concepts, but let me move to the next stage and try to make this very real for you with a number of client examples. So to be honest, we have more demand than we can almost handle right now. We have incredible interest in this agentic AI studios and just sharing with you a couple of examples here. One is Scottish Water, where we're working together to really transform the way they are doing operational planning, risk assessment, decision-making across the entire national and wastewater networks. And this is really mission-critical environments where AI agents are used to continuously monitor the network, to analyze proposed changes to automatically generate contextual risk assessment. And as you can imagine, this is the type of AI, which really needs to work, which really needs to be secure, which really needs to be accurate and timely. Another example is Defra, the U.K. Department for Environment, Food and Rural Affairs. Their mission is to make the air purer, the water cleaner, the land greener and food more sustainable. So obviously, very important mission and vision. So what we're doing with Atos is that we're using a new set of highly differentiated agentic AI solutions we have developed to rapidly modernize and transform their entire application portfolio. We call those digital transformation engineers. They're AI agents which work in collaboration with our human experts to achieve things which frankly wouldn't have been possible to achieve just a few months ago. So we're seeing a close to 30% time-to-market efficiency gain around how to modernize those mission-critical applications. Another example is mBank. We are really working very closely with them to develop their entire advanced digital foundation. And again, this is not AI, which is an add-on. It is mission-critical AI, which is being used to improve operational resilience, to create real efficiency in their business, to manage risk and to really make a difference around their customer experience. And there are many, many, many more examples of this. So we're very proud about this sovereign agentic AI studios, much more to come in this space going forward. If I go to the next slide, I'd like to share with you a perspective around how we're approaching the sovereign space. So what we see is that clients, they have an increasing desire to retain control, authority and accountability over their data, their infrastructure, their applications and digital operations and to have this be in compliance with all the applicable regulations to minimize dependency, exposure and disruption risk. And I think it's important to note that this is not just a European development. We see sovereign requirements being very high in North America as well, both in United States and in Canada and also in our international markets. And in actual fact, there are data points which point to the fact that over 80% of requirements from clients going forward are going to include a critical demand for sovereignty. And this is a massive business opportunity. It's currently estimated to be in the EUR 40 billion to EUR 50 billion of total addressable market, and it is growing quite fast. And frankly, we believe that we are one of, if not the best player in this space. I'd like to draw your attention to the quote on the bottom right corner from one of the leading independent analysts, which is basically and I'm quoting, "Few players can claim the unique combination offered by the Atos Group, an umbrella of sovereignty, which provides the whole with an unprecedented coherence." So we are able to do this in a variety of models because sovereignty takes different shapes and forms in different countries. What U.K. means by sovereignty is slightly different than what France and Germany means by sovereignty, which is different than what U.S. means by sovereignty and so forth. So we're able to offer this full spectrum of solutions ranging from enhanced native clouds to controlled clouds to trusted clouds to disconnected clouds to fully sovereign AI, as I mentioned previously. So I would like to give you, again, a little example of this. One of them is Eurocontrol. Eurocontrol, you might be familiar with, they are the organization, which manage and control the European skies. They are providing a really mission-critical service to the entire continent. If their systems and operations wouldn't work, then flights would not fly, that would obviously have a very, very high impact on the entire economy. So what Atos is doing is that we're one of their leading partners to ensure the strict resiliency, safety, security compliance requirements around the entire IT value chain. And we do this in a way which is coherent, is aligned with the industry regulation and generally spans infrastructure, application, artificial intelligence and so forth. And this is a solution where we are partnering with Microsoft as well around the Azure cloud. If we move on to cyber, that is, of course, a very hot topic and it continues to be so. And what we're seeing is that AI security has really changed the game. So it's become the primary focus area for the way our clients spend. AI is truly redefining threats, defenses and vastly expands the attack surface. And cybersecurity is shifting to an always-on compliance model where our clients are requiring very much verifiable controls and sovereignty aware architectures. And again, this is a space which is moving super fast and really redefining the game. So to give you a little anecdote, it is estimated that there are 80x more machine identities in any organization today compared with human identities. And this is, of course, because of the advent of agentic AI. So that type of AI where you have agents which perhaps only need to have split second life cycles. They need to be controlled. They need to have verifiable access controls. They need to be spun up and potentially terminated in under a second really redefines the rules of the game. So we believe that we are super well positioned in this space. We have very much an end-to-end best-in-class set of cybersecurity services ranging from advisory which, Philippe just mentioned. We have very much embedded AI agents in our entire life cycle of threat intelligence, threat detection, investigation and response. We're also, we believe, one of the market leaders in post-quantum cryptography. And of course, with the Eviden Group, we have some fantastic EU, European sovereign cybersecurity products. So again, to make this real, I'd like to give you a sense of the work that we're doing with the European Commission. This is one of the most important cybersecurity services in Europe, full stop. And Atos is on point and has won a substantial framework agreement to provide operations, incident response, digital forensics, threat intelligence, threat monitoring, offensive security in the areas of vulnerability management, penetration testing and red teaming. And again, I draw your attention to a number of independent analysts, which continue to recognize us as a market leader in the cybersecurity space. So let's move on to the next slide and try to give you a big picture of where we're at and how we see AI impacting our businesses. So this might be a little bit of a busy slide, so please give me a chance to walk you through it. So at the bottom of the slide, you're seeing our different historical business lines with data and AI, cyber, Eviden and so forth. Then the Harvey balls are representing the way we see AI impacting those specific business areas. So on the top row, you're seeing how AI is impacting the addressable market expansion with the full Harvey ball, meaning it is very high expansion, i.e., more opportunities for us or a limited partial Harvey ball demonstrating or indicating a limited expansion. And then the AI top line pressure row is basically a way of indicating how we see AI impacting or having the potential to impact our top line revenue ranging from low to high. So all in all, all in all, we see AI being a strong driver for growth in Atos. We are very much on the offensive. We believe that AI is a game changer, and we are super well positioned in this space. But the important bit to mention here is that we have a leading position in a number of these building blocks in the colorful table below. But what we are doing very successfully is to combine and recombine them into this 3 big bets that I've been talking to you for the last few minutes. So again, please remember the growth engines of Atos are agentic AI digital sovereignty and cybersecurity. And we're seeing substantial opportunities and a lot of momentum in those areas. And we truly believe we have the right to win. So moving on to the last slide as a little bit of summary. We are still going through a massive transformation. We've turned the corner. We are reimagining and we have reimagined the entire technology function in Atos. We're attracting some absolute top-notch talent. We have done a full portfolio redesign, doubling down on agentic AI and AI in general, digital sovereignty and cyber. We have a very unique and differentiated approach to sovereignty and security. We're boldly and ambitiously embracing this new world of services software where increasingly, we are building very unique, very specialized AI solutions powered by software to augment and enhance our services. And the Agentic Sovereign Studios, which we have just launched are really a showcase of much more to come. We really look forward to sharing with you progress and a lot of success in this space. So having said that, handing over to my colleague, Jacques-Francois, to walk you through some interesting numbers. Philippe Salle: So thank you, Florin. I will take the lead before Jacques-Francois if that's okay. And in fact, Florin, you're right, we're going to have a special press release on the agentic next week on the other. We're going to much comment, let's say, much more in detail on what exactly we're going to do in the coming weeks and months, of course. So now going back on the number -- topic #3 on the presentation. So we go to Page 26. So you can see the revenues of '25 versus last year. We call also the pro forma without the foreign exchange and scope. Scope is world grade, of course, in '24. And as you see, minus 14% in terms of sales. If we go to Page 27, you have the EUR 8 billion between Eviden and also Atos in blue. And then in the different countries, Germany is #1, North America, France, U.K. and an international market and what we call BNN, which is Benelux, Netherlands and Nordics. And if you look on the right, this is the EUR 7.2 billion, that's the pro forma of '25 without Latin America and without BNN. And you can see that the base we're going to rebound for this year. And you see now, I would say, what is the split of revenues between Eviden, now, of course, much smaller on the EUR 300 million plus and I would say Atos with different yields. Now if we go to Page 28, I'm very proud to say that we have doubled the margin in terms of EBIT and in terms of percentage more than that. So pro forma in '24, we were at EUR 172 million of EBIT, and we -- last year, we touched the EUR 351 million. So it's more than doubling in fact, the profitability and also a margin at 4.4%. And as I said, that's the biggest margin we have since 2021. Now if you look at the operating margin by geography on Page 29, I will not go into detail but you can see on the left column, that's the results of '25. And on the right, that's the pro forma without -- and without Latin America. So that's the rebound. So the EUR 7.2 billion and EUR 314 million, that's the base impact of the rebound for '25 -- '26. Now I will go very quickly on the different business units. But you can in fact that in Atos for the 6 geos, we have done quite a very good job. Germany, we start first minus 10% on the top line. So tough year. We know also that some of the clients have decided to exit. For example -- of their platform. So it was nothing to do with Atos. Germany is for the first time probably of many years on a positive territory. And as I said to you, this year, we'll be probably close to EUR 100 million. I think the budget is EUR 90 million. So we have, I would say, with Genesis, more to come, of course, in the course of '26. Atos North America on Page 31, that's the area that has been touched more, I would say, in terms of top line. A lot of clients have been frightened in the course of '24 and we -- they stopped, of course, some of the contracts. But as you can see, of course, the EBIT in terms of quantum is less than '24. But in terms of margin, we are double digit, and I think it has been a very good job done by the U.S. team. Now if we go to France, the decrease is around minus 10%. And also, I would say, however, we have a decrease in terms of top line. We have been able, I would say, to stabilize the earnings a little bit more, in fact. And of course, with Genesis, there is more to come in the course of '26. U.K. and Ireland also is an area on Page 33, where we have had also a -- it's like in the U.S. In fact, it has been a tough year because of a lot of clients stopping to work with us and stopping contracts. But as you can see, we have been flat in terms of EBIT and roughly at EUR 83 million versus EUR 82 million. But in terms of margin, we have increased the margin by roughly 1.6%. International market is down also at minus 15%, but we have more than doubled the profitability. We have done a very good job, in fact, in the Genesis transformation in different countries in Middle East, in also South Europe and also in Asia. And last, Benelux, where I would say probably we have been the more resilient in terms of top line. And so we are on Page 35, minus 4% in terms of organic -- inorganic growth, so a decrease in terms of organic, let's say, and a very, very good job from the team on the bottom line. As you can see, we have multiplied by 10 the EBIT with a margin around 7%. So as you can see, in fact, despite, of course, the top line, I would say, pressure, we have been able, I would say, to manage very well the bottom line. Last slide on 36 is on Eviden. Of course, this is the part that is growing and mainly of the advanced computing activity. This activity was losing money, in fact, in '24, and we have done quite a good job to restore some profitability. It's still too low for me. But definitely, there is more to come in this business unit. With this, I hand over to Jacques-Francois to go more on the P&L and balance sheet. Jacques-François de Prest: Okay. Thank you, Philippe. Good morning, everybody. Now that Philippe has gone through the drivers of our business operational performance, let me walk you through the P&L items below operating as well as the cash flow statement and the balance sheet. So as Philippe indicated, our operating margin amounted to EUR 351 million in fiscal year '25. We incurred reorganization and rationalization charges for EUR 642 million in total, of which EUR 540 million reorganization costs as we made significant progress in the execution of our restructuring program and EUR 102 million provision related to leases and real estate asset impairment. We impaired EUR 166 million of goodwill this year as a result of the upcoming disposal of the Advanced Computing business. Other items reached a negative EUR 331 million. They included losses related to some onerous contracts for EUR 123 million and litigation provisions for EUR 145 million. The net cost of our debt reached EUR 333 million, up from EUR 178 million last year, reflecting our new debt structure post '24 refinancing and including PIK interest as well as the amortization of 2024 fair value adjustment. Other financial expenses were EUR 102 million in fiscal year '25 due to debt lease pensions and provisions on nonconsolidated investments. As a result, our net income group share amounted to minus EUR 1.4 billion. On the next page, we see the cash flow generation, which improved significantly year-on-year from minus EUR 735 million in '24 to minus EUR 326 million in fiscal year '25. We generated EUR 883 million OMDA in fiscal year '25, and we expensed EUR 170 million in CapEx and EUR 278 million in leases. Our change in working capital requirement, once we neutralize for the working capital actions, you recall that the unsolicited cash received in advance from some customers, this amounted to a positive EUR 33 million. It essentially reflected a lower activity level in 2025. Going forward, we expect further sustainable working capital improvement. Our cash restructuring expense was EUR 445 million. As expected, cash out accelerated in the second half of the year. Tax paid was EUR 31 million and cash cost of debt EUR 160 million. Onerous contracts and litigations amounted to EUR 157 million. As a result, our net change in cash was limited to EUR 326 million, better than anticipated despite higher restructuring costs, cash at EUR 445 million. Now the net debt as at December 31, '25. The net debt was EUR 1.8 billion compared to EUR 1.2 billion as at December 31, 2024. Beyond free cash flow, it reflected the impact of the change in working capital actions for EUR 43 million, negative ForEx impact for EUR 104 million and other elements such as the PIK component of the debt. Net debt consisted firstly, of cash and cash equivalents for EUR 1.265 billion. And secondly, borrowings for a nominal value of EUR 3.64 billion. As at December 31, '25, the group financial leverage ratio was very similar to the end of '24 level at 3.17x. I remind you that our target is to reduce leverage below 1.5x at the end of the year 2028. Thank you. And I now hand over back to Philippe. Philippe Salle: Thank you, Jacques-Francois. So let's go over to the section, which is the outlook. So on Page 42, first, we want to come back on what is Atos -- do that we will give the keys at the end of the month, in fact, the end of March without also Latin America that we have sold and the closing is expected in fact in April and also the small divestiture that we have done in the Nordics. So on the left side, you can see that the revenue is EUR 7.2 billion. Operating margin is EUR 314 million and that's the pro forma without, as I say, the new perimeter, roughly 57,000, 58,000 people without -- in Latin America and 54 countries of operation. And as I say, we want to be below the 40 threshold, so we continue to reduce the perimeter in this topic. On the right, you can see the different business lines, the different geography. #1 market is now Germany. North America, #2. France, #3. And U.K. and Ireland, #4. And as you can see, these 4 countries is roughly more than 70% of our total revenues. And then you can see also the industries. Now the financial ambition is on Page 43, and I know that a lot of people are waiting this moment. So the guidance for the 3 elements, which is top line, bottom line and cash. So on the top line, we are looking for a positive organic growth. That's the budget that we have internally. But we want to say that there is also a downside scenario possible that is limited to minus 5%. So it's very important that we are cautious. We don't want to over give, I would say, confidence. It's very important that we deliver the numbers that we announced. And that's why we say that, of course, the budget is and our target internally is to grow. It could, I would say, there are some less good news in terms of top line. The maximum we can see this year is minus 5%. And remember, it went over minus 14%. So of course, the first half year will be negative, and we estimate that we will be probably around minus 9%, minus 10% in Q1. And then it will, of course, stabilize in Q3 and a rebound in Q3 or in Q4. Operating margin around 7%. So it means that it's indeed, let's say, around EUR 500 million. So it's an increase by 60% versus '25, which is very important. And we are on, I would say, to the journey to touch this 10% margin by '28 and a positive net change in cash. So it's without, I would say, a divestiture of course, of -- So it means that with the cash that we're going to produce this year plus, of course, the cash we're going to have from the M&A, the debt will be reduced. The EBIT will increase. So the leverage for sure is going to decrease strongly, in fact, in the course of '26. And we are very, I would say, very confident that we're going to produce cash this year. And I think it's the result, of course, of this Genesis plan that we have accelerated in the course of '25. Now for '28, we continue to say that the 3 phase, as I say, reset in '25, rebound in '26, accelerate now in '27 and '28. We continue to see an acceleration of the top line between 5% and 7%. We track probably do better than that. Still looking at an operating margin around 10% and of course, deleveraging to be below the 1.5% net debt by the -- the way we calculate this in the course of '28. So to have, let's say, a profile of BB and BBB probably in the course of '29. That's the goal we have. Now if I have to sum up, I would say, what we have said today with Florin and Jacques-Francois. So on Page 44. First, we have a restore the foundation of Atos. We are very pleased to say that we have met or exceeded, I would say, the financial guidance that we have set. We have done a lot of job, in fact, in the commercial strategy, and I definitely think it's going to yield a lot of results. In fact, I would say the Genesis cost, it's a 1- to 2-year effect. We have done most of the plan in '25, we will finish in '26. And the rebound, it's a 2-, 3-year effort. We have done a lot of job in '25. We're going to see some of the results in the course of '26 and I definitely thing that we're going to accelerate in the course of '27. As I said, the Genesis plan, we have done roughly 88% in terms of savings. It's a pro forma. So we have, of course, part of it in the P&L of '25, and there is more to come, of course, in the P&L of '26. Second, I think we are very well placed for the AI journey, and I think Atos has as a unique position. We're going to reinforce, as I said, the 3 tech pillars that the Florin has said. So agentic AI with the launch of the studios, more to come next week, sovereignty and in cyber. And remember also that we have launched also the consulting we rebranded, I would say, the Atos Amplify. So today, we are announcing the launch of Amplify and also the launch of the Agentic Studio. And we have, in fact, a new website that you can see on the Atos group. And then we have quite a promising outlook on the right part of this page. So stabilization in '26 with a rebound in H2 and then acceleration of top line and of course, production of a lot of cash in the course of '27 and '28 when we can probably resume M&A, we'll see if there are targets that are interesting, but it's also possible that we do probably less because we estimate that with agentic, we have a lot of opportunities we're going to have we probably will try also to invest also in the company more in our studios. With this, I turn to the Q&A session that is open and then I will give the floor to Florin or Jacques-Francois depending on your questions. Operator: [Operator Instructions] The first question today is from Frederic Boulan from Bank of America. Frederic Boulan: Two questions for me. Interesting discussion on your AI offering. Would be keen to understand how you define your competitive edge versus your key global competitors and players. And more broadly looking at your midterm targets, 5% to the kind of growth ambition, what kind of upside have you -- do you anticipate and have you penciled in on that kind of segment versus potential pressure on traditional, I mean, digital transformation, as you mentioned on that slide? And maybe as a second question, is there any -- would be good to have an update on the kind of current pricing environment any kind of areas of your business where you do see kind of margins going down on new projects. I mean you mentioned some of competitive bids where you walked away. But where you do see already today Gen AI driving some price deflation? Philippe Salle: So in fact, Frederic, you have to understand, I think the slide of Florin, which I think is not the most important, but I would say in the Page 23. The way we look at it is very simple. In fact, AI is going to touch the company in 2 types of impact. There is an impact on the coding, so the digital applications where we definitely think we're going to go faster and cheaper. And that's why we said there is an equal to negative impact. But here, in fact, what we see is that we're going -- it's not going to impact the top line that much, but we're going to produce much more for the same price. And what we see from CIOs and the budget right now is that they are accelerating, in fact, their plan because there is a lot to do, in fact, in digitalization in many companies. And in fact, we can probably -- do probably twice as much that we were able, I would say, to provide in the past. We definitely think that, in fact, with AI, coding and testing is very simplified, and we can produce much more than we have done in the past with probably less people. And -- but for us, I think there is no impact on the top line. It's just the fact that we're going to accelerate the project and we're going to provide more. The second impact for the rest is the agentic studio, so the AI on our operations, for example, on CMI, et cetera. And there, we definitely think that it's a big opportunity because we definitely think that with AI, we're going to provide more services or accelerate, for example, some work that we ask, I would say, by the client. So we don't see for the moment, for example, for a big tender, we're going to announce one probably in the course of March, a very big one. We -- and it's a very long contract on CMI. In fact, the margin is up because also we apply also agentic on our own delivery. We pass, of course, some, I would say, the savings to the clients, but we protect the margin of Atos in fact in the future. So we -- that's why we say we are quite positive. Probably Florin, you want to answer on the strategic, I would say, advantage or competitive advantage we have versus the competition. Florin Rotar: Yes, sure. Thanks. So if we go to Slide 17, I'll give you a summary of it. So I think one of the key differentiators is the fact that we have this very long relationships and know-how with a number of really important clients. And what we've been able to do is to bottle up this decades-long insights and data from running hundreds, if not thousands of managed services and long-running engagement into a series of agents, which are sitting on unique Atos foundational models. So if you remember previously in the presentation, I mentioned our collaboration with Poolside. So we are creating a frontier level model, which is Atos native, which packages up this know-how developed the processes and the data built over decades, which we're providing on an Agentic-as-a service model. I think the other differentiation we would have is this experience of working in highly regulated, secure mission-critical environments. So you need to remember that most of the time when people talk about AI today and agents, it's around things like customer service or B2C or call centers. And AI is, frankly, fairly easy to implement in those environments. The accuracy just needs to be good enough. And to be very direct, if a customer who calls a call center does not get the right answer, the sky does not fall down. On the other hand, the type of agentic AI that we specialize in, like the super mission-critical one, it's a completely different ball game in terms of robustness and industrialization. So if our AI agents would not work properly when there is a flooding in Scotland, then we have a serious problem. If the AI solutions that we're creating together with Eurocontrol would not work properly. Well, then you have massive flight delays in Europe and the entire economy loses $1 billion a day. So I think this know-how we have based on our heritage of working in areas which some people consider non-sexy, if I'm allowed to use that word, it's turning into a competitive advantage for us. We really know how to make AI work in those environments. And you see some of the recognition we have in this space. So ISG has recognized us as an absolute leader in advanced analytics and services. We've just made a leader in all market segments with Nelson Hall around transforming business operations with Gen AI and so on and so forth. So to summarize, we are neutral. We're the Switzerland of governance. We know how to make AI work in this super difficult environment. And we have bottled and packaged this know-how into unique models and unique agents, which nobody else would be able to replicate. Philippe Salle: Thank you, Florin. Operator: We'll now take the next question. This is from Nicolas David from ODDO BHF. Nicolas David: I have 3 questions on my side. The first one is regarding the cash guidance. Can you help us reconcile how this net change in cash you expect for 2026 is comparable to what could be a free cash flow to equity definition? What could be the difference between the 2 in terms of cash collection or cash outflow? The second question is regarding the provisions you have passed in 2025, the EUR 123 million on onerous contract notably. Can you help us understand if it's just a cost overrun on this year -- on last year, and it was linked to cash out last year? Or is it a provision for multiyear upcoming losses on the contract you identified? And do you expect more in 2026 if you review more contracts? And also regarding the litigation, when do you expect the potential cash out? And the last question I have is what is -- what would be your strategy regarding the debt refinancing given that the debt market for tech companies is getting more tight right now? Philippe Salle: Okay. I will just answer the last question, and then I give the floor to Jacques-Francois for the first 2. As we say, the door is open for us to renegotiate the debt after 1 year, in fact, it was on December last year in '25. And as you -- what we have done is that we are prepared, I would say, to take any opportunity to refinance the debt. And as you said, right now, the door is closed just because the markets are not in a good shape. So we will wait until I would say there is an opportunity. So we will see. So it could be in March, could be, I would say, in different other period. I think the message is that we are ready to do part of the refinancing as soon as the door is -- I would say the window is opening again, we will probably decide an opportunity on this, okay? So we'll see what happens in the course of '26. I don't have a crystal ball. It's difficult also because, of course, you said for the tech, it has been shaky, I would say, in Feb. Now with Iran, I'm not sure it's going to be less shaky in the course of March. So let's wait and be patient. But if there is an opportunity, we're going to take it. Now for the two first questions, I'll let Jacques-Francois answer to answer. Jacques-François de Prest: Yes, Nicolas. So the net change in cash is the way we call internally this free cash flow, which you're referring to. There are no reasons for differences just in our guidance, we are excluding the repayment of debt. We keep in there the interest to serve the debt, but repayment of debt is excluded, so is FX impact, so is M&A. So that's the first question. Second question is regarding the provisions for onerous contracts and other items basically. So in terms of onerous contracts, Philippe has mentioned quite regularly in the calls that we had still a couple of significant black accounts on which we are losing some money. We have, can I say, the duty to assess these contracts regularly. Of course, management is trying to mitigate with action plans to reduce the losses. And to be clear, we're also trying to exit. But so far, we are bound. So in our reviews at the end of fiscal year '25, we have decided to provide more for future losses. So at this stage, you should not expect additional provisions to be added in '26 because the review we have done is quite prudent and should be comprehensive to cover all the future. And in terms of litigation, well, by definition, it's a bit uncertain and it doesn't depend on us. So I'm afraid I cannot give you really a timing for the cash out of these provisions. But you will recall that the bulk of the litigation provisions has already been booked in H1 '25. So there is not so much which has been added in the second half of '25. Philippe Salle: And in terms of black accounts, there are no new brand accounts, so don't worry. We are -- as I say, we have signed quite a very healthy project, and we are still managing the last 2 accounts in the U.K. Again, one account should finish mid-'27. So that's the goal that is to stop one. And the second one, we are in negotiation also to stop it, but the end of the contract is 2034. Operator: We'll now take our next question. This is from Sam Morton from Invesco. Sam Morton: So in the release, I think you talked about considering to repurchase bond debt. Can you talk a little bit about what that would look like? Is there a particular tranche that you're looking at? Or is that just sort of repurchasing across the board? And then I'd like to dig into the refinancing. Obviously, the window is challenging at the moment. But when you think about the refinancing, is this a piecemeal approach? Or will you -- are you looking to do all of the refinancing of the first lien and the 1.5 lien at the same time? Philippe Salle: So I would say on the refinancing, the goal is first to refinance the 1L because it's 13% and we definitely think that we can be much cheaper right now with B- and also with a positive outlook. And then after that, if we can do 1 and 1.5, of course, we will do both. I would say it will depend on the depth of the market. But I would say 1L is more important for us just because it's too expensive. The 1.5L in fact, is cheaper and it's around 8% plus in terms of yield. So 1L is the priority. But if we can do 1L and 1.5L so that we can stop also the, I would say, the procedure that was in place since '24 for Atos, we will try to do both. But I would say the priority is 1L. Jacques-Francois, probably you want to... Jacques-François de Prest: Yes, on the repurchase of bonds, so forgive me, I'm not going to give you a straight answer. However, I can tell you that what is guiding our actions is we are making a standard calculation of value and we are targeting the instruments where there is the better value. Sam Morton: Okay. Sorry, can I just dive into that? So would you look at the lowest cash price? Or would you -- I mean, I'm just -- I mean, like what's the philosophy. You're looking at the lowest cash price? Or you're trying to facilitate the refinancing? I'm just trying to understand how you think about it. Philippe Salle: Well, in the URD, which is going to be published next week, you will see that in '25, we have already bought a little bit of second lien bonds, a very tiny amount because it was not very liquid, but we have bought a little bit of 2L already in '25. Now we are looking at NPV, IRR. The first reason -- the first objective is to look at what's generating more money, what's -- because we are -- today, we consider we're a little bit in excess cash. We have some big proceeds coming on, namely with the proceeds for the closing of the advanced computing division in a few weeks. So we are trying to make the best use of our money. Operator: [Operator Instructions] The next question is from the line of Derric Marcon from Bernstein. Derric Marcon: I've got 4 questions, if you authorize me. The first one is on the range given for the guidance -- you gave for the guidance. So minus 50 plus or positive. Could you try to help us understand the difference between the low end of the range and the upper end of the range. At the bottom of the range, does it take into account significant revenue reduction with Siemens. And can you also explain us where you land with Siemens in 2025 versus 2024? And what do you expect in 2026? Just to understand if it's an important moving part in the construction of this range. My second question is on the -- your commercial momentum. If we look to the full qualified pipeline number at the end of 2025, it does not improve much compared to previous quarters despite FX. So I'm trying to understand here what KPI do you have to, let's say, assess a much better, as you said, not Q1, but maybe Q2 or Q3 or Q4? And do you see really this momentum improving quarter after quarter? Because, unfortunately, on our side, we can't see through that number. My third question is on CapEx. So as you said, really good performance in 2025 on that side. Do you expect CapEx to remain at the same level in 2026? Or will you be impacted by the massive price increase on memories? And what percentage of the CapEx of this EUR 150 million plus is linked to server plus memory, hardware, let's say. And that's it for me. Philippe Salle: Okay. So on your first question on Siemens, roughly revenues of '25 was EUR 300 million. And this year, we anticipate the EUR 250 million plus. So it's only EUR 50 million, so it's less than 1% in terms of impact on the top line. Remember that with Siemens, we work with 3 different entities, in the Healthcare segment, Energy and Siemens AG. And in fact, we do roughly EUR 150 million plus and EUR 50 million, EU 50 million with the 2 others. And in fact, I would say there are also different dynamics with different accounts. But as I said, this year, we'll be at EUR 250 million plus because some of the contracts will stop also in the course of '25. But there is no, I would say, a big impact on Siemens, as you can see. Now between minus 5 and 0 plus, as you, as you say, we want to be cautious this year. I don't want to say we're going to grow, I would say, and sign it today. The goal, of course, for us is to do it. But we want to be a little bit cautious and give you a range between minus 5% and 0% plus, let's say, between minus 5% and plus 1%. And then you will pick the number you want. But I think it's a cautious stance in the beginning of the year, and we will have probably more to give in the course of this year. For the qualified pipeline, you're right, it's stable, but I think it's much more quality, I would say, for me than it was 1 year ago. And in fact, what makes me, let's say, more optimistic is that the win ratio is increasing right now. So I would say that the qualified, it's a pipeline where we are quite confident we can make a lot of wins in this pipeline. And then your last point was what about CapEx number. Remember that is going away. After that, I would say for Eviden, the chips, it's not a big problem for us. And in fact, for some of our data centers, most of our contracts will pass, I would say, the increase that we see from our providers directly, I would say, to the client. So there is no much risk in fact in terms of CapEx. The CapEx we are looking for this year is at EUR 100 million plus without -- So that's the target that we have for this year. Derric Marcon: Can I add just a small follow-up because on your explanation on AI, very helpful and interesting. And I'm on the same line than you about compensating price deflation with volume on most activities you are doing. But I was wondering if this reasoning can apply or could apply to digital workplace and cloud and infrastructure and modern infrastructure because here, I struggle to understand you will get this price deflation for sure, but I don't see where the increased volume will come from. Philippe Salle: Florin, you can explain that. Florin Rotar: Yes. So it's a great question. So actually, if we go into the cloud and modern infrastructure, so we see a quite substantial uptick around the work that we're doing based on the sovereign movement. So there is -- it is a quite complicated area where clients need a lot of help, everything from advisory to try to understand which workloads they do sovereign and which version of sovereign and to move and redesign both the application and the infrastructure space from those areas. I would also say that we have substantially improved our partnership with a number of the hyperscalers. So we're driving a lot of additional new joint go-to-market campaigns and solutions in this space, which is acting as a net positive. And I would also say that on cloud and modern infrastructure, actually, AI is opening up new opportunities, which historically wouldn't have been possible to do for our clients. So as AI is making the modernization and the digitalization of legacy applications possible in a way which, frankly, again, wouldn't have been realistic or cost efficient in the past. That drives substantial requirements for infrastructure and cloud modernization. So AI is actually a tailwind for us in cloud and modern infrastructure. And when it comes to digital workplace, we are expanding the type of services we provide in digital workplace. So again, AI is, to some extent, a headwind because some of the services which we historically would have done with people are now done by agents, but we're able to improve our margins in that case. But we're also seeing AI act as a multiplier. So one of the key demands we see from clients is how to have their people truly be able to use AI constructively, usefully and in a meaningful way. So we're actually adding AI enablement and AI capabilities as part of our digital workplace services. We're also using AI to make the digital workplace experience a lot more enhanced to help with self-healing. So we're basically adding additional services, additional value-adding services in our digital workplace portfolio, which again are quite nicely balancing those tailwinds are nicely balancing the headwinds we would have had traditionally with digital labor replacing human labor. I hope that answers your question. Operator: We'll now take the last question today. And the question is from Laurent Daure from Kepler Cheuvreux. Laurent Daure: As for Derric, I have also 4 questions. First, I'd like to -- if you could come back on the way you have built your revenue plan for 2026. I mean, if you start the year with the first quarter close to minus 10, and you're not going to have much easier comps the following quarter. Does it mean that you're expecting to win sizable deals that will start during the year? Or what makes you so confident that you're going to end the year with strong growth in order to offset the first quarter? Then my second question is, first, thanks for the clarification on Siemens. But if you could share with us exactly your relationship with your clients as of today. And in particular, I understand that you have 2 more years of business. But do you already have a visibility on what's going to happen for that client as of 2028? And the last 2 questions, one is on the one-offs. At which timing do you expect the P&L to start to be quite clean with limited restructuring and provisions? Is it 2027? And the final question is on the nice improvement you're expecting on EBIT. Could you share a bit the building blocks to go from 4% plus to 7% the main savings, that would be helpful as well. Philippe Salle: So on your first one on Siemens, so we have what we call -- that was signed in 2020. It was a 5-year plus 2 year contract. So there is 2 more years. But after that, in fact, in the course of what we want is not to have any -- whatever with Siemens. It's to continue with Siemens exactly the way we continue with other clients. We just answer tenders and one project. So in fact, in '28, we will continue to answer the tender and win some of the projects. In fact, and when you look at the backlog in Siemens, we have already revenues for '28 and '29 for some of the projects that we have won in fact in the course of '25. So I would say it's a normal client. There is no need, I would say, to resign whatever, it doesn't make sense. Also because, in fact, in the time that we have signed in 2020, you should know that there was a signing bonus that makes, in fact, the margin of the contract not that good. And in fact, now the margin has been restored in the course of '26. So we are quite happy on it. And the idea for me is to continue with the Siemens, like all other clients. There is no specific agreements that we need, I would say, with Siemens. And remember also that, as I said, Siemens, it's 3 different entities with 3 different, I would say, clients. So in fact, we have also client partners addressing the different entities of Siemens. Now for your second question. Of course, if we start at minus 10 and we want to be positive, there is no magic. We need to be a strong growth in Q4. That's the anticipation that we have. I cannot go into details on which contracts we want to win or not. It's too difficult to do that. And I'm not sure it's very useful. But of course, that, I would say, the goal that we have in our budget is that to be roughly at 0 plus in Q3 and then have an acceleration of the growth in the last quarter. And I would say that it would if we are able to be at 0 plus, it's a very good result for us because it means that we are have, let's say, growth going forward in the course of '27. The bar is high, Laurent, I don't say it's an easy one. Please be careful on that. Don't estimate that everything is easy. But of course, we have an ambition, and we definitely think that we have the pipeline and the projects to rebound, I would say, in the course of Q3 and Q4. For your other question, I don't remember. Yes, go on, Jacques-Francois. Jacques-François de Prest: Well, I think, Laurent, you were asking when do we stop the one-offs and do we when do we have a P&L which is clean. Well, I think already '26. I mean, for me, the numbers we are publishing now are taking everything we know into account. So of course, in '26, we still have the continuation of the Genesis restructuring plan because we said that we booked a large chunk in '25. If you remember, the full envelope was EUR 700 million. So we're still a bit below. So there is still somehow -- a portion of that to come in '26. But beyond that, I would say that '26 already should be expected to be clean. That's the question on the one-offs. Your last question, I don't know if you want to take it, which is the further -- the building blocks of the path to the 9% to 10% margin. Philippe Salle: I think yes, well, first, we were at 6% in H2. Remember that we have roughly EUR 200 million of savings of Genesis in the P&L coming this year. So if you start with EUR 300 million plus, plus the EUR 200 million, we are already at EUR 500 million, then you need to get rid, of course, we're going to have an increase of salaries and it's an impact of EUR 70 million plus. So your building block is EUR 314 million, plus EUR 200 million, minus EUR 70 million and then plus the other actions that we are going to take in the course of this year. But that's why we are quite confident on the 7% margin. Laurent Daure: Philippe, if I could add on the new scope question on the seasonality of the margins because you improved nicely from first half to second half. But do you have part of that is coming from seasonality? Or going forward, do you expect when you will have stabilized the operations to have a similar margin level between the 2 halves? Philippe Salle: In fact, it's going to be always more marginal in H2 than H1, but with less Eviden -- is out. And that's most of the explanation why H1 and H2 are very different. It's not going to be the case in the course of '26. So you will see a more stable revenue and I would say, EBIT stream between H1 and H2. But usually and all the companies, and it's the case of, there is more margin in H2 than H1, but not, I would say, like it was, in fact, in the course of '25, to a smaller extent. And remember that I said already in the CMD last year that there will be close to 0, I would say, nonrecurring expense in terms of cash in '28. We cash out, I would say, Genesis. So this year, we estimate that it's going to be between EUR 150 million and EUR 200 million. We have done EUR 450 million last year and then the rest in the course of '27. No more, I would say, cash out in '28. Same thing for the litigations, we estimate that most of the litigation will be done. And then for the black account, as I said, there will be probably only one in '28. So it will be, I would say, a small impact in terms of cash. So EBIT will be clean this year, but I would say, in terms of cash also it will be clean in the course of '27 and '28. Operator: There are no further questions at this time. So I will hand the conference back to the speakers for any closing comments. Philippe Salle: Okay. So thank you, everyone, for this long call. We are very happy as you have seen, I think the focus was on technology today because there were a lot of questions on our industry and also on Atos. Have a good day. And of course, we will talk to you probably for Q1 and in the coming months, and we are, of course, focused to the rebound of the company. Have a good day. Bye-bye. Operator: Thank you. This concludes today's conference call. Thank you for participating, and you may now disconnect. Speakers, please stand by.
Operator: Good day, and thank you for standing by. Welcome to the Atos Group FY 2025 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Philippe Salle, Group Chairman and CEO. Please go ahead. Philippe Salle: Hello. Good morning, everybody. Thank you for joining us for this call of the full year results of 2025. I'm here in the room with Jacques-Francois, the CFO; and Florin, our CTO, because we're going to talk also a lot about technology. And of course, we're going to talk about the future of the company. So the agenda of today is 4 topics. The first one is the 2025, let's say, business and strategic highlight that I will manage. Then Florin will take the floor to have a tech update. And today, we are announcing 2 things with the launch of Atos sify and launch of our agentic studios. Then I will come back on operational and financial results with Jacques-Francois. We're going to have together this section. And then I will finish by the outlook, and then we'll take Q&A. So let's start with the first part, and I'm going to go on Page 6. So 2025 was the year for me of the reset. Remember that I want to have 3 phases, I would say, in the turnaround of the company, reset, rebound, acceleration. So '25 is a reset and '26 is the rebound. In 2025, first, we have a very good financial improvement with clear signs of recovery, we'll see that. Second, a significant progress, of course, of our Genesis plan. And the third is that we have a positive business momentum and a commercial, I would say, traction. If we go on Page 7, the key numbers of the company, first in terms of top line, the revenues at EUR 8 billion, EUR 8,001 million to be really clear, so above the target that we have set during the Q3 the last call, in fact. Operating margin, EUR 351 million, it's 4.4%. Just for information, that's the best margin we have for the last 5 years. And I think I'm very pleased to say that we have doubled the margin versus last year with a decrease in top line of minus 14%. And remember that we have guided EUR 340 million at the beginning of '25. Net change in cash, it's minus EUR 326 million, although we have accelerated, I would say, Genesis, and we paid in fact, EUR [ 250 ] million roughly of exit cost and it's better, of course, than our guidance that we say that it will be EUR 350 million or below. And then the liquidity, and we published this already in Jan is EUR 1.7 billion. So it's far above, of course, I would say, the covenant that we have in our debt package that is EUR 650 million. So we have ample cash to finish the Genesis plan. And in fact, this year, we'll be already cash flow positive and the debt, in fact, will go down. Now if we go on Page 8, you can see the inflection point in terms of revenues. So the fourth quarter and that's the figures we have published, in fact, in Jan was around minus 9%. So you can see, I would say, quarter-by-quarter that we had, in fact, a deceleration or, let's say, less momentum, I would say, better momentum in terms of revenue decrease. And then you can see also the number between Atos and Eviden and the organic growth that we have, which is around minus 9% in Q4. In terms of the OEM for the EBIT, the pro forma of '24 for the information we hold are that -- we have sold in '24 and at a constant exchange rate is EUR 1.72. So you can see that we have more than doubled the margin and the margin was beyond 2% in '24 and in terms of '25 is at 4.4%. And in terms of cash flow, the net change in cash was roughly minus EUR 700 million in '24, and we have roughly minus EUR 300 million in '25. If we go to Page 9, you can see also that the backlog -- the book-to-bill has also improved in the course of '25 at 94% for H2. And the total book-to-bill, in fact, for '25 was 89% versus 82% in '24. Now if we go to Genesis on Page 10, remember exactly, I would say, the plan that we have sketched in May '25 with the 7 pillar. This is, I would say, exactly what we have shown, in fact, in May. And I will now -- if I go on Page 11, a little bit deep dive on what we have done. So on the first pillar, we have reviewed the top 100 accounts, and it has, I would say, produced EUR 1 billion plus of opportunities. Remember that during the CMD, I have said that the number of business line per account was around 1.4, and we want to push it, of course, to 2 or above, I would say, that level. And then we have also in terms of growth streamlined, I would say, the processes and also with, I would say, a better organization in terms of sales with salespeople in the different geo than in [indiscernible]. In terms of HR, so we have reviewed the bonus framework. We have launched our LTI plan with a share plan for the top 200, and we have started also to have a leadership culture. And this year, we're going to push very hard on the AI culture. In terms of country reviews, so we have roughly 10 countries that are exited or in inactive. Remember that we want to go probably above around, let's say, 40 countries. We have also sold 7 countries in Latin America and also in Nordics, which is Norway and Finland. And this year, we want to continue to probably, let's say, close or inactive around 20 countries. In terms of portfolio review, first, we have sketched, I would say, the different branding. So you have Atos Group, which is the holding. And under Atos Group, you have 3 brands. Atos, of course, service, let's say, company, Eviden product and software and Atos Amplify, the new name that we are launching today for the consulting arm. So we have 6 -- in Atos, 6 business lines and 6 geos. And with Eviden after the disposal of the high-computing, we have 3 product lines. In terms of PM and GM, so in terms of project margin and gross margin, so that's the way we look at our P&L internally, you have revenues, project margin, gross margin. And then EBIT margin. So we have, I would say, a plan, remember that we are looking at EUR 650 million of savings, and we have already achieved 88% of it, EUR 350 million roughly are in the P&L in fact of '25. And EUR 200 million more to come in the course of '26. We have increased the reliability ratio by 3x. We are now above 80%. We have also continue, I would say, to push the offshoring. And as you can see, we have also a different, I would say, actions on the reduction of the -- It's just switching, I would say, a bench people. We prefer, of course, to use I would utilize people on the bench and of course. Just for information, very important, the discipline also on the new contracts we have signed. Remember that we want to have a margin of 25% to 26% in the future. And in fact, if you look at without the black contracts, we are already at that level. And on average last year, we have signed roughly all the contracts on the book-to-bill and for the EUR 8 billion plus -- EUR 7 billion is around 24%, which is roughly 2.5% above what we have done in the course of '24. And it's very important to understand that we could have probably a better book-to-bill in the course of '25, but the idea was really to protect the margin, and I prefer to say no for some tender, then I would say, to have, let's say, more revenues and less margin in the future. Pillar 6 is the cost review, it's the G&A. So we have done a lot of things there for your information, we reduced the G&A by roughly 26%. Remember that the target we have in G&A is 5%, and we are close to 6%. So we still have 1 point to gain in the course of this year and next year. And then in terms of cash for the Pillar #7, the DSO is at target. We have reduced over by 13%, reduced all the, in fact, by roughly 27%. And we have managed quite very well, I would say the CapEx, and we felt good, we are roughly at EUR 100 million plus. Just on the bottom, you see also that we have completely reviewed the target operating model and also the government has been satisfied. Now if we go on Page 12, today, we are launching, as I said, 2 things. I'm going to talk on Amplify and then we're going to talk on the Agentic Studio with Florin. So Amplify, that's the consulting arm or body, I would say, of Atos, still the brand of Atos because it's very linked to the services that we provide with Atos. And the idea is that we're going to refocus Amplify on AI. The idea for us, it's a door opener, in fact, in artificial intelligence that will help us after that, of course, to push the studio that we are going to. In terms of workforce on Page 13, we are now at 63,000. So you can see the hiring, the levers and also the restructuring we have done. And if you want to see without Latin America and without view, we are close to 57,000 people. That's the number of staff that we're going to have after the divestment. Last, on Page 14, that's the order book. So we have roughly -- we have the key numbers. As you can see, the renewal rate, in fact, is 92%. It's not bad. I want to have a little bit more this year. And in fact, in this year for the large accounts, what we call the large bit over EUR 30 million per year, we estimate that we're going to win most of them or all of them, in fact, a number of strategic deals 19. It was 10 in fact in '24. And there is a good traction in fact, in cloud, cyber and data AI where the business line we are pushing more than the rest. You can see, I would say, different names on the, I would say, extension or win. And for Siemens, of course, we continue to work with them. We're going to do probably EUR 250 million, in fact, the course of '26. Last on Page 15, just to also recognize that we also continue, I would say, to be recognized as a sustainability in the IT sector, it's very important. So we have won or renewed, I would say, some award in terms of sustainability, you can see it on the left and then many business awards from the analysts that we continue to have in the course of '25. I go quite fast, in fact, because I think it's very important that we spend some time on the technology today because there have been a lot of buzz on AI and probably a completely crazy movement for me on the share price in a different company as -- and we estimate in fact that for us, we are very well placed in AI. And in fact, we don't do BPO that is probably, I would say, the business that is going to be attacked for me by Agentic. And definitely, I think that there is a big opportunity for us, in fact, with AI going forward. So with this, I'll give the floor to Florin, who is in the room with us, and he's going to talk about you about, I would say, the AI and the agentic we're going to launch this year, in fact, today. Florin Rotar: Thank you so much, Philippe. Good morning, everybody. Thank you for joining us. Delighted to be here. So what I suggest we do for the next few minutes is for me to walk you through the way that we see the market developing in general in the space of technology, and I will double-click on AI, of course. And I will share with you how we are planning on attacking and delivering this very exciting space. So I'm sure you're well familiar with the fact that global AI spending is booming, a lot of increase in AI infrastructure, AI services, AI software, AI cyber. And we genuinely and truly believe that Atos is very well placed to win in all of those areas. We do have some very strong moats. So the background and the history of Atos, as you all know, is to work and help our clients in highly regulated environments where security is a top concern, where sovereignty is increasingly becoming a priority, where the IT landscape is very complex and where a lot of the systems are truly life and death and are genuinely mission-critical. And what we see happening is that in all of those environments, there is a flywheel convergence happening between sovereignty, AI and cyber. And the fact that we have this decades-long managed services relationships with the clients, the fact that we have really deep know-how of their environment of their data has truly enabled us to progress very fast into packaging those into agentic AI as a service offerings, and I'll cover this in more detail. As you know, the technology space is quite complex right now. It's evolving super fast. There are daily announcements front and left, right and center. And our clients are really hungry for a level of clarity and assurance. And I think we play a very important role as if I'm allowed to use the word Switzerland of governance. The ones which are able to provide secure cross-platform neutral agentic AI. And we're doing this through a very exciting set of partnership with the big players, but also through a set of unique partnerships with AI native and sovereign start-ups. So let me double-click on all of this into more detail. So if we go on the next slide, what you'll see is the 3 big bets for Atos going forward. We believe these 3 pillars are going to be substantial drivers of growth for us in 2026 and beyond. The first one is mission-critical agentic AI. This type of agentic AI is fairly different to the type of AI that is most commonly mentioned in media. When you're doing agentic AI in really complex regulated environment with high level of governance, requirements around sovereignty, reliability, security and responsibility, the type of technology and the type of services is fairly different. We're also seeing digital sovereignty be super important for our clients. And actually, this is the case in North America, in Europe and international markets as well. And what we're doing is that we have embedded digital sovereignty as a core design principle across all of our portfolio. And last but not least, cybersecurity, of course, continues to be a high area of focus. Developments in AI are, of course, helping us to deliver cybersecurity services in a better, faster and more efficient way. But AI actually, of course, also opens up new attack surfaces and new potential vulnerabilities. So what we see happening is that there is this flywheel of self-reinforcement powers between AI, sovereignty and cyber. And we believe we have the right to be winners in all of these 3 areas. So sovereignty, of course, requires security controls to be able to be fully enabled. Sovereignty is, by definition, more complex than non-sovereign solutions, and therefore, AI can play a role to make them more affordable and more innovative. As I mentioned, AI has a huge impact on security. There is a quest to secure AI, but also to use AI to drive more security solutions. So you will hear us going forward really focusing and doubling down on these 3 areas. And what I would like to do is to double-click into each and every single one of those to give you a flavor of what we're doing, the success we've seen so far, what we see happening in the marketplace and to give you a glimpse into the future. So if we go to the next slide, Slide 19, we are very excited to have 4 Atos sovereign agentic studios come out of stealth mode in U.K., in U.S., France and Germany. This will serve the local markets based on their needs, the focus industries, their requirements, and they're all built for truly mission-critical production from day 1 with extraordinarily high focus on the topics which make AI adoption at scale more difficult in most organizations, which is governance, sovereignty, reliability, security and responsibility. So the reason we're launching the studios is that we see that our client spend is converging services and technology budgets into a unified value pool. This value pool and the size of those budgets are increasing, of course. But they're also a very high demand for measurable value generation at scale. Everybody is sick and tired of pilots and proof of concepts and prototypes. Organizations really want to make sure that they have AI, which is secure, which is reliable, which adds business value at scale. And the main challenges in this space is governance and orchestration. And this is where we believe that Atos is an absolute key power player. And then we're actually also seeing sovereignty emerge for AI as a very high priority. So our clients are very happy to use closed black box models for the typical back-office functions, which are important, but which are not differentiated. But they actually are increasingly becoming wary of developing their own brains, so to say, so they own their future, and they have full control of their data, the controls and the intelligence, which they're building. So we are very excited to announce a unique partnership with one of the absolute leaders in foundational models for agentic enterprise, which is [indiscernible]. And this will allow us to deploy and develop sovereign solutions in Europe, in North America, in international markets. And this will help and is helping already our clients to harness the full power of AI on their terms and without compromise. We're, of course, also working with the major market leaders here such as Google Cloud, SAP, IBM, AWS, Microsoft. As a little anecdote, we've just received Frontier partner status with Microsoft given the fact that we're one of the leading organizations leading the path around AI and innovation. But we're also working with this really interesting set of AI native start-ups, which allow us to add unique value across the entire value chain of AI. So we're using KYP, which stands for Know your Potential to help our clients mine and redesign processes and to really understand the business case and the value generated with AI on a very specific and data-driven manner. We are working with the likes of EMA and [ NAN ] as to create and orchestrate and manage the digital AI employees, the agents. We're working with AI to really be able to measure and value the highly, how should I put this, movable cost of AI consumption and to have the causality and the correlation to value. And we're working with clarity around helping our clients drive this continuous change. And we're using all of this technology for our own back office and front office transformation as well. So I know I've used a lot of words here, a lot of concepts, but let me move to the next stage and try to make this very real for you with a number of client examples. So to be honest, we have more demand than we can almost handle right now. We have incredible interest in this agentic AI studios and just sharing with you a couple of examples here. One is Scottish Water, where we're working together to really transform the way they are doing operational planning, risk assessment, decision-making across the entire national and wastewater networks. And this is really mission-critical environments where AI agents are used to continuously monitor the network, to analyze proposed changes to automatically generate contextual risk assessment. And as you can imagine, this is the type of AI, which really needs to work, which really needs to be secure, which really needs to be accurate and timely. Another example is Defra, the U.K. Department for Environment, Food and Rural Affairs. Their mission is to make the air purer, the water cleaner, the land greener and food more sustainable. So obviously, very important mission and vision. So what we're doing with Atos is that we're using a new set of highly differentiated agentic AI solutions we have developed to rapidly modernize and transform their entire application portfolio. We call those digital transformation engineers. They're AI agents which work in collaboration with our human experts to achieve things which frankly wouldn't have been possible to achieve just a few months ago. So we're seeing a close to 30% time-to-market efficiency gain around how to modernize those mission-critical applications. Another example is mBank. We are really working very closely with them to develop their entire advanced digital foundation. And again, this is not AI, which is an add-on. It is mission-critical AI, which is being used to improve operational resilience, to create real efficiency in their business, to manage risk and to really make a difference around their customer experience. And there are many, many, many more examples of this. So we're very proud about this sovereign agentic AI studios, much more to come in this space going forward. If I go to the next slide, I'd like to share with you a perspective around how we're approaching the sovereign space. So what we see is that clients, they have an increasing desire to retain control, authority and accountability over their data, their infrastructure, their applications and digital operations and to have this be in compliance with all the applicable regulations to minimize dependency, exposure and disruption risk. And I think it's important to note that this is not just a European development. We see sovereign requirements being very high in North America as well, both in United States and in Canada and also in our international markets. And in actual fact, there are data points which point to the fact that over 80% of requirements from clients going forward are going to include a critical demand for sovereignty. And this is a massive business opportunity. It's currently estimated to be in the EUR 40 billion to EUR 50 billion of total addressable market, and it is growing quite fast. And frankly, we believe that we are one of, if not the best player in this space. I'd like to draw your attention to the quote on the bottom right corner from one of the leading independent analysts, which is basically and I'm quoting, "Few players can claim the unique combination offered by the Atos Group, an umbrella of sovereignty, which provides the whole with an unprecedented coherence." So we are able to do this in a variety of models because sovereignty takes different shapes and forms in different countries. What U.K. means by sovereignty is slightly different than what France and Germany means by sovereignty, which is different than what U.S. means by sovereignty and so forth. So we're able to offer this full spectrum of solutions ranging from enhanced native clouds to controlled clouds to trusted clouds to disconnected clouds to fully sovereign AI, as I mentioned previously. So I would like to give you, again, a little example of this. One of them is Eurocontrol. Eurocontrol, you might be familiar with, they are the organization, which manage and control the European skies. They are providing a really mission-critical service to the entire continent. If their systems and operations wouldn't work, then flights would not fly, that would obviously have a very, very high impact on the entire economy. So what Atos is doing is that we're one of their leading partners to ensure the strict resiliency, safety, security compliance requirements around the entire IT value chain. And we do this in a way which is coherent, is aligned with the industry regulation and generally spans infrastructure, application, artificial intelligence and so forth. And this is a solution where we are partnering with Microsoft as well around the Azure cloud. If we move on to cyber, that is, of course, a very hot topic and it continues to be so. And what we're seeing is that AI security has really changed the game. So it's become the primary focus area for the way our clients spend. AI is truly redefining threats, defenses and vastly expands the attack surface. And cybersecurity is shifting to an always-on compliance model where our clients are requiring very much verifiable controls and sovereignty aware architectures. And again, this is a space which is moving super fast and really redefining the game. So to give you a little anecdote, it is estimated that there are 80x more machine identities in any organization today compared with human identities. And this is, of course, because of the advent of agentic AI. So that type of AI where you have agents which perhaps only need to have split second life cycles. They need to be controlled. They need to have verifiable access controls. They need to be spun up and potentially terminated in under a second really redefines the rules of the game. So we believe that we are super well positioned in this space. We have very much an end-to-end best-in-class set of cybersecurity services ranging from advisory which, Philippe just mentioned. We have very much embedded AI agents in our entire life cycle of threat intelligence, threat detection, investigation and response. We're also, we believe, one of the market leaders in post-quantum cryptography. And of course, with the Eviden Group, we have some fantastic EU, European sovereign cybersecurity products. So again, to make this real, I'd like to give you a sense of the work that we're doing with the European Commission. This is one of the most important cybersecurity services in Europe, full stop. And Atos is on point and has won a substantial framework agreement to provide operations, incident response, digital forensics, threat intelligence, threat monitoring, offensive security in the areas of vulnerability management, penetration testing and red teaming. And again, I draw your attention to a number of independent analysts, which continue to recognize us as a market leader in the cybersecurity space. So let's move on to the next slide and try to give you a big picture of where we're at and how we see AI impacting our businesses. So this might be a little bit of a busy slide, so please give me a chance to walk you through it. So at the bottom of the slide, you're seeing our different historical business lines with data and AI, cyber, Eviden and so forth. Then the Harvey balls are representing the way we see AI impacting those specific business areas. So on the top row, you're seeing how AI is impacting the addressable market expansion with the full Harvey ball, meaning it is very high expansion, i.e., more opportunities for us or a limited partial Harvey ball demonstrating or indicating a limited expansion. And then the AI top line pressure row is basically a way of indicating how we see AI impacting or having the potential to impact our top line revenue ranging from low to high. So all in all, all in all, we see AI being a strong driver for growth in Atos. We are very much on the offensive. We believe that AI is a game changer, and we are super well positioned in this space. But the important bit to mention here is that we have a leading position in a number of these building blocks in the colorful table below. But what we are doing very successfully is to combine and recombine them into this 3 big bets that I've been talking to you for the last few minutes. So again, please remember the growth engines of Atos are agentic AI digital sovereignty and cybersecurity. And we're seeing substantial opportunities and a lot of momentum in those areas. And we truly believe we have the right to win. So moving on to the last slide as a little bit of summary. We are still going through a massive transformation. We've turned the corner. We are reimagining and we have reimagined the entire technology function in Atos. We're attracting some absolute top-notch talent. We have done a full portfolio redesign, doubling down on agentic AI and AI in general, digital sovereignty and cyber. We have a very unique and differentiated approach to sovereignty and security. We're boldly and ambitiously embracing this new world of services software where increasingly, we are building very unique, very specialized AI solutions powered by software to augment and enhance our services. And the Agentic Sovereign Studios, which we have just launched are really a showcase of much more to come. We really look forward to sharing with you progress and a lot of success in this space. So having said that, handing over to my colleague, Jacques-Francois, to walk you through some interesting numbers. Philippe Salle: So thank you, Florin. I will take the lead before Jacques-Francois if that's okay. And in fact, Florin, you're right, we're going to have a special press release on the agentic next week on the other. We're going to much comment, let's say, much more in detail on what exactly we're going to do in the coming weeks and months, of course. So now going back on the number -- topic #3 on the presentation. So we go to Page 26. So you can see the revenues of '25 versus last year. We call also the pro forma without the foreign exchange and scope. Scope is world grade, of course, in '24. And as you see, minus 14% in terms of sales. If we go to Page 27, you have the EUR 8 billion between Eviden and also Atos in blue. And then in the different countries, Germany is #1, North America, France, U.K. and an international market and what we call BNN, which is Benelux, Netherlands and Nordics. And if you look on the right, this is the EUR 7.2 billion, that's the pro forma of '25 without Latin America and without BNN. And you can see that the base we're going to rebound for this year. And you see now, I would say, what is the split of revenues between Eviden, now, of course, much smaller on the EUR 300 million plus and I would say Atos with different yields. Now if we go to Page 28, I'm very proud to say that we have doubled the margin in terms of EBIT and in terms of percentage more than that. So pro forma in '24, we were at EUR 172 million of EBIT, and we -- last year, we touched the EUR 351 million. So it's more than doubling in fact, the profitability and also a margin at 4.4%. And as I said, that's the biggest margin we have since 2021. Now if you look at the operating margin by geography on Page 29, I will not go into detail but you can see on the left column, that's the results of '25. And on the right, that's the pro forma without -- and without Latin America. So that's the rebound. So the EUR 7.2 billion and EUR 314 million, that's the base impact of the rebound for '25 -- '26. Now I will go very quickly on the different business units. But you can in fact that in Atos for the 6 geos, we have done quite a very good job. Germany, we start first minus 10% on the top line. So tough year. We know also that some of the clients have decided to exit. For example -- of their platform. So it was nothing to do with Atos. Germany is for the first time probably of many years on a positive territory. And as I said to you, this year, we'll be probably close to EUR 100 million. I think the budget is EUR 90 million. So we have, I would say, with Genesis, more to come, of course, in the course of '26. Atos North America on Page 31, that's the area that has been touched more, I would say, in terms of top line. A lot of clients have been frightened in the course of '24 and we -- they stopped, of course, some of the contracts. But as you can see, of course, the EBIT in terms of quantum is less than '24. But in terms of margin, we are double digit, and I think it has been a very good job done by the U.S. team. Now if we go to France, the decrease is around minus 10%. And also, I would say, however, we have a decrease in terms of top line. We have been able, I would say, to stabilize the earnings a little bit more, in fact. And of course, with Genesis, there is more to come in the course of '26. U.K. and Ireland also is an area on Page 33, where we have had also a -- it's like in the U.S. In fact, it has been a tough year because of a lot of clients stopping to work with us and stopping contracts. But as you can see, we have been flat in terms of EBIT and roughly at EUR 83 million versus EUR 82 million. But in terms of margin, we have increased the margin by roughly 1.6%. International market is down also at minus 15%, but we have more than doubled the profitability. We have done a very good job, in fact, in the Genesis transformation in different countries in Middle East, in also South Europe and also in Asia. And last, Benelux, where I would say probably we have been the more resilient in terms of top line. And so we are on Page 35, minus 4% in terms of organic -- inorganic growth, so a decrease in terms of organic, let's say, and a very, very good job from the team on the bottom line. As you can see, we have multiplied by 10 the EBIT with a margin around 7%. So as you can see, in fact, despite, of course, the top line, I would say, pressure, we have been able, I would say, to manage very well the bottom line. Last slide on 36 is on Eviden. Of course, this is the part that is growing and mainly of the advanced computing activity. This activity was losing money, in fact, in '24, and we have done quite a good job to restore some profitability. It's still too low for me. But definitely, there is more to come in this business unit. With this, I hand over to Jacques-Francois to go more on the P&L and balance sheet. Jacques-François de Prest: Okay. Thank you, Philippe. Good morning, everybody. Now that Philippe has gone through the drivers of our business operational performance, let me walk you through the P&L items below operating as well as the cash flow statement and the balance sheet. So as Philippe indicated, our operating margin amounted to EUR 351 million in fiscal year '25. We incurred reorganization and rationalization charges for EUR 642 million in total, of which EUR 540 million reorganization costs as we made significant progress in the execution of our restructuring program and EUR 102 million provision related to leases and real estate asset impairment. We impaired EUR 166 million of goodwill this year as a result of the upcoming disposal of the Advanced Computing business. Other items reached a negative EUR 331 million. They included losses related to some onerous contracts for EUR 123 million and litigation provisions for EUR 145 million. The net cost of our debt reached EUR 333 million, up from EUR 178 million last year, reflecting our new debt structure post '24 refinancing and including PIK interest as well as the amortization of 2024 fair value adjustment. Other financial expenses were EUR 102 million in fiscal year '25 due to debt lease pensions and provisions on nonconsolidated investments. As a result, our net income group share amounted to minus EUR 1.4 billion. On the next page, we see the cash flow generation, which improved significantly year-on-year from minus EUR 735 million in '24 to minus EUR 326 million in fiscal year '25. We generated EUR 883 million OMDA in fiscal year '25, and we expensed EUR 170 million in CapEx and EUR 278 million in leases. Our change in working capital requirement, once we neutralize for the working capital actions, you recall that the unsolicited cash received in advance from some customers, this amounted to a positive EUR 33 million. It essentially reflected a lower activity level in 2025. Going forward, we expect further sustainable working capital improvement. Our cash restructuring expense was EUR 445 million. As expected, cash out accelerated in the second half of the year. Tax paid was EUR 31 million and cash cost of debt EUR 160 million. Onerous contracts and litigations amounted to EUR 157 million. As a result, our net change in cash was limited to EUR 326 million, better than anticipated despite higher restructuring costs, cash at EUR 445 million. Now the net debt as at December 31, '25. The net debt was EUR 1.8 billion compared to EUR 1.2 billion as at December 31, 2024. Beyond free cash flow, it reflected the impact of the change in working capital actions for EUR 43 million, negative ForEx impact for EUR 104 million and other elements such as the PIK component of the debt. Net debt consisted firstly, of cash and cash equivalents for EUR 1.265 billion. And secondly, borrowings for a nominal value of EUR 3.64 billion. As at December 31, '25, the group financial leverage ratio was very similar to the end of '24 level at 3.17x. I remind you that our target is to reduce leverage below 1.5x at the end of the year 2028. Thank you. And I now hand over back to Philippe. Philippe Salle: Thank you, Jacques-Francois. So let's go over to the section, which is the outlook. So on Page 42, first, we want to come back on what is Atos -- do that we will give the keys at the end of the month, in fact, the end of March without also Latin America that we have sold and the closing is expected in fact in April and also the small divestiture that we have done in the Nordics. So on the left side, you can see that the revenue is EUR 7.2 billion. Operating margin is EUR 314 million and that's the pro forma without, as I say, the new perimeter, roughly 57,000, 58,000 people without -- in Latin America and 54 countries of operation. And as I say, we want to be below the 40 threshold, so we continue to reduce the perimeter in this topic. On the right, you can see the different business lines, the different geography. #1 market is now Germany. North America, #2. France, #3. And U.K. and Ireland, #4. And as you can see, these 4 countries is roughly more than 70% of our total revenues. And then you can see also the industries. Now the financial ambition is on Page 43, and I know that a lot of people are waiting this moment. So the guidance for the 3 elements, which is top line, bottom line and cash. So on the top line, we are looking for a positive organic growth. That's the budget that we have internally. But we want to say that there is also a downside scenario possible that is limited to minus 5%. So it's very important that we are cautious. We don't want to over give, I would say, confidence. It's very important that we deliver the numbers that we announced. And that's why we say that, of course, the budget is and our target internally is to grow. It could, I would say, there are some less good news in terms of top line. The maximum we can see this year is minus 5%. And remember, it went over minus 14%. So of course, the first half year will be negative, and we estimate that we will be probably around minus 9%, minus 10% in Q1. And then it will, of course, stabilize in Q3 and a rebound in Q3 or in Q4. Operating margin around 7%. So it means that it's indeed, let's say, around EUR 500 million. So it's an increase by 60% versus '25, which is very important. And we are on, I would say, to the journey to touch this 10% margin by '28 and a positive net change in cash. So it's without, I would say, a divestiture of course, of -- So it means that with the cash that we're going to produce this year plus, of course, the cash we're going to have from the M&A, the debt will be reduced. The EBIT will increase. So the leverage for sure is going to decrease strongly, in fact, in the course of '26. And we are very, I would say, very confident that we're going to produce cash this year. And I think it's the result, of course, of this Genesis plan that we have accelerated in the course of '25. Now for '28, we continue to say that the 3 phase, as I say, reset in '25, rebound in '26, accelerate now in '27 and '28. We continue to see an acceleration of the top line between 5% and 7%. We track probably do better than that. Still looking at an operating margin around 10% and of course, deleveraging to be below the 1.5% net debt by the -- the way we calculate this in the course of '28. So to have, let's say, a profile of BB and BBB probably in the course of '29. That's the goal we have. Now if I have to sum up, I would say, what we have said today with Florin and Jacques-Francois. So on Page 44. First, we have a restore the foundation of Atos. We are very pleased to say that we have met or exceeded, I would say, the financial guidance that we have set. We have done a lot of job, in fact, in the commercial strategy, and I definitely think it's going to yield a lot of results. In fact, I would say the Genesis cost, it's a 1- to 2-year effect. We have done most of the plan in '25, we will finish in '26. And the rebound, it's a 2-, 3-year effort. We have done a lot of job in '25. We're going to see some of the results in the course of '26 and I definitely thing that we're going to accelerate in the course of '27. As I said, the Genesis plan, we have done roughly 88% in terms of savings. It's a pro forma. So we have, of course, part of it in the P&L of '25, and there is more to come, of course, in the P&L of '26. Second, I think we are very well placed for the AI journey, and I think Atos has as a unique position. We're going to reinforce, as I said, the 3 tech pillars that the Florin has said. So agentic AI with the launch of the studios, more to come next week, sovereignty and in cyber. And remember also that we have launched also the consulting we rebranded, I would say, the Atos Amplify. So today, we are announcing the launch of Amplify and also the launch of the Agentic Studio. And we have, in fact, a new website that you can see on the Atos group. And then we have quite a promising outlook on the right part of this page. So stabilization in '26 with a rebound in H2 and then acceleration of top line and of course, production of a lot of cash in the course of '27 and '28 when we can probably resume M&A, we'll see if there are targets that are interesting, but it's also possible that we do probably less because we estimate that with agentic, we have a lot of opportunities we're going to have we probably will try also to invest also in the company more in our studios. With this, I turn to the Q&A session that is open and then I will give the floor to Florin or Jacques-Francois depending on your questions. Operator: [Operator Instructions] The first question today is from Frederic Boulan from Bank of America. Frederic Boulan: Two questions for me. Interesting discussion on your AI offering. Would be keen to understand how you define your competitive edge versus your key global competitors and players. And more broadly looking at your midterm targets, 5% to the kind of growth ambition, what kind of upside have you -- do you anticipate and have you penciled in on that kind of segment versus potential pressure on traditional, I mean, digital transformation, as you mentioned on that slide? And maybe as a second question, is there any -- would be good to have an update on the kind of current pricing environment any kind of areas of your business where you do see kind of margins going down on new projects. I mean you mentioned some of competitive bids where you walked away. But where you do see already today Gen AI driving some price deflation? Philippe Salle: So in fact, Frederic, you have to understand, I think the slide of Florin, which I think is not the most important, but I would say in the Page 23. The way we look at it is very simple. In fact, AI is going to touch the company in 2 types of impact. There is an impact on the coding, so the digital applications where we definitely think we're going to go faster and cheaper. And that's why we said there is an equal to negative impact. But here, in fact, what we see is that we're going -- it's not going to impact the top line that much, but we're going to produce much more for the same price. And what we see from CIOs and the budget right now is that they are accelerating, in fact, their plan because there is a lot to do, in fact, in digitalization in many companies. And in fact, we can probably -- do probably twice as much that we were able, I would say, to provide in the past. We definitely think that, in fact, with AI, coding and testing is very simplified, and we can produce much more than we have done in the past with probably less people. And -- but for us, I think there is no impact on the top line. It's just the fact that we're going to accelerate the project and we're going to provide more. The second impact for the rest is the agentic studio, so the AI on our operations, for example, on CMI, et cetera. And there, we definitely think that it's a big opportunity because we definitely think that with AI, we're going to provide more services or accelerate, for example, some work that we ask, I would say, by the client. So we don't see for the moment, for example, for a big tender, we're going to announce one probably in the course of March, a very big one. We -- and it's a very long contract on CMI. In fact, the margin is up because also we apply also agentic on our own delivery. We pass, of course, some, I would say, the savings to the clients, but we protect the margin of Atos in fact in the future. So we -- that's why we say we are quite positive. Probably Florin, you want to answer on the strategic, I would say, advantage or competitive advantage we have versus the competition. Florin Rotar: Yes, sure. Thanks. So if we go to Slide 17, I'll give you a summary of it. So I think one of the key differentiators is the fact that we have this very long relationships and know-how with a number of really important clients. And what we've been able to do is to bottle up this decades-long insights and data from running hundreds, if not thousands of managed services and long-running engagement into a series of agents, which are sitting on unique Atos foundational models. So if you remember previously in the presentation, I mentioned our collaboration with Poolside. So we are creating a frontier level model, which is Atos native, which packages up this know-how developed the processes and the data built over decades, which we're providing on an Agentic-as-a service model. I think the other differentiation we would have is this experience of working in highly regulated, secure mission-critical environments. So you need to remember that most of the time when people talk about AI today and agents, it's around things like customer service or B2C or call centers. And AI is, frankly, fairly easy to implement in those environments. The accuracy just needs to be good enough. And to be very direct, if a customer who calls a call center does not get the right answer, the sky does not fall down. On the other hand, the type of agentic AI that we specialize in, like the super mission-critical one, it's a completely different ball game in terms of robustness and industrialization. So if our AI agents would not work properly when there is a flooding in Scotland, then we have a serious problem. If the AI solutions that we're creating together with Eurocontrol would not work properly. Well, then you have massive flight delays in Europe and the entire economy loses $1 billion a day. So I think this know-how we have based on our heritage of working in areas which some people consider non-sexy, if I'm allowed to use that word, it's turning into a competitive advantage for us. We really know how to make AI work in those environments. And you see some of the recognition we have in this space. So ISG has recognized us as an absolute leader in advanced analytics and services. We've just made a leader in all market segments with Nelson Hall around transforming business operations with Gen AI and so on and so forth. So to summarize, we are neutral. We're the Switzerland of governance. We know how to make AI work in this super difficult environment. And we have bottled and packaged this know-how into unique models and unique agents, which nobody else would be able to replicate. Philippe Salle: Thank you, Florin. Operator: We'll now take the next question. This is from Nicolas David from ODDO BHF. Nicolas David: I have 3 questions on my side. The first one is regarding the cash guidance. Can you help us reconcile how this net change in cash you expect for 2026 is comparable to what could be a free cash flow to equity definition? What could be the difference between the 2 in terms of cash collection or cash outflow? The second question is regarding the provisions you have passed in 2025, the EUR 123 million on onerous contract notably. Can you help us understand if it's just a cost overrun on this year -- on last year, and it was linked to cash out last year? Or is it a provision for multiyear upcoming losses on the contract you identified? And do you expect more in 2026 if you review more contracts? And also regarding the litigation, when do you expect the potential cash out? And the last question I have is what is -- what would be your strategy regarding the debt refinancing given that the debt market for tech companies is getting more tight right now? Philippe Salle: Okay. I will just answer the last question, and then I give the floor to Jacques-Francois for the first 2. As we say, the door is open for us to renegotiate the debt after 1 year, in fact, it was on December last year in '25. And as you -- what we have done is that we are prepared, I would say, to take any opportunity to refinance the debt. And as you said, right now, the door is closed just because the markets are not in a good shape. So we will wait until I would say there is an opportunity. So we will see. So it could be in March, could be, I would say, in different other period. I think the message is that we are ready to do part of the refinancing as soon as the door is -- I would say the window is opening again, we will probably decide an opportunity on this, okay? So we'll see what happens in the course of '26. I don't have a crystal ball. It's difficult also because, of course, you said for the tech, it has been shaky, I would say, in Feb. Now with Iran, I'm not sure it's going to be less shaky in the course of March. So let's wait and be patient. But if there is an opportunity, we're going to take it. Now for the two first questions, I'll let Jacques-Francois answer to answer. Jacques-François de Prest: Yes, Nicolas. So the net change in cash is the way we call internally this free cash flow, which you're referring to. There are no reasons for differences just in our guidance, we are excluding the repayment of debt. We keep in there the interest to serve the debt, but repayment of debt is excluded, so is FX impact, so is M&A. So that's the first question. Second question is regarding the provisions for onerous contracts and other items basically. So in terms of onerous contracts, Philippe has mentioned quite regularly in the calls that we had still a couple of significant black accounts on which we are losing some money. We have, can I say, the duty to assess these contracts regularly. Of course, management is trying to mitigate with action plans to reduce the losses. And to be clear, we're also trying to exit. But so far, we are bound. So in our reviews at the end of fiscal year '25, we have decided to provide more for future losses. So at this stage, you should not expect additional provisions to be added in '26 because the review we have done is quite prudent and should be comprehensive to cover all the future. And in terms of litigation, well, by definition, it's a bit uncertain and it doesn't depend on us. So I'm afraid I cannot give you really a timing for the cash out of these provisions. But you will recall that the bulk of the litigation provisions has already been booked in H1 '25. So there is not so much which has been added in the second half of '25. Philippe Salle: And in terms of black accounts, there are no new brand accounts, so don't worry. We are -- as I say, we have signed quite a very healthy project, and we are still managing the last 2 accounts in the U.K. Again, one account should finish mid-'27. So that's the goal that is to stop one. And the second one, we are in negotiation also to stop it, but the end of the contract is 2034. Operator: We'll now take our next question. This is from Sam Morton from Invesco. Sam Morton: So in the release, I think you talked about considering to repurchase bond debt. Can you talk a little bit about what that would look like? Is there a particular tranche that you're looking at? Or is that just sort of repurchasing across the board? And then I'd like to dig into the refinancing. Obviously, the window is challenging at the moment. But when you think about the refinancing, is this a piecemeal approach? Or will you -- are you looking to do all of the refinancing of the first lien and the 1.5 lien at the same time? Philippe Salle: So I would say on the refinancing, the goal is first to refinance the 1L because it's 13% and we definitely think that we can be much cheaper right now with B- and also with a positive outlook. And then after that, if we can do 1 and 1.5, of course, we will do both. I would say it will depend on the depth of the market. But I would say 1L is more important for us just because it's too expensive. The 1.5L in fact, is cheaper and it's around 8% plus in terms of yield. So 1L is the priority. But if we can do 1L and 1.5L so that we can stop also the, I would say, the procedure that was in place since '24 for Atos, we will try to do both. But I would say the priority is 1L. Jacques-Francois, probably you want to... Jacques-François de Prest: Yes, on the repurchase of bonds, so forgive me, I'm not going to give you a straight answer. However, I can tell you that what is guiding our actions is we are making a standard calculation of value and we are targeting the instruments where there is the better value. Sam Morton: Okay. Sorry, can I just dive into that? So would you look at the lowest cash price? Or would you -- I mean, I'm just -- I mean, like what's the philosophy. You're looking at the lowest cash price? Or you're trying to facilitate the refinancing? I'm just trying to understand how you think about it. Philippe Salle: Well, in the URD, which is going to be published next week, you will see that in '25, we have already bought a little bit of second lien bonds, a very tiny amount because it was not very liquid, but we have bought a little bit of 2L already in '25. Now we are looking at NPV, IRR. The first reason -- the first objective is to look at what's generating more money, what's -- because we are -- today, we consider we're a little bit in excess cash. We have some big proceeds coming on, namely with the proceeds for the closing of the advanced computing division in a few weeks. So we are trying to make the best use of our money. Operator: [Operator Instructions] The next question is from the line of Derric Marcon from Bernstein. Derric Marcon: I've got 4 questions, if you authorize me. The first one is on the range given for the guidance -- you gave for the guidance. So minus 50 plus or positive. Could you try to help us understand the difference between the low end of the range and the upper end of the range. At the bottom of the range, does it take into account significant revenue reduction with Siemens. And can you also explain us where you land with Siemens in 2025 versus 2024? And what do you expect in 2026? Just to understand if it's an important moving part in the construction of this range. My second question is on the -- your commercial momentum. If we look to the full qualified pipeline number at the end of 2025, it does not improve much compared to previous quarters despite FX. So I'm trying to understand here what KPI do you have to, let's say, assess a much better, as you said, not Q1, but maybe Q2 or Q3 or Q4? And do you see really this momentum improving quarter after quarter? Because, unfortunately, on our side, we can't see through that number. My third question is on CapEx. So as you said, really good performance in 2025 on that side. Do you expect CapEx to remain at the same level in 2026? Or will you be impacted by the massive price increase on memories? And what percentage of the CapEx of this EUR 150 million plus is linked to server plus memory, hardware, let's say. And that's it for me. Philippe Salle: Okay. So on your first question on Siemens, roughly revenues of '25 was EUR 300 million. And this year, we anticipate the EUR 250 million plus. So it's only EUR 50 million, so it's less than 1% in terms of impact on the top line. Remember that with Siemens, we work with 3 different entities, in the Healthcare segment, Energy and Siemens AG. And in fact, we do roughly EUR 150 million plus and EUR 50 million, EU 50 million with the 2 others. And in fact, I would say there are also different dynamics with different accounts. But as I said, this year, we'll be at EUR 250 million plus because some of the contracts will stop also in the course of '25. But there is no, I would say, a big impact on Siemens, as you can see. Now between minus 5 and 0 plus, as you, as you say, we want to be cautious this year. I don't want to say we're going to grow, I would say, and sign it today. The goal, of course, for us is to do it. But we want to be a little bit cautious and give you a range between minus 5% and 0% plus, let's say, between minus 5% and plus 1%. And then you will pick the number you want. But I think it's a cautious stance in the beginning of the year, and we will have probably more to give in the course of this year. For the qualified pipeline, you're right, it's stable, but I think it's much more quality, I would say, for me than it was 1 year ago. And in fact, what makes me, let's say, more optimistic is that the win ratio is increasing right now. So I would say that the qualified, it's a pipeline where we are quite confident we can make a lot of wins in this pipeline. And then your last point was what about CapEx number. Remember that is going away. After that, I would say for Eviden, the chips, it's not a big problem for us. And in fact, for some of our data centers, most of our contracts will pass, I would say, the increase that we see from our providers directly, I would say, to the client. So there is no much risk in fact in terms of CapEx. The CapEx we are looking for this year is at EUR 100 million plus without -- So that's the target that we have for this year. Derric Marcon: Can I add just a small follow-up because on your explanation on AI, very helpful and interesting. And I'm on the same line than you about compensating price deflation with volume on most activities you are doing. But I was wondering if this reasoning can apply or could apply to digital workplace and cloud and infrastructure and modern infrastructure because here, I struggle to understand you will get this price deflation for sure, but I don't see where the increased volume will come from. Philippe Salle: Florin, you can explain that. Florin Rotar: Yes. So it's a great question. So actually, if we go into the cloud and modern infrastructure, so we see a quite substantial uptick around the work that we're doing based on the sovereign movement. So there is -- it is a quite complicated area where clients need a lot of help, everything from advisory to try to understand which workloads they do sovereign and which version of sovereign and to move and redesign both the application and the infrastructure space from those areas. I would also say that we have substantially improved our partnership with a number of the hyperscalers. So we're driving a lot of additional new joint go-to-market campaigns and solutions in this space, which is acting as a net positive. And I would also say that on cloud and modern infrastructure, actually, AI is opening up new opportunities, which historically wouldn't have been possible to do for our clients. So as AI is making the modernization and the digitalization of legacy applications possible in a way which, frankly, again, wouldn't have been realistic or cost efficient in the past. That drives substantial requirements for infrastructure and cloud modernization. So AI is actually a tailwind for us in cloud and modern infrastructure. And when it comes to digital workplace, we are expanding the type of services we provide in digital workplace. So again, AI is, to some extent, a headwind because some of the services which we historically would have done with people are now done by agents, but we're able to improve our margins in that case. But we're also seeing AI act as a multiplier. So one of the key demands we see from clients is how to have their people truly be able to use AI constructively, usefully and in a meaningful way. So we're actually adding AI enablement and AI capabilities as part of our digital workplace services. We're also using AI to make the digital workplace experience a lot more enhanced to help with self-healing. So we're basically adding additional services, additional value-adding services in our digital workplace portfolio, which again are quite nicely balancing those tailwinds are nicely balancing the headwinds we would have had traditionally with digital labor replacing human labor. I hope that answers your question. Operator: We'll now take the last question today. And the question is from Laurent Daure from Kepler Cheuvreux. Laurent Daure: As for Derric, I have also 4 questions. First, I'd like to -- if you could come back on the way you have built your revenue plan for 2026. I mean, if you start the year with the first quarter close to minus 10, and you're not going to have much easier comps the following quarter. Does it mean that you're expecting to win sizable deals that will start during the year? Or what makes you so confident that you're going to end the year with strong growth in order to offset the first quarter? Then my second question is, first, thanks for the clarification on Siemens. But if you could share with us exactly your relationship with your clients as of today. And in particular, I understand that you have 2 more years of business. But do you already have a visibility on what's going to happen for that client as of 2028? And the last 2 questions, one is on the one-offs. At which timing do you expect the P&L to start to be quite clean with limited restructuring and provisions? Is it 2027? And the final question is on the nice improvement you're expecting on EBIT. Could you share a bit the building blocks to go from 4% plus to 7% the main savings, that would be helpful as well. Philippe Salle: So on your first one on Siemens, so we have what we call -- that was signed in 2020. It was a 5-year plus 2 year contract. So there is 2 more years. But after that, in fact, in the course of what we want is not to have any -- whatever with Siemens. It's to continue with Siemens exactly the way we continue with other clients. We just answer tenders and one project. So in fact, in '28, we will continue to answer the tender and win some of the projects. In fact, and when you look at the backlog in Siemens, we have already revenues for '28 and '29 for some of the projects that we have won in fact in the course of '25. So I would say it's a normal client. There is no need, I would say, to resign whatever, it doesn't make sense. Also because, in fact, in the time that we have signed in 2020, you should know that there was a signing bonus that makes, in fact, the margin of the contract not that good. And in fact, now the margin has been restored in the course of '26. So we are quite happy on it. And the idea for me is to continue with the Siemens, like all other clients. There is no specific agreements that we need, I would say, with Siemens. And remember also that, as I said, Siemens, it's 3 different entities with 3 different, I would say, clients. So in fact, we have also client partners addressing the different entities of Siemens. Now for your second question. Of course, if we start at minus 10 and we want to be positive, there is no magic. We need to be a strong growth in Q4. That's the anticipation that we have. I cannot go into details on which contracts we want to win or not. It's too difficult to do that. And I'm not sure it's very useful. But of course, that, I would say, the goal that we have in our budget is that to be roughly at 0 plus in Q3 and then have an acceleration of the growth in the last quarter. And I would say that it would if we are able to be at 0 plus, it's a very good result for us because it means that we are have, let's say, growth going forward in the course of '27. The bar is high, Laurent, I don't say it's an easy one. Please be careful on that. Don't estimate that everything is easy. But of course, we have an ambition, and we definitely think that we have the pipeline and the projects to rebound, I would say, in the course of Q3 and Q4. For your other question, I don't remember. Yes, go on, Jacques-Francois. Jacques-François de Prest: Well, I think, Laurent, you were asking when do we stop the one-offs and do we when do we have a P&L which is clean. Well, I think already '26. I mean, for me, the numbers we are publishing now are taking everything we know into account. So of course, in '26, we still have the continuation of the Genesis restructuring plan because we said that we booked a large chunk in '25. If you remember, the full envelope was EUR 700 million. So we're still a bit below. So there is still somehow -- a portion of that to come in '26. But beyond that, I would say that '26 already should be expected to be clean. That's the question on the one-offs. Your last question, I don't know if you want to take it, which is the further -- the building blocks of the path to the 9% to 10% margin. Philippe Salle: I think yes, well, first, we were at 6% in H2. Remember that we have roughly EUR 200 million of savings of Genesis in the P&L coming this year. So if you start with EUR 300 million plus, plus the EUR 200 million, we are already at EUR 500 million, then you need to get rid, of course, we're going to have an increase of salaries and it's an impact of EUR 70 million plus. So your building block is EUR 314 million, plus EUR 200 million, minus EUR 70 million and then plus the other actions that we are going to take in the course of this year. But that's why we are quite confident on the 7% margin. Laurent Daure: Philippe, if I could add on the new scope question on the seasonality of the margins because you improved nicely from first half to second half. But do you have part of that is coming from seasonality? Or going forward, do you expect when you will have stabilized the operations to have a similar margin level between the 2 halves? Philippe Salle: In fact, it's going to be always more marginal in H2 than H1, but with less Eviden -- is out. And that's most of the explanation why H1 and H2 are very different. It's not going to be the case in the course of '26. So you will see a more stable revenue and I would say, EBIT stream between H1 and H2. But usually and all the companies, and it's the case of, there is more margin in H2 than H1, but not, I would say, like it was, in fact, in the course of '25, to a smaller extent. And remember that I said already in the CMD last year that there will be close to 0, I would say, nonrecurring expense in terms of cash in '28. We cash out, I would say, Genesis. So this year, we estimate that it's going to be between EUR 150 million and EUR 200 million. We have done EUR 450 million last year and then the rest in the course of '27. No more, I would say, cash out in '28. Same thing for the litigations, we estimate that most of the litigation will be done. And then for the black account, as I said, there will be probably only one in '28. So it will be, I would say, a small impact in terms of cash. So EBIT will be clean this year, but I would say, in terms of cash also it will be clean in the course of '27 and '28. Operator: There are no further questions at this time. So I will hand the conference back to the speakers for any closing comments. Philippe Salle: Okay. So thank you, everyone, for this long call. We are very happy as you have seen, I think the focus was on technology today because there were a lot of questions on our industry and also on Atos. Have a good day. And of course, we will talk to you probably for Q1 and in the coming months, and we are, of course, focused to the rebound of the company. Have a good day. Bye-bye. Operator: Thank you. This concludes today's conference call. Thank you for participating, and you may now disconnect. Speakers, please stand by.
Reshmee Soni: Good morning, and welcome to Grindrod's 2025 Annual Financial Results Presentation. My name is Reshmee Soni from Investor Relations. I am delighted to welcome our analysts, shareholders and members of our management team this morning. Thank you for your interest in Grindrod. A special welcome to our nonexecutive directors who are also online. Today's session, we will cover the 2025 financial performance, having a look at our financial performance, our divisional performance, ending with our outlook. We will then proceed to a question-and-answer session. With us this morning are CEO, Kwazi Mabaso; and Fathima Ally, our CFO. Before we commence, please take note of the forward-looking slide on your screen. I will allow you to peruse this at your own time. And with that, I hand over to Kwazi. Kwazi Mabaso: Thank you, Reshmee. Good morning, everyone, and thank you for taking time to join us today. The year 2025 was marked by geopolitical tensions and trade policy uncertainty. Our success in executing our strategy and continued focus on operational excellence has assisted in limiting the impact of this volatility. We closed off on key strategic milestones in 2025. We concluded the ZAR 1.4 billion TCM acquisition, which is now under our full control. We successfully executed an exit from our shareholding in our nonstrategic Marine Fuels business, securing cash of ZAR 102 million. We exited our exposure to KwaZulu-Natal, North Coast property and secured ZAR 500 million in the process. Now let's take a closer look at the macroeconomic environment. As I have stated earlier, the period under review reflects a complex global operating environment, one that is characterized by elevated geopolitical risks and challenging environment. This has placed pressure on regional economic conditions resulting in shifting demand for commodities that we move for our customers. Looking at the key regions where we operate and where our customers export to, starting with China, China recorded an economic growth rate of 5% despite reduced iron ore demand resulting from a 4.6% decrease in steel production. This decline was attributable to a slow property sector and a weak infrastructure investment. India, the key importer of South Africa's thermal coal grew its economy by 7.3% in 2025, continuing its streak as the fastest-growing economy in the world. Although South Africa's economic growth at 1.3% is an improvement from the sub 1% growth, this still falls short of the required rate to mitigate the structural economic challenges such as high unemployment rate. Mozambique economy grew 1.1%, a substantial drop in the performance we have seen in the past, but LNG project activity is expected to underpin a recovery going forward. The rest of the SADC region's economic growth is expected to be supported by the strengthening of the mining sector. On the next slide, we'll take a closer look at the 2025 price performance of the commodities we handle for our customers. Overall prices outside copper continued to underperform. Chrome ore prices experienced notable fluctuations during the year. We saw an increase in chrome ore exports as South Africa's smelting capacity slowed due to energy challenges. On the other hand, iron ore prices started softer into 2025 and peaked in the second half of the year as China stimulated its steel sector. Coal prices fell in 2025 as India's output rose, which had an adverse effect on South African coal demand. Now I'll take you through our performance overview. Safety remains a priority at Grindrod. Our focus on driving a safe working environment for our employees through BASSOPA safety awareness campaign resulted in Grindrod achieving a year of 0 fatalities. We achieved a record lost time injury frequency rate of 0.16 across all our operations. This demonstrates the employees' dedication to maintaining safe practices. We delivered record volumes in Maputo and Matola terminals, delivering growth rates of 6% and 22%, respectively. I'll give more color to this performance in the next section. However, it's safe to say that our decision to buy up shareholding in Matola Terminal TCM was a strategic breakthrough. As a result of the record volumes, our EBITDA grew by 13% to ZAR 2.3 billion, translating into headlines growth of 17% to ZAR 1.2 billion. We generated ZAR 2 billion of cash from operations at decent EBITDA cash conversion rate of 1.3%, and we held ZAR 3.9 billion in cash at year-end. Consistent with our dividend policy, the group has declared an ordinary dividend of ZAR 0.252 per share for the 6-month period. This brings the total ordinary dividend for the year to ZAR 0.482 per share, marking a 21% increase. We have received more than ZAR 1 billion from noncore assets for the year. The Board has subsequently approved a further once-off special dividend of ZAR 0.43 per share for the 6-month period. As a result, 49% of noncore proceeds have been returned to shareholders. Between ordinary and special dividend, Grindrod has returned ZAR 476 million to shareholders for the 6-month period, bringing the total number returned to shareholders for the full year to ZAR 862 million. Now let us look at our Port and Terminals volume performance. Strong chrome market, partly buoyed by increased chrome ore export from South Africa and Zimbabwe contributed to yet another strong volume growth in Maputo port, culminating in a record performance of 15.2 million tonnes. Maputo has achieved a compounded annual growth rate of 14% since 2021. Moving to Matola. Conclusion of strategic buy-up of control of Matola Terminal was key in enabling Grindrod to unlock operational efficiencies. The reduction of vessel turnaround time by 30% and 11% for coal and magnetite, respectively, resulted in the terminal achieving a record of 9.9 million tonnes, marking the highest throughput in its history. This performance is at 83% of the committed capacity expansion to 12 million tonnes required in the sub-concession extension. Now let's move on to our Logistics segment. The Logistics segment remains a critical enabler to our Port and Terminals business. This segment gives Grindrod the ability to offer an integrated logistics solution to our customers, a solution that is cost effective and efficient. This ability remains Grindrod's market differentiator. Performance in ships agency and clearing and forwarding was soft. Our graphite operations slowed down last year, but recent market development points to a recovery in this business. We have substantially concluded our locomotives refurbishment program we announced previously, which we managed in line with our expected timing of rail open access in South Africa. Engagement with Transnet Rail Infrastructure Manager, TRIM, on Rail Open Access continues with expectation to close the negotiations after the revised network statement has been issued, which is expected in April. I'll now hand over to Fathima to share more insight on the financial performance. Fathima Ally: Thank you, Kwazi. Good morning, everybody, and a warm welcome from my side. It's certainly a pleasure this morning to deliver Grindrod's performance for financial year 2025. Before you, you'll see our income statement and the numbers that we're presenting today, both from an income statement and a balance sheet perspective, have been put together on a segmental basis, which means that the impact of our joint ventures are proportionately included based on our effective shareholding on a line-by-line basis. Our core business performed well for us in 2025. Core revenue up 1% and core EBITDA up 13%. This is largely attributable to the stellar performance coming out of the Matola terminal with volumes up 22%, as Kwazi mentioned earlier. This was offset somewhat by performance in our Logistics segment, which we'll delve into further once we look at the segmental performance in detail. Pleasingly, overall EBITDA margins for the group improved year-on-year by 11%, reflected at 30% for the financial year 2025. Significant corporate activity prevailed for us in 2025 and reflected, you will see nontrading items on screen at ZAR 927 million. The Matola buy-up contributes ZAR 937 million of that, comprising both a gain on disposal as required by the accounting standards as well as the release of foreign currency translation reserves. The Marine Fuels investment, as divested from in the first half of the year, attributing to the drop of revenue and EBITDA, also contributed to nontrading items in terms of a net gain of ZAR 34 million. Our share of associate earnings, which represents performance of the port in Maputo is up 3% year-on-year. Volumes were up 6% and record milestones were met. The performance was slightly offset by tax obligations that was recorded due to the change in tax regimes in the United Arab Emirates. Our overall effective tax rate for the group sat at 31%. Now if you take profit before share of associate earnings and ignore the effects of nontrading items as well as withholding tax effects, which were elevated in the current year following repatriation of dividends from Matola post the buy-up, that's how we arrive at the 31%. Overall, net profit attributable to our ordinary shareholders are reported at ZAR 2.1 billion, 559% up on the prior year, and our core headline earnings at ZAR 1.2 billion, 17% up on the prior year. Our core headline earnings in cents per share closed at ZAR 1.765. If we look at our segmental performance, Port and Terminals doing really well for us. Revenue and EBITDA margins up 20% and 44%, respectively. Again, big contributor being Matola. Matola has been transformational for Grindrod in terms of financial performance as well as financial position. The acquisition has played out exactly as we expected with it being and reflecting as a major earnings and cash contributor. We are excited in moving forward with this asset. Our overall normalized margins, reflecting the impacts of the Matola acquisition and the overall uptick in our Port and Terminals volumes, dry bulk specifically, are reported at 44%, firmly up from the 36% I had reported to you in H1 of this year. Our headline earnings for this segment closed at ZAR 1.1 billion with strong return on equity at 24%. Our Port and Terminals business remains a U.S. dollar-anchored business with 89% of our EBITDA earned offshore. Our Logistics segment faced headwinds in the current financial year. Commodity prices saw a downward shift in our transport brokering business, which put pressure on an already low-margin business. Our graphite contract was renegotiated in the current year, and we moved from a fixed fee model and now earning a variable fee. Revenue and earnings, respectively, moving forward will now be aligned to volumes that we report. Our rail deployment was low. However, we have significantly advanced on our refurbishment program. Ships agency and the container business performance was subdued, largely linked to market challenges. Overall, revenue and EBITDA down 10% and 18%, respectively. And normalized margins, once you ignore transport brokering as well as the COVID-19 business interruption reported in the first half, sat at 25%, whilst at the low end of management's target, still within the range that we target for our enabling business. And this is an important principle. The Logistics business, as Kwazi mentioned, is an enabler to Port and Terminals. It is imperative to how we bring our integrated, efficient and cost-effective solutions to our customers. Overall, this segment gave us ZAR 212 million of headline earnings. And this segment, again, strongly rooted as a rand-anchored business with 83% of our EBITDA earned onshore in South Africa. From a balance sheet perspective, due to the significant impacts of the Matola acquisition, we have represented the December 2024 balance sheet. This will allow better comparability by us notionally including 100% of Matola as it reflects in the December 2025 numbers. We spent ZAR 1.5 billion in terms of capital expenditure in the current year, 81% of that being expansionary. And of that, 75% largely underpinned by the Matola acquisition. The remaining ZAR 362 million was invested in property, plant and equipment, largely in all our facilities and to name a few, our upgrade and our development of our Matola buildings in the current year as well as our Salt River facility in Cape Town linked to our container business and new undercover warehousing facilities in Walvis Bay. Aside from this, other capital acquisitions this year related to steel business, yellow equipment, vehicles and Jersey barriers. Our PPE dropped 5% December '24 to December '25. Whilst additions were significant, we did see depreciation impacts as well as a strengthening of the rand by 12%, which impacted on the translation differences that we booked in the current year. Our intangible assets grew significantly. The Matola acquisition brought on book $86 million of intangibles, both recognized in the form of goodwill as well as customer relationships. In terms of our working capital, our current assets reduced in the current year by 22%. It was very pleasing to see improved collections robustly across our businesses, a testament to the hard work of our finance and commercial teams. This coupled with the down trading in logistics as well as the capitalization of prepayments for rolling stock investments in the prior year contributed to that difference. Our bank and cash balances are up together with our current liabilities. What we experienced this year was significant prefunding that came through from our fuel customers in both the ships agency as well as the clearing and forwarding businesses. What happens here is that the cash is collected and sits on our balance sheet until it is paid over to SARS based on deferment arrangements that we have in place in these businesses. From a liabilities perspective, we saw significant repayments of borrowings. What we also saw was lease liabilities coming to book on renegotiation of the GML concession as well as the Matola acquisition. Our other liabilities have also grown. This is largely in view of the fact that we agreed to certain deferred consideration payments under the COG transaction as well as the fact that we had to recognize deferred tax liabilities linked to the intangible assets that we brought on book and that I mentioned earlier. Overall, we closed this financial year with Grindrod's balance sheet healthy and stable. Our asset base is now rooted firmly to just our core business with all material noncore assets materialized. If we look at how our net debt progressed in this financial year, we closed last year with net debt reported at ZAR 1.5 billion. This was post us ring-fencing funds of ZAR 1.1 billion in anticipation of closing the Matola transaction. Together, this gives us a net restated opening net debt position of ZAR 413 million. We raised in excess of ZAR 2 billion in terms of cash generated from our operations in this financial year. This stemmed from both operational performance as well as the efficient working capital measures that I talked about earlier. Our cash conversion was at 1.3x EBITDA, certainly a record for us looking back into a 10-year history for Grindrod. 27% of this cash was spent towards our interest, tax and dividend obligations. On acquisition of Matola, we brought net cash on book of ZAR 316 million. This comprised of both cash on hand at the time, offset by lease liabilities that were on book. We put ZAR 1.4 billion away in terms of capital expenditure. Again, this largely linked to the Matola transaction where we spent ZAR 1.1 billion, as mentioned earlier. Proceeds on our disposal also amounting to ZAR 1.1 billion and proceeds from noncore taking up 93% of that amount. Our overall noncash movements amounted to ZAR 412 million, again, through the introduction of lease liabilities when the Maputo concession was signed in November this year. We closed the year in a net cash position of ZAR 699 million. If we look at what this comprises, our total debt moved from ZAR 2.9 billion to ZAR 3.2 billion, 10% up. Our borrowings reduced, as indicated earlier, from ZAR 2 billion to ZAR 1.4 billion. We saw net repayments in the year of ZAR 710 million. We saw a significant uptick in our lease liabilities. The Maputo acquisition as well as the signing of the GML concession brought concession-linked lease liabilities onto our book of ZAR 1.1 billion. Our overdraft movements are linked to timing of cash flows. From a cash perspective, we closed the year on ZAR 3.9 billion. Our ZAR 1.4 billion, including ring-fenced cash of last year, give us a net increase in cash of ZAR 1.4 billion in 2025. This resulting in ZAR 700 million arising from the Matola acquisition and ZAR 700 million stemming from the timing of cash flows linked to the prefunding in the ships agency and clearing and forwarding. We closed this year with Grindrod's balance sheet largely ungeared, and we sit with debt capacity that approximates ZAR 4.5 billion. We have plans in place on how to take up this capacity. And to tell you more about that, I'll hand you back to Kwazi. Thank you. Kwazi Mabaso: Thank you, Fathima. Our capital allocation framework directs how we deploy capital through the business cycle, enabling us to shift between stay in business CapEx, growth investments and shareholder distributions. Over the past 3 years at Grindrod, the management team has done well to have a business evolution that supported a balance sheet restructuring. This restructuring improves access to both optimized debt capacity and cash reserves. This work was undertaken to position Grindrod to act on growth opportunities as they emerge. Grindrod has completed its strategic reset. The foundation for growth has been laid. We are now moving into disciplined growth execution. We are focusing on strategic infrastructure initiatives for the short to medium term. Several projects are already underway and additional opportunities are being actively pursued. Starting with the Phase 1 of TCM expansion project, the Back-of-Terminal, this project will lift the terminal's capacity to 12 million tonnes. This project is making good progress. We are still on track for the hot commissioning at the beginning of 2027. The Richards Bay container handling facility, which will give Grindrod direct access to the quayside in South Africa remains on track and is expected to be commissioned in 2028. On the Rail Open Access, as I've alluded earlier, negotiations are ongoing, and we are in the process of procuring 50 wagons this year, specifically for rail slots. MPDC is planning to commence a dredging campaign. This is in line with its commitment to grow and develop the Port of Maputo as part of the concession extension to 2058. This will be project funded against the balance sheet of the port dredging company of MPDC. The capital dredging program, once completed, will allow the handling of ultra-large container vessels and the full handling of the Cape size vessels at Matola Terminal. This will increase the quayside capability of TCM to handle 170,000 tonne vessel size. This project should be completed by the end of 2027. During the month of February this year, Transnet released a request for qualification to identify and prequalify potential private sector partners for the Richards Bay dry bulk terminal, in short DBT. Transnet seeks to partner with the private sector to modernize and expand DBT, which is one of South Africa's largest dry bulk export terminals. DBT mainly handles chrome, magnetite and coal. The terminal currently handles around 17 million tonnes with the potential of expanding to 27 million tonnes, which is plus/minus 59%, 60% improvement that is expected. Now for nearly 2 decades, Grindrod has been a long-term partner in the Port of Maputo through our investment in MPDC and as a terminal operator in TCM Matola. Over that period, we have transformed a legacy dry bulk terminal, TCM, into a modern, high-performance export gateway that today plays a critical role in the regional trade. At Matola, we have invested in the upgrading of a berth, deepening key walls, modernizing handling equipment and deploying integrated terminal operating systems. The results speak for themselves. Matola has consistently delivered record volumes. For the last 11 years, we moved from moving 4 million tonnes at Matola to now moving 10 million tonnes, which is about 150% increase. This clearly illustrates Grindrod's capacity to invest and operate reliably on large scale. And we would like to demonstrate that in South Africa. Therefore, Grindrod will participate in this RFQ for Richards Bay. In closing, our strategy is clear. We provide our customers with integrated logistics solutions that are both cost effective and efficient. We are delivering strong operational and financial results. We will continue to deliver incremental volumes through operational excellence underpinned by our tenacious employees who are the heartbeat of Grindrod. Our commitment to generating value for both shareholders and stakeholders will continue to be a priority. Thank you. I'll now hand over to Reshmee for the Q&A. Reshmee Soni: Thank you, Kwazi, and thank you, Fathima. We will now open the floor for questions. [Operator Instructions] We have our first question online. Fathima, I think this one is for you. Thank you, Blessing Phakula from Vunani Securities. What hedging strategies are in place to manage U.S. dollar or foreign currency exposure? Fathima Ally: Thank you, Blessing. A really good question. We are fortunate at Grindrod. Our significant and material businesses that are anchored in Mozambique, all operate to functional currency of U.S. dollars. Customer collections are U.S. dollar denominated. And where we do see some foreign currency exposure is where we have our cost base that's denominated in local currencies. But again, these close out very quickly within the working capital cycle. So we do not face significant foreign currency fluctuation in the construct of how our businesses operate. We also ensure that when capital expansion happens, we secure funding in the functional currencies of the entity, which eliminates the need for any functional currency or the volatility that could come through from foreign exchange. Where we are exposed as Grindrod is when we translate into our reporting currencies, we use average exchange rates in the income statement and then, of course, closing rates for the balance sheet. Again, the upside here impacts on the earnings that you report, but you can't really apply hedging strategies for this. It's an accounting construct. In this year, we saw close to ZAR 1 billion worth of impacts from foreign currency on translation. These impacts were not absorbed into our earnings. They were absorbed on balance sheet when we translated those assets. So in closing, very simple construct. Grindrod is naturally hedged. And where we do have exposures, we seek forward covers when needed. Reshmee Soni: Thank you, Fathima. The next question, thank you, Rowan from Chronux Research. Is there any impact expected from the current Middle East conflict? Kwazi Mabaso: Yes. Let me take that one, Reshmee. I think that talks to the geopolitical risk that we have alluded on. And I think it's affecting everyone. And certainly, nowadays, you can't predict what's going to happen. And really, for us, as Grindrod, we tend to focus on what's within our control. We've got our strategy that we are executing. We've got short-term to medium-term infrastructure initiatives that we are highlighting. Safe to say that for us, we are looking at how the commodity prices are behaving as it has a direct impact on the commodities that we are handling. We've already seen at Navitrade, the coal coming to Navitrade increasing because of the slight uptick that we have seen on the coal price. We are already tracking at a run rate of about 2.5 million to 2.8 million tonnes at our Navitrade facility. And even when you look at the inbound volumes that is coming into our Navitrade has increased by over 50% on rail predominantly as well as on road. So that is what we are seeing. But our focus really is what is within our control currently. Reshmee Soni: Thank you, Kwazi. The next question from Toko, Oystercatcher Investments. Thank you, Toko. I'll perhaps split this for Fathima and Kwazi. The first section, Kwazi, perhaps from your perspective. Please provide an outlook on chrome volumes for the year given government support for the domestic ferrochrome sector. I think the second one, Fathima, perhaps on your side. What is the medium-term margin outlook in each segment over the next 3 to 5 years? Are there any choke points in the current value chain that may attract additional capital or I suspect CapEx? What is the net debt outlook given the strong balance sheet and growth ambitions? And lastly, what is the maximum net debt and EBITDA you can tolerate? Maybe I'll ask Kwazi to start. Kwazi Mabaso: Thanks. Obviously, with the discussions that are happening between the producers of chrome so that they can process and only ship ferrochrome, it can only be an uptick for us because ferrochrome also moves through our port of Maputo. However, we know that for every tonne of ferrochrome you produce, you need about 3x of chrome ore for you to process that. So maybe there can be a reduction on chrome ore, but there's sufficient demand in the market for chrome ore. We are currently handling chrome from South Africa and Zimbabwe. And right now, I think even the market share of Zimbabwe chrome ore in our port of Maputo has been hovering around 5% to 7%. And maybe we can see that also becoming strong if the chrome from South Africa subside. Fathima Ally: Thank you, Reshmee. Reshmee, you keep me honest here, but I think the first part of the question was around margin stability in our segments. So from a Port and Terminals perspective, we believe that our 44% margin is sticky. You must remember that in the current financial year, we actually consolidated Matola for 7 months in the year. So the first 5 months still came in at 35%. So we've got 5 months' worth of EBITDA uplift that can prevail. But as we've communicated before, our business is cyclical. And the thresholds that we hold for our Port and Terminals business are within a construct of between 35% and 40%, and we stick to those thresholds. From a Logistics perspective, with this business being an enabler to Port and Terminals and with us really moving forward on our integrated solutions strategy, as mentioned, our low end of the threshold is 25%. So it would need to be a really compelling customer opportunity that will allow us to work in breach of those thresholds. But we do have limits in place, and we do believe that those EBITDA margins based on our current business is sustainable. In terms of our net cash, the question was whether we expect the ZAR 699 million to prevail. With the dividend declarations that we have now, that will actually eat up -- both from an ordinary as well as preference dividends, it will eat up ZAR 510 million of that capacity. Overall, long term, depending on when those opportunities that Kwazi mentioned come into fruition, we expect that our net debt position will be depressed as Grindrod. But we are in a growth phase, and that's certainly not abnormal for business planning or in anticipation of growth. I think the last bit of the question was how much we can tolerate in terms of our net debt or EBITDA. We work to tolerating 2x our EBITDA. And again, if we're presented with a really good opportunity, we might work to 2.5x, but we hold ourselves accountable to 2x, again, because of the cyclicality of our business. Reshmee Soni: Thank you, Fathima. Maybe perhaps to move towards the Logistics segment, Kwazi. We have 2 questions in this regard. The first from Alistair Lea of Coronation. Your logistics businesses have not performed well for a while now. What is the short and medium-term outlook for these businesses. Thank you, Alistair. And the second one from Mike Lawrenson. Thank you, Mike. Congrats on an excellent set of results. What can be done in the short term to optimize resources in Logistics division and improve operating performance without impacting long-term aspirations? Kwazi Mabaso: Thanks for that, Reshmee, and thanks for those questions, Alistair and Mike. When you look at our Logistics business, our Logistics business, you've got rail there, you've got our graphite business, you've got container business and then you've also got road transport as well as our ship agency business. Our ships agency business, it's always solid. So there isn't much movement there. Road transport is directly linked with the coal commodity cycle. If coal is down, we'll see road transport also going down. Our graphite business, as also Fathima alluded earlier on, is that we are now moving into a variable contract with our customer after we were earning a fixed fee from the customer. But what is exciting is that the developments in the future is that we are now going to be getting consistent volumes from our graphite customer, the indication of roughly about 30,000 tonnes a quarter, and they are preferring to use our Pemba facility, the dry bulk instead of the Nacala Intermodal facility. So there is an uptick there. On the rail side, where we've seen really a decrease over the last year or so, it's because we deliberately went on an aggressive locomotive refurbishment program. I mean, last year, we refurbished 10 locomotives out of the 13 locomotives that we repatriated from Sierra Leone. And we did that so that we get ready for the Rail Open Access opportunities. But however, even this year, our focus on the rail will be to increase our deployment rate because currently, it's below 50%. And this year, we're going to up that, our local deployment rate, because we have now completed our aggressive locomotive refurbishment program. And then lastly, we've seen the container improving from last year, and we're hoping that it will continue to improve as we move forward. I think I've covered all the segments. Reshmee Soni: Thank you, Kwazi. The next one from Cobus, Value Capital Partners. Thank you, Cobus. Congrats on a good set of results. What is the expected time line for the PSP opportunity in the Richards Bay dry bulk terminals? Does the Richards Bay dry bulk terminal generate revenue in USD or ZAR, or does it depend on the commodity handled? Kwazi, maybe I'll take the second part on the U.S. dollar and ZAR. And on that Cobus, the terminal, as we understand it, does ZAR. Remember, we are at a request for qualification. So we are indeed in an early stage, and that level of detail has not been made available. Kwazi, if you can assist with the time lines? Kwazi Mabaso: Yes. The time line, the RFQ will close in August. And thereafter, then the RFP process will commence. Certainly, from our side, like I alluded earlier on, we are ready for this opportunity. We know that it's still at an early stage, but we've been waiting for this opportunity to come in the market, and we are ready. Reshmee Soni: Thank you, Kwazi. Perhaps, Fathima, we can go back a little to the debt. [ Jaco from Rena Investments ]. Thank you for your question. Are you perhaps contemplating reducing interest-bearing debt with the cash that you have? Fathima Ally: Thank you so much for the question. I think the question is an important one. In fact, it talks to a significant project that we have ongoing at the moment, whereas Grindrod, we're looking to restructure our debt and put it into what's commonly known as a common terms arrangement structure involving all of our main bankers. What this construct will do based on our indicative models that we've put together is reduce our interest burden over the period of our debt, which is lower than 5 years, up to ZAR 40 million over that period triggered by the refinancing. So we are constantly looking at measures on how it is we can be efficient from a cost perspective. But again, how it is we have a construct that would allow us to move forward in terms of our growth plans. Reshmee Soni: Thanks, Fathima. Kwazi, maybe perhaps this is back to you. Wallace Steyn from Steyn Capital Management. To what extent can you expect the dredging program and Matola upgrade to disrupt volumes in the short term? Kwazi Mabaso: That's a good question, Wallace. I think our approach in executing this program has been a modular approach. I mean if you remember, even our Matola expansion program, there was an option of going big, but we decided to do it -- split it into 2 Phase 1, Phase 2, so that we minimize disruption to our operation. So with the capital dredging program, the same approach will be adopted. We don't want to disrupt the ongoing operation in our operations. So we're going to continue taking a modular approach in executing our projects. Reshmee Soni: Thanks, Kwazi. Fathima, maybe back to you. There's a few questions on CapEx, and it may be worthwhile noting what's in the booklet versus the presentation. The first question is from Matthew, Blue Quadrant. Thank you, Matthew. What is the guidance for CapEx in 2026? And what is that split between H1 and H2? The second is from Alexa of Fairtree. Regarding the CapEx plans you've provided for the years ahead, how much of the CapEx is fixed? And how much wiggle room do you have to back out of certain capital commitments? Fathima Ally: Thank you. I think if we go back to the first question, in the booklet that we released on SENS this morning, a capital expenditure and commitment note is included as Note 9 in that booklet. If you look at that booklet, in terms of the future years, we've actually disclosed all of our authorized capital expenditure, which is reflected at approximately ZAR 1.2 billion. A big part of this is skewed toward Port and Terminals. We are currently a go on our Back-of-Terminal project, as Kwazi mentioned earlier, looking to do all the heavy lifting in 2026. Again, with respect to how it plays out between H1 and H2, it's difficult to say. A project is dependent on various eventualities, weather being one of them, engineering milestones, et cetera. But like I said, we are targeting to close this project and do all the heavy lifting in 2026 with commissioning early in 2027. I think the second question was around whether we see the CapEx fixed or is there wiggle room. In the booklet, we also disclosed how much of this authorized CapEx is contracted for. And you will see a significant portion of that is contracted for. Of course, the timing on our cash flows is what we can control depending on how projects advance. Reshmee Soni: Thanks, Fathima. The next one, Kwazi, I think perhaps from your perspective. Thank you, Bruce, for your question. Kwazi, can you please give us information on the top 2 to 3 destinations for coal exports and chrome exports? Kwazi Mabaso: Thank you, Reshmee, for that. When you look at the 16.7 million tonnes that we have moved as Grindrod, of that 16.7 million tonnes, 41% is magnetite and that entire magnetite is destined for China. And 34% has been coal, and that is destined for South Asia as well as some parts of Europe, but predominantly, it's in the Asia part of the world. Chrome is also following the same route, which is mostly China and South Asia. So that is where predominantly our destination of the commodities that we are exporting. Reshmee Soni: Thank you, Kwazi. The next question from Mike again. Thank you, Mike. I think, Fathima, this is perhaps for you. Working capital release of approximately ZAR 500 million in FY '25 appears to be largely due to ships agency prefunds of ZAR 700 million. Can you provide guidance as to whether this is a once-off or permanent benefit? Fathima Ally: Thank you for the question, Mike. As I mentioned earlier, these cash flows come from prefunding that customers give to our ships agency and clearing and forwarding business. And again, it's prefunding because we have deferment arrangements within which we need to pay those funds over to SARS in the form of VAT. That construct is here to stay. It is very critical to how our clearing and forwarding and our ships agency businesses operate. But what is volatile is the quantum of prefunding we can hold. That is entirely customer dependent. So in short, the ZAR 700 million timing and not permanent. Reshmee Soni: Thank you, Fathima. Having a look, there seems to be no further questions online. With that, I think that concludes our morning presentation. I thank everyone for their insightful questions. We appreciate your support, and we appreciate you joining us this morning. If you have any further questions, please do not hesitate to reach out to Investor Relations. My details are on the slide that is currently being presented. With that, thank you again for your support. Thank you, and have a good day.